EP 5 - Steve Simonson - Steve Answers Live Questions from the Awesomer Army of Listeners
Join us as we present a live question and answer session with entrepreneurs and Awesomers from around the world.
In this episode, Steve tackles the important questions about Amazon, dropshipping, Shopify and consumer-driven products. More interesting tidbits on today’s episode:
What is Amazon review purge and how it can affect your business.
What service elements to include in a feedback sequence for your customers to get better reviews.
How to know if Amazon FBA is a viable economic model for you.
And many more!
Stay awesome and listen below to know more!
Welcome to the Awesomers.com podcast. If you love to learn and if you're motivated to expand your mind and heck if you desire to break through those traditional paradigms and find your own version of success, you are in the right place. Awesomers around the world are on a journey to improve their lives and the lives of those around them. We believe in paying it forward and we fundamentally try to live up to the great Zig Ziglar quote where he said, "You can have everything in your life you want if you help enough other people get what they want." It doesn't matter where you came from. It only matters where you're going. My name is Steve Simonson and I hope that you will join me on this Awesomer journey.
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Steve: This is Episode 5 of the Awesomers.com podcast. That's episode number 5 and you can find all the show notes and relevant details by going to awesomers.com/5. That's awesomers.com/5 to see all of the relevant show details.
This Episode is a little bit different because we do a live question and answer session with entrepreneurs and Awesomers from around the world. From time to time, we'll post these live Q&A sessions. They'll be posted on Awesomers.com and various places on Facebook and for those who join us live, they'll get the chance to answer questions sometimes on video, sometimes on audio and sometimes just through the live chat function. But between myself, Steve Simonson and sometimes special guests we'll try to answer your questions to help you the best we can so what a great opportunity for the community to be involved and become part of the show and this is one of those episodes, it's our first one so nothing's ever perfect but we're always trying to improve so thanks for listening and again this Awesomers podcast number five.
Steve: Okay everybody welcome back awesomers.com today we are doing a live session, a little Q&A. You might think of it as talkback or perhaps even back talk depending on who asks a question but either way we want to just talk a little bit about what's happening out there. One of the things that has has caused a significant amount of consternation in the Amazon world is this so-called review purge and the the change in terms of service at the end of 2016 created a whole series of events from Amazon trying to respond basically to some bad PR they got. I think it's the New York Times there's some big publication that said, hey everybody's gaming the system of reviews on Amazon and it's overt, it's naked, it's ridiculout. Why are you letting people get away with it Amazon if reviews are supposed to be credible and if that's supposed to be kind of your sense of trust with a customer. Since that time there's been kind of a ratcheting up of what review enforcement looks like and the interesting thing is often the reviews, the same review tactics have worked since 2016 but boy in the last six months and particularly in the last six weeks heading into the middle of 2018, the level of sophistication and what they're scanning for seems to be significantly more aggressive. So some examples we've seen and again, this is happening routinely including in the you know the the past 24 hours before this recording, people are still having reviews disappearing in wholesale measures in other words people having 750 reviews now have 75 reviews. Some people have thousand reviews now have you know dozens or maybe even hundreds if they're lucky. And other people have had their reviews wiped out and had their accounts suspended. So you know a lot of people ask you know well what is Amazon looking for? What’s causing this problem? Why do you get people suspended and as always Amazon doesn't give specific answers because the more specificity they give the more people try to gain those specifics and so they just kind of say don't do anything nefarious, don't do anything wrong and don't do anything to game the system. But their interpretation of that seems to be far and wide including things as simple as asking for a review in an email a poorly reviewed poorly worded email to a customer post sale saying hey it would be nice if you left a review or if you're happy leave us a review that can lead to account suspension and we're talking about, it appears that there's a 21-day suspension if they say that you've been gaming the reviews that's what they consider manipulation of reviews and 21 days suspended from the account not the item, but your account shut down for 21 days is one type of seller focused enforcement that's happening so that's from the seller perspective. What are the seller behaviors that are happening and how is the seller going to be held accountable for that? So there's a lot of people now who are taking away the request for feedback or reviews in their email follow-up sequence now whether that's a good idea or bad idea I can't tell you and and again it really boils down to the the words you use. If you ask especially people who are delineating between if you're unhappy email us here or contact us here and we'll take care of you. If you're happy to go leave a five star review, that's for sure gonna get you in trouble at this stage you know. It doesn't mean they they've scanned every a counter there they're gonna actively have you shut down in the next 24 hours but that kind of parsing of language you know if you're happy go this way if you're unhappy go that way Amazon not a fan and they have said
unequivocally that that sort of thing will lead to trouble. So from the seller perspective people really need to review what they're doing email follow-up sequences even inserts anything that might lead to trouble. Now I don't think Amazon is actually looking at inserts. I don't think that inserts have an early the visibility of an email so for most people who use an email follow-up sequence they are sending out you know one to four emails. I think four is too many. One’s probably not enough, probably two or three is the right answer. They should be largely service focused and delivering of a good experience so content delivery you know here's how you to use our product here's common you know frequently asked questions these types of things. Those are good service elements to include in a feedback sequence so that has high visibility because it's being delivered on the Amazon platform itself whereas inserting a you know something into the package whether it is a physical part of the label that may be on your product itself or an insert a physical insert that's put inside the box and not inside the shipment right if you're doing fulfillment by merchant or seller fulfil prime if you're just putting it in with the box that's against Amazon's Terms of service but if you put it inside the box as it would come from a manufacturer and to manufacture communication this is still relatively acceptable especially if you're positioning it from the manufacturing perspective versus from the seller perspective so so far I've talked about kind of the seller enforcement angle but I want to changeour attention over to the the consumer angle so again recently people have been making noise and and the media has been publishing articles about the fact that some even consumers are being fired basically from Amazon they're like you can't order in here anymore and a lot of people have said well it's