Inside the mind of Kevin King who’s pulled 3 Million so far selling on Amazon FBA - Episode 88

Inside the mind of Kevin King who’s pulled 3 Million so far selling on Amazon FBA - Episode 88 What's up guys? Today, I've got an invincible king on the show, Kevin King. Kevin has been an entrepreneur his entire life. It's been 30 years since he last received a paycheck from someone else. He has created, developed, and guided hundreds of products from inception to market. In 2015, he started five private label brands on Amazon. Together, those brands have grossed over $3 million. His goal is to reach $4 million per year on Amazon alone at the end of 27. And I'm your host, David Lydon, and this is the amzsecrets. com show. You're listening to episode 88. Let's get past the sponsors and right into it. Great to have you on the show, Kevin. Glad to be here, man. Can you take us to the beginning? 00:00:40 Before your first million, before Amazon, where did it all begin? Well, like you said in the intro there, I've been an entrepreneur my entire life. I think the last time I got a paycheck from someone, I was like 17 years old, and that was about 30 years ago. I've been doing e-commerce back when email first started. So I've been involved in this for a long time, running several different sites, e-commerce sites, fulfillment stuff. So the Amazon stuff, I've been actually selling on Amazon for like 20 years. I was actually using Amazon almost like an eBay in the beginning where I would be one of those hijackers. Some old DVD player or something laying around the house that I was like throwing it up on eBay. 00:01:25 Sometimes I'd throw it up on Amazon, just jump on somebody's listing and sell it as used. And then I've also been doing some wholesale to Amazon through the Amazon Advantage program, which is their program for DVDs, books, and that kind of thing. And so audio tapes and stuff, it's like a special program. So I've been doing wholesale with them. For almost 20 years on a line of calendars that I do. That's a seasonal product. So it's almost like a vendor central, but they issue purchase orders and then we ship them in. But then I started the private label stuff on Amazon in 2015. Like everybody else, I think I saw one of those AMS ads come across my email. I was like, this looks interesting. 00:02:08 So I took a look at it and I said, you know, I don't need to take the course. I kind of already have this background. Let me just jump into it and do it and start listening to podcasts. researching everything I could, and that's where it went from there. Was that 1997 you started, kind of-ish? Yeah, 95, I think, is when I sent my first email. And I started my first selling online, first e-commerce site, I think, in '97. It was back before there was a PayPal, even. People had to, like, I think I used a plug and pay or something back then. They're still around today, but they were one of the first guys to actually take credit cards online. So yeah, I go back and I think Amazon was, I haven't looked. 00:02:53 I have daily withdrawals on my Amazon account. So it's an old school account. So I think maybe '99 or 2000 probably is when I first did my first Amazon stuff. Do you know why they removed daily withdrawals? I have no idea. Someone told me they took it away in like 2011, 2012. So any accounts after that. But it probably had to do with, you know, just protecting themselves against returns and against, you know, people taking their money every day and then them getting left held with a bunch of returns or a fake seller or something. I'm sure they got burned a few times. So I don't know what the exact reason is, but I'm happy to have it. 00:03:35 Well, I know there's like services that come out trying to give us our payment before the two weeks and you don't even have to deal with that kind of nonsense, no, no. It's like I think it's like you know there's there's a couple different services that take like one percent, two percent and do that and but they they still hold some back and uh Yeah, it's every day I can log in, six days a week. So I've got a time. It helps for Christmas. If you're doing $10,000, $20,000, $30,000, $50,000 a day at Christmas and you need that cash flow instead of having to wait two weeks, I've got it figured out that if you do it before 4 o'clock Central Time. 00:04:11 You give it about 30 minutes for it to go through the system. So about 3:30 by central time, if I do that on a Wednesday, I'll have the money Friday morning in my account. So during the busy times, I log in daily, like clockwork, and then just take daily withdrawals. And that definitely helps as you're growing and as you're scaling. So let's go back a little bit. At 17, what were you doing? What took you on this path? Well, at 17, I think my first job was in a McDonald's. I worked in a McDonald's, and then I worked in a deli, and then I delivered pizzas. So those are the only three jobs I've ever received at W2. I've never worked in the corporate world, never done anything like that. 00:04:51 And I've always been interested in direct marketing. Since I was a child, I was selling stamps by mail as a 12-year-old, and I was always an entrepreneur, mowing people's yards, painting numbers on street curbs, everything I could do to make money. I made so much money as a kid. I was making a couple hundred dollars a week as a 12 or 13-year-old. My parents were like, look, this is too much money for a 12 or 13-year-old, so you have to save half of it. They ended up dumping that into a bank account and gave it back to me when I was in college, basically as an allowance. That was my beer money. What did you go to school for? Marketing. Texas A &M University. Then you decided not to go? 00:05:34 Toward the typical route, yeah, I just, I can't, I don't think I can work for anybody else, I think I'd last a day or two with someone else telling me what to do or to um you know looking over my shoulder, where you're not you're you're doing you're doing the hard work and someone else is getting the credit, um, it's just not my thing. And so yeah, I came out of school and i started telling I was selling t-shirts on campus during college during football games, we'd get the license for the school and we do all kinds of stuff. And then I traveled around all the spring break spots with the, out of the back of my, my car with a buddy of mine selling, uh, you know, get drunk shirts to spring break kids and stuff. 00:06:11 And then I did that for a while and then started a couple other businesses, um, and just went from there. I've always been a direct market, direct marketer. You literally direct like right to the customer. Yeah. So you've been hustling before, like, you know, without the distribution. Yeah, no, I'm kind of the anti-thesis or anti-guy in this business. A lot of people, they are attracted to this Amazon business and a lot of the marketing out there from all the people doing courses is quit your day job, you know, get your life back, travel the world. I've already done all that stuff. I organized one of my businesses so that in 2007 I could travel. So I was actually for seven years, I was spending like two weeks in the office and two weeks on the road traveling all over the world. 