“You are the average of the 5 people you spend the most time with” – Jim Rohn.
Taking this quote to heart, I wanted to learn from successful Amazon sellers and ecommerce experts how they built million-dollar businesses. What I learned was surprising at times and yet commonsensical at other times.
At the end of the day, these successful entrepreneurs aren’t superhuman. In most cases, they are just like you and me.
Yet they had certain common threads running through them in the habits and mindsets they built, the blueprints they created to scale their businesses, the marketing and branding strategies they implemented, the special attention they paid to profitability, and the ways they built up their businesses to sell them.
If you haven’t already, you can watch the full interviews at the 2020 7 Figure Seller Summit where we deconstruct each of these elements from multiple perspectives from 7 Figure Sellers and E-commerce experts. Not only do we learn their best practices and benchmarks for successes, but we also learn from the mistakes they made along the way and what we can do to avoid them.
Here’s a summary of the top 10 things I learned after interviewing this amazing group.
#1 Successful Entrepreneurs Get Around Excuses
One of the sure things in running a business is that you WILL face problems, challenges, and setbacks. 100%. No doubt about it.
What sets these 7 Figure Sellers apart is that when faced with trials and tribulations is that they found ways to get around these “excuses”. They did not throw in the towel when hit with these problems that may cause some people to fail and give up.
Case in point, 7 Figure Seller Chris Davey, shared that it was a pain in the butt to deal with European VAT (Value Added Tax) and the bureaucracy and administrative work it entails. He spends dozens of hours if not more on fulfilling all of these cumbersome requirements so that he can legally sell on Amazon European marketplaces. Some people may have given up if they faced these challenges and made the excuse that it’s not worth it or that they don’t know what to do but Chris was determined to get around these excuses and find a way to get it done.
And the main takeaway here is that he sees these challenges as barriers that keep out his competitors! Especially competitors from countries like China where he feels they probably aren’t willing to go through this process. So this means MORE BUSINESS FOR HIM!
Furthermore, Nick Katz, a 7 Figure Seller that sells in Amazon Japan and Europe, revealed that you don’t necessarily need to set foot in a country to sell there. To learn about the cultural differences in Japan for example, Nick used an example of Japanese kitchens which are designed differently from Western-styled kitchens (smaller size, different types of appliances, etc.). He shared that rather than flying to Japan to see these kitchens in person, you can learn what a Japanese kitchen looks like by searching on Youtube!
There are more examples than I have room to list and you can view the full sessions at the 7FSS but takeaway #1 is that successful entrepreneurs find a way around excuses!
They always find a way to get things done.
#2 Get off of Amazon to find profitable products
What may have worked in 2016 to rank and sell on Amazon doesn’t work as well today.
The old way of ONLY relying on research tools to come up with product ideas doesn’t work the same when millions of sellers are using the same research tools and same methodology.
As the saying goes:
If you start out from the same place as everyone else,
you end up in the same place as everyone else.
What may look like a profitable product opportunity now can be a flooded market 3-4 months later when the hundreds of other competitors using the same tools, the same criteria as you are sourcing the same product and shipping them to Amazon’s warehouses.
According to 7 Figure Seller Tim Jordan, looking on Amazon alone can lead to saturated niches. Now Tim uses external sites such as Pinterest and Cratejoy to find profitable product ideas and keywords.
Tim loves subscription sites such as Cratejoy because they source new and trending products that can be months or years ahead of mainstream demand found on Amazon. They are early in the product life cycle and if you get it on this then you are able to capitalize on the demand before everyone else.
After getting these ideas Tim uses research tools such as Helium 10 to check keyword search volume to make product decisions. Even though there is early demand for these products, the products are not there yet on Amazon.
Note that he does not start out on Amazon like everyone else because that means that he will be stuck looking at saturated niches.
Similarly, Chris Davey uses non-Amazon sites such as Etsy in his product niches to find out what customers are searching for to gauge interest and product demand.
Not only that, he also uses Sub-Reddits to get feedback on new product designs… before he manufactures them. This is akin to the Lean Startup methodology’s Minimum Viable Product principle where you invest in the minimum amount of time and capital in a hypothetical product in order to test it. If you can validate it using substantive user feedback without committing to thousands of dollars in a purchase order and months to manufacture it in China and ship it, then you are shortcutting this process and taking a lot of risk out of the equation.