related to their refunds our rate is too high and and there's been some interesting cases one couple I don't recall they were there from someone in the Midwest maybe Michigan they basically purchased a million dollars worth of stuff said they were returning it and asked for the credit got the credit back never returned it and sold it and they've now been apprehended put in jail so there's there's all kinds of manipulation happens on the consumer front from returns from you know fake returns but I think even the review side of the equation is getting attention Amazon. In the last two years put in requirements to leave a review you have to have at least fifty dollars of purchases on Amazon where as before you just need an Amazon account basically an email and a password got you an Amazon account and there were many many companies he still exist today and in bangalore and all around the world that are focused on gaming that system right they have tens of thousands of Amazon accounts and they will go leave reviews that make fake purchases this whole ecosystem exists so from the seller side Amazon are from the buyer side the consumer side Amazon is trying to get rid of some of those fake accounts and those bad actors so that's another area of focus so there's the seller side then there's a buyer side and finally there's the ace inside so people look at that ace in Amazon specifically we look to the ACE in and says you know what algorithms can we run to analyze the statistical relevance of this product. Excuse me getting reviews in a let's call it a normal way so it's very clear when you launch a product if you make ten sales you get ten reviews that's a hundred percent review rate that's probably well it's probably manipulated honestly from using Amazon's language now all of us know we want to get as many reviews we can when we launch the product but Amazon's like a if they're not real you're not keeping them they there's a high degree of speculation that Amazon has has taken your Facebook friends and associated those friends and family for that matter and will proactively say hey you know we're going to ignore reviews from them and we will delete potentially reviews from them and further we may suspend your account if we see a bunch of reviews from them now I haven't seen any first-hand evidence to Amazon's actually using that although it's been confirmed that Facebook's given them access to certain data points including your friends lists without your permission by the way there's an article about that just came out recently but I can I can tell you whether facebook cooperates with Amazon or not whether PayPal cooperates with Amazon or not.
There there's plenty of general consumer data at the consumer credit agencies that know all of your friends all a family where you've lived they know you know if you've ever gone through credit checks or you know you're trying to apply for a car and they're like hey we want to make sure it's you for identity theft requirements and so forth they'll ask you know what house did you live in what was your old phone number that's easy enough but they'll often say what's your brother what city is your brother live in where's your sister you know they'll ask you all kinds of deep questions that you're like why do they know this stuff about me so my point is that it's not just Amazon or Facebook cooperating it's there's a whole bunch of data out there so the
best method than to deal with all this you know review mania or the avoid the review purge is to get reviews the old-fashioned way you know what if we actually sold a product that somebody felt compelled to review the fault sequence was subtle I think the codes still that is generally accepted is if you ask for feedback versus a product review even though amazon says it's still okay to ask for product view if you ask for feedback you know your feedback is welcome we'd love to have your feedback about this product without bias without ceding them towards you know a positive thing that's that's an important piece of the puzzle to consider the idea that there's such a nuanced I don't know a nuanced issue with nomenclature it seems idiotic to me but that you know Amazon's Amazon so the review purge does continue and who can tell where it's going to come from but the reality is there's no way to avoid it and my main advice is just to get reviews the old-fashioned way sell a good product have a proper sequence of reviews there are some advanced tactics that seem to be still working
that I want to get into here because Amazon can eventually see this but I would say that you know any advanced seller can could share some of those advanced tactics with you I don't think they're violation because they don't ask for bias and they don't reward or incentivize for reviews but it's just kind of the method of asking for that review that is evolving to get out of Amazon's radar.
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Steve: Okay so that's enough on reviews now if your may ask questions you can scroll down to the bottom chat and you can just click into the chat and I can see those things and so don't hesitate to ask questions if you have on this subject or any subject that you wish to discuss talking about prime bay is a big deal now I think most people are speculating myself included that prime date will be July 10th and that's this coming July 10th 2018 amazon expects us to be its biggest prime day ever and for those who don't know prime day is larger in terms of gross sales volume than Black Friday so Amazon manufacture this holiday in July because July is generally the slowest month and all of us who have gone through July's are like what's happening why is everything falling apart but it's just summertime and people are an online purchasing as much unless you sell summertime stuff right if you're selling patio sand barbecues and this sort of stuff you probably live in the dream but for the for everybody else especially consumer driven products that are fed by Q4 July is not that awesome so Amazon will realize that said will manufacture this holiday we're going to call a prime date and that started basically I think this will be the third one I could be wrong but I think it's the third one so if you haven't prepared already some of the things you need to consider ensuring you have inventory they've already handed out the lightning deal slots but keep your eyes open maybe if something opens up if you can get a lightning deal they are more expensive and they're less and less effective lightning deals these days but if you have the stock and you have the potential to make some money in other words high throughput on prime day it's something to consider posting so prime days an important one to consider so we talked about inventory we talked about the fact that you want to try to get in some Lightning deals but you might even consider some coupons on that day and as you guys know to put a coupon in the system usually has a 5 day I think it's a five-day waiting window but so getting those in ahead of prime day would be to your benefit and remember these prices you know these discounted prices they help set future Lightning Deals so don't get too nuts people often forget when you set the bar lower on your price and then you get a lightning deal offer that comes in later it has to be a certain discount level below that prior I think it's a 90 day price average and Amazon sometimes moves these targets around so I could be wrong but fundamentally if you don't have you know if you're not beating your let's say 90-day price by 20% then they don't want your lightning deal they don't want your your deal of the day or whatever opportunities you may have and that of course leads to additional discounting right an additional margin being gobbled up one of the problems and we've talked to Amazon about this one of the problems is if you get your listing hijacked and then somebody makes a lower price listing they set that price for