00:06:59 And so I've already done that. And I had some money from the last business that was doing pretty good. And it started to run out after about seven years of doing that. So I was like, okay, I got to get serious again. And that's where I jumped into the Amazon. I was like, okay, this is perfect for my skill set of e-commerce, direct marketing. I know all the – I've been buying stuff in China, been doing all that. So none of that. Was new to me, I just had to learn how Amazon likes everything done um from a third-party point of view and that's that's how it started so I have five brands um in five different categories on Amazon. So, just leading up to it in 2007 what type of business allowed you to travel? 00:07:44 I had a television business. We were shooting TV shows all over the world. But we would go in there, and we'd go to some island in the Caribbean and be working for a week and not really get to enjoy the place. When you're there, yeah, that definitely beats being in an office. But I was like, 'I want to come back here and spend a week and get to know this place really.' So that's kind of what led to it. So I had my bucket list, and I just made a list, and it was supposed to be one year of travel. And I wasn't backpacking. I wasn't staying in hostels. I was hiring a private guide everywhere I went. So you have almost like a friend there. Drive me around, show me a thing. 00:08:20 They take me to their house for dinner. So I get a real taste of the culture. And I ended up going to about 90 countries in all seven continents. So it was one year turned into seven because it became kind of addicting. You'd be out there and you're like, oh man, I've got to check out this place. Or someone would be saying, have you been here? No, that sounds really cool. It's the best education you get. I tell people, especially here in America, a lot of Americans don't even have a passport. I think 90% of Americans don't even have a passport. Or their idea of international travel is go down to Cancun or go to the Caribbean. To me, that's not international travel. You've got to get out where you don't speak the language. 00:08:58 You don't know what the hell you're eating. Nobody can communicate with you. And to really experience a culture and really get out there and not be a tourist, but actually be a traveler. There's a big difference between those. Do you think the products that I have today are a result of some of the traveling that I've done? No, none of them are, actually. None of my products are related to travel at all. Because I'm not. I'm not married to any of my products. Some people, you see it even on Shark Tank and some of those shows where people come on and they think their product is the best in the world. They're like, 'I've spent five years developing this.' All my friends like it. Everybody likes it. I know it's good. 00:09:44 I don't get emotional like that. I use the tools out there on Amazon. Whatever people want is what I give them. Whatever's selling, I think there's an opportunity. I started five brands on Amazon. All at the same time, because I had a little bit of money to put into it. I wasn't coming with 500 bucks or something. And I wanted to see how each category would fare, because on Amazon, each category can react differently. I mean, there are different rules, there's different things, different levels of competition. And so I wanted to see which ones would make sense for me to pursue deeper, you know, to build out from Amazon, big social, Facebook, and Instagram sites, and all that kind of stuff. Out of those five, there's three of them that I'm dialing down and focusing on. 00:10:28 The other two, I've still got some products in there and they're making money, but I don't think there's as big of a potential. I'll narrow those five down to three by the end of this year. Me and you started actually around the same time, it seems, except you have five brands and I have one. Where did you get all this time to launch five brands at the same time and then also have like that confidence to just launch that much all at once? I'm a one-man show. I have no VAs, no helpers. I'm just now in the process of hiring someone to help on the social media side because, like I said, I've narrowed those five to three that I want to really focus in on. So I'm building out a whole Facebook and Instagram. 00:11:12 I hired someone to actually do that. But that's the only help I have. I mean, I still have most of my products come from China to me. Yesterday, I was out in my storage, you know, wrapping five pallets, putting stickers on boxes and wrapping the pallets. And tomorrow the truck will come, pick them up, ship them to Amazon. I just work efficiently and smartly. And like I said, I've been doing this for a long time. So, I'm not trying to be you know, some people get into this, like I want to grow this to a hundred million dollar company. That's not what I'm trying to do. My goal is $10 million. I mean, this year I'll hit about $4 million on Amazon, but my goal is $10 million by the end of 2019, and I'll be happy. 00:11:52 I don't need – I've been there where I had an office with 16 people and all that headaches, and I'm not looking for that again. I'll probably hire one more person, and that will be it. Just keep it lean and mean, and that way it's easier to adapt. It's easier to change as Amazon changes because if you've got a big office with 16 people – And overnight, Amazon makes an algorithm change or they kill your product for some reason. It gets suspended. I hear horror stories of people having to lay off people, and you can't be as nimble. And so I'd rather have 10 million sales with a 20% profit margin. Some of that's reinvested. I can live on $500,000, a million a year. I'll be happy. No big deal. 00:12:35 Yeah, so I don't need all those other headaches and all that other stuff. My personal goal. And like I said, I've already traveled, not traveled all over. So I'm not doing this to, you know, go work the four-hour work week, like some people think, which is a fallacy in this business. That's what Tim Ferriss says. Yeah. Amazon's not a four-hour work week. Not if you're going to make, I mean, it was for some of the people that got in maybe in 2012, 2013, like right place, right time on a few products. But in today's world, it's, it's a lot of hard work. I mean, if you want to. You can work the four-hour work week if it's your side gig and you're keeping your normal job and this is your vacation money or college money or whatever. 00:13:13 But if you want to make a real business out of it and make real income, $50,000, $100,000 a year, it's a lot more than four hours a week you've got to work. Agreed. Okay, so how much did you initially start off with to get to this amount within two years? I started off with about $150,000. Okay. But some of that, I actually, two of my products that I started off with, out of those five brands, three of them I did the typical private label, find something in China and differentiate it. I really differentiate my products heavily. A lot of people don't really do that, but I spend time to change it up and to differentiate its packaging and everything. All my packaging is nice. 00:13:58 In two years, I've had 20 some odd SKUs. I've had one hijacker once. So I don't have that problem because I differentiate so well. But when I started two of those brands, I actually created the product. So it took a little bit more money because I actually came up with the idea for the product, had it designed, found someone on Upwork to actually do the CAD stuff, had the factory make the molds for it. And so I made my own product. It was in the dog category. And then another product was in the Apple accessories category. It was a charger, actually, for the Apple Watch. All the stands that were out there, right when the Apple Watch was first coming out, they were ugly. 00:14:39 So I created my own that was; instead of selling for $10 or $15 like everybody else, I sold for $80 because it had a lot of extra features on it that the others didn't. So that cost me about $35,000 in molding costs. That is a lot, yeah. I took that approach on that product, and that product now is going through. I'm doing a version two of it, fixing a couple of the issues I had on the first round, adding a couple of new features, and it'll be out for Christmas. But that product at one point when it first launched, I remember Christmas of 2015, it was selling $25,000, $30,000 a day on that one product. So it was a big investment up front. 