“There are ways to drive traffic with the content and there are ways to drive conversion rate depending on how the content is written.”- Jamin [35:07]
“If you want to make sure you’re prime, that can be a big breakthrough since prime badging is so critical to the ranking algorithm.”– Jamin [38:14]
“If you can manufacture or source products at a lower cost than anyone else, you will win.”- Jamin [31:28]
Understanding How to Sell and Succeed on Amazon with Jamin Arvig
What does your performance on Amazon and other marketplaces look like? It is crucial for your business to be on the best fulfillment methods through a well-thought-out strategy for you to be successful in selling your products online.
In this episode of the Page One Podcast, Luke Peters speaks with Jamin Arvig, a thought leader in the world of Amazon who has spoken on Amazon topics at many industry conferences. He is the chairman of the YPO Amazon Group and is one of four co-founders of OnlineMerchantsGuild.com, which is a trade association that represents sellers and vendors on Amazon. He’s the co-founder of AI commerce which powers profitable growth for manufacturers brands, large resellers that are trying to own the online channel before they’re disrupted. Jamin also founded US Waters Filters, the leading online source for water and air filtration products.
Listen in to hear as Jamin explains the different sales options that exist in marketplaces and their distinct shipping options. You will also learn how the Amazon algorithm works and the efforts you can make to drive traffic towards your products.
- The benefits of using FBM selling and shipping options over Amazon.
- The importance of getting the Amazon prime badge to help boost your traffic and sales as a 1P vendor.
- The benefits of establishing and improving the product, marketing, and fulfilling differentiators to keep winning on Amazon.
- [2:11] Jamin describes the capabilities he provides to succeed on marketplaces like Amazon in the US and abroad.
- [4:19] Understanding the difference between 1P and 3P and FBA and FBM and how they all play together in marketplaces.
- [9:15] Why Amazon is the best option for selling and shipping small and light products considering their next day service.
- [14:58] Factors to consider when choosing either 1P and or 3P selling and shipping options.
- [19:47] How the Amazon system works to drive traffic to 1P and 3P vendors.
- [25:05] Why Amazon isn’t likely to give ground in the next five years.
- [29:11] The Amazon ‘recipe’ to success through smart cost lowering and advertising.
- [33:39] Jamin explains important marketing differentiators that you can apply to drive traffic to your product on Amazon.
- [36:35] The challenges of having a prime badge that makes a seller fulfilled prime account beneficial.
Announcer: Welcome to the Page 1 Podcast. A podcast featuring a variety of guests and thought leaders, on topics ranging from digital marketing, sales channel strategies, influencer marketing, best in class product launches and all the details about how to accelerate sales. Now, here’s your host Luke Peters.
Luke Peters: Thanks for joining us on the Page 1 Podcast. I’m your host Luke Peters, CEO of NewAir Appliances and Retail Band, Digital Strategy Agency. This episode is sponsored by Retail Band, where we can give business owners a blueprint on how to grow their digital sales, either direct to consumer or via channels like Home Depot, Wayfair, Walmart and many other growing retailers. To learn more, find me on LinkedIn or email me at email@example.com. In this episode, you’re going to learn from Jamin Arvig on how to best decide on an Amazon strategy. How do you know which fulfillment methods are best for your business?
Luke Peters: This is going to be an Amazon deep dive. Jamin is a thought leader in the world, of Amazon and he has spoken on Amazon topics at many industry conferences, in addition to being the Chairman of the YPO Amazon group. Jamin is one of four co-founders of the onlinemerchantsguild.com, which is a trade association that represents sellers and vendors on Amazon.
Luke Peters: Jamin is the co-founder of AiCommerce which powers profitable growth for manufacturers, brands, large resellers, that are trying to own the online channel before they’re disrupted and Jamin also founded US Water Filters, the leading online source for water and air filtration products. Jamin, welcome to the Page 1 Podcast.
Jamin Arvig: Thanks Luke.
Luke Peters: Awesome. So great to have you here. And Jamin, just so the audience learns more about you, just describe a little bit more about what you do. I talked about your companies right there in the intro, but just maybe, what you guys do with Amazon, would be helpful for the audience to get that baseline?
Jamin Arvig: Sure. So AiCommerce provides a lot of different capabilities to succeed on marketplaces. That includes Amazon, it also includes Walmart, it also includes other market places in the US, as well as abroad. And those capabilities can include things like strategy, advertising, technology, fulfillment and other capabilities that people really need to be able to find their differentiators and then put their differentiators to use, so they can win on marketplaces.