the the AC net large and although we've encouraged and we we think they're going towards independent supplier pricing for that Aysen in other words if somebody comes in hijacks it sells it for a dollar you shouldn't be obligated to sell it for 80 cents when the the regular price is $22 or whatever amazon says they they recognize that issue there they haven't as far as I know produced a long term solution for it. So anyway preparing yourself for prime date I think is a relevant thing to consider one of the other topics that has come up and I got a lot of questions about this in the last 30 days or so is you know with vendor Express going away Amazon decided earlier this year in 2018 to to say you know what vendor express is no longer important to us and I'll be honest I'm not sure how great of an idea of vendor Express was, to begin with the principle of it was you know there's vendor central which is a much more sophisticated wholesale method the amazon buys and when it says ships are sold by Amazon that was purchased through vendor central for the most part but a couple years back maybe even three years back they developed the vendor Express as a method date to an easier method to get people into the system to wholesale products to Amazon well what happened is i've taught a guy who just started gaming the system right they would open a Vendor Express account to get access to AMS Amazon marketing services and then they would never ship product in or and the Chinese suppliers would ship product into vendor Express and hijack your listing so now it looks like Amazon's hijacking your listing all kinds of gamesmanship was happening with that program and the majority of in my opinion started to just manipulate everything they possibly could at Amazon and so Amazon said you know what we don't even need this thing. Forget about it so that everybody was panic-stricken when they announced that is their access to AMS going to disappear as a result of this change and happy to say that AMS has not disappeared there's one piece of functionality that disappeared but you can still do that in sponsored product so the you know the fundamental change is the subtle for most sellers the marketplace sellers in particular you didn't need vendor Express you were using it for access to AMS or whatever else and now that's gone so it I think we posted we may not post it publicly but there was an Amazon email that said you should have access to ms ongoing and at some point I suspect AMS a sponsored products will merge together into one user interface and become basically the same program regardless of who's using it whether it's a vendor central or a seller central user I suspect those are going to consolidate and become the same.
Okay! so one of the other topics is the fact that the cost of storage just continues to rise. A lot of guys when they first started selling on Amazon or you know their first foray in the e-commerce was selling on Amazon and they said you know what a great thing to be able to just ship product directly into Amazon the FBA centers will do all the heavy lifting for you and as long as that products moving it you know is relatively affordable and that still is the case today if the product comes in and it ships out on a short time basis it's still an effective program and the you know it's still within the realm of reasons but barely for the the overall cost so it depends on the cost of your product but those you know the cost for FBA can range anywhere from you know on the low side if it's a really high dollar item you know single digits on up to 40 50 percent of your product the cheaper the product is where the heavier it is what have you so you know you really have to understand if FBA can fit in for you if it's got a viable economic model great but if you leave product there long term the long term storage is going to kill you and now that they assess that monthly you don't even have even you know kind of the the short periods of time of grace period I supposed I would call it where you could slide products in or out based on holiday seasons they're just can assess long-term storage on your product every month after a certain period of time I think they're assessing it now at six months and it doubles that assessment doubles in rate at the twelve month mark so every bit of inventory you have gets kind of a monthly tax on it based on the length of time it's been in there so what does this mean and why is it happening obviously for those who can't do the math I'll help you 1+1 yeah it means they want more money and they want the product to move they Amazon is all about you know just-in-time delivery they have no interest in idle inventory taking up space cubic space in their warehouse they want that out and and they're telling you as much get it out because we're gonna make you go broke if you keep it in here we don't care what you do with it Amazon you know as far as you're concerned it's up to you to figure out the solution but they don't want to idle stuff just gumming up the works in their warehouse so fair enough so what do you do and this you know I've been talking about this for the last couple years I already thought that the cost for storage and so forth was too expensive compared to the Main Street rates either of holding the inventor yourself and if you have a an organization where you can pick pack and ship on a regular basis that's one way to go the other way and the more common way at this stage is third party logistics centers or 3pls so if storage costs are going up the most obvious way to minimize that is to put the bulk of your inventory somewhere else and then you just feed into Amazon as as the volume requires so for example let's say you bring in you know a container of product and you put that in a third party logistics center and and let's just say for the sake of discussion that's six pallets and you sell a pallet a month we're gonna just do easy math for me if you sell pallet a month you want to feed that in you know probably a month ahead of time you probably want to have at least 30 days of inventory maybe a little more especially if you have any seasonality or especially if you have any promotions planned but your objective should really to be to consider what your move prediction is for the next let's say 30 to 45 days and i make sure that you have not just enough inventory but some safety stock as well the the last thing you want to have is some you know ranking bursts or some sales burst and run out of stock by the same token you can't have too much in there and and hope that you get those ranking boost because it's just simply too expensive so by leveraging what I often call these across stock place and the the premises again you'll and the product from the factory if your factories in the US doesn't matter China anywhere in the world you land in a third party logistics center in the United States and there's two kinds of logistics centers one is where they are basically a freight forwarder and they will send pallets for you on words on a on a single pallet kind of bulk basis so this means you land that container and when you send a work order you send them an email say hey send this pallet in they charge a relatively low amount for storage and you pay the Amazon shipping to get that pallet moved in I see some cars are some questions coming in so give me a second so that general freight forwarder is a bulk forwarder they will hold the inventory for you and then they will ship it by bulk means even cartons are probably acceptable to them on some degree but they want larger shipments to go in and out that's that's fine if you don't expect to sell through other channels if you do expect to sell through other channels I would highly recommend finding a 3pl that has the ability to do what we call last mile delivery so they will do pick pack and ship and then they will connect you with the last mile carrier like USPS or whomever and you could do this through a ship station whatever now Sean asked you a question exactly do you have a good three pele that has a good FBA work flowin place and he says it's hard to beat the prices he's paying but they have limitations if they use software in other words a port integration option so this is almost always the case Sean is there's almost a correlation between technology ability and price the higher the technology ability the lower the the higher the price and the lower the technology the ability to lower the price ironically right you'd think that technology should enable the better price but some of these guys especially freight forward is a deal in bulk they don't really have a great deal of technology they bring the container over they stick it and they say I got 10 pallet slots and they keep track of the