00:15:27 It was a risk, but in the end, it paid off handsomely. So you're like a hybrid. You're not even a private label. You're kind of an inventor as well. I don't really call myself an inventor. You brought a product to market. Yeah, I brought a couple. A new product, yeah. I do the same thing. I have dog treats. I'm big on differentiation on images. I spend a lot of money on my product photography. I'm talking tens of thousands sometimes. I'll do a photo shoot for nine of my products and I'll get; I might spend $15, $ 20 grand in photography. I mean, I group them together to save, but my images set things apart. Like I have a dog treat, for example, that everybody else puts them in a plain plastic bag with a little label on them, just a simple private label, sells 20 or 25 of these treats in a plastic bag for, I don't know, $ 30 bucks. 00:16:19 Edible, right? Yeah, they're edible. Yeah, consumables. And then I have a treat in that same line where I have three in a bag. Instead of 30 in a bag, I have three. I don't put it in a bag. I put it in a nice box, like a cigar box almost, and with really nice packaging. It's like framed. Yeah, for my three, and my images on there are very special and very good to really justify this, but I sell my three for $50. Everybody else sells their 30 for $30. And so a lot of people always think on Amazon it's a race to the bottom. Amazon customers are always looking for the best deal and the lowest price, and that's simply not true. 00:16:59 Something like 47% if you look at the stats of Amazon sellers are making over $75,000 or $100,000 a year. And then upper middle class and above. And a lot of them aren't price shopping. And they might price shop on Amazon. So if you're selling a garlic press and yours is $8 and the other guy's is $9 and they look identical, they're going to buy the $8 one. Every time. So that's where the price shopping comes in and that's where people get confused. But if you can differentiate the product and justify its price, people eat with their eyes first. So if you show them really good images on Amazon and tell them why in the marketing and the copy, why this price is justified, you can get it. 00:17:39 And so that product that sells at $50, now the guy that's selling at $30, he's probably buying them for, I don't know, $20, let's say. um 15 bucks let's say let's say he's doubling his money so he's buying 15 from the wholesaler and he's selling for 30. well after amazon fees and everything else you know he's making what five bucks or so on every sale he makes and he may have a bsr of a thousand so that may mean he's selling say 20 25 a day at that bsr so he's making 125 profit a day on paper off of that item well if you take mine that's selling at fifty dollars My cost on that is a little bit more than his because I'm doing some special stuff to it, but it's not much more. 00:18:19 So if my cost on it is, say, $20, his is $15, mine is $20, I'm selling it at $50. Amazon takes roughly a third of that. So I'm getting about $35 from Amazon minus my cost, so I'm making $15 profit on every one. My BSR is about $5,000, so I don't care. At that number, if he's selling 25 a day and making $125 a profit, you can do the math real quick and see that I only need to sell about eight a day to make the same amount of profit with less headache and less stockouts and everything as him. And I sell on that one about 10 a day. So in the end, I'm making more money than he is. 00:18:56 And I'm not worrying about hijackers. I'm not worrying about all this other stuff. So you have to differentiate. And I think that's where the biggest opportunity in the future. People say, 'Is Amazon dead?' Is this opportunity gone? Absolutely not. It's only going to get better. But where it's gone is for the simple me-too stuff, the simple punching some numbers into Jungle Scout or one of those Unicorn Smasher or one of the others and some parameters and come back and just cheaply put your label on a product. Those opportunities now, if you can make one of those work, it's like hitting the lottery ticket. But there's tons of opportunity for differentiation. Now with the EBC, the enhanced brand content, you can really ramp up what you can do. If you're brand registered. 00:19:36 And I do that with all my products and people will pay. And people forget that in this business. They're looking for the quick, easy out. They're not developing brands or they're not developing really good products that people will pay premium money for. I mean, there's a reason people buy some people buy a Lexus and other people buy a Chevrolet. And they both do the same thing, but it's the same in these products. People forget all that. And they just become too – I don't worry about – I don't use any keyword ranking tools. I don't use spy on my competition. I don't care what they're doing. I mean when I'm going into a market, I will look. I will use the different tools that are out there to actually see does this market – here's a good example. 00:20:16 I was just in Yiwu in China sourcing some stuff in April. I came across a product. I was like, 'this is a kick-ass product.' I got to get this on Amazon. I go back to the hotel and I look at – look. Use the different tools, and I'm like, 'holy shit, there's like 20 people already selling this that have like 200 reviews plus.' It violates all the rules that people say the different gurus teach. But I'm looking at it like, look, you add all these ads up, and they're selling a million dollars a month of these top guys. Yeah, they have the reviews, but they're missing a couple things here on this product. There's a couple things you can do in the bundling, a couple things you can offer. 00:20:53 I can come in and get 10% of that market. So I'm pretty confident with my marketing. I can go in and I can capture $100,000 a month of those million-dollar sales, if not more. So that's how I look at that stuff is differentiating and not just going by some basic formula. So I use those tools to see is the market – because those tools are all guesses. None of them are accurate. It doesn't matter who you use, but it just gives me an idea relatively of the market. This episode of AMZSecrets is brought to you by our Amazon seller tools. AMZSecrets. com VIP supercharges your Amazon listings. It uses big data from Amazon and Google in a meaningful way to increase the traffic to your Amazon listings. 