Moreover, these million-dollar sellers are not just sitting in front of their laptops or phones to find products. They GET OFF THEIR BUTTS to find products.
Nick Katz says that every time he travels and boards a train to Tokyo, he spots at least one new product idea just observing other people.
Tim Jordan finds endless new product ideas from trade shows such as the Yiwu Marketplace in China and the Delhi Fair in India.
Speaking of the Delhi Fair, if you want to fast-track your sourcing from India, I highly recommend the India Sourcing Trip organized by Meghla Bhardwaj. I’ve attended this trip and it really helped fast track my sourcing from India. I was able to find several new product ideas that I’m sourcing now. India Sourcing Trip is a sponsor of the 7 Figure Seller Summit and you can find out more details here.
#3 Apply the 80/20 rule to save time and increase profits
One of the biggest pains entrepreneurs face is the lack of time.
That’s why I was so shocked when I interviewed Jason Vander Griendt, to learn that even though he runs a million-dollar one-person business, he’s NOT busy all the time!
He shared that he applies the 80/20 rule to decide on what tasks to work on. More specifically, he follows Steven Covey’s 7 Habits of successful people and he cranks out the Non-urgent, Important tasks – this way he doesn’t give them a chance to get bigger. And this saves him time later.
I also found the 7 Figure sellers apply the 80/20 Rule to work SMART to gain more profits.
Big Profit Formula = Small Work x Big Smarts
Brandon Dupsky built a one million dollar, one person business, selling one product, and working one hour per day by applying this Big Profits formula.
Brandon focuses on the SMARTS and tasks that MAKE money and outsource the tasks that are moving money.
For example he focuses on tasks such as creating videos featuring himself and his children showing customers how to use their products which help boost his sales and his brand
I found that 7 Figure Amazon sellers Alex and Jerry Mills focus on launching new products and optimizing PPC campaigns and outsourcing the rest of their work to free up their time
In other words, they outsource the other tasks that are moving money so they can focus on the SMART tasks that are making money and creating Big profits.
Remember Big Profit = Small Work x Big Smarts
This leads us to the next point
#4 Build a superstar team
When I was traveling in Chiang Mai Thailand I met Nate Ginsburg, a 7 Figure Seller, who’s a digital nomad who spends much of his time traveling Southeast Asia, sold his Amazon business for nearly a million dollars.
When I asked him how he built his business to sell it for nearly 7 Figures, he said it was because of his superstar team. He couldn’t have done it himself.
He hired for his weaknesses. Nate is an ideas person and not so detail-oriented so he hired people to build a team that was detail-oriented to fill in those gaps to make his business stronger.
I wanted to dig deeper into learning the benefits of working with a superstar team and learned that your team not only supports you but you can learn valuable information from them.
For example, CJ Rosenbaum, who runs a successful law firm to help Amazon sellers protect their brands and get their accounts back from suspensions, meets with his team every day to learn what’s working and what’s not because they are interfacing with customers. CJ’s team is on the frontline with customers everyday so they know the customers’ key pain points and goals. This valuable information helps CJ tailor his services to meet their demands and grow his business.
One of the struggles with running a team is to motivate them to perform better. To build a strong relationship with his remote team, Mike Jackness visits his team of virtual assistants in the Philippines every year and spends time with them in person. He works with them in the same office and spends time socializing with them outside the office over meals, karaoke, and team building activities.
Similarly, Jason Vander Griendt visits his team in Europe and even goes to celebrate the birth of their children! One of the beautifies of running an online business is that James is able to make a trip out of it and runs his business while traveling.
#5 Building a brand is more critical than ever to rank products, get reviews, and sell your business for a higher multiple
Building a brand is more and more important now given the increased competition and the fact that Amazon gives more weight to external traffic that drives sales.
Dave Huss has spent over $400k on Facebook ads for his own ecommerce businesses and he works with a number of 7 and 8 Figure Ecommerce sellers to rank their products on page 1 on Amazon. In Dave’s experience, he shared that building an audience or list on Facebook is like bringing a gun to a knife fight. You can launch to that list and rank new products on page 1 of Amazon.
Also you can use your list to get reviews in a “white hat” way that is compliant with Amazon Terms of Service.
Chris Davey shares that his Brand is a roadmap that helps him decide what products to launch to market. He can map out his product portfolio based on what products would complement his brand and what products to avoid.