stock in and then they ship it I'm not sure about who's got the best work flows but I can't
say that I generally will prefer to use a higher technology somebody who will at least integrate with shipstation and i also use people who can do last final delivery because I want to sell across multiple channels even though if Amazon's are your bulkier business and that's where you need to put your attention that's fine but there is a little higher cost on using somebody who can do pick pack and ship on an individual basis so I don't want to use real numbers because these numbers change between different carriers and for different reasons but let's just say for the sake of discussion that you can pay a dollar you know to a big bulk forwarder they cost you a dollar for storage of a pallet and it's probably a dollar 20 to store that pallet at a 3PL that has the ability to do the pick pack and ship on an individual basis they can also do the bulk shipments by the way but I would suggest that the pick pack and ship is one of the things that can really give you some flexibility sell on other channels and when you think of when you think of those other channels consider for example Walmart com they do not want you using Amazon no other channel want you to use Amazon but they are proactively like you're not it ain't happening so if you ever really want to sell on Walmart or effectively on other channels I highly recommend a 3 PL that can get the job done and let's say Sean adds another note that says they use a 3 PL for a full automation and book forward or feeded FBA which is a common thing but the 3 PL is too automated and feeding with those excuses the nightmare back and forth that's interesting the 3 PL is too automated and feeding FBA with those excuses is a nightmare so I'm not I understand that some of these guys have very rigid systems when it comes to bulk feeds and so forth but I'm not sure what the nature of that problem is if you want to unmute yourself Sean and maybe articulate that a little bit more. And if you can’t, I can.
Sean: Hey you can hear me!
Steve: Yeah I could hear you. Go ahead tell me a little bit more about what you mean by too automated.
Sean: So basically everything in their system is automated to fulfill all of our Shopify orders and then what happens is they hold all of the SKUs all of the inventory for a certain set of excuses and so whenever I feed Amazon I have to create manual orders for them to deliver it to Amazon they have to package everything. Nothing is case packed everything is individual pack and say. It's literally a one to two week process back and forth to get all the box content details and enter that in the Amazon so it's it's really kind of broken in that sense they're great for automation all of the fulfillment and costs and everything are amazing but it's a juggle and then the other the other warehouse we use does nothing but feed them they hold kind of our long-term storage and we pay like eight cents per cubic foot it's pretty pretty reasonable but they don't do good with you know single unit fulfillment or automation so I have kind of good solutions for each but they're I need one I'd like to have one as possible I might still need to stay stick with the two but you know can consolidate into one would be ideal.
Steve: Yeah so that's a very good thanks for that extra detail Sean that's it is a classic problem and to be honest those are their different functions so first of all let's talk about the first thing you said whether they're not keeping bulk stock they when you shift in your inventory to that that 3pl who does your Shopify fulfillment and that that means they're doing pic package ships it sounds like they broke down all of the cartons and put them into individual pick pack locations is that your understanding that they, in fact, took all of the cartons that you shipped in unpacked them all and put them into pick slots so they can ship them out individually is that about right I know you've muted yourself again.
Sean: Yeah that's correct I'm trying to fix that with them now basically the the product is also a little complicated that's why this 3PO holds it and the other one doesn't otherwise we'd have the case packed ones that the the one that feeds Amazon's it's got currently 40 SKUs and and some of the velocities really slow so some of the orders are only you know 20 units when a case is 84 units so so that's that's part of the problem I'm working on trying to standardize that,that way that when the inventories received by them it stays case packed as much as it can but yeah it's it's been a little bit of a challenge that products actually gonna go from 40 SKUs to 120 soon so we're we're trying to find ways not to completely make it more of a nightmare.
Steve: Yeah for sure so this it's a common Awesomer problem to be honest is when you first are dealing with these different types of warehouses well actually when you're first dealing with your manufacturer you're like hey make me this stuff and ship it to me and we don't give a great deal of thought about how these cases are packed in in most sophisticated supply chains you're gonna have a pallet which is a number of cases and by the way that'll actually even have a barcode in the UCC code you'll then have a case that has a case pack code that's a UPC in a UCC and that case has a certain number of inter case packs inside of it depends on the size of the item but if one case has multiple let's say one case has a 80 units you might have an inner case pack that has you know sets of a 10 and so there's eight inner case packs in there each again with its own barcode it sounds like Sean is on that trail right now so the one reality is when you talk to your 3pl you can let them know that it's important to you that you that they keep let's say you have you said 40 SKUs if you ship 40 cartons and they're gonna have to break those each of those SKUs down into pick pack locations but if you ship you know let's say 10 cartons of each color and they should only have to break down one carton at a time for each SKU to be sure that they can pick back and whether it's a carton or an inner case pack that's generally the the philosophy that we approach it with and and a lot of times that's just a pure conversation that you have with the guys and and try to explain now I will tell you that one thing to look out for and this applies to everybody not just Sean it's a common thing especially when there's a receiving amount per skew for them to come up with lots of reasons why they need to break down cartons so if they're you want to kind of look for that as you know if they're getting paid to receive individual SKUs so we have one example of a 3pl it was $25 receive a pallet that pallet had 1500 units on it and they wanted to bring in all those individual SKUs because they get paid per individual SKU that they check in so we could have paid $25 on one hand or something like 40 cents per unit on the other hand which was like 800 dollars to receive that same pallet right so without understanding kind of their their monetization or without fully, my understanding of the monetization you want to look for those kind of little clues.
