Eric Stopper 14:51
Yeah. You mentioned the second one that you had invested in; she had an inherent talent, right when she came and just was ready to hustle you’ve invested into these people now. Why did people fall short? You know, why? Why have some people come and gone through the door and not gotten the capital?
Brandon Young 15:11
Yeah. So I don’t offer it to everybody. And I’m, you know, really ramping that up. I think the virus, you know, really slowed us down. My goal was to invest in quite a few of these companies this year, not just two so far. But we’ve been a little behind.
Eric Stopper 15:26
Yeah, make sense.
Brandon Young 15:28
So the reason that I see my students not succeed is a combination of a few things, but it boils down to them just getting in their own way. Right? It’s either that they don’t want to commit the time to learn the processes. They are too busy with whatever else they’re distracted by, or they aren’t. They give up too easily. And this business takes consistency, and it takes trial and error. And I can teach you as much as I can teach you about every possible scenario, but I’m not going to cover everything, and you’re not going to potentially learn about everything, and something’s going to pop up. And I can answer that question for you. Out of the 550 students in my inner circle, with so many being seven figure sellers, there’s probably not something that will pop up that has not been experienced by another member. Sure, we teach a real abundance mentality in that mastermind where it’s, you know, you get a quote, you have a question, you have an emergency, you’re going to get several answers in a few minutes, and you’re gonna have people want to jump on a call to help you. And I think that the reason that I see people fail is really a lack of effort, consistency, and, and desire to succeed in this business. It’s more of a, they got distracted by the next shiny object. And I see that with entrepreneurs on a regular basis.
Eric Stopper 16:49
Is there any commonality to what the next shiny object is when you’re talking to Amazon sellers? Oh, man, I,
Brandon Young 16:55
I don’t know. I mean, it’s everything from drop shipping to, you know, I would say, opening up a restaurant or a food cart, like I’ve seen so many excuses, boy, I’ve got people, though, that are that own their own accounting firm, for example. And they were selling on Amazon and doing okay, but not as great as their accounting and their accounting grew. And, you know, now he’s put his accounting for more on autopilot, he’s hired and replaced himself to an extent, and he can come back and focus on Amazon. Now, things like that are understandable. I mean, you’ve got to put food on the table and set yourself up to succeed. And it takes a long time to build a successful business, especially depending on how much capital you have to start, the determination and the the, the fortitude, and the consistency is where you really have a lot of people struggle, and it’s why they are going to struggle with anything they do. When I went all in on this business, you know, I basically burned the boats and went all in. And I said, this is the greatest opportunity that I’ve seen, I can send everything directly to Amazon, and they’re going to fulfill my inventory. They’re going to, I don’t have to have a warehouse, I don’t have to have employees stuff stuff in a box. I don’t have to buy packing materials, I can focus on just the things that are going to drive the most ROI and growth in my business. I’ve never seen a business like a business model that could do that.
Eric Stopper 18:21
And you almost sailed away. Right? I think I think I heard a podcast right? Where you almost missed the Amazon opportunity and went for something else. Is that right?
Brandon Young 18:30
Well, when we first started, I had never even heard of FBA until a friend brought it up. And then we saw mutual friends of ours doing arbitrage and really crushing arbitrage, where they were just going to stores and stacking discounts and, and getting stuff on sale and clearance and then reselling it. And to me that was more of a job like you’re going shopping every day, and then you’re gonna go process goods every day. And if you don’t shop and you don’t process goods, then you’re not getting paid. You’re You’re slave to your own business at that point. That’s not a true business. For me, that’s not something scalable. So, but I immediately looked back at a previous big family business that we had with tools and I said, I wonder if I can sell tools and I reached out to the reps. And I was able to get large discounts, bonuses, extra batteries thrown in that would make the ROI feasible to sell on Amazon. And all of a sudden I said, Yeah, I’m all in on FBA. My wife and I started a private label, we failed miserably for the first few products like we had products that were selling and then got shut down. We had inventory sees that customs because we didn’t know about Bluetooth rules and trademarks and, and certain things and yeah, there were so many opportunities for us to give up. But then, you know, we learned from each of those things. And we said, well, that was stupid. Let’s not do that again. It’s got to be a better way to do this. Why did we do a million dollars in revenue and only make $50,000 this year? You know why? I wanted How did you not
Eric Stopper 20:01
get distracted though? You’re an entrepreneur, the shiny stuff came up, oh, it,
Brandon Young 20:07
I still get distracted, but my wife keeps me on track. And then and you know, I can invest in another business. I’ve invested in things like rebate keys, for example, I’m one of the owners of it. I’ve invested in a board game that a buddy of mine does in a production company, and I’ve been like, I’ll still cut checks and invest in other projects, but I can have a limited role, right? I can be an advisor, I sit down on the advisory board of several e-commerce businesses, where I just offer some support for some equity and and you know, whatever else they need. But the goal was that I’m all in on this private label business, I’m going to create brands, and I’m going to figure out the most efficient way to find products, source them and launch them on Amazon, so that I can repeat the process as often and quickly as possible. So that can scale. It sounds