00:21:39 I use them with my brand and I am personally ranked in the top five of some major Amazon categories. It's not a golden bullet as you need marketing and good brand strategy. But having the ultimate Amazon listings goes a long way. To learn more about it, go to amesysecrets. com. Okay, so how many SKUs do you have per brand, would you say? A couple. I only have a couple SKUs active in the brand. And the biggest one right now, I have like 12. So total active right now is around 20 SKUs. Okay, I have about 20 as well. I'm just trying to see how you've got a lot, like so much done. Two years is not a lot of time. I'm in my business every day working as well. 00:22:25 I'm just gauging if I'm working fast enough. I work a lot of 16-hour days there, seven days a week. Money never sleeps. A lot of hustle, a lot of hard work. Then just picking the right products and marketing them. I've dropped products in the last two years. I have 20-some-odd. whatever, 20 SKUs live now, but out of those, I'm about to drop eight of them. And I've dropped six before. Not because they're not profitable. I just have a rule that if I give a product six months, and after six months, after I've done all the tweaking, all the launches, all the, you know, gotten it going, gotten the whole usually initially to get it going, if after six months, if it's not throwing off $2,000 profit per month, and our profit is after all advertising costs, after all shipping, everything. 00:23:19 If it's not throwing off $2,000 per month, then I drop it. That's cold. Because I'm like, I can, you know, money is limited. I'm not a multi-billionaire that can just keep dumping money into it. So I'm like, look, if I can, if that product costs me, I have carrying costs, you know, depending on how fast they're selling, how much they're making, I can take, deploy that same investments in another product. Get a better return. So that's how I look at it. I look at it almost like stocks. All my products, like I was saying earlier, I'm not emotionally tied to them. Like the people on Shark Tank and some of these other people are. If it don't work, yeah, I spend a lot of time developing really nice boxes, taking pictures. 00:23:57 I drop it and move on to the next one. I don't get tied to them or hold out hope or try to rescue them. I mean, it's pretty obvious after two or three months, usually, that if this product's going to have any potential or not. Actually, yeah, I've had like 500 units that were pretty like oversized units, but they weren't selling and it just came time to just kill them. I had them all destroyed. It was kind of painful, but didn't make sense. I've never lost money because I've had a couple that I just lower them down to basically break even and just turn off PPC and just let the one or two people a day that discover them find them. And usually, I mean, I think one of them took me, it's one of my first products. 00:24:40 It took me about 10 months, but from the time I said, okay, screw this product, it's out of here. It took about 10 months to finally get rid of them all. But I just let them sit and just let them, you know, it got some bad reviews. I didn't do my homework correctly on it. It's like three-star products, but it eventually sold out and, and I moved, you know, got my money and moved on. So I haven't actually ever, like you said, take 500 and just destroy them. I've never done that. How long did the mold take to develop? I developed a mold myself. It took about a year to actually finally get it onto the market. Yeah, I mean, my process, in the dog category, it took about when I started that product, I designed it in the summer of 2015. 00:25:24 I launched it in January. So it was like six or seven months from, about seven months from conception to its pretty good on on the market for that one, but you know all and then the other one took a little bit longer that because it's electronic parts and stuff and um that one was pretty complicated uh see but what I did on those I mean i did i I designed it, had someone on Upwork do the CAD work. Then I took it and I have a guy here that has 3D printers. He has like 20 of them in a building in his backyard, literally. He's like a 3D printing junkie. So he would print me 3D prints of them. I would test them. I'd test it with the dog. 00:26:02 The one that was electronics for Apple, I'd take it to the Apple store. Like, hey, can you pull out all the watches in your drawer here and let me make sure every band fits, everything fits. That's funny. And then I’d make adjustments, go make another 3D print, get it right, and then send it to the factory. They would have to make a prototype, which would cost me sometimes like $1,500 for just a one-off functioning, had the power and everything prototype. I'd check that, make sure everything was okay, make any adjustments. Then they’d make about 20 more prototypes. And those are the ones that I'd say, okay, these are all cool. I would send those out to reviewers. This is back when you could do the incentivized reviews, so to get the reviews going. 00:26:41 And then wait for the product to get manufactured and brought over. I'm surprised you were able to do that within seven months. I kind of almost gambled, and it took a year because I was only able to get one or two samples back and forth, and I'm like, this is taking forever, but I think this is pretty good, so let's go with it. But it seems like you had a lot of samples done within the seven months. I mean, once I green-lighted the product, it's probably about three to four months. About a month to make the mold and then three months to manufacture, just like a lot of other products, two to three months. But, yeah, I did have some of them flown over, like Christmas of 2015. 00:27:25 This Apple stand was doing really, really well, like I told you earlier. And so I had no choice, but they weighed about – almost three kilos each. So I just actually put some pallets on an airplane and air freight them over. I spent like $16,000 bringing over a couple of pallets, but it was Christmas and it cost me like $10 a unit, uh, you know, to bring them over. Uh, but I'm selling them for 80. And so I had good margin and my cost on them was $22. So, I just had to eat 10 in margin. Uh, what was worth it to maintain the momentum. And as you know, on Amazon, you don't want to run out of stock. Um, so, um, Yeah, I've done that too. 00:28:04 Yeah, I have too. But for me, I've overbought due to fear of running out of stock. So now, for me, I don't really care if I run out of stock as much as before because it's been painful to oversupply. Yeah, I typically order 1,000. I'm not one of these guys that lets test 50 units and see what happens. I'm not going to dip my toe in the water. I'm going to jump in. And so I'll order a thousand. Um, and I know I, like I said earlier, I can sell a thousand, and I've done the same thing as you. I brought over a thousand. They're doing really well. Like, okay, let me order. I mean, let me order 1,500 to get ahead of this. 00:28:44 And then all of a sudden the sales start slowing down, and those 1,500 arrive. I'm like, 'God damn it, man.' Now I'm going to be stuck with these for. Six six weeks or six months or eight months or whatever, so I've had that happen too. You make you make those mistakes, so as you go, you learn. You kind of learn what works, what doesn't, you develop your own risk tolerance and decide what is best for you. Let's talk about um stability in terms of suspensions. You've been in this game for a long time, even before the private label. Have you had your fair share of suspensions or people-I don't know anybody personally that's been suspended. I'm in several different masterminds, and I don't know anybody personally. 