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Sean: So sometimes 3PLs make money on that initial receiving breakdown and if that's the case you want to try to minimize that break down other times just for clarity like we were shipping stuff out of a 3pl and the same type of thing applied when we tried to ship out individual units they wanted you know whatever was a Buckey unit and buck-fifty unit I don't know what the going rate was at the time and they you know it descended when we increased but we had something like 450 units we were shipping out and the cost came up to I don't even remember it's close to 500 US dollars this happened actually in the UK.
Steve: And we're like this is nuts you know to ship out this this bulk shipment we shouldn't have to pay $500 and you know they went round in circles around in circles and finally we figured out that the the items were already marked they all had UPC codes and we were shipping them to Amazon we were running short at Amazon and as a bunch of different SKUs at this time you didn't have to individually break down what was in the cases and we we just said you know what we'll pay a work order we'll pay you by the hour to just put all these SKUs into three boxes and we ended up paying like $60 and they shipped this stuff out so almost ten times less because we had to really dive into the how they're charging for things and that's one of the big you know we're complaining about Amazon storage fees but it's really important that you understand how three peels are charging and you know what is the most effective method of working with them to reinforce Sean's points the big bulk feeders will you know do freight forwarding and they'll do really cheap storage but they often will not do the individual pick package ship so that's where you generally will use a different solution unless your stuff moves relatively fast then you can consolidate it all of that look that that other carrier and just kind of keep keep the stuff moving feed Amazon as you need to but I highly recommend keeping as much of it palletizing can cartoonize until it needs to be broken down that's best practices anyway and I know that there are lots of different ways of doing things but this is you know something is served as well so any other questions about 3PLS let's see I thought I saw a question from Edie and asked what kind of steps should a seller take to assure their inventory secure and properly accounted for while you wall inside amz storage so and I'm going to take this too to mean when the product is inside of Amazon your question is you know how do they make sure it's all okay and the reality is assuming in its in amazon fulfillment centers FBA centers the inventory is always being tracked in seller central so you have a clear a line of custody I suppose so you can see what's being received you can see what's being shipped and you can see what's on hand and of course you will get damaged items you'll get various types of issues that happen FBA centers and if you guys if sellers out there are not following the best practices to get refunds back from Amazon you really leaving some money on the table so I know there's a lot of urban legends about well if ya ask for too many refunds from Amazon they're going to cut off your account but that's in my opinion absolutely not true Amazon has a the FBA centers for example have a guaranteed service level with you the same with Amazon But the third-party merchant program whatever they call Amazon services the point is both of them have obligations to you as a seller than a contractual which includes if you lose my inventory you have to pay me back for that inventory it includes if a customer returns a product and you give the customer money back from my account and the customer never returns it you have to give me my money back now Amazon themselves admits only 80% of the time are they catching those types of things those types of things that happen on a common basis right even when they damage something in the warehouse or you know I talked about the missing example earlier but if they damage something they're supposed to notify you this is no longer fulfill able and we're paying you for that based on your retail price - Amazon fees and that's that those things are supposed to happen and so there's about nine or ten different case types that happen and these sorts of things happen routinely and the larger seller you are you're probably having them a crew hundreds if not thousands of dollars a month in lost products you know refunds given the not return and again people got a little squirrely because they were using automated services and Amazon's like no you can't use an automated service to file all these claims now I don't know how good those automated services were I've never used automated one I always use an agency that will do it manually but the reality is if you're using automated service and Amazon doesn't like it you got a problem now you know from a purely legal basis I would tell Amazon that there you know it doesn't matter if it's automated or not automated if it's a legitimate case they better pay it and at some point I said we'll assume that somebody's going to go to the the legal matter on that as well so as you think about the the idea of you know filing for these types of claims or these you know problems that you may have an FBA Center or refunds given but not actually returned these are things I highly recommend you being proactive don't do it automated but there's lots of tools out there that help you establish what these cases are and so that these cases and just have one of your teammates do this you know process once a week just stay on top of it and it's you know at that point once you get caught up it'll be a small amount of money but it's real live money and we've used kind of auditing systems like this for a long time if you do a lot of next day air freight UPS FedEx DHL whomever then you're getting shipments that are showing up late and you have every right to get those refunded back to you when they show up late or they're outside of their terms of service and there are actually auditing companies that all they do is they run around and find you money and many of them will just give you a cut of the action in the freight guys case it ranges between fifteen to fifty percent that they try to take depending on your volume and in the case of Amazon services I think they range also you know probably from from probably around eight percent to twenty five percent or thirty percent something like that and I think the reality is something is better than nothing if you end up getting money back every month as just a case of Amazon messing up stuff but you don't have to pay somebody on a fixed fee basis to do it or if even if you are doing it you're just using tools to make it a small and easy process that's just good management and you should be aware of those types of things and and not miss out on the opportunity to hold Amazon accountable even though people will tell you and again I hear so many urban legends around the Amazon community they will say oh Amazon doesn't like it when you ask for your money back or this or that but fundamentally Amazon as a company doesn't care that you know if they mess up they want to be held accountable they have no problem with it they don't like abuses they don't like again I think automation could be argued as long as the automation is legitimate now give me an example of automation that they hate and and this will lead to problems for people I think so as many of Amazon sellers know there are lots of different kinds of competitor mischief that and occur and one of the types that has raised its head is turning you know basically turning in people for copyright violations and there are automated services out there that will send out ten thousand you know hundred thousand copyright violation cases a month and Amazon is hating those services because copyright violations give them some kind of legal responsibility so for those who are not familiar with the Digital Millennium Copyright Act DMCA this essentially says hey once I notify you somebody's stealing my stuff as a host as a search engine as a as a you know the technology provider whatever the case may be if I notify you this is happening and you don't do anything about it now you're gonna take some of the liability on and so you know Amazon is worried about that liability of potential liability but they have to balance it with the fact that there's literally companies out there sending in hundreds of thousands of copyright complaints a month many of them are completely bogus for example if you are a wholesaler and you're buying products and you happen to sell you know Disney items you can't go send a copyright claim on a competitor who's got the by box because he sells Disney stuff that's that's not how it works copyright is supposed to be used for the right reason. So in that context I understand Amazon's sensitivity to automation kind of you know being a big problem however from the from the refund basis I think automation is perfectly acceptable as long as the cases are all legitimate and as long as they haven't already been filed and and the automation creates some sort of you know duplication so fair's fair as long as it's really truly
owned it should be paid and I don't have any problem with Amazon and Amazon does
having a problem with it but I don't have any expectation that Amazon will try to somehow beat that down because they're giving back what they're supposed to give back.
