Helping Amazon Sellers Sell
August 10, 2021
James Thomson 5:09
So let’s talk about new soft skills needed. Now, with all these new investors popping into the scene, looking at Amazon, private label brands, these these brands are a hot commodity. Now, let me ask you, what do you see, that has caused all this recent interests in private label brands that quite frankly, have been around since the beginning of the Amazon Marketplace.
Carlos Alvarez 5:36
The ease of entry, I would say it’s, it’s pretty straightforward nowadays, too. If you treat this like a business, it pays you like a business. So if you dislike a business, and you understand the power of networking, you know, listening to podcasts, like yours, reading books, and treating it like a business networking with people, you stand a really good chance of having a successful profitable brand. And I think that has just, you know, reach the right people. And now we have a lot of just, I probably get three messages a day, easily running this group from another brand, you know, m&a, we can offer your, you know, everyone in your group, you know, amazing exits and all this other stuff. But it’s, I think that’s what happened. I think these hedge fund types have have said, Wait a minute, there’s a lot of money here,
James Thomson 6:22
there is a lot of money, there is a lot of money. But there’s also a lot of questions. And I’m curious, how has the conversation changed within your Meetup group, now that people are starting to see other sellers getting those successful exits? Now talk to me about some of the new questions, you’re starting to hear people talking to each other?
Carlos Alvarez 6:43
Yeah, God, that’s such an awesome topic. across the entire spectrum, first of all, everything now is sort of run through the filter of like, when somebody asks a question, it’s no longer just the question, it’s and how would that impact me on an exit? Does that make me more attractive in an exit? Yeah, yeah. How to handle that? Should I take a loan? And if I take it from a family member versus something else, does that impact me? One good thing is, you know, business partners, and how that affects you when you’re starting off. If you started with arbitrage, and wholesale, and then you get into private label, is your account. Attractive still to somebody that’s going to look at the history and realize, Wow, you didn’t always make this? I don’t know, fancy milk frother sure, beats with KitchenAid or something like that, you know, a lot of stuff like that a lot of questions about, I’ve just had a lot of success in my business is like building an email list and building community and stuff like that. But you have a lot of people that are buying these companies that will just straight face say, and maybe they’re right, but they say we don’t we don’t care about that. Like we’re that’s not going to help you get a multiple in the space. So the questions become, does it like, does having a social media following and an email list and IP and all these other things? Does that make you more attractive in an exit? Or is it just pure data, follow the numbers treat this like a like day trading, and just make it look as pretty as possible with a bow to sell?
James Thomson 8:15
So let’s talk about what do you see as some of the biggest concerns that private label sellers are now having to tackle issues that they weren’t tackling in the past? You talked about your example of how do I how do I tackle debt? But I’ve got to think that having people on the sidelines standing there saying I want to buy your brand. There’s a lot of new concerns that that brand owners have to think through that in the past that those were irrelevant parts of the the day to day equation? Absolutely. I don’t know if that was a question again. Yes. So the question is, like, what are the biggest concerns that you’re now seeing among your members, where they’re having to ask the questions around, you know, the potential to eventually exit? You gave the example of, you know, do I borrow money from family or do I go elsewhere? Well, what are some of these other concerns that you’re seeing loud? And clearly?
Carlos Alvarez 9:10
Questions and not really concerns questions like How much do I have to be selling to be attractive for somebody to to want to buy my company? Should I stay on as like a part time or advisor or something after the fact? Or can I just walk away clean and be done with it? Yep. You know, what if I really love this space, but I like something else in this space, am I going to have a non compete if I sell and I can’t do this other thing and that’s kind of like all I know. A lot of stuff a lot of a lot of stuff too, that have come up a lot recently are and I guess there’s some information going around that you’re almost less attractive, your your your your brand you’re on Amazon is less attractive, if you are already selling successfully internationally. I don’t Get the logic in this one, but I’m getting it asked a lot. And it’s more like your upside that they see is less, or something like that. Another one is actually sellers are getting worried. And they’re like, Look, if these companies start gobbling up enough of our competitors, and they’re willing to work on razor thin margins, and their teams are just, you know, 50x better than mine. Yeah. And they have a massive logistics team and we have, you know, full Lana on Alibaba, then how can we compete? Yes,
James Thomson 10:32
yes. Yeah, there’s definitely something to be said about being the second or third person in your space to be acquired the first the first company that gets acquired new capital we put into that business potentially opportunities to create efficiencies that are simply not available unless you have massive scale already know that I can see those certainly, certainly being concerns. Let me ask you this. Some of the private label sellers that I’ve talked with recently, are asking the question, how much longer is this investor interest going to continue? What what are your thoughts on that?
