The Seller Abroad

Using FBA to sell on Amazon from abroad… can't be that hard!

Author: The Seller Abroad (Page 2 of 2)

Product Sourcing

Sourcing a product can be quite tricky. There are numerous options; websites such as Alibaba and Aliexpress and local US wholesalers. I found it quite tough to get any decent information on local wholesalers so I relied on the likes of Alibaba to source from China. The pros of going down this path was that pricing was cheap, MOQ was negotiable and there were many alternative suppliers. Cons were the complicated logistics, language barrier causing miscommunication (this wasn’t too bad in my experience), communication was slow.

Couple of tips going down this path; always negotiate price and never go with the first offer, make the manufacturer work hard to win your order (negotiate required changes to product and branding options). In my limited experience, I felt most comfortable dealing with a manufacturer that would make an effort and accommodate changes. Perhaps the most critical tip is to always get a sample and ensure you are happy with it, because after all, this first product is going to set the scene for your brand. First impressions count.

Product Sourcing

Now here’s the funny part. I was too reckless and rushed to listen to my own advice and went ahead and placed an order without inspecting a sample! :O *extreme shock face*. I went with my gut feel, judging the manufacturer’s quality by communication, price point (I did not go for the cheapest manufacturer) and effort to make a custom product/packaging. This was a massive risk and thinking back on it, I am so very lucky it paid off (so far anyways).

I waited till I sourced a product prior to signing up to a seller account with Amazon to avoid paying the $40 USD monthly fee during my 1.5 months of back and forth with manufacturers. Also, I only sourced 100 units in my first order to test the market and make sure I had a winner. Now I’m in the process of getting a further 300 units ordered. As you may have guessed, I’m dealing with a high priced low turn-over product. Order sizes will vary depending on the product you have decided to go for.

Once your product is sourced and you are waiting for it to be manufactured (which can take about a month), stay productive! Take this time to work on your product listing and marketing.

Post Highlights for sourcing product

  • Take your time and contact several potential suppliers
  • Do not take the first price or MOQ, this is usually negotiable
  • Use convenient websites such as Alibaba and Aliexpress
  • Always inspect a sample product
  • Wait till after you source a product you are happy with before creating an Amazon seller account to avoid unnecessary fees

It’s All About The Brand

If my research and business studies have told me anything, it is that building a brand is very difficult and you have to play the long game. And like many things that are difficult to achieve, establishing a brand has tremendous upside. A brand brings increased customer awareness and positive associations that can be stretched across several SKUs. To give you an idea of how powerful this can be, pick a well-known brand…. Say BMW. Now picture how easy it is for BMW to launch a new car. As soon as new car is launched, it automatically inherits the BMW quality and performance regardless of actual features. See what I mean? Now obviously building a brand like BMW is a very farfetched example but it does a good job of highlighting the benefits behind building a brand albeit an extreme case. Check out the image below with a bunch of brands on it. I bet you recognise these brands so well, you even know the ones where the image is half cut off!

brand_3

My approach to branding was to create one based on my first product. My logic was that once I did all the hard work finding a product, I had to leverage that with a brand that can then be transferred across to new SKUs in the broader market (when I’m ready to roll them out). On a superficial level, branding can be done in several ways: logo, packaging, pamphlet inserts, personalised cards with each order, etc. Let your imagination go wild on this one. I myself stuck to a logo, a name and a pamphlet insert for starters to get the product going quickly and on a budget. I created both of these on Word and went with a very simple design. You can of course get a lot more creative if you have the designer’s touch. The other option, often recommended by my mentors, is to use a graphics company such as 99designs. This company gets graphic designers from around the world to compete for your business. You can check this service out here. The good thing is you do end up with some pretty awesome logos and inserts through these guys.

Now here’s the hard part, building a brand means you have to stick to your brand message for a very long time, whether it be premium, value for money or intimate customer experience. Take my word that you will be tested time and time again to compromise your brand message to try turn an immediate profit or due to the effort required. In my short tenure selling, I’ve already second guessed myself a few times.

So in short, build a brand, it will be worth it. It will take a long time so stick to your brand message for as long as it takes to catch on. Easy right…..

Finding a Product that is Niche Enough

How to Find a Niche Market Product

I’m going to briefly take you through what you should consider when identifying a niche market product to sell on Amazon in the USA.

Now I’m not going to harp on about this part too much as there is plenty of information out there already. I recommend listening to podcasts such as Smart Passive Income, Freedom Fastlane or The Amazing Seller. These podcasts are great for giving your product hunt some real direction. Finding the correct or almost correct product is a long and tedious process and it is super important to take your time with this. I decided to do this the budget way without using any available research tools. It took me about 2 months of research to find a product I was happy with. The key for me was that the product had to meet the following conditions:

  • It was a product I wanted or would want
  • At least 3 of the top 5 products must have less than 500 reviews, preferable less than 200 (Indicates there is room in the market for new entrants)
  • Product must have a gross margin of over $20. Gross margin = Sell price – Cost of goods sold (Indicates the product is profitable)
  • At least 2 of the top 5 products must have a Best Seller Ranking (BSR) number higher than 8,000 (Indicates that the market is not dominated by big sellers)
  • At least 3 or 4 of the top 5 products have a 4 or 4.5 star rating (Indicates that there is room to improve on existing products)
  • There is a gap in the market (the niche market I picked had the super-premium and the low cost offering with no value for money option in between)

There are a couple of other points that some recommend. I know a few people say to stick to a small product. I didn’t listen to this and went through a lot of pain with the logistics side of things. That said, picking a larger product does mean it is less likely other private label sellers will go to the trouble of entering that niche market. I consider this a barrier to entry.

NicheI stumbled on my product after a couple of months of research because I was in the market for one myself and couldn’t find a product that met all my requirements. I strongly recommend picking a product that is differentiated from current offerings in some way so that you can charge a premium for it.

All that said, do your research, take your time and make your own decisions as to what dictates your product choice. Like I mentioned earlier, there is a wealth of information out there and there is no full proof right and wrong way. A little bit of luck is always required however adequate research will increase your chances of success.

Research Tools

You can do the research for a niche product the manual way, scouring through Amazon and running numbers through excel… kind like I did.  Alternatively you can use one of the few good tools out there such as AmaSuite 4.0 which is a paid product that can compress your research time from months to a week. This tool is great at quickly crunching important statistics from Amazon to identify good niche products. There is also a bunch of helpful tutorials and tips for included in the product for selling through FBA. You can check this software out here. Again, weigh up your time’s value and make your own decision on which way to go (clearly I didn’t value my time much). I can’t speak from direct experience, however the guys I learned from rave on about this software!

Crunch the Numbers

Another quick tip (this is the engineer in me); run a few simple Excel models using some quick pricing from a manufacturer, freight to a FBA warehouse, marketing and expected sell price to ensure you will make a good enough profit to justify the investment. Don’t forget to account for any applicable taxes, additional Amazon charges for premium features such as premium placement (where you get to pick your FBA warehouse), a healthy product return rate and so forth. Trust me, you will be sick of Excel spread sheets when you are done with this!

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