Having a tight brand of products helps you get a higher multiple if you decide to sell your business according to Coran Woodmass, the FBA broker who helps Amazon sellers exit for 7 and 8 figures. He says that this is in contrast to having a “hero product” that generates the lion’s share of sales and some other minor products that trickle.
Takeaway: Build a brand to beat your competitors and sell for a higher multiple
#6 Keywords for PPC campaigns – need to balance data with common sense so you don’t pay the “idiot tax”
When it comes to Amazon Sponsored Search or PPPC, many of you including myself are struggling to run profitable PPC campaigns.
Enter Stefano Starkel – a 7 Figure Amazon seller and founder of ZonTools. Stefano shared that in the initial 6-12 months of running a PPC campaign he aims to only breakeven. The goal is to mine valuable Keyword data from Amazon for search terms that convert. The reason in terms of profitability is the lack of market data and that Amazon is a “pay to play” game. The more you pay in PPC, the better the ranking of your product. Only after this initial 6-12 month period will he decide whether to shift the aim from breakeven to profitability.
Furthermore, when it comes to keyword selection he recommends using your brain and not just relying on a formula based on the number of clicks, conversion rate, etc. He says that every week you need to download your search term report and manually review each keyword to decide if it is relevant or not.
In other words, focusing on “F* yeah” keywords that make sense when people search for your product rather than diluting your budget across less relevant keywords with low conversion rates… and wasting your money and dragging down your CR at the same time
David Bryant agrees and when I interviewed him on how he increases his profitability in his business, he shared that he cuts out 80% of potential keywords and focuses on 2-3 keywords for his PPC campaigns to get higher ROI.
Takeaway: 80/20 rule focuses on the most relevant or “F* yeah” search terms by using your brain to decide whether they are relevant or not.
#7 Whatever gets measured gets managed
Interviewing these 7 Figure sellers, the #1 quote that was repeated over and over again is Peter Drucker’s quote “Whatever gets measured gets managed”.
Chris Davey’s products have over a 30% margin and he says that you should ask yourself if your product has enough margin for PPC? If so then you can afford to outspend your competition and buy your way to the top. The key is he knows his numbers!
Chris Rawlings shared that now he gets very granular when launching a new product. Everyday he and his team are tracking all the metrics in a 35 day honeymoon period – How many rebates are given out, how reviews are given out, sales numbers, etc.
Robyn Johnson also tightly tracks her Amazon product Conversion Rates. Every week she pulls her Amazon session reports and studies to learn what’s working well and what’s not.
And you can automate this process by using tools such as SellerBoard to track sales and SentryKit to track keyword ranking and monitor your listings to save you tons of time.
John Cavendish shared that when selling internationally keep an eye on your Amazon fees to bring your international sales revenue back to your home country and home currency.
In fact, I made this mistake the first year I sold internationally when I used Amazon’s default currency exchange and money transfer service. I mistakenly thought that they would be a good option and later discovered that I had wasted thousands of dollars in the exchange rate and money transfer fees paid to Amazon. Amazon was charging up to 3.9% in fees!
If I were to give myself advice when starting to sell internationally, I would tell myself to use a payment transfer service like Ping Pong to lower these fees from 3.9% to 1% or lower.
I’d like to take this chance to thank our sponsors Ping Pong. As you scale your business if you’re selling internationally and need to bring your payments back to your home currency, OR if you’re paying your suppliers abroad in China or India, or if you need to pay for VAT, then Ping Pong offers very competitive rates and you’ll save thousands of dollars compared to using Amazon’s own currency exchange and money wire services. Visit Ping Pong to learn more.
#8 Split Test ideas cheaply and quickly
Nowadays when you want to validate a product idea, rather than committing to a purchase order with a foreign supplier for thousands of dollars and months waiting for it to arrive – you can shortcut this process by testing it quickly and cheaply using online tools.
Jason Vander Griendt registers for a domain cheaply on Godaddy to build a simple website. He then drives about 100 people to the page using FB ads to see the conversion rate to validate his idea whether it’s worth pursuing or not.
Split testing and Pickfu especially is one of the tools of titans that ecommerce sellers like Mike Jackness and Richard Ren use to rapidly test their product images, copy, variations, packaging, and more. I’d like to take a moment to introduce and thank our sponsor Pickfu.