Carlos Alvarez 11:04
I don’t, I don’t think we’re anywhere near the end of that. I think the next I think the next year or two personally, well, I had intentions to sell to exit two of my brands this year, and I had those intentions January or February of last year. Okay. And I don’t claim to be, as a matter of fact, I have no idea what they really look at and what they’re interested in at this point, because I’ve successfully exited brands, and they were interested in just killing off my brand. They didn’t like keep it and continue selling it. But COVID happened. And it’s a sad and horrible thing. But if you’re an e commerce, you do have something to smile about. And we had 69% growth now. I was like, Okay, well, let’s just continue writing this. So you know, we’ll look better let’s exit in 2021. But now we have a few months to compare towards, against the earlier months of last year, and I see continued growth. I’m not seeing any kind of pullback. So if that’s the case, then I think we at least have a few more years. To exit now.
James Thomson 12:17
Yeah, I mean, you’re sitting on a really good asset. And one of the big questions that I have been asked repeatedly is, is now a good time to sell. Should I sell in a year Should I sell in two years? It’s a very personal question. But quite quite frankly, there are dynamics in play. And some of the investors are asking questions and making offers that provide sellers with the opportunity to enjoy some of the future earnings. That may that may happen under new ownership. How do you see this whole equation playing out around? Sell now sell in six months sell in 12 months? How do you see that playing out? And how do you how do you help the the folks in your Meetup group think through that?
Carlos Alvarez 13:00
It’s it’s, it’s it’s extraordinarily difficult. Whether someone, let me say that I think a lot of businesses start with this whole, like, start with the exit in mind. I’m incapable of doing that. And maybe that’s a flaw of me as a business owner, like I start a business. And I put so much time and energy into it, that I need to be emotionally connected. So I imagine like my grandkids working in this business. Sure, sure. That’s what fuels me. So if I get to a point where and it’s happened before that another idea happens, and then I see that there’s interest in this one business that, you know, a day I go, I thought I could never park with my mind starts going towards this other thing that I’m now going to be able to do if I exit because I’m going to have the capital and the bandwidth. Yep. So when that happens, I think, you know, for most people, though, that come up and ask me that, it seems like, you know, oh, my goodness, we just had our best three months, we, they suspect that this will not continue. And they wonder if they can sort of sneak out on a high note. And I just explained that it’s not really like that, that I think most businesses would do better. And this is what I tell my group, especially if they’re in the early stages of their brand. I was like, Look, focus on having just a rock star product. You know, your branding, your imaging, like dominate in your category. Yeah, focus on getting sales, focus on that profit. And just focus on growing your brand. And if you just focus on that focus 98% on that, obviously in that is keep your books good. You know, managing cash flow. If you just do that. I think that’s the best thing to do to make you attractive to be purchased. It does that. I don’t know if you agree with that. But that’s,
James Thomson 14:48
yeah, it feels like every person is going to have to look at the stars and decide for themselves with the stars lineup. But you still have to have a fundamentally good business that you can explain to someone without Having to explain away a bunch of cobwebs or gray hat, Black Hat stuff that you may have done in the past that is completely inappropriate for the time we were going to sell.
Carlos Alvarez 15:11
Yeah, that that’s a good point that you bring up there, like I’m extraordinarily white hat like maybe even to a fault. I mean, I think you should push a little Greg’s as business owners, we should push limits and explore, but definitely not even dark gray or black for me. Yeah. And I see some people that are just getting a ton of reviews and doing a lot of blackhat stuff to rank and become attractive. And I’m thinking, like, say, Thrasio, right? I have no affiliation with them. But I know some of the people that are over there. And these are people that are clearly going to be able to look at an account and see what blackhat stuff was done. Like, nobody’s going to be duped here anymore.
James Thomson 15:47
Yeah, yeah. So I want to run through some very specific tactical aspects of running private label brand, and how some of these components are having to evolve, because there is the possibility of an exit. So let’s talk first and foremost, getting your operating procedures documented. How do you think about that process? And what are you talking to your your meetup colleagues about?
Carlos Alvarez 16:15
It’s, it’s like the gospel to us. It, it’s something that I’ve always put a great emphasis on is building your slps out now that there’s a lot of talk on exiting. My personal opinion is that that has to be very attractive in an exit. So what I am hearing, though, from some people that buy company they just come in, they’re like, Look, we’re not interested in your slps. Like, we have our own slps. So I still emphasize people to build out their slps to be attractive for a business, even for a purchase, even if the fact of having those slps will allow them to reach a level in their business with their sanity that will make them attractive. So either way, I think slps are extraordinarily important.