Eric Stopper 20:58
like the business format franchise from like the E myth, right? You put all the systems in place, and the sucker just eventually runs. Now, I want to take a step back, because I have a question about the economics behind selling a business that is at that half a million dollar stage, you’re trying to get it to $2 million, right a year, or at least in value. We had another guy named Chris Shipferling on our podcast, who works on things like the merger and acquisition side of things, and he helps queue up these smaller businesses far down the river to be prepared to sell. One, one point that he brought up with me was that the professional investing world, the one that everybody is used to seeing as kind of this wall street blackbox, is a really exciting thing that they don’t want to touch. It seems to be like this professional investment. scarcity, when it comes to Amazon, they look at it and they’re like, I don’t have as much data as I would like to have, you don’t control the customer. And there’s this short list of things that make it so that some of them disagree with the multiples that I agree with you on? Do you think that that is just going to change, right, that there’s enough investors in the world that that paradigm is going to go away? Or are you viewing ROI and value of these businesses in a different way that these professional investors should need to start considering?
Brandon Young 22:21
So we’re seeing a lot of major shifts and business, right? I think that retail is obviously shrinking. And e-commerce is obviously growing, and the virus accelerated that a lot of businesses are going to go out of business. During the lockdown, overall, retail sales were down 20%. But e-commerce was up over 9%. So if that could sink in for you, people were locked in their houses, and they were shopping online. And you had people subscribing and Amazon grew their subscribers and their prime subscribers. And you had people getting used to buying online that couldn’t. And then what companies are going to go out of business, you’ve got Victoria’s Secret, you’ve got Sears, you’ve got you know, Macy’s on the chopping block, you’ve got all these clothing companies. And you’ve got travel companies and accessories companies and you’ve got companies that were suffering that were bleeding already. So what’s going to happen over the next few years, if you’re talking about how you can become a more robust company to improve your multiple that you can exit at, there’s a few things you can do. You can roll up multiple brands, you can increase the overall abita across multiple SKUs, so you have more diversity and instead of all of your revenue and profit coming from very few SKUs, it comes from many SKUs. And that gives you more stability. You also can increase the number of sales coming from Amazon. So you can have a Shopify store, you can capture your your your customer data, you can add insert cards into your products that entice buyers to come from Amazon and come join you on your own site so that you can remarket to them and retarget them and provide opportunities for them to even if it’s to bring them back to Amazon to help launch a product. But you own that data now. And that’s powerful. So those things all increase multiples if you’re only an amazon.com brand. You’re going to be limited in your multiple, but it still grows with your profit. Sure. Once you hit a million dollars in eBay, you’re talking about four and a half five x, even if you’re just Amazon.
Eric Stopper 24:47
I think the next logical question in that vein is if I’m a company that and there’s a bunch of these right like companies that have reached some decent Large critical mass, they’re pretty profitable. They’re just over it. Right? And they want to sell it. Where would you have them start poking around? Obviously, a robust network of professionals helps. But, you know, where would you encourage people to go first and maybe sell their business?
Brandon Young 25:20
Yeah, there are a few brokers out there that will help them list their business and put them in touch with a lot of buyers. I’m actually, you know, in the process of finalizing a deal with a fund to be an advisor and an equity owner. Nice. Um, so later stage companies like you’re talking about that have grown the business that are a little bit further along, that want to exit, like, I’m going to have some capital to play with there to actually acquire some of these businesses, but we’re structuring a little bit differently. Whereas like, we’re, a lot of these companies will just give you a check and tell you to walk away, right, or give you an urn out where you’re not really that responsible, and you don’t really have too much equity left, there’s no upside for you. Okay, we want to have the owner self finance, we’re going to give them a better multiple than they were going to get, we’re going to give them, let them maintain some equity. Because as we grow the business, and as we optimize the business beyond what they were capable of doing by themselves, we’re gonna allow them to eat on that upside, right, but give them a check in the front end, as well. So what that does for us is, it allows us to use less capital to acquire more businesses. And then everybody wins. Because then we can roll those up and manage those better. So I mean, it’s a little bit different. I like to think differently. And I think that that type of business model works better than just taking, you know, a few, a few multiple, you know, a couple points, or, you know, two to three x or four x, and I’m walking away from the business.