Ok if anybody else has questions we're gonna be coming to a close here in the relatively near future so I saw Thiel joined in looked like maybe Zara popped in and I see some others in here so the you know most of the people let's see he ok so. Ok sharing a little bit of news this is very good so 2015 it sounds like was the first prime day and then 2016 increased 60% over 2015 which is it was already a substantial day in 2017 60% again over 2016 they did stretch it out Michael points out they length it by 30 hours to include more countries oh and included more countries yeah that's a very good point so this is one important note I'm glad you brought this up Michael Minkowski the the fact is that you know prime Day actually starts like 18 hours ahead of time or maybe it's 12 hours at a time and maybe goes on a little bit longer but the point is they're trying to make it into a real event and they're even doing this with lightning sales you know preceding and post events and again they're rolling it out on their global platform so a lot of opportunity you know can you imagine if they grow against 60% this year that's pretty insane so a lot of opportunity as I look through my list here now's the time again.
if anybody has any questions they can hop them throw them in the hopper somebody asked me earlier online they said they couldn't join but they're like hey can I use Amazon to fulfill for my Shopify site the answer is you can do that there are pretty simple tools to do it when you do use Amazon to fulfill for your Shopify that's called a multi-channel fulfillment by Amazon and the cost for that can be it depends on the price your product can be as much as twice as twice the cost of an FBA and so you want to kind of keep your eye on the the cost when you think about that cost of shipping from Amazon for an external customer like Shopify or any other channel that you choose to use the good news is with the Shopify is there's actually an app. that you can use that will make it completely automated it's basically it'll connect your inventory to Shopify it'll show your available inventory and every time an order is placed it'll go automatically place your order at Amazon using the multi-channel fulfillment function when it's fulfilled it will come back with a tracking number to the Shopify system and automatically fulfill that as well so the upside of that is it's automated. One little safety tip for you is Amazon if you just put in regular shipping on a multi-channel fulfillment let's just say you're shipping to Dallas and their stock in Dallas if you put that in to as a multi-channel order and you just put in regular shipping which has basically a seven-day delivery window they may not ship that until the sixth day and still be within their service level agreement and deliver on the seventh day what they're trying to do is they're trying to get you to upgrade to a faster shipping and and this is one of those things that you have to consider when you upgrade your faster shipping then they make more money right and so if you don't know that then your your Shopify audience can be kind of ticked off and so you actually can set it automate it up to select the faster shipping today or what have you so that's it that's a gotcha that I'm glad the question came in and I'm sorry they couldn't join the call but hopefully they'll catch this recording so yes you can have Shopify do it automated make sure you check the shipping time frame because Amazon will take their time to try to encourage you to pay more for shipping I saw a couple other guys join in here if you guys have questions about selling on Amazon you can use the chat window and so the chat is if you just kind of mouse over the the main video screen it's kind of near the bottom I don't know if it's near where I was pointing but I pointed anyway for those on the podcast you can't see where I pointed but you'll have to take my word for it it was right there alright. One final note are a couple of final notes I see fields got a question I'll come back to you field a lot of people still asking questions about sales taxes and there's so much involved with sales taxes and I would just say the Supreme Court decision which will have a big impact on the the existing precedent known as Quill versus North Dakota in 1992 they did revisit this case earlier this year and they you know they're do at some point really any day now to deliver a decision regarding that review of the case I don't know what they're gonna do it's it's too difficult to forecast when you read all the arguments from the day you know they grilled both sides pretty heavily and fundamentally I think the question comes down to does the Supreme Court believe that there are automated services to deal with the taxes the the state argued South Dakota in this case argued that a for as low as 10 bucks a month they can have their their taxes taken care of so this is not an obstacle for anybody anybody claiming that collecting sales taxes honorous is misleading the court of course they were absolutely misleading the court you know they didn't talk about the ten thousand different you know individual tax jurisdictions I think it may be up to twelve thousand now across the United States they didn't talk about the fact that once you're a judge for sales taxes now you're responsible for income taxes in each of those states for the income generated in that state they didn't talk about the fact that you know inventory kept in a certain location now be required to pay inventory tax or asset taxes that are applicable in some counties and cities and states there's a whole series of things they didn't talk about so I don't know what's going to happen but I think at that point once they make a decision that's when we can look a little further into policy about how to deal with sales taxes the best news is I think it is it's Washington for sure but it might also be Pennsylvania that have said basically marketplaces are responsible to collect