James Thomson 16:57
Carlos, talk to me about getting your p&l numbers in order, making the metrics look good. How do you help? How do you help your members think through that process? When historically, you could have a bunch of receipts in a in a shoe box and nobody really cared? But now that you have to show stuff, somebody else? metrics and p&l, those thing kind of matter?
Carlos Alvarez 17:21
Absolutely. My answer is not very glamorous. But in my early stages of running a business. And I looked up and sold an early business, I immediately went to night school to learn, you know, bookkeeping and accounting. That was horrible. Yeah, absolutely horrible. And one of the worst one of the worst experiences of my long list of bad experiences in my life. And I decided, it’s good to hire amazing people for this. So I suggest to any business, especially for the exit, that you hire the right team for that. And I recommend people to my, to my group that, you know, are local or abroad, depending on you know, what they need in their business, if they’re national or domestic. For that, but I couldn’t tell you, apples or oranges in that regard, except they need to be on point.
James Thomson 18:11
Talk to me about what you’re seeing with some of your newer members who are new to the private label space? How are they thinking about building a business from the ground up? What’s changed? Since let’s say 14, 16 months ago,
Carlos Alvarez 18:26
I’m seeing a greater which is, which is exciting. But I’m seeing a greater. And I don’t know, I don’t really know that this has much to do with, you know, like exiting or the fact that people are buying businesses, but I’m seeing a greater level of education in the space around the importance of keywords. And there just seems to be a lot more a lot people talking knowledgeably that you don’t just put a product up and it sells like they understand how keywords work. Yeah, it used to be a lot more people that were just come up to me and say I’m ranked on the top of page one. And I’m like, for what? Like for what keyword? You know. So there’s this seems to be over the last 16 months, a greater understanding of that, a greater understanding of the different competitors that are involved. In some cases, understanding that this competitor is actually owned by a much bigger company, like I know people that are trying to put together lists like that to add into the evaluation process of a product.
James Thomson 19:22
What about expectations around what it means to have a successful brand on Amazon? This whole concept of branding and, the brand that that that thinking has evolved a lot, certainly in the decade plus I’ve been involved with Amazon. What are you seeing owners today thinking about when they say I need to build a brand?
Carlos Alvarez 19:48
that’s a I guess that’s a sore spot for me to this. I feel like a lot of people say you know, I’m going to start a brand and what that in reality means is they’re going to get a trademark and get Brand Registry. Yep. So that they can take advantage of, you know, the awesome features that come with that. I don’t consider it that, but you’ll hear me say it because it becomes such a difficult explanation to say I think there’s a difference between private labeling and having a brand. And I always try to hammer that home what I feel is the importance of of having a brand and the differences between, you know, branding and private label. Your question specifically though, I like I went my rabbit hole.
James Thomson 20:30
Yeah, I’m curious. If I came up to you, too. It said, Listen, you’ve been on Amazon, you’ve been selling for a while I want to build my own private label brand. Tell me what does it mean to have a successful private label brand? What does that constitute on Amazon? What is a brand?
Carlos Alvarez 20:46
Yeah, I would say a constituted brand on Amazon is one thing, you’re going to want people going to Amazon and searching for your actual brand. I think that would be important. It’s also more important in the beginning to you know, rank for your important keywords. So you get sales. Yep, I, you know, somebody’s searching for your weird name brand. And they’re only, you know, converting three times a day, that’s not going to help anybody. But nowadays, I would also say that all important for Amazon is owning your own list, building your own community, creating your own content off of Amazon. And you can sort of turn that spigot on and send Try not send traffic directly to Amazon, but get your offer in front of your people. And if you want to aim that towards Amazon, fantastic. If you want to aim it to Etsy or aim, it’s a Walmart fantastic. But even if you rank really good for your important keywords, and you’re doing great, we all know, sometimes things happen with Amazon, and it takes a day or a week or two weeks to resolve. If you lose rank, and anything happens, it’d be really nice to fall back on your list.
James Thomson 21:52
Talk to me a little bit of what you’re seeing with regards to brand owners thinking about potentially exiting through a broker going direct looking to people like you to make introductions? How do you think through that process of making sure that brand owners know their options and make the necessary trade offs?