Eric Stopper 27:00
Yeah, and I think a lot of a lot of these folks should plan to come with it for a year, right, during this, like, how long should the transitional period be? Oh, it
Brandon Young 27:08
could be anywhere from three to six months. I mean, if the so if the, if the principal is really good at what he does, and his team is really good at what he does, there’s an opportunity to keep them on, right? Sure. We just incorporate them into, you know, we basically are like the board and we assimilate them into our company.
Eric Stopper 27:26
Yeah, you you would systemize their talent into a more scalable model, right, you’re gonna launch us, you’re gonna keep I
Brandon Young 27:33
say, congratulations on doing a great job on this brand. Now, you’re in charge of doing this with a few other SKUs from these other brands.
Eric Stopper 27:39
Yeah. And we can help with keeping it fresh. I’ve heard a lot of complaints where someone’s just sick of working on the same corpus of products for 11 years.
Brandon Young 27:48
Yeah, 100%. I mean, people get stagnant in the business. And that’s another mistake that I see entrepreneurs do is they get really bogged down and obsessed with a particular product or niche. And if one thing goes wrong, then it consumes them, and it could destroy their business. Whereas what the proper approach should be is to be as precise and scale as quickly as possible into more skews and more opportunities so that you can be more resilient.
Eric Stopper 28:19
I see. I see. People are incredibly myopic when approaching products, right? They just, they’re just like, they’re, but niches are really important, right? I don’t want to discount that. Of course, he I don’t know if it’s data agnostic. Or you just like you ignore all the extra stuff, and you only look at a few key metrics, from listening to listening to the content that you put out, it seems like that’s kind of the direction that you go just like, forget what it is. And just look at the profitability metrics, how do you look at it, pull back the veil a little bit for me?
Brandon Young 28:57
Yeah, so I mean, we are a 100% product, you know, agnostic, like, I do not care what the product is, what the widget is that I’m going to sell if it makes sense from, like a data perspective. So like I said, we look at those top 10 sellers, we understand how they’re getting their sales. That’s the key. That’s the key right there is how are your competitors getting their sales? What is the demand on Amazon, first of all, and you need to understand the concept that you can’t create demand on Amazon. So once you understand that core principle, that rule, you cannot create demand on Amazon. Now you can understand, if you look at the demand on Amazon, which is all of the ways people are searching for a specific product. And you need to understand that Amazon is a search engine. It’s not an e-commerce platform in the sense that you’re just selling products. People don’t search for products. They search for keywords that lead to products. So you need to understand what are all the ways people are searching for a product. You need to understand the search volume related to each of those ways. And then you cannot understand whether the current sellers are meeting that demand. And once you analyze that, in a spreadsheet with very straightforward, it’s going to be very apparent, whether that product cares what kind of risk that product creates for you to try to do. Now you can have advantages with your supply chain and your sourcing. And you can make the box and packaging smaller and get an advantage with pricing. And you can add more value to the product and still go after competitive niches. But if I analyze 50 products, and I stack them from highest opportunity, and lowest risk down to lowest opportunity, and low and highest risk, I’m going to have a very clear idea of which products to do.
Eric Stopper 30:49
Yeah, and I guess from that point, it’s, it’s not or right, you’re not like, I’m going to identify a niche, or I’m going to do all the data analytics, it’s like, I’m gonna do all the data analytics, and then that top product that I see, I’m gonna look at all the other people selling it, and I’m gonna change one key thing about it that makes it stand out, either in the way that I market or the or even the way that it looks in order to to satisfy the need in that market is is the way that I look at that. Right. It’s not It’s not an exclusivity, it’s both do do both.
Brandon Young 31:20
Yeah. So what I think is the way so the way I look at it is this. You can look at a 10,000 foot picture and look at every possible niche. But I think what you need to be focused on more so than anything is your budget. What is how much capital Do you have to actually do a new product, and it could be your 10th product, it could be your first product. But if I have $10,000, to spend this month on a new product, I know what type of velocity that product needs to have, what kind of landed cost that product needs to have, and lead time so that I understand how many I need to order. Now those look, those are levers you can pull, you can get something that’s more expensive but slower moving or you can get something that’s faster moving but but less expensive, and still hit the same budget. Right. So as you can see, you can use tools out there like Helium 10’s Black Box, or Viral Launch has one as well where you can plug in, I want something that sells for $15 and sells 600 times a month, and in the sports and outdoors category, and they’re going to spit back everything that meets that criteria. And you’d be, you know, between 14 and $16 that sells between 500 and 600 times a month. It’s all thresholds. Yeah. And so then it’s going to spit back 100 results or 300 results. And then you can analyze those products in a more in depth manner, which is that keyword research if it and understand which one you found, you may have found the fifth best seller, which means that that product probably is too expensive for you to do. So there’s data that you have to dig into. And then you have to understand don’t bite off more than you can chew. But understanding your budget so that you don’t get overwhelmed and you’re not underfunded, which is the number one reason businesses fail is they don’t have enough funding.