sales taxes so if you sell on Amazon. Amazon's got to collect tax in Washington and submit it to the state of Washington that's how everybody should do it and I believe Shopify has been forced into doing that eBay and all the rest of the so-called marketplaces so that's that's a positive thing I hope that the court looks at those things for direction and just one find a little asterisks even when the court decides they're not specifically deciding whether or not FBA inventory in a particular state means Nexus in other words whether or not you have Nexus for the state and are responsible to that state for various taxes but it should be directional and it should give us some idea. So before I come back to TheoI see Marquis has asked a question he says is FBA Amazon FBA still a vile viable business model in the under $50 category so I think it's a fair question I do get this question pretty often and the answer is “Yes” it's definitely still viable I wouldn't go too far below 50 I think under 20 is is a problem and you really have to be able to deal in volume to make under $20 work but I think 25 to 50 is still quite viable and it all comes back to the products you pick how you do your product launch and your marketing and so forth to get visibility as everyone should know if they don't just putting a product on Amazon is not enough that's like you know looking at a star in the sky and then trying to count the rest of the stars there's billions of them you're not going to get found unless you're on page 1 of the organic search results which is based on the a9 algorithm on Amazon so went for your main search chart if you can't find yourself on page one then you're not doing enough for visibility and there's lots of ways to kind of increase that visibility so that's an important thing to consider so yes as a matter of fact Markie I would go farther say not only is it still viable I still consider it the one of the best so ecommerce as a category is the best business model that I have ever experienced and I love it and I think within ecommerce starting on FBA gives you the most leverage which means the highest potential return on investment with the lowest potential upfront risks of any business out there still to this day as a matter of fact I think it's getting better not worse to many people especially those with maybe I'll just say they don't have the same experience that others have they are like oh the salad days are gone you know three years it was easy and now it's hard and impossible in blah blah, and I've been selling online for 20 years I my first sale was in 1998 and every year somebody's pronouncing it's the end of the Internet at the end of this it's the end of that and I've seen it all and it's just the beginning we are I think what stood church out a good Hulk quote I'm gonna try to butcher here for you guys but it's something like you know this is not the the end this is not the beginning but this might be the end of the beginning right so the last 20 years was the beginning of e-commerce and we might be at the end of the beginning but it's still at the very freshest part of this nascent industry so it's a really great place to be I love e-commerce and there's absolutely decades of upside ahead field I see how much clarity do I have on importing into Canada and I've done Canada for a number of years so some clarity the government custom site is super confusing all right well that's a I think a lot of governments share that and he needs to get a business license etc and how do you file income so one of the things I would recommend Theo or anybody who's looking at to go on to Canada is that you can get the importer numbers and things like that through a typically a broker who's brokering you're free so when your your freight can actually be inbound and then when you clear the customs on that Freight they can help you get the the required numbers for EM for importing relatively quickly sorry I you know I would ask them for help and say you know if you're really gonna go into County you're gonna do it right then you should probably just find an accountancy firm that can handle Canada and have them help you get set up and get it done right so that you can you know not have surprises later you know. One of my least favorite things in business is surprises you know everybody likes a surprise well forget that and in business surprises I mean you didn't plan right you didn't prepare well and I highly recommend never having governmental surprises they're the worst and with the cross-border trade increasing every day all of these governments are trying to figure out how to get their hooks into it, so if you really think Canada is important enough to you then just go do it right and there are plenty of lawyers and accounts that can help you get that stuff set up as a side note and I'm going to come down I see Sean's got another question for everybody who hasn't heard about his but I Australia's just passed basically a law that says hey if you are selling into Australia guys like Amazon specifically marketplaces you're going to be responsible to collect the GST which is their sales tax and Amazon just launched in Australia and their response basically is they're gonna block amazon.com will not be accessible to Australians they're they're doing a geo block which means if anybody tries to go the regular amazon.com site which has many many more parts than the Australia site they just simply are blocked and redirected to the Australian site that's how serious Amazon is and I actually think that could have a you know depending on your product but they could have a one to two percent impact to your sales probably not something that you're going to notice automatically but Australia or there's a lot of stuff I don't know how many people look at their their geography but you know probably in many cases Australia could be already 1% of your sales so you might have a little bit of a hiccup there if you're not already in Australia and Australia is developing quickly and there's there's ways to get into these other countries using Amazon's business development department.