00:29:31 You hear the stories on Facebook, and you hear them on the podcast, but I've had a couple products suspended temporarily either for a safety issue because a customer said something or someone doesn't know how to use the product. I had a makeup product that was a 3D fiber mascara, so it comes in two different – vials and a woman opened it up and one of those vials is dry because it's like fibers they're like tea leaves almost and she's like 'Oh, this is dry. Uh, it's the dried-out version of this product must be old; it's all dried out.' So she sent it back to if someone off a review service; she paid you know 99 cents for it and she sent it back to Amazon Center for replacement. 00:30:11 And she's like 'Oh, the next one is dry too.' So she filed a complaint because there's two of them back-to-back. Amazon suspended the product. And I had to go do a warehouse check, and then it took me about two weeks to get it up. So I've had a couple instances like that where you're dealing with stupid-ass customers that cause that. But my accounts ever suspended? No, I've never had that. I do have insurance. There is insurance through Lloyd's London that they insure Amazon accounts. So I do have that insurance so that if I ever did get suspended, they'll pay out up to a million bucks as long as you weren't doing some black hat or some – some crazy thing, but they'll pay you out on that. So I do have that. 00:30:51 I pay about $3,000 a year for that coverage. And you answered my question before I asked it. Interesting. Okay, so $3,000. I mean, I also pay, I also have product liability and general liability. I mean, Amazon actually requires general liability. Most Amazon sellers don't have it. But the general liability, usually I have, I think, a $2 million policy, but that just covers. Basically, if the UPS guy sticks a package on the doorstep and the customer trips or something happens in the warehouse, that's about $500, $600 a year. And that's what most people have, and they think they're covered, but you're not. I also have product liabilities, a completely separate insurance. And product liability covers you if someone eats your product and they die or if someone's using your product and they hurt their back. 00:31:46 catches on fire and their house burns down or whatever. So product liability is depending on your product and your category and your sales. There's a lot of variables in that that will determine the price, but I'm paying about $5,000 a year for that. And that covers me so that, like I said, if someone gets hurt or something gets damaged using the product, I'm covered. $5,000 a year for both the liabilities? No, $5,000 a year for the product liability. And that will vary. I mean if you're selling more, it will be a lot higher. If you're selling less, if you're selling supplements, human supplements, that price is going to go up. So that's not – the $500 to $600 price for general liability, that's pretty much for everybody that can get a price around that. 00:32:27 But the product liability is all dependent on your sales and the categories you're selling in. But for me, it's about $5,000 a year. And then I have on top of that – the Amazon suspensions insurance, which is three. So you can see there I'm paying about $8,500 a year to cover my ass. When I talk about Amazon a lot, it's like all these people are taking money out of your pocket from all different services and liabilities, software services, Amazon's 15% fee, warehousing through FBA. The list is never ending. And then by the end of the year, you look at how much you've made, it starts to. It starts to look smaller than what you – There's a lot of people doing – I agree with you. 00:33:08 There's people doing $10 million a year on Amazon. They have trouble paying their rent. I mean people get confused. You see it on the forums and stuff. People are like, oh, I got 40% profit margin, 60% profit margin. I call bullshit on every single one of them. They don't know their true numbers. So, I mean, you got to factor in everything. They may have a 60% margin on what they're paying to what they're selling it for. But when you factor in, like you just said, all these other costs. You don't have that margin. I believe that if you can hit a 20% bottom line margin, you're doing well on Amazon. So after your PPC, after your warehousing, after your returns, a lot of people don't factor in returns. 00:33:46 I'll use Hello Profit. There's other software, Celex. There's tons of them out there that do it. But to manage that, to watch that stuff, and then Xero and some of the QuickBooks, that would kind of give you an idea too, but it's not as – Not as on point as like Hello Profit for what we do. So I'm typically at about a 20% margin. Some products I might dip down. That's another criteria. I was talking about earlier. I'll drop a product. If I can only achieve a 5% margin on it, I'll screw it. It's not a good ROI. So I move on to something else. So what are your thoughts about – have you been expanding outside of Amazon? Yeah, I sell on Amazon Canada. 00:34:33 Amazon Canada is about 7% right now for me, but I only have really six SKUs over there out of my 20, and two of them aren't selling. They sell like one a month, even though they sell 20 a day here. They sell like one a month over there. But I got a couple SKUs that took off over there, and so it's about 7% of my sales. I am going to expand to Europe later this year, but it's cash flow. It's basically like starting a whole other business over there, and I'll take my best sellers. My philosophy is test everything here on Amazon, get the bugs worked out, like I said earlier, find out who the winners and losers are, and then expand out so you're not going over to Europe with a garbage product and you have to deal with returns and getting them back or getting a suspension over there. 00:35:19 And then also sell on Jet, sell on Walmart. com, sell on eBay. And I have my own Shopify site. And then I do some wholesale through some of the deal sites like Touch of Modern, which is kind of like a – if you're old enough, you remember Sharper Image. They're aimed at men. They have about 10 million men, and then they do deals. It's kind of a daily deal site, and they run for like four days. So you have to price competitively. But I've done – Well, they're most of my deals over there run over four days and I'll do five a nice five figures I do stuff on Zulily for some of my my stuff aimed at women. 00:35:57 It's owned by QVC and they also a deal site so I do something there and then I get approached by Like my dog stuff. I just got approached by Chewy. com, which is actually they're bigger than Amazon on On selling dog products. They sell more than Amazon but they They're very smart over there. Rather than me having to approach them, because I've reached out to them a couple of times through a couple of people I know, and I'm just basically ignored. But they mine their search data. They get reports. The buyers get reports of what people are searching for in their search box. And so my brand is getting searched for quite a bit as a result of Amazon and some Facebook ads and stuff. 