Luke Peters: Okay, perfect. And we’re going to dive into some of these questions and just a little bit more about your company, just so the audience understands scale, maybe how many employees and maybe how many square feet of warehouse you guys have?
Jamin Arvig: Sure. We’ve got 100 employees, well, we’ve got a lot of contractors too, that help on different, specialized areas. Our first warehouse was in Minnesota and that’s 35,000 square feet. We’ve got a secondary warehouse and we’re opening up more space on the East Coast and the West Coast, right now.
Luke Peters: Cool. So just for the audience, I know a lot of us know about Amazon. We’re going to go a little bit deeper and really talk about, maybe questions around why you choose 1P over 3P? I mean, beyond the obvious, why you choose one shipping method over another? Maybe how to use both options of 1P and 3P and just depending on your product assortment? So we’re going to go deep into different Amazon strategies and fulfillment strategies and why don’t we just jump right in to this one? So let’s start out with fulfillment options for companies? Most companies are using either FBA like I said, or a 1P relationship and for the audience, if you’re shipping something small, FBA may be the go to.
Luke Peters: And for my company NewAir, we’re shipping larger things, so 1P does make a lot of sense and 1P meaning, you’re working directly with an Amazon buyer, they’re buying your product. But what other options are there Jamin, that companies may not think of and in addition, why would they use those other options?
Jamin Arvig: Sure. It may make sense, and I’ll get that, but it may make sense for me, first to just clarify a few things, for those who are listening, there might be some confusion. So a lot of people get confused between 1P and 3P and FBA and FBM and how do these thing play together? So they are very different things. So 1P is, I think you mentioned this Luke, is when you’re selling first-party, actually, Amazon is selling first-party. They are the retailer. We, as a product owning company, would be selling to Amazon, then they would be selling to the end-user. They use a program called vendor central and that’s how the vendor, in that case the product company, they’re able to push their product. All of those products are owned by Amazon and so they are owned and held in the Amazon warehouse system, so that’s 1P.
Jamin Arvig: Then when we’re talking about 3P, that’s when Amazon sells as a third-party. And we, as a product seller are the actual retailer, actually selling through Amazon. And in that case, there are different options, where it doesn’t have to ship through Amazon’s warehouse. If it does ship through Amazon’s warehouse, it’s considered FBA, fulfilled by Amazon. If it’s not shipped through Amazon’s warehouse, it’s considered, there are other options, but a particular one that you mentioned, FBM, fulfilled by merchant. So in that case, it’s shipping through the sellers warehouse. So those are different options.
Jamin Arvig: Of course, if you’re working with Amazon in 1P, typically you are selling the product to Amazon and their owning it and they ship it themselves. There are ways where you can drop ship as well, even if you’re doing 1P through vendor central and that can be helpful, if Amazon’s not picking up some of your products, for example, if you’ve got a long-tail set of products and they don’t want to invest in it but you think you can sell some more. And then, in the product category, you can ship them to your warehouse in time. So that can be helpful and it can open up to new opportunities. But from Amazon’s perspective, they get to invest less in inventory, so it can be a win-win.
Luke Peters: Yeah.
Jamin Arvig: For third-party, there’s FBM, that you were talking about. So FBA, shipping to their warehouse, is a go to standard option but a lot of times, like you’re talking about, with a bigger, heavier product, sometimes other options work better. So it may make sense to use FBM or other options. So you asked, what other options there are? Well, there’s what we just described, 1P options or vendor drop ship, if applicable.
Jamin Arvig: But for 3P, you can do FBA or FBM or there’s something called, Seller Fulfilled Prime which is something that a lot of people don’t know about but it’s like FBM, in the sense that you are, as the seller, shipping the products from your own warehouse directly to the consumer, but it is different in the sense, that you actually get to have the Prime badge on your product listing. Now that can be very useful in certain situations, so that’s what Seller Fulfilled Prime is.
Jamin Arvig: There’s another option that has been available for very select sellers and vendors called, FBA Onsite. That was and is, a classification that gives the seller an actual node on Amazon’s fulfillment network. So if you’re an FBA Onsite seller, your warehouse is actually a node of the FBA network. So that can be interesting as well. And then lastly, of course, there’s 3PL. You can use a third-party logistics firm that can ship whatever products you have and not use your own warehouse and not use Amazon’s warehouse. So that’s the lay of the land.