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Steve: Okay I see Sean’s got a question if you guys have any final questions now's the time to get it get them in we're coming up on an hour and I don't want to keep people here all day, probably have other things to do so. Sean asks a pretty good question he says do you believe using any groups for ranking boosts is fingerprinted or has a digital footprint I've heard that using launch services can be risky because of this so let me just reframe the question for everybody's benefit. So there are services out there that offer kind of giveaways snag shouts an example you can post your product on there and then in you can discount it to whatever level you want you can give them a dollar off you can give them you know hundred dollars off or we'll just say the percentage you can give 1% offer you give 99 or a hundred percent off and the principle is if you do these types of giveaways then this will help boost your organic ranking so there are a few things in there and by the way there's there's a number of these types of services that are out in the marketplace today and there's a lot of speculation again the rumor mill is running like crazy but very few times do I see them match up with facts so the rumor mill says they don't work anymore you know. Amazon's ignoring them, this and that and I can say that there is a an evolution that's happening at Amazon from what I've seen on a factual basis for example it used to be that these launch services let's say you did a hundred review 100 giveaways that were literally free price giveaways that any reviews you got or verified reviews because they made a purchase well now Amazon looks at the discount level and decides if that's a verified review or unverified review the prevailing wisdom by the way is that anything more than a 40% discount will be an unverified review if the review even sticks at all and so there you know that's that's an indicator that Amazon knows what's up with these types of services I have no doubt in fact from an empirical data standpoint absolutely Amazon can do digital footprints on these types of customers these giveaway customers that have a high propensity to buy discounted products from a variety of vendors and it's very clear who these people are from a data perspective I'm sure of that where the whether or not they're looking at it or whether or not they're taking action on it I don't know it doesn't appear that they are because these booths still work these customers are still able to buy and honestly what's the downside for Amazon if the review manipulation piece is out of the equation you know one could argue that over time the ranking boost could disappear go away but that hasn't happened yet and there's also a general customer experience benefit to Amazon customers to be able to get low price or free stuff it drives the ecosystem if this same type of ecosystem exists at a walmart.com, walmart.com would be getting more sales so amazon has to balance this you know the positives and the negatives of this if they just simply said nobody can do anything at any time that ecosystem will just move over to Walmart or somewhere else and that's probably going to happen at some point anyway. So one thing that and I can tell you for those listening and power he has a very I think very unique approach to this problem in terms of the power. They deal with it and doing basically rebates and and general brand marketing that is all well within terms of service yet it helps accomplishes the goal of increasing awareness and you know often you'll get ranking boosts as a side effect of those types of things so those are the types of things that we still think work we know they work by the way I just did a few months ago a relaunch of a product the name main keyword had fallen back to 260 because we ran out of stock for a long time and we were too lazy to get it back in and within eight days and 125 giveaways we were a rebase we should call them we were at position number three so it's it can be very very effective and and honestly a game-changer still so is there a risk yes but if you mix between different launch services is probably less risky to you and if it's just part of your overall launch program then it's probably also okay because over time you're going to get regular organic sales you're going to have promotion sales from sponsored products maybe some external traffic from Facebook or or others and all of that that I think what Amazon wants to see is a big gumbo right the more ingredients in there the more honest you probably are whereas if you just have a bunch of free giveaway sales like so many guys you know one of the things that one of the black hat tactics that is being used in China for example is they will contact Chinese university students and they they will pay those students first of all they give him the prior product price right so whatever the product cost they they make sure they have that money and then they pay them five to ten dollars to go buy the product and leave a review totally black cat completely against the Amazon terms of service but they'll launch a product and have 500 reviews on the first day and this is exactly how they do that so these types of black hat techniques you know they're they're not ideal and again from a data standpoint it's absolute that Amazon can tell you know what's up that you know those types of things are not going to work forever and that's probably a very good point to kind of wrap up this theme you know when we think about you know driving a business of being in e-commerce all of us want the easy button right we want that silver bullet we want just what's that one button I can I can click and just have passive income and sleep and knack for the rest of my life and take it easy and cruise around the world whatever it is the reality is it's you know entrepreneurs are problem solvers our responsibility is to find a problem and solve it for the customer and then all the problems that go along with solving that problem they're kind of side effect problems that's that's what we solve and you know for years Michael and I have worked together on and off for 20 years Michael now is heading up that parsimony.com SAS model which is a full-service ERP but we used to just say if it was easy anybody could do it and it's not super easy therefore that's why you know Awesomer is out there have the opportunity to make a difference and earn you know their freedom lifestyle or whatever they're trying to get so it really is a fine place to be in business and I wouldn't trade it for the world so in the absence of final questions I'll give you guys just a minute or two to answer any final questions Sean yeah absolutely appreciate you good to see online safe travels out there and for those who haven't already you can go there's a free photo giveaway and I it's somewhere posted in the online in the Facebook groups but there's a king sumo free photo giveaway if you want to have your new product with nine high-resolution fully edited images you absolutely can enter the free giveaway and we'll put it in the show notes as well but these types of giveaways are really fun it's the only requirements a product has to be in China but it is a nice little free giveaway for everybody so anybody who's launching a product in the next you know 45 to 60 days you got the chance to get free photos done in China before your product that even arrives in America the photos are typically done they're beautiful they're high-res white background all amazon specs and again free is hard to beat actually I'm paying for the amount so it's not free to me but it's free to you and finally everybody thanks for joining us you can go to Awesomers.com the podcast is available by the time you hear this on the recording it'll be available but for those who are attending live before we launch it's gonna go live later on this summer hopefully in sometime in July but it's not August we got to get a lot of episodes done thanks everybody for joining and if you do have questions you can find us at awesomer.com ask questions there or back in the facebook groups as well all right thanks again everybody and we'll talk to you next time bye bye.
Okay, episode number five is a wrap everybody and we hope everybody got something out of the live Q&A session where real awesomers from around the world joined us and asked their questions on the website and on the blog. Keep your eye on various Facebook posting where we'll post live mentor monday or other similar sessions that may be upcoming. Hey and don't forget to share this with a friend it really is a best way to pay it forward and help somebody else out that you know who's on the path to being an Awesomers whether or not to entrepreneur a writer just somebody who's breaking out of the normal paradigms of everyday living we certainly do have them enjoy our journey as well thank you very much.
Well, we've done it again everybody. We have another episode of the Awesomers podcast ready for the world. Thank you for joining us and we hope that you've enjoyed our program today. Now is a good time to take a moment to subscribe like and share this podcast. Heck, you can even leave a review if you want it. Awesomers around you will appreciate your help. It's only with your participation and sharing that we'll be able to achieve our goals. Our success is literally in your hands. Thank you again for joining us. We are at your service. Find out more about me, Steve Simonson, our guest, team and all the other Awesomers involved at Awesomers.com. Thank you again.