00:36:35 So they reached out to me and said, 'Hey, we're seeing your. your brand being served for a lot.' We would like to carry your products. But the problem with them is they want net 90 terms. So I'm basically, you know, so it's a cash thing. So I got to figure out what I want to do. And then besides the price I give them, unlike Amazon, so I can go to Chewy and say, okay, your price is $10 for this product. Well, that's not the price they pay. They take 22% off of that for other fees. So for average four percent advertising fee, a three percent return co-op fee, uh, all kinds of bullshit fees that they add in so you have to factor that into your price too, so instead of ten dollar wholesale, you know I might be getting eight eighty-eight dollars off of it, seven dollars eighty cents. 00:37:20 And then they're going to take out what you want to get paid, you know, early or whatever you take a few more points so you can lose pretty quick, and then if I have to factor that into cash flow it because if they come back and they give me a quarter million dollar order, you know, unlike Amazon, you can like buy smaller amounts and just feed the feed the beast as you need to, and you know how long it's going to take. But they give me a quarter million dollar order I'm going to have to go out and factor that so I'm going to pay someone three percent to factor it maybe four percent to actually run the production, run to pay the factory, and then wait 90 days to get paid, so at the end of the day I'm not going to be making much money, so I'm not sure. 00:37:59 You have to be very careful on that stuff. And retail is the same. A lot of people are like, 'I want to get into big box retail, get into Best Buy and Target and Walmart.' They could be great places, and 90% of all things are still bought off in physical stores, so that's not dead. But it's a whole different game, and it takes a whole different mindset and a whole different pocketbook to do that stuff. I think Chewy just got acquired by, was it Petfood? Pet something? Yeah, PetSmart. PetSmart, yeah. So you might be able to get into retail as well with that. Yeah, yeah, I could. So I'm playing that game too. But you also lose control. I mean, I do that with, like you said earlier, you had. 00:38:44 If you have a product on Amazon and it's a dog, you know you're going to sell it through, and you're kind of controlling it as a third-party seller. You can modify the price. You can mess with your images. You can influence it, run some ads. When you're in a box retailer, sometimes that stuff doesn't get even put out on the floor. They might order 1,000 units, send them to different stores, and 10 of the stores, it just stays in the back. They never even bother putting it out. And then you get returns. You've got to pay for the returns. It's a whole other animal that a lot of people don't think about. It could make a sense for some products and for some people, but it's a whole different mentality than what we think about as Amazon sellers. 00:39:21 One thing that stood out earlier, you mentioned that you're a one-man team and you have a warehouse. Can you tell us more about what's your warehouse situation look like? Well, my garage is a whole shipping center. So I have one of those big peanuts with the – the little styrofoam things that comes down and I got the whole thing set up as a, as a shipping center, but I don't store, I only store a little bit there. Um, or I can still park my car in there too, but I store a little bit, like I said, I'm, I'm very tightly organized. Um, so I have customer service stuff, you know, some parts missing or something I can ship from there. Um, and then I have three, they're like public storage warehouses, you know, they're like, um, three side by side. 00:40:02 So I can hold 16 pallets in each one, I think. And so I have two pallet jacks. You can go to Harbor Freight, get a pallet jack for $250, $200. And so I keep my-I used to ship everything into Amazon. I would bring it here. Relabel it and ship it on Amazon, but you know that gets expensive with Amazon's fee. So now I bring it in, piecemeal it, so about every two weeks I'll go spend about two hours. You know people like I want to hassle with all this, but it gets me off my chair, gets me a little exercise. So yesterday, I had five big I have some oversized stuff. So I have five pallets that I packed up-you know, all you gotta do is move the box around, put a label on it, and put the shrink wrap around, put the labels, and then send that LTL on Amazon. 00:40:46 So instead of paying $800 in UPS fees, even at Amazon's heavily discounted rate, I can send it in for $75 LTL. So right there, I just made 700 bucks, and I know the product's good; I know everything's fine. Um, and I got some exercise, and tomorrow the truck will come pick it up. It'll back in, take me 10 minutes. So for three hours of my time, total time, yeah, I know everything's done right. And, and I saved money and I get, get out of the chair and not sitting on my ass all day i mean if you're doing 100 million a year i can't do that no and i have a couple things some of my dog stuff or dog or consumables but i got good factories here in the us and so they ship direct so i'm not messing with that but anything coming from china i want to i want to see it i mean i do inspections in china before they before it comes 00:41:38 and do all that, but anything coming from China, it has to come through me. I don't do any direct to Amazon. That's another cost that is hard to factor in into the profit statement, the inspections that go on in China. I pay $200. That's pretty good. I've got a really good company. It used to be higher. They give me discounts now because I've done so many, but I do an inspection. On every single order, even if it's the 20th order from that company, you think like 'Oh, you've ordered 19 times in this company, everything's been fine so far, I don't need to waste the money.' Um, I do an inspection. I've had problems where because these factories in China, people forget every time there's a big holiday, a lot of their low-paid labor doesn't return; they go back to their home families; they go back in the middle of the country and they stay there; they don't come back. 00:42:26 So there's big turnover at the at the worker level in a lot of these factories, and so things can change over the course of a year. So I just had a factory. I've ordered, I think it's my 10th order from them, and it failed inspection. And so I made them fix it. And I make them repay for the inspection. So it's not just 'fix it' and they send me a picture and say, 'Look, Mr. Kevin, everything is good.' And I'm like, no, we're doing a third-party inspection again, and you're paying for it. And they do. And sometimes I've gotten in big fights with a couple of them where one day I refused to pay the rest of the money. I said, 'You don't fix it.' Because in China, it's different. 00:43:02 Their standards are not the same as ours. In China, they don't care if it's in a nice box, for example. But if there's a small scratch on the bottom of a piece of cookware, they're like, 'Look, it works. It still cooks your stuff.' What's wrong with it? There's nothing wrong with it. But here, someone gets a small scratch on the bottom of their cookware. They're going to say, 'You sold us new.' They're going to make a complaint or whatever. We can't. I can't have that. So it's a different level of thinking. And so sometimes I've gotten into some big fights with those guys saying, 'I don't care if it works.' There's a small little scratch here, and it's out of parameter. 