Luke Peters: Yeah. And there’s a lot in there and I’m not going to regurgitate, but I guess, if you’re listening, you can rewind that part. If you know it all, that’s great and if you don’t, you can rewind. But there’s basically, breaks it like you said, it breaks it down on the two parts, are you selling third-party or are you selling directly to Amazon? We call it vendor central, seller central or 1P, 3P. And then from each of those methods or selling options, you’re going to have a slightly different shipping options. But Jamin covered it there.
Luke Peters: But okay, let me ask, just we’ll go rapid fire here. But quickly, why is there a scenario where, if a company is selling small stuff, okay, let’s talk about stuff that’s going to be able to fit in a USPS package, maybe an envelope, maybe a little bigger sometimes, a really small 6 x 6 x 4 box, we’re talking small stuff, overall. Is there any advantage, where they would not want to do a FBA shipping method? Like the onsite, maybe it wouldn’t be onsite but it’d be seller fulfilled Prime or something like that?
Jamin Arvig: I think you framed the question really well, Luke, which is, what is advantage? Where there’s an advantage? and that’s the whole reason for this topic that you selected, which is fulfillment methods that can drive differentiators or advantages. There’s lots of ways we can provide capabilities to people, but it’s all about providing advantages.
Jamin Arvig: So one of them is through helping pick and manage the right fulfillment method. In this case, to answer your question more directly, there are examples. One of them would be, for control. This is the obvious, as I think you were alluding to earlier. The obvious reason why someone would want to ship it out of their own warehouse via FBM. You have much more control. They can know exactly when things are going out.
Jamin Arvig: Now, Amazon’s warehousing system is quite good of course, but they do have gaps and they do make a lot of mistakes. If it’s ultra, ultra important to your business, that you know exactly where a product is, that’s one benefit. It can be more cost effective at times too, Luke. So if you’re on filler central and you’ve got a good, efficient warehouse, and you’ve got a certain method of shipping your products, and you’re very effective at that, you can often times ship it, way more cost effectively than Amazon.
Jamin Arvig: Now they at Amazon, have much lower shipping fees. So you need to run the analysis, is it actually, are your savings on being more cost effective, shipping it, outweighing the cost of the shipping increase, when you’re shipping it? But sometimes, that comes into play. There are of course, fewer fees on some products, depending on the situation, there could seasonality issues where you get charged so much in fees for storage or overcharges, extra charges for storage if things are there too long in Amazon’s warehouse, where it does make more sense to stay with products in your own warehouse. And you’re asking about small and light, Amazon is very good there.
Luke Peters: They’re good and thing is, I mean, you gave a couple good examples, so control, you could save on costs, there could be a reason you need to track the orders more closely, where they are. But it’s hard to replicate their next day service, right?
Jamin Arvig: Yeah.
Luke Peters: So even if a provider is a 3PL and even if you get a Prime badge, generally, you’re going to have two day delivery, but the nice thing, if customers are ordering, I’m guessing, you’re going to get a higher conversion rate when you’re FBA, because if you’re getting that next day delivery, I’m guessing, you’re going to get a slightly higher conversion rate? Is that something that A, is that true and B, is that something that can be tracked any way, on Amazon?
Jamin Arvig: It is true. People with the Prime badge or next day, of course, do have a conversion rate increase, so it definitely does that. It’s hard to track a lot of these things with precision at Amazon, of course, because their data is limited and they closely guard it. But there’s a lot of antidotal evidence of this. And I think, you can also consider a scenario, depending on your situation, there might be no competitors selling your type of product, next day or two day through Prime. If you really have an interesting, unique product, and there isn’t a knock-off or a product that is essentially the same, you have more flexibility. You can sell things without the Prime badge sometimes.
Jamin Arvig: It was interesting, this last year. Luke, I noticed, I’m sure everyone did, that the expectation for shipping time was, it was getting towards two day and then even one day, at the early part of this year, 2020. Then when COVID hit, people then, are shifting to again, being okay with a week or two weeks, or a month, or even more sometimes, even on Prime products. So really it’s about, what is the expectation of the customer and what are their alternatives? So that’s one more example for you.
Luke Peters: Yeah. Okay. So we’re trying to get examples here. So we covered the small product one and again, it looks like FBA is hard to beat, but there could be options to go elsewhere. Now, let’s go with the bigger box. Let’s call it, the 25 to 100 pound weight, or DIM, my company falls in that category, a lot of other companies do. I don’t want to turn this into a complex math equation Jamin, because I’m sure there are factors on that. But let me just set the ground here. So with a larger product, when you’re working directly with Amazon, you obviously lose control but the nice part is, they’re buying inventory, they’re owning your inventory and you’re going to lose some price control, so that’s a major thing you’re giving up, because they’re going to discount that to whatever they need to discount it.