You can run a poll and get up 50 replies and comments for $50 in as little as 15 minutes. This can help you decide based on actual customer data which color variation to choose, what’s the best image or infographic that will increase your conversion rate on Amazon product listings, and which type of packaging resonates best with your audience so you can get a better unboxing experience and better reviews… before having to commit to a purchase order with your supplier for thousands of dollars.
So Test drive it today as PickFu is offering a 50% off discount for running your first poll! Check them out at www.pickfu.com
7FSS All access pass holders will be able to get a 3 month professional subscription worth $250 value
#9 Focus on the BOTTOM line not on the Top Line.
Anna Hill who’s a CPA who specializes in helping Ecommerce sellers with their accounting says that the biggest mistake sellers can make is trying to grow their business only by increasing sales
Top-line revenue doesn’t necessarily mean you’re profitable. In fact quite the contrary. Some 7 figure sellers she works with are actually in the RED – they are not making any profits but taking a loss. So you definitely want to KNOW YOUR NUMBERS
Nate Ginsburg says that the 80/20 rule doesn’t apply here. He recommends hiring a bookkeeper (can be part time) to track your finances and to put together a Profit and Loss Statement (P&L) and balance sheet.
Brandon Dupsky agrees and he reviews his profitability dashboard every day. This way he knows exactly how much profit is made in every transaction. It also helps him recognize the product life cycle as the data will tell him if a product is shifting from a growing product, to mature product, to declining product.
And knowing your numbers is one of the most important aspects if you want to sell your business someday. Dave Bryant shares that when he sold his business the business value is based on PROFITS, not on revenue. By cutting his expenses he was able to significantly add tens of thousands of dollars to his business’ selling price.
Takeaway: Know your numbers so you can profitably scale your business and sell it – the 80/20 Rule doesn’t apply here!
#10 Selling a business – need to be smart to get a higher multiple
If you were to mention that you wanted to sell an Amazon business back in 2015 or 2016 people probably thought you were crazy. Who in their right mind would buy an Amazon business?
But now the landscape has shifted significantly. More and more Amazon businesses are now considered a legitimate investment vehicle as more investors are getting in on the action from retirees to institutional investors.
But there is one thing that you might not be aware of and this is a big problem if you’re thinking of exiting your Amazon business.
As of today, there is an abundance of Amazon businesses on the market according to Coran Woodmass the FBA broker.
AND there’s only a 23% sell-through rate. That means that less than one in four Amazon businesses that go to market are actually sold.
In other words, there are more sellers than buyers on the market today.
So what can you do to increase your chances of selling and to get a higher multiple? Besides Coran, I asked Mike Michelini who works on the buy-side at Alpha Rock as well as Mike Jackness and Nate Ginsburg who each sold his Amazon business for 7 Figures respectively.
First, you need a tightly focused brand portfolio of products. Not just a hero product and some scattered lesser products. The products should be appealing to a common target audience and the products should complement each other.
Next, buyers like to see Net profit margins of 30% or higher. Thin margins are not attractive to buyers and may cause your business to be skipped over by potential buyers.
In addition, buyers like to see diversification of sales away from Amazon – at least 30% – so it’s less risky for them. Don’t have all your eggs in one basket. This can be in the form of selling on different platforms such selling on your own site, Walmart, etc or selling in different marketplaces such as Europe.
Finally, give them something that they can improve on. By having some upside to your business that the buyer can take action on, this will increase your chances of selling your business and increasing your multiple according to Mike Michelini.
For example you may have a few more vetted products that you haven’t been able to develop because of lack of cash flow. But the buyer can come in and get these products manufactured and sold to immediately boost sales.
Takeaway: it’s a buyers market now so make sure to have a tightly focused brand of products, have net margins above 30%, diversify your sales away from Amazon, and give the buyer some upside to increase your chance of selling and to boost your multiple.
In conclusion, building a 7 Figure Ecommerce or Amazon business takes the right mindset, the right strategies to scale, to build a brand and market it effectively, and to know your numbers and profitability so you can ultimately look to sell your business if you want to.
These are my personal top 10 takeaways and they are only the tip of the iceberg from valuable knowledge and practical experience in the 20+ interviews I had with these top ecommerce entrepreneurs.
To learn more how you can view the interviews and to get a free 7 Figure Seller Playbook PDF visit the 7 Figure Seller Summit here.