Eric Stopper 33:10
So we’re running on time here. And I and I, there’s so many other questions that I want to talk to you about. I’m wondering if there’s a lot that’s currently going on right here. I’ll send everybody over to your website so they can find you as well. But Amazon, like you, like you mentioned is always changing every second. I want to look to the future a little bit. No one could have seen the Coronavirus coming, you know that’s that kind of in its own little class. And I’m mad that more people didn’t have more cash to survive, but it is what it is. So what should private label sellers and brands be looking at? Right now, you know what’s kind of the maybe the fruits a little higher on the tree, but it’s something that they can’t they can’t risk not trying to build a ladder to go reach for it.
Brandon Young 34:07
I think that things are gonna normalize in a lot of ways, like people. There’s a chart out there that showed the products that were hit the hardest during the virus, and then the ones that did the best. But I think that for example, party supplies and travel accessories got crushed, right, no one was throwing parties, no one was traveling. Hmm. launching new products into those niches right now before they come back is actually a great proposition because it’s going to cost you less money, right? So I’m not, I’m not saying that you need to go after something that grew and did great, like be a little contrarian. You know, the number one thing that people need to be doing is actually just starting and sticking to this business. Learn from someone that knows how to look at the data knows the algorithm. If it’s not me, it could be somebody else. But understand how to pull the lever is what the leavers are right and I’ll show you the ranking algorithm today. takes into account a few different things. And I’ll leave this with your listeners. And you know that it takes into account your click through rate, your conversion rate, and your total revenue that a product generates. And then your relevancy for that keyword. Those four things combined equate to a quality score. That quality score determines where you rank on a particular keyword. So if you understand how to pull the levers to impact your conversion rate, and your click through rate, how to generate more revenue than your competition, and how to make sure that Amazon’s algorithm sees your product as relevant for a keyword. So you set your indexing up properly. And you build your listing properly based on the keywords you put in your listing. And then how you get credit for a lot of these keywords. Because you’re just not like you, if you sell a diaper caddy, and you have a diaper caddy and your keyword, you’re not getting credit. If someone searches for a diaper caddy and buys it, you’re not getting credit just for diaper caddy. You’re getting credit for thousands of keywords, in different forms and in different percentages. And if you put that keyword in a different part of your listing, you’re getting a different amount of percent a different percentage of credit as well for all of those keywords. Because where you put the keywords in your listing matters and what type of match you had matters. Understanding the in depth way that you get credit for sale and that way the algorithm works is crucial to beating your competition right now.
Eric Stopper 36:34
Go to seller-systems.com. right that is that where I should send everybody?
Brandon Young 36:41
Yeah, that’s, that’s fine. That’s the homepage. I think I have some things on there. I’ve got a, you know, five hour masterclass on product selection and data analysis, if you want to see the way the data works, or how we do our product selection process, that’s going to be the best way to do it. I spent five hours digging in and finding real examples of a product like different products, and letting you know, sourcing them and letting you know the opportunity of those products. So you can see me walk through it pretty boring. If this business isn’t for you, you’re gonna know it after watching. But if you get done with that, and you’re like, Man, this is a little bit easier than I thought and this is exciting, and I want to do this business, then maybe this business is right for you. Right on, and it’s only a buck. So instead of being $197 use the code, Stay Home all together, and it only be $1 for you.
Eric Stopper 37:31
Now what to do right on go to go to seller-systems.com and go and sign up for the course see if it’s for you if you’re one of the people that got unemployed because of the virus. I mean, literally it’s a $1 Go Go and check it out. It could change your life. Brandon, thank you so much for coming on the show.
Brandon Young 37:47
Thank you for having me.
Eric Stopper 37:48
To finish today’s podcast I want to share some final thoughts. For brands to be successful on Amazon. A critical lever will be launching and managing Amazon advertising campaigns. We at Buy Box Experts are really big fans of the team at Kenshoo. Their sophisticated software helps brands to manage ad campaigns, and gather further data intelligence across Amazon, Google and Facebook platforms. We’re excited that you joined us today. We’ll see you next time.
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