Is your prep service a service provider, or a competitor? Is prepping their main business, or just something they do on the side?
Years ago, I took a basic finance course. The prof gave the example of what he called the Widget King.
The Widget King had a company to manufacture an automotive part, The Widget, that was used by every car maker. He had competition but lowered his price below everyone else. That's when he became the King. For a moment...
Turns out that he was selling The Widget below his manufacturing cost; the more he sold, the more he lost. Most of you are not manufacturing your products, but before you set your selling price, do you determine your Cost of Goods Sold (CoGS)?
The components of the CoGS are:
- Cost of acquisition; manufacturing, or buying.
- Cost of inbound shipping.
- Cost of inbound brokerage, duties, taxes.
- Cost of preparation for sale; labeling, boxing, bundling, etc.
- Cost of marketing.
- Cost of outbound shipping; for example shipping to a retailer.
- Third party fees; for example, selling channel fees.
Some components may not apply, and I may have forgotten some, but you need to consider all of these when determining your CoGS. Even if you sell at your CoGS, you are not making a profit; remember that there are sales, and income tax to contend with.
Don't become a Widget King.
Do brands matter? Heck yes! Check out the story of our boss, and his pickup truck.
Our boss bought a new F150 and has been making little changes to it; fixing little annoyances. He was looking for a tailgate assist, and a tailgate gap cover.
You can get the tailgate assist in a factory installed package ($$$), by installing a Ford part ($$ + painful), or you research on the Internet. "F150 tailgate assist" finds third party tailgate assists in a flash, shows a lot of pertinent information about installation, including video reviews, and the very first link in the page is a paid ad pointing to an Amazon listing. That seller did the job well. The boss posted a 5 star review. That was a Canadian FBM purchase.
The tailgate gap cover was a bit trickier; "F150 tailgate gap cover" finds the part rapidly, but the first links point to a product that does not have good reviews on Amazon at least for trucks with a bed liner. A few of the links are for a branded product, with good reviews, and links to Amazon.ca, and Amazon.com. Again, the seller did the job well. The product will receive a review once delivered. That was a US FBM purchase. With the number of pickup trucks on the road a Canadian seller should look into Rok Block...
Can you benefit from chasing fads, fashion, world events?
I am not a seller, and anyway it is prohibited by the company because of the potential conflict of interest.
I read a lot, and listen to a lot of podcasts about eCommerce, and a theme that is often revisited is sourcing based on fads, fashion, world events, etc. The tone is often "Do this, and get rich quick".
Obviously, some made a killing selling spinners, solar eclipse sunglasses, garlic presses, meat claws, etc. I just wonder how many lost their shirt, or got banned from their selling platform.
A variant is selling products that would be useful in response to some disaster, or point in time event. Yes people could use product X in their time of need, but can they get the product delivered in time, or at all?
None of our clients sell faddish products. There must be a reason for that.
If you sell a branded product you have to defend your brand
I have been browsing Reddit, and Facebook groups, and there is the inevitable flurry of sellers going on about how some unscrupulous low life has piggy backed on "their" listing, driven the price low, or sold counterfeit products, killing the ratings.
If you are going to invest the time, and money to launch a product, private label, or totally new, you have to be willing to defend your brand. You also have to be able to defend it. The two are not the same.
If you have not set up your brand to be defended, you may well want to defend it, but you are bringing a knife to a gun fight. Or to a nuclear war. It is likely a lost cause.
I am not a PL, or Brand Registry expert, hopefully some will chime in, but a barrier to entry is essential to protecting your investment.
Offense IS the best defense.
There is a huge gap between what is urgent and what is important. Too often the urgent stuff gets in the way of the important stuff, and not taking care of the important stuff will hurt you more than not taking care of the urgent.
Lame Amazon example:
- Important: customer support.
- Urgent: finding boxes for that FBA shipment.
Do not Source Branded Products from Alibaba
Let's face it, most everything is made in China, so buying "Made in China" is not the issue.
The main issue with sourcing branded products from Alibaba is counterfeiting; outright copies, or extra shift production, it is the fast track to getting your account suspended.
None of our repeat clients source branded products from Alibaba; instead they do it through Online Arbitrage (OA), Retail Arbitrage (RA), or Wholesale (WS).
I listened to a number of podcasts on keyword selection in Amazon listing, and I can condense them into a single phrase:
Keyword Stuffing Hurts Your Listings
It used to be that you could cram 1000 characters in your listings back end, but that number has been reduced to 250. Google severely penalizes sites that keyword stuff, and Amazon is doing the same with listings.
If you control a listing, pick wisely, make few changes, observe the results, repeat.
Jeff Bezos has Amazon, and the Washington Post; we did not want to be left behind, so we are launching the FBA Prep Times.
We will focus on Amazon FBA, with some FBM, some general ecommerce, some sourcing, some marketing/SEO, and whatever seems pertinent at the time.
We will keep it brief, and clean. No politics, religion, bad language, or other buzz kills.
Enjoy (maybe), and comment (hopefully).