Jamin Arvig: And you’re talking 1P, Luke, right?
Luke Peters: We’re talking 1P.
Jamin Arvig: Yeah, yeah.
Luke Peters: So this is for anybody listening, who’s got a little bit of a larger product, that doesn’t always fit into FBA. It seems like the requirements have gotten tighter and smaller for FBA? So this is a lot of people. Now you want to look at, okay, should you stick with the 1P or do you want to go to 3P? What are the main equations you’ve got to do, to figure out if that 3P is going to work and is it as cost effective or is it going to end up costing you more in the end? Because I think you’ve got to pay at least 15% to Amazon on your seller central side-
Jamin Arvig: Yeah.
Luke Peters: … depending on your category, then you’ve got to pay for the shipping. And I don’t know if there’s anything that you’ve got to pay for? What do look at, if you want to convert from a 1P to a 3P, what are the different things that you’ve got to take into account?
Jamin Arvig: Yeah mathematically, you’ve covered some of it. There’s the 15% commission to Amazon, typically for most products, at most prices but that’s the most standard one. There’s the shipping costs, storage costs, fulfillment costs that you’re paying Amazon, any surcharges, they get you, they nickel and dime you a lot on fees, with FBA. So there’s a lot that you end up paying Amazon, depending on the category and product attributes, you could be paying, not just 15% but then it increases really, to 30%, between 30% and 50%, maybe more, in a lot of instances. So it is a real number.
Jamin Arvig: So some people look at 3P, if they’re on 1P currently, and they say, “Wow, that price is way better. Let’s just move over there.” But there are these expenses that you talk about, to keep people weary. Now typically, it does still create more margin on the 3P side, that is more common than not.
Luke Peters: Why is that though? Where are you getting the extra margin versus the 1P side?
Jamin Arvig: Well, if you’re selling a refrigerator or a water filter, or whatever it is, to Amazon, the price might be $80 to them then they’re marking it up and selling it for whatever they’re selling it for, maybe $150. So if you’re selling directly for $150, to the person buying on Amazon, then you will have that extra margin to work with.
Luke Peters: Yep, yep. Makes sense. Then anything else? So we’re talking about bigger products.
Jamin Arvig: You bring up math and math is good and we talked about that. I mean, the math has to work, so you need a special analysis for any of these situations. But there a lot more than math too, for this. There is strategy and branding and long-term control issue, there’s lots that goes into this equation. So there’s a lot of people that just cannot stand being on 1P because they can’t control the content, as much as they want. They can’t control the pricing at all. It’s got a lot of channel conflict or channel considerations, anyway. And it can’t afford to have a price that they can’t control, on Amazon.
Jamin Arvig: So in some cases, it’s just impossible for a company to do 1P, because of their company vision or strategy or brand guidelines. So there’s branding issues that go into this too. And then, there’s also things to think about, as to, where is Amazon going next? Can we skate to where the puck is going instead of where it was? What is their 1P program and 3P program going to look like in five years from now? And as I’m sure a lot of people remember reading about or experiencing in a difficulty way, a year and a half ago, there was a lot challenge on this, with a lot of people missing orders for a period of time, from 1P. And there was a lot of controversy and a lot of people thought Amazon was shutting down 1P for anybody under 5 million or 10 million or for some arbitrary reason.
Jamin Arvig: And so there wasn’t maybe, as much controversy as a lot of people expected there really was, behind the scene, but the truth is, Amazon would like to have 1P for certain, strategic skews. For a lot of skews that are not strategic to them, to have on 1P, they prefer to have them on 3P. And 3P is growing faster than 1P for them and they don’t mind that, it’s highly, highly profitable, with variable revenue and variable expenses in a big part, versus them owning inventory. So I think we need to also think about, just long-term, is our product going to be one, is our brand going to be one, that Amazon wants to have on 1P in two years? If not, we should think about being decisive and strongly considering 3P.
Luke Peters: Yeah, that’s a huge thing to bring up. So it’s not just math, it’s not just dollars and cents, but there’s that strategy. What do you think about this Jamin, so a lot of people here, will have a 1P, vendor central, direct connection with their buyer, they’ve got a good relationship. By the way, it’s hard to walk away from those because Amazon has some internal rules that they’ll bring up about that. Do you think, because I do get the feeling that, if you are strong 1P and they’re stocking your product, that there’s something else in the algorithm that maybe, helps you sell more? Maybe it ranks better if they’ve got a bunch of inventory or maybe the buyer has some levers they can pull. What’s your take on that, versus, if you were 3P? So in other words, if you have a 1P, do you risk losing some sales velocity potentially, if you lose that great relationship you might have?