Carlos Alvarez 22:14
Yeah, I have a few people that I really trust, that are no longer in the space. And they’re just just keeping an eye on it more as a hobby. They’re, they’re retired. And whenever I get reached out to by people wanting to buy companies, I and I hear something new, I run it by them. Also, there’s there’s two people in the space that I don’t know, they’ve either their marketing worked, or I feel like I have a really good relationship with them. And they’re shooting straight, they understand I have a good community. And I pretty much boil it down and say look like, I need to know the answer to some of this stuff without any like hidden motives or anything as you successfully buy something for my group. And it turns out really bad for them. You just completely burned your bridge with my entire group. So it’s not good for either one of us. So I reached out, I talked to them, I asked
James Thomson 23:04
how are you seeing your members evaluating the prospects of going direct to, you know, an aggregator that reaches out to them versus let me go to a broker who will package up my business and let’s see if we can get 10 offers? How do you think through that process?
Carlos Alvarez 23:22
Yeah, my group is enamored again, I have no affiliation with them. But my group is enamored with with Thrasio. So like, through SEO is almost like when somebody says they want to sell their business, they just say that. It’s like synonymous in my group right now. With that. So I think everyone is like hell bent and going in that direction.
James Thomson 23:41
Do you think there’s enough private label brands, good private label brands out there? That aggregators will be able to wait for these brands to finally come around, or the aggregators will have to keep going to brokers and doing outreach directly to brands that may not be necessarily ready to sell?
Carlos Alvarez 24:00
That’s a phenomenal question. I’m trying to like scramble for that answer myself right now. Like, is there enough private label brands right now for? What a phenomenal question.
James Thomson 24:12
I mean, you’re here is you’re an owner of brands that of course, I’m sure they’re phenomenal brands, but the question is, how do you find the right seller? Excuse me, the right buyer who will say yes, this is a phenomenal brand. And it’s it’s, you know, there’s a lot of stuff to think through, especially when I’m pressed by what you said at the beginning. You’ve got a whole bunch of different things. You’re working on this brand, and that brand and this brand, and I suspect for many people listening, they have one brand. This is the first time they’re doing this and the prospect of having four or five other brands that are all being run a separate businesses. But that sounds great, but that’s way more complicated than most of us can handle right now. So and the challenge of this is my first business I’m building the first business I’m ready to sell. Again, how do I avoid making mistakes that have been made over and over by others, how do I learn from those mistakes? How do I leverage the Wizards of Ecom? And all the members that have gone before me down the sales path? How do you how do you make sure that that knowledge comes back to your group? So everyone can benefit?
Carlos Alvarez 25:15
Well, one thing we do is when somebody is thinking of exiting, because our group is so like in person and you know, tightly knit, yeah, that conversation is going to have been going on for months before the person’s decided to sell it. And when that person shows up, everyone’s saying, hey, so what’s happened next? And how did it go with so and so. So this is a very, it’s a very transparent process, all the way up until when the person finally sells it, they share if they hadn’t already, like what their brand is, which is like a taboo thing in Amazon. And this is what happened. And let me show you behind the scenes of what happened. So we’re very, the group is very knowledgeable on more than just theory as to what happens because we share it because we’re face to face. And when somebody else decides that, you know, they’re thinking of selling it, or they saw this webinar, they’ll come to me, and I’m just like, Look, here’s this little group chat we have that has a bunch of us that have successfully exited businesses, and we’re not trying to buy your business. We don’t buy businesses, and we just want to answer this for you. And I’ll just drop that person and say in that group chat, and we’ll answer the person’s question as best they could. So the knowledge lives that way.
James Thomson 26:28
You have members who have been through this more than once you built a business sold it and they said, I want to get back into this. How do you get people who are exiting for the first time? How do you get them excited to come back again, and build another business? Usually, the payout does that.
Carlos Alvarez 26:47
I think you still pay how does that like the person just got a really nice payout? Yeah, in most cases, they were happy before, but they weren’t really making a lot of money. They were paying themselves a little some scratch, but it was nice. And they were in charge of their own destiny type of thing. Yeah, the exit the exits the first time, they’re actually seeing a nice little chunk of change all at once. And it’s sort of validates the whole thing. And then it’s like, wait a minute, I can get a small piece of this. And I can just apply what I obviously know well enough to make it attractive to somebody buying into something else. I could also hire people now that I can do the things that I just hate, but I know how to do and I can easily create an ESOP. So it sort of becomes like the easiest thing, the easiest option they have going forward. So most of the people I know to most that do sell and get back in, this is almost a lifestyle for them. So when you took it away, it was like, What do I do? Now? I can just sit on the sofa and play Call of Duty, like what am I going to do? So they they’re desperately wanting to get back?