00:43:37 You're allowed to have 10 small scratches on an order of 1,000, but you have 13. That's too many. You've got to go open every box, fix everything. And they fought me on it. And if I haven't gotten to the point on one, I said, 'screw it.' Keep them. I paid them 30% deposit, I think, said, they're yours. Do whatever you want with them. I'm not paying you. And they finally buckled and said, okay, we'll open them all up. We'll fix it, and we'll pay for it. So it's a challenge sometimes, but I don't trust them at all. And I even do that here in my U. S. factories. I don't do a big inspection before they leave because I trust a couple of these guys, and I haven't had a big problem. 00:44:16 But I do, once they send it into Amazon, I will order a couple units to me, to my house just to spot check, just to make sure that they didn’t put the labels in a different place this time or whatever. So I'll do that as well. And that way it's totally random. I can't just tell them, hey, send me a couple samples, and then I'm going to make sure they're the prettiest, nicest ones. So going back to the warehouse, do you have a big trailer? I'm guessing you have to move the pallets from the warehouses. How are you picking up those? Well, I have an agent. Like my cut broker here is in here in Austin so literally all I do is if my factory in China has got something ready I just call my agent say 'um' here's the name of the factory and their address go get it and I don't know about it again until the day they're calling me, 'Hey, just it's eight o'clock, you know. 00:45:04 A month later it's eight o'clock uh we want to deliver today to you at 11, you're gonna be around and so they bring over a small truck um like a a 25-foot truck or something that has 10, 15, 20 pallets in it. It has a lift gate. We just lift them down, roll them right into the storage. From exiting your storage, moving those pallets afterwards. Once they're in the storage, I have pallet jacks. I have two pallet jacks. Those are the metal things you put under the pallets and you can move them. I have two of those. I just move them. Yesterday, I pulled five pallets out. Right in the middle of the Sun, 00:45:43 whatever, and put the little stickers because you have put one if you ever done LTL shipments, but yeah a sticker on each box and then you gotta wrap the whole box in cellophane and Then I put the sticker out outer stickers on all four sides like you have to do and then ships just push it right back in with the pallet jack into the Storage and then it takes two days for LTL from the time you schedule shipment Amazon It assigns it to a trucking company, and it's two days later that they come pick it up. So tomorrow— Oh, you have the LTL come and pick it up at your storage location? Oh, okay. That's what I was wondering. I was wondering if you brought it to your house. 00:46:23 No, in the past, I have brought stuff to my house, and sometimes I will do that because I can store nine pallets in my garage. But I was doing that in the beginning, but now it's easier just to have them go there. Because I can just back right in and bring a big 47-foot trailer. Yeah, but the problem I've had is they're just not consistent in showing up on time. They always tend to show up whenever they want, maybe like a few hours from the scheduled pickup time. So I guess you'd have to meet up and just wait at the storage unit? Well, my storage unit is three minutes from my house. A lot of times I have the same driver, or if I don't, they go there and they're like, we can't get in the gate here. 00:47:03 It's a locked gate or whatever. So they call me, and I'm like, I'll be over in a couple minutes. I know here they do the pickups in the afternoon because it doesn't matter who the freight company is, it's always after 12 because they're doing their drop-offs in the morning. And so it works good. I have no problem. We've got about 12 minutes left. Let's talk about marketing. How are you getting traffic to your listings? I have a whole marketing story strategy that I use to launch. And a lot of people are like, how do you get traffic now in lieu of the terms of service change from October last year? But there's a whole process I go through to launch. And it depends on the product. 00:47:47 But I believe there's a lot of traffic on Amazon. A lot of people are focused on sending traffic from outside of Amazon. I don't think you really need to do it, I mean, it does help. There's no doubt. And maybe when you're first launching, you can do a few of those. And I do do a few of those. But when you're there's a lot of traffic on Amazon, and you can maximize that. A lot of people overlook that, and they just get the listing up and do some PPC. There's all kinds of stuff you can do with AMS and targeting competitors on a launch. There's all kinds of stuff you can do with Frequently Bought Together. There's all kinds of stuff you can do with cross-promotions in your images to get additional traffic. 00:48:29 There's ways to do the PPC. If I'm doing a launch service, like a viral launch from one of those guys, I still use those. Some people say they're against terms of service, but they're not. They're not asking for their views. There's nothing wrong with using those. So I don't get out of the gate. A lot of people, they go and they do their homework, and they're like, okay, according to these keyword tools, these are the top keywords I want to target. And so they go after those keywords using their own service or using their own. Facebook list or a Super Bowl or whatever it may be trying to rank for those words and they're missing the boat because just because those are the most trafficked words supposedly doesn't mean that's the words you're going to compete on. 00:49:08 For example, I have a dog bowl. In my dog bowl, I don't convert on the word dog bowl. I cannot stay on page one for the word dog bowl. But I can stay on page one for a lot of other variations of ways people type that in. So I use my PPC when I first launch a product. Run that for a couple weeks. I take use of the automated PPC and also go and I use the manual, so I'll take all those search terms that I've found, put them in manuals, and run it all with no reviews; nothing just run everything for a couple weeks and see what I'm converting on, then I look for something. I sold at least; I have a formula for it. 00:49:46 Let's get at least a point; let's get at least two sales-at least a thousand impressions! I combine all the data, let me back up-I can buy and download that report and combine all the manual and automatic PPC data into a single Excel spreadsheet so I have everything meshed together and i look for anything that's sold at least two through PPC for a click-through rate of at least point um seven; I look for a thousand impressions and I look for things that that I'm not worried about a cost-I'm not worried about any of that stuff; I'm just looking to see what converts. And so once I figure that out, what actually converts, then I will 00:50:26 actually use that in my launch; so I'll look at that data and say, 'Okay, these are the ones I think I can stay on page one for' because you can use a big launch service to do big giveaways to your own list or wherever and you don't stay on page one that's because you're not converting on that keyword and so you're just wasting time and money. So I'll do this and figure out what actually converts for me and target those. And when I do that, I typically stay on page one; but then you could do some stuff with frequently bought together. You can do, I do do some Facebook stuff. Um, I do, um, quite a lot of things. 