Jamin Arvig: That’s a good question. I guess you opened up a lot of different issues there. Starting with the buyer issue. Depending on the category, you’ve got certain buyers or account managers that are available and you’ve got different levels of those, within Amazon and they’re based typically, on how much revenue you have with Amazon. So of course, if you do a lot more on Amazon, you get more attention and you can have these vendor account managers helping you. So if you’ve got that in your corner, it can help in a big way.
Jamin Arvig: However, as I’m sure you know, Amazon has a lot of turnover with employees moving around quickly and these buyers are very, very busy, extremely busy. They have way more on their plate than they can really, effectively manage and so they need to be super smart and carefully prioritize how they spend their time. And that very well could mean, they never look at your brand or they get on a call once in a while with you, and then they never think of your brand again.
Jamin Arvig: Then you get a new buyer, soon after that, and you’ve got to develop a relationship and history, and all these things again. So it’s not as much of a given, as one might think. I think a lot of brands, we hear this a lot actually, people come to us and say, “Hey, Amazon reached out to us, they want to sell our brand.” And usually, for that to be flattering, and think, “Wow, that’s great. Amazon wants me. They came to me, I didn’t go to them.” But they’re pretty good at math, as you know, it doesn’t mean that they’re going to be assigning huge account representatives to you, and advocating for you over all of your competitors on Amazon. So it’s just something to watch for. It’s just the reality of how the system works. So that’s a little about buyers.
Jamin Arvig: But in terms of whether there’s a bump on Amazon, if you’re 1P versus 3P, there’s a lot of controversy there, of course. And whether there truly is a Chinese wall between 1P and 3P at Amazon, and they try to do a good job with that at Amazon. I think they’ve made a few mistakes that they’ve owned up to, where that Chinese wall has had some leakage, I guess, between that, where there have been things like that, what you’re talking about, but it’s pretty hard to prove that.
Jamin Arvig: But Prime badge, there’s a huge, huge known, proven direct correlation to the rankings and the Prime badge. If you’re selling 1P and you’ve got a Prime badge, you should definitely do better but it could be, just because you’ve got a Prime badge. So it’s one thing to watch out for. There are example where, Luke, where Amazon is going in and helping 1P considerable, and I don’t think it’s always a Chinese wall issue. I think, they chose from time to time, what categories are important to them and how they’re going to spend.
Jamin Arvig: And we track this sometimes, where it shows, they’re spending on Google Ads, for example, sky rockets in a category, for a period of time. And then it falls later on and then it sky rockets again. So when they’re doing this and trying to drive traffic to a product they are selling or an Amazon Basics product for example, then yeah, it does help those products more than a 3P product, for example.
Luke Peters: Great. Okay, cool. So for the audience, we ran through a bunch of different options here, with 1P, 3P, vendor central, seller central, fulfillment methods, and the main thing I would leave everybody with is, the key point that Jamin talked about there was, obviously, we all know this, you’ve got to have that Prime badge and there are ways to get that, with 3PLs who can offer that service and have a distributed warehouse network, so you’re not stuck in 1P only. If your products are big, you can find this other option but there’s complications along the way.
Luke Peters: So what we want to do is, we’re going to move into another area where I’m going to challenge Jamin and he’s going to put out his Amazon recipe. So this is about growing your sales on Amazon. Before I go there though, Jamin, looking at the online sales and just thinking of a pie chart and looking where Amazon is, they’ve got a huge slice, I don’t know, if they’re 50% now, of online sales? They’re getting huge and others are growing too. You hear about great success stories with other retailers, but they don’t seem to be growing as strong as Amazon.
Luke Peters: Just before we move on to the next questions, do you have a prediction or a forecast on where Amazon’s going to be in 5 or 10 years? Are they going to have even a bigger slice of this, or is a competitor going to gain enough ground, like a Walmart, to stop Amazon from taking a bigger share of the pie?
Jamin Arvig: Well, I think it’s good for the consumer and then, probably good for Amazon too, in a way, for there to be more competition. But Amazon just has such an enormous advantage. I see it continuing Luke, I think Amazon’s done a tremendous job. You’ve probably been tracking Amazon’s GMV, compared to Walmart’s revenue-
Luke Peters: Yep.