James Thomson 28:00
So let’s, let’s take that enthusiasm. And let me flip it on its head. I run a large national brand. I’ve got my products on Amazon. And I’m hearing more and more about all these private label sellers who not only exist in large numbers, but are being paid to build and sell their business. What advice do you have to the big national brands that are having to compete head to head with small private label brands that no one’s ever seen other than on Amazon?
Carlos Alvarez 28:31
Go back to their roots is what I would say. And that is, you know, they entered certain markets that were like wild wild west for themselves at one point. And more than likely what they did was they hired the right people. They hired people that were knowledgeable of that. I would suggest they do the same thing. Instead of trying to apply like what they’re doing now in big box retail stores or somewhere else or griping in forums about how somebody could just add themselves on their listing or Amazon won’t remove an undesirable seller or something like that. Like instead of griping about that, hire someone that knows how to actually handle that that’s knowledgeable of transparency and zero and all this other stuff to help you navigate those waters, a company like yours actually.
James Thomson 29:16
Let me ask you this, you have a lot of responsibility in managing your Meetup group, with so many people needing or looking to your group for to be the place where they can share ideas and get valid ideas around how to improve their business. How do you think about this process of running a better Meetup group and continuing to be relevant a year from now two years from now as things continue to evolve and Amazon sellers have new opportunities.
Carlos Alvarez 29:49
I’m figuring that out as we go. I have to say this though. I have the meetup group as we know it has a has, I think 14 admins as a 16 And leadership team and has, I think a dozen I think 12 full time, virtual team members that make all that work, I couldn’t remove the background in Photoshop, let alone create those thumbnails. Nor do I have the time so blessed to have an amazing team leadership team and peep staff that like work at becoming relevant, staying relevant, and making it the place everyone wants to go to still a year from now. I’d say just sticking to our guns are our hashtag is sellers, helping sellers. That’s what we do. We help sellers. And it’s a non selling environment. So unless you’re the presenter that’s coming in there and giving your time to pitch something you can’t plug your service, you can’t sell nothing, there is no course there is no anything like that. Yeah, so I would say staying true to that. And providing a an environment of just sellers, helping sellers, you know, encouraging, you know, controlled failures and stuff. And taking action instead of just spending like, I don’t care if you’re an RA seller, and you get to the group, I just don’t want you still on YouTube deciding what scanner app to use in six weeks, like just just go scan something, buy something and send it if you’re allowed private label all that the same way. So I’m just gonna say stay true to what we’re doing. Stay current, continue selling. I think that’s important. Even though this has become very time consuming, I feel that if I stopped selling, or stop being a seller, I worry that one day when I’m in there doing, you know, teaching in the beginner hour, which a lot of people feel like why would you still teach the beginner hour if you’re, you know, at this stage of your life, I learned the most in that beginner hour fielding questions and having to answer them from people. But I worry that I’ll get in there and I will be kind of like I’m giving an answer that stale. That was the right answer three years ago. So being in the thick of it. Yep, yep, sure the people that the admins and the leadership team, they’re in the thick of it. I think that’s how it will stay cutting edge.
James Thomson 32:04
I want to wrap up our conversation today by asking you a question about the FBA investors. They’re paying higher and higher multiples literally every month, those numbers keep going up. I’m curious in terms of how do you see them getting the value out of the multiples they’re paying? How do you see them being able to take these brands and do things with them that are going to allow them to get a quick, quick return on investment?
Carlos Alvarez 32:33
And a lot of cases, I don’t see how they’re going to do that and don’t see how in some cases, I think there was a cool case study out there about some like carpet product deodorizer. That was how they painted it out. And what they did with the sales and like for axing it like yeah, that’s that’s amazing. In most cases, I don’t see how they’re going to do it. And I wonder, I wonder with as many people getting in, and the pickings becoming at some point, smaller and smaller. What margins are they working on? Are they just trying to like maximize this gross number at the expense of profits to like, go IPO or like what’s the goal here? I don’t know. It’ll be interesting. Time will tell.
James Thomson 33:17
Carlos I want to thank you for joining us today on the Buy Box Experts podcast. For those of you interested in learning more about the Wizards of Ecom, please visit Wizardsofecom.com We look forward to having you join us again next time on the Buy Box Experts podcast. Today’s episode is brought to you by GETIDA. GETIDA is a global leader in Amazon FBA auditing and reimbursements. GETIDA analyzes your Amazon data reconciles your FBA inventory and files claims reimbursements on your behalf. No obligations no hidden fees, just GETIDA recovering your money. GETIDA helps you get your money back into your pockets so you can focus on investing in more inventory and growing your business. To learn more, check out getida.com that’s getida.com.
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