00:51:00 I mean, it’s something that, um, we teach in the, I’m part of the Illuminati mastermind, which is a deal for, for, uh, sellers who are already selling out there that who, who are like stuck they’ve done some of the courses they’ve done it on their own like okay I’ve reached this level how can I get to the next level what can I do and so we have a program called the Illuminati Mastermind it’s a live training program that we teach and we show exactly how we do all that stuff in there but that’s so that’s how I get traffic to my to my that’s one of the strategies but you can do a lot with AMS if you’re not using AMS there’s a lot of powerful stuff that you can do 00:51:40 uh in ams and targeting other people’s products when you’re launching yeah i hate when people target my products i’m like yeah well you can control it yourself by by by bidding on your own to keep them out of there but it can get expensive it gets really expensive yeah like i’m like why would someone pay like i have it set at like a dollar and then set it at two dollars and three it’s like why are people paying this much to advertise on my listing it doesn’t make sense Well, a good strategy, though, is if you’re launching, and frequently bought together is heavily overlooked. 45% of all sales on Amazon don't come from search. They come from things that are on the page. 00:52:18 So if you can get into that, customers who also bought this, bought, that can boost your sales a lot. And I do that even when I launch a product. I'll use one of my best products, and I'll tag it. I'll send something out. That's where I use the Facebook or off-site. I'll go to my customers and say, look, if you buy – we have a new dog treat. If you buy my new dog treat – let me back that up. There's a dog treat they're already buying. I know they love this particular dog treat. They're repeat customers. I say, 'Hey, look,' if you-I'll give you 25% off this treat that your dog loves if you'll just go buy my new one and put them in the cart. 00:52:52 I'll give them the link that puts them in the cart at the same time, and that way – with usually five or ten sales, I get in the frequently bought together on my own products, and then I then that leads to other sales because other people that are finding I have a product that's already established lots of people come in and like oh they've also got this other one here let me click it and so you can there's a lot of tactics you can do, how about what's creating that link that a lot it adds two products at the same time? There's a special link that you you um have to do. It's a long URL. I don't have it off the top of my head. 00:53:29 That's something that I'm just wondering, is there something that generates it? I don't know of a tool. I'm sure one of these guys, there's a thousand different software tools out there. I'm sure someone has a tool that does it. I just know what the link is and I just change out my ASINs in there. One product, two products, three products, five products, however you want, and it just puts them all in the cart together. So, with a single click, it puts everything in the cart together so the customer doesn't have to go back and forth, back and forth, back and forth. Okay. I've been wondering how people have been doing that. I don't know if you could send us that link after and we'll put it in the show notes. 00:54:08 I'm sure. Yeah, that sounds cool because some of my products are frequently bought with other very popular items and it's definitely a contributor. you know large amount of sales i'm sure you're having some some success with frequently bought together if you can get in the frequently bought together it can add five to twenty five percent to your sales yeah according to amazon statistics just being in a frequently especially if you're in that top row of three uh whereas three it can be very very effective and there's tools out there you can use too like we just At the Illuminati Live Mastermind event in Cancun, we had like 75 people there, and we were showing – one of the speakers was showing a tool that you can actually use that finds things that you should put your product frequently bought together with. 00:54:54 And it's not always what you think. You may be selling a dog collar, and you think, oh, I should get on a dog leash and be frequently bought together with a dog leash. Those two go together. But your dog collar might not be best with that. You might actually get more sales if you – if you get your frequently bought together dog collar with a garlic press. And you're like, that doesn't make sense. But the way customers buy and the data is all on Amazon, you have to know how to mine it. And there's tools and ways to do that. And you can be surprised. You can test that with AMS and actually see. So you can actually use these tools and they suggest other weird things that you don't think. 00:55:31 And you take it into AMS and run ads in AMS to test it and see, if you think that will work. And then once it works, then you can go out and use this URL we were talking about and go out to your own customer list and make sure you're getting that frequently bought together. And it could take as little as five sales or if it's heavily competitive, if you're trying to get in a frequently bought together or something that's a BSR 500, for example, you might have to give, it might take a lot more sales. And there's software that does that too. There's a software program in some way. charges like $1,000 a month for. I think it's the Rapid Crush guys that does some of this and creates those funnels, but you don't need to use all that stuff. 00:56:14 Awesome. Well, it's been awesome having you on the show, Kevin. Is there a way for people to contact you? I don't really have a direct [channel]. The best way probably if you wanted to contact me would just be, like an email address? I don't know. Sometimes people like to be contacted at the end of the show. Yeah, you can reach out to me at business, B-U-S-I-N-E-S-S at illuminatimastermind. com if you want to reach me. That's the best way to do it. Awesome. All right. I appreciate all the golden nuggets that you shared today. It's been a very good episode. Cool. I've been able to help some of you guys and gals out there listening. Gave me a few things to think about and things to look at. And I know David's doing a good job here delivering some good value on this podcast. So I'm glad to be able to be part of it. Kevin King, David Aladdin. Peace. Peace. 00:57:27 In the top five of some major Amazon categories, it's not a golden bullet as you need marketing and good brand strategy, but having the ultimate Amazon listings goes a long way. To learn more about it, go to amesysecrets. com. Mermitans, I hope you loved the podcast as I did. Be sure to check out our live Facebook mastermind group at amesysecrets. com slash FB. There's over 5,000 members in there. Also, I'm looking for guests to come on the show to add more value and more golden nuggets. If interested, go to amzsecrets. com/ slash guest. I know you're out there. Yes, you over there. Lastly, please leave a review on iTunes at amzsecrets. com/ slash review. Every review counts and helps spread the word. This podcast has been written, edited, directed by David Aladdin, Global King, and Amazon Logistics Strategy and Building Castles. Hee hee. What? Diva Len, out.