Jamin Arvig: … for years, as I have. And they’re finally approaching it. So they’re going to be bigger growth in GMV, versus Walmart, in revenue. And when you look at the others out there, I mean, they’re finally making some strong effort, but I think as Buffett put it, “Never give Jeff Bezos as 10 year head start.”
Luke Peters: That’s true. Yep.
Jamin Arvig: And it’s so curious, to a lot of us watching, why that was the case? Walmart had these tremendous assets and all the retail stores and locations that can be distribution centers. They’ve got huge differentiators that they could have leveraged against Amazon, at any time. You’ve got Google that has all the traffic and they could have made a Google Shop, Google Store, Google Express and they dabbled with some things, but they could have required a log-in, they could have required certain things, that could have shifted the model. So it’s very curious, but we are where we are and it seems unlikely that Amazon’s going to give up ground, from what I can tell, in the next 5 years.
Luke Peters: Yeah. It’s such an interesting conversation and I would agree with you. You just look where they are in technology and you look at how they are compared to other retailers that are catching up. There’s a couple of really, really good one, Wayfair and Home Depot and stuff but still, Amazon, I think it’s a funny quote, “Never give Jeff Bezos a 10 year lead.” And that’s literally, what’s happened. I remember, I was at a dinner, I think it was with an agency partner, this is probably 10 years ago, somewhere in that neighborhood.
Luke Peters: Might’ve been at an internet retailer in Chicago, many years ago and I was at this dinner and I think the purpose was, to get everybody in a room, so investors could ask questions about Amazon, something like that. And this investor’s like, “Well, they don’t make any money. Why would I invest in them?” “Well, who else are you going to invest in, online?” At the time.
Jamin Arvig: Yep.
Luke Peters: And I wish I would have kept it all in, right at that point, it’s too easy to buy and sell. But I think they’re probably 70 bucks or something. It’s a crazy story.
Jamin Arvig: That would have been okay, that would have been okay.
Luke Peters: Yeah, that would have worked out better. All right. Cool. So let’s jump into this question. All right. So let me set the stage for everybody listening here. So what we’re going to talk about is, how you can grow on Amazon, but it’s going to be really focused into one main question. And one thing I was sharing with Jamin pre-call, is what can be frustrating, with working with other Amazon experts, is that, how to grow on Amazon, always boils down to two things. Spend more money on EMS or whatever they’re calling it now, so spend more money on advertising to get a better ranking, and lower your price or promo somehow, to get more sales and that’s going to drive your velocity and that’s going to drive your ranking, is a major part of their algorithm.
Luke Peters: But not everybody wants to, or can, continue to spend even more money on those things and lose money on the sale price because then your margins erode. And some people will say, “Okay. Well, do it for a month, get your ranking and then back off.” And I think that could be a good strategy, so okay, you’re not going to make a lot of profit, say, for a certain period of time and then you can back off and be more profitable. But I guess, the challenge here for Jamin and hopefully, the audience finds this helpful, is what are specific actions, brands can take to sell more and rank better, that don’t involve increasing ad spend and lowering prices? So we can call this the Amazon recipe. So with that long introduction, I’ll hand it to you.
Jamin Arvig: Well, I wasn’t prepared for this but it’s a great question and I’ll probably give a very frustrating answer, which is-
Luke Peters: Oh, no.
Jamin Arvig: … we all look for this silver bullet. Where’s that button in seller central or vendor central, we can push and get our product to the top? And it’s really, a set of lots and lots of little things that can get us there and even with those, we have to first look at what we’re selling. So when I speak on the secrets of success on Amazon and the keys to success, I always start with the product and that has nothing to do with the marketing of anything. But if we don’t have a good product, we can’t even begin.
Jamin Arvig: Some people try 10 different things and hire and fire agencies and they get so frustrated because they can’t sell the product, but maybe people don’t want the product. So the product needs to be good, of course, and be worthy of its use and there needs to be a market for it. So those types of things can be evaluated through strategy. Analytics and understanding, is there a market for it, for this products, versus a different product? Where should we spend our time? Should we cut this product and create a new product? What are customers actually looking for? So I think finding the right product is step one.
Jamin Arvig: Then, after you’ve got a product, where there is really, some differentiator that people care about, there’s a value there, I should say, that people want and there’s a market for it. You need to make sure there’s a differentiator. So a few differentiator examples are, IP. If you’ve got some patent or protected thing that no one else has, that’s great, that’s going to help. Of course, there’s issues with enforcing that anywhere in the world, especially on marketplaces, it can help a great deal.
Jamin Arvig: Another example is brand. If you’ve got a lot of brand horse power, whether it’s your band or a licensed brand or an exclusive representation deal you have for a brand, that can be great too. Now we’ve got some more leverage. Another big thing is, a differentiator in supply chain and having the best cost. A lot of people talk about best price, but it’s really the cost, where there’s a differentiator. So if you can source or manufacture a product at a lower cost than anyone else, you will win, unless you’ve got very long-term, unintelligent competitors or folks that really can afford to have a loss meter for some business model reason that you don’t know about.
Jamin Arvig: But typically, on Amazon, you’re dealing with a one and out type customer, for most products, and if that’s the case, you need to have the lowest cost possible. If you’ve got the lowest cost, now you can reinvest the margin that the other people don’t have, into advertising or into a lower price or discount or coupon, or you can reinvest it into your bank account. So all of these things allow you to win. So having that low cost supply chain, is critical. And Amazon, one of Bezos’ quotes is, “Their margin in my opportunity.” As sellers and vendors, we all have to have that same mindset and figure out how we can operate more efficiently.
Jamin Arvig: We have to lower cost supply chain, every penny helps and efficiency in our operation. How can we tighten that up with technology or automation or streamlining or direct shipping? How can we really make sure that we’re getting all we can, to lower the cost in the supply chain? So I think those differentiators are a big deal.
Luke Peters: So those are great points. Start with a good product, obviously, have a differentiator, supply chain and the differentiators one that I think, everybody can work to improve. But what about marketing efforts? So companies are going in and interviewing agencies or they’re even interviewing staff to bring on for Amazon. Let’s assume all of these things are taken care of and I know, every company can improve on them, but let’s assume, hey, companies have worked hard to find a low cost supplier, et cetera, et cetera. How important are things like doing proper keyword research, certain types of images, different types of descriptions, how important are those things? And besides those things, what other on-page things should people be focused on?
Jamin Arvig: Yeah, they’re critical too. And a lot of these things become table stakes, we need to do all of the above. It’s all about differentiators. So first we were talking about product differentiators and now you’re talking about market differentiators and we can also talk about things like technology differentiators and one of the main topics today, fulfillment differentiators. If you have all these things, you’re really going to be setting yourself up for success.
Jamin Arvig: For marketing differentiators, some of the product things we already talked about, cover this too. You need to make sure you find the right product and the right attributes, to talk about, and once you’ve got that, you need to talk about those attributes in the right way. And you need to understand, who is your audience, from a market perspective? Who is looking for this insertion for their solution to their problem? And what are their characteristics and can we target that demo in certain ways, with Amazon demo programs or retargeting or whatever?
Jamin Arvig: As far as the things on-page, you’re talking about with keyword research and titles, description and images, once you know the customer and the problem you’re solving for, we can get into, what is the verbiage, what are the keywords, what’s the content that we need to appeal to? And how are people searching for this solution? And once we have that, now we can go after the keywords and be really mindful of those things. We can do it in a way that is speaking more to the benefits and the features. So there are ways to drive traffic with the content, by picking the right keywords, for example, and there are ways to drive conversion rate, based on how the content is written.
Jamin Arvig: For example, talking more about benefits, versus features. Now, there’s a lot that can be done on-page and there’s a lot that can be done before that, identify the traffic, and prioritize traffic and then of course, to scale the traffic too. There’s all the different programs that Amazon offers today and hopefully, you can be with an agency or account or whatever it is, that has data access, to a lot of the latest and greatest. It’s always good to be in on the new things, when they get launched. Typically, the cost to use the new programs, is much less than it is the mature programs. So they are a few examples on the marketing side.
Luke Peters: Those are great. And why don’t we finish this up and we can wrap this conversation up by, it would be great to hear, from your perspective, because you talked about so many different things here. But is there a couple of examples that stand out? Maybe two areas, that when you take over customer accounts, you always find these areas are mismanaged or just that there’s a lot of low hanging fruit. Is it on the marketing and image side? Is it on your fulfillment side? Where are you finding the gains on these accounts, typically? I think just hearing those specifics would also be a great way to wrap this up.
Jamin Arvig: Well, there’s a lot. It’s hard to think about just one, but since our topic was more fulfillment related, I can speak to that one as an example. We talked about this very briefly, earlier on. But if people are in certain product categories and have certain attributes, where they can benefit from having a Prime badge, which most anyone can benefit from having a Prime badge. But they’re challenged with all the costs and inefficiencies and delays and issues with FBA, and inventory carrying costs, there a lot that goes into that. So if some of those things are challenges, there’s a lot of times when the seller fulfilled Prime can be a great cure.
Jamin Arvig: And unfortunately, seller fulfilled Prime was paused to submission, close to two years ago, for new entrance to qualify, but if you can get on a seller fulfilled Prime account, and we have these, we do this, then you can have some benefits and you can get a Prime badge, even though you’re not shipping to your own network. And as many people saw this year, there are constraints on Amazon’s FBA network, so there might be delays in getting your product in the door to them.
Jamin Arvig: There might be suspensions for periods of time, in situations like we had this year, there’s a lot of challenges. But as they scale, they’re going to continue to scale very, very quickly, there warehousing system does have constraints and it does break from time to time. So if you want to make sure you’re Prime, that can be a pretty big break here, since Prime badging is so critical to the ranking algorithm.
Luke Peters: Yeah. No, that’s a great example. And fulfillment merchant, if you’re not getting that Prime or maybe you’re getting it locally and not over the whole country, it is a big drop off from always having that Prime badge. So I think bringing up seller fulfilled Prime is a good one and quickly Jamin, just for my knowledge, if a 3PL doesn’t have seller fulfilled Prime, as you mentioned, they stopped giving away those badges a couple years ago. How do they access Prime, is there another Prime service that they utilize? Just so we understand all the acronyms here.
Jamin Arvig: We kind of fell into it, honestly, with seller fulfilled Prime. So we got the certification for seller fulfilled Prime to use for our own selling accounts and for those that were working with. We didn’t know at the time that they were going to be shutting it down or pausing it. It seems like it’s an indefinite suspension, at this point. But we’ve got that and so now, we can use it. So to answer your question, I think more directly, the certification is attached to the account, not to a company. It’s attached to the Amazon account.
Luke Peters: So what are 3PLs offer? Are there other Amazon services or acronyms, where they’re able to ship with a Prime badge or with a 3PL, do you have to ship under their Amazon account, to get that?
Jamin Arvig: Yeah. The vast majority of Amazon 3PLs, do not do this. They do not have the Prime badge. They might say they support it and they have seller fulfilled Prime happening, but the vast majority of them are doing that because someone might’ve had a seller fulfilled Prime account years ago and that account has been managed by the 3PL company. So that is one common instance. But for us, we let people sell under our account and so that’s the way that’s done, logistically.
Luke Peters: Yeah. Well listen, that’s really good insight and a great way to finish off. And quickly, I’d love to… I read a lot of books. You actually, had sent me, a couple of months ago, a great PDF of the top 52 rated business books. I think it’s from your EO group or something like that, or WPO group. But just for the audience, is there a book that stands out? Maybe a book you think is the best business book? And if not, maybe some business leader that you follow?
Jamin Arvig: A couple that I thought, years ago, that I love and I highly recommend to anyone who hasn’t heard of these, one is called Traction.
Luke Peters: Yeah, that’s a great book.
Jamin Arvig: And one is called Scaling Up.
Luke Peters: Yep, both good books.
Jamin Arvig: Real quickly, for those who haven’t heard of these. Traction, it’s about a management operating system called the entrepreneurial operating system, and it just puts into place, a lot of very, very simple processes and systems, you need to run your company. And we all have processes and systems to run our companies, but they really identified and fine tuned a lot of these, very well. Another system, very, very similar is Scaling Up, based on Rockefeller Habits and so these things are so helpful and if companies implement these in all parts of the organization, there’s a huge business evolution and huge business learning from everyone in the organization. I’ve talked to many, many people that use these systems, I don’t think I’ve ever heard regrets. I think I’ve heard a few people say, “That was a game changer for us.” And it has been for our businesses, as well.
Luke Peters: Those are great choices. Yeah, and I highly recommend, if the audience, even if you’ve heard of them, if you haven’t implemented them, they are total game changers. Well listen, a lot of great information. Enjoyed the talk today, Jamin. How can listeners find more about you or AiCommerce?
Jamin Arvig: AiCommerce has a very simple site. You can contact folks to that site, if you want to connect with me, you can email me, the letter J@aicommerce.com. J@aicommerce.com or find me on LinkedIn, Jamin Arvig.
Luke Peters: Awesome. And we’ll have all this in the show notes. And Jamin, really appreciate you again, for joining me on the Page 1 Podcast and hope everybody enjoyed the interview today. Really appreciate your reviews on iTunes, if you guys can leave one there and hope you join us for the next interview.
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