#413 – Omnichannel Online & Retail Strategy Advice For Big Brands with Steve Yates

Listen to this insightful episode as we chat with Steve Yates, the founder of Prime Guidance, who brings a wealth of experience from his time at Dick’s Sporting Goods, Amazon, and Woot. Steve shares valuable strategies for liquidating inventory, controlling the buy box, and optimizing brand presence on major platforms like Amazon, Target, and Walmart. We explore the benefits of using Woot for your inventory liquidations and discuss effective methods for brands to establish and enhance their e-commerce footprint.

In our discussion, we cover the intricacies of e-commerce consultancy and growth strategies, highlighting the options available for liquidating or donating excess inventory and the benefits of each approach. Steve explains how Prime Guidance supports sellers in optimizing their marketplace presence by providing tailored consultancy services, training internal teams, and offering strategic advice. We also touch on the challenges brands face when transitioning to Amazon and the importance of channel control policies and managing their own sales to improve profitability.

Finally, we talk about the complexities of inventory and pricing strategy, discussing the importance of channel control, product serialization, and the Amazon Transparency program. Steve shares insights on maintaining good relationships with retail giants and the significance of product differentiation in retail success. We also explore the emerging e-commerce opportunities on platforms like Walmart.com and TikTok, emphasizing the need for brands to adapt their strategies to each platform’s unique algorithms and consumer expectations. Tune in to learn how to navigate the ever-evolving e-commerce landscape and accelerate your brand’s growth.

In episode 413 of the AM/PM Podcast, Kevin and Steve discuss:

00:00 – Opportunities in E-Commerce for Big Brands
01:38 – Amazon’s Acquisition of Woot.com
06:16 – Retail Strategy of Daily Deal Website
08:26 – E-Commerce Consultancy and Growth Strategy
14:40 – Revenue-Based vs. Fixed Fee Agency Services
17:21 – Navigating Resistance to Amazon Marketplace
20:25 – Strategies for Brand Channel Control
26:11 – Controlling Inventory and Pricing Strategy
28:50 – Dealing With Amazon Resellers
32:54 – Channel Strategy and Marketplace Differentiation
33:59 – Business Strategies for Retail Success
37:35 – Key Price Points for Product Placement
40:40 – Brand Strategy in E-Commerce Marketplaces
45:21 – Branding Strategies for Amazon Success
47:27 – Emerging E-Commerce Opportunities
50:59 – Optimizing Walmart Listings for Success
54:20 – Unscripted Conversations on AM/PM Podcast

Transcript

Kevin King:

Welcome to episode 413 of the AM/PM Podcast. My guest this week is Steve Yates. Steve is the founder of Prime Guidance. He’s been involved in e-commerce for quite some time, first with Dick’s Sporting Goods, then working for Amazon and now out on his own advising brands on how to sell on Amazon. He’s not an agency that’s necessarily doing it for you although they have done a little of that from time to time, temporarily, but mostly guiding people and big brands on why they should be on Amazon, what they need to do to get on Amazon, onto Target, onto Walmart and all the different platforms. Great talk today about everything from liquidating inventory to controlling the buy box, to getting your brand on Amazon if it’s not on Amazon already or if it is on Amazon some of the things you could do. I think you’re going to really enjoy this episode. So this is Steve Yates. Welcome to the AM/PM Podcast. Welcome to the AM PM podcast. Steven Yates how are you doing, man? You’re just right up the road from me.

Steve:

I’m good. Yeah, it’s good to be on with you, Kevin. Your legend and I’m honored to be alongside you. And yeah, it’s funny, I didn’t realize how close we were, Both Texans.

Kevin King:

So what brought you to Dallas originally, then what brought you to Texas?

Steve:

So I was working at Dick’s Sporting Goods and Amazon relocated me to start a sporting goods category for Woot.com, one of their subsidiaries.

Kevin King:

Oh, so you were working for Dick’s and then Amazon hired you for Woo.

Steve:

That’s right.

Kevin King:

Okay, yeah, I remember Woo. Are they still around?

Steve:

They are.

Kevin King:

Yeah, they did like liquidation Was it liquidation type of stuff and like deals special deals a day, kind of thing, right?

Steve:

Yeah, so basically they were the leader in the space back when daily deals were so popular flash sites, that’s where Groupon and everybody else kind of following their footsteps. They had a kind of a cult-like audience of people that would buy products from them based on the confidence that they knew was always the best deal on the internet. So they shopped it. They bought large quantities. You had 24 hours. There was like an impulsiveness You’ve got to buy it before it’s gone and a lot of items would sell out even early in the morning. So people would wake up at midnight, you know, and try and be the first to grab products and stuff. I think over time customers fatigued on that model. But Amazon’s used them for a lot of other things, like you know, liquidating their own products, and Woot is actually one of the sellers on Amazon today doing pretty sizable business also.

Kevin King:

Yeah, I’ve lost. I remember them back in the mid, like 2015, 2016, 2017. Kind of first on the scene. It’s W-O-O. For those of you listening, if you’re wondering what we’re saying, what’s he saying? Wooo or who?

Steve:

W-o-o-t.com? Yeah, w-o-o-t. I haven’t actually checked on late so I wasn’t even sure if they, like you said. You know, Groupon was a hot thing back around then too, and people were selling products, not just, you know, dental certificates and free hamburgers or whatever. But there’s those two guys were competing head to head and a lot of that was the thing. Like now everything is get on TikTok back. Then everything’s like try to get on Groupon or try to get your products on moved if you got some excess inventory.

Steve:

Yeah, it’s still actually a great place for sellers that they have a product that’s just not moving very well, but it’s well reviewed, it’s well liked by customers and for some reason now the competitive landscape may have changed on Amazon and they’re stuck with a bunch of inventory. It’s still a great channel to sell products and because they’re owned by Amazon, there’s actually this process called an IOG inventory flip that Amazon can kind of take possession of that inventory without even having to pull it out of Amazon FBA warehouses. They can basically just buy it from you and keep it in those warehouses.

Kevin King:

So how does it work then? So if someone, if I have some excess inventory I want to get rid of, do I contact Woot? Do I contact my SaaS rep at Amazon? What do I do?

Steve:

Woot. Woot’s the one that you’d want to contact. Basically, they have teams of buyers. I started their sporting goods category sports and outdoors and they have buyers for each different category home goods, electronics, et cetera and you need to reach out to either one of their buyers or through a sales rep group that has a good relationship in there and they can basically pitch the product, say here’s how many quantity we have, here’s the price that I can sell it to you and here’s when the product’s available. Amazon or it’s kind of interesting because you know kind of Amazon.com email address got paid by Amazon. You know Amazon RSU. So I speak of it as you know, we’re just working at Amazon because they have so many different subsidiaries and they’re all really well connected. But you’d reach out to them and they would do an evaluation how is this thing selling If we lowered the price? They have forecast models to know what the sales velocity would be and then they can decide is this a daily deal where I can sell $250,000 of that product in a day and just be done with it, or is it something that’s going to be a part of a flash sale, where they’ll put it as part of a collection and sell it over a period of time, usually a week or two.

Kevin King:

So what kind of discount do I need to be looking at? Is it 10 cents on the dollar kind of thing? Or what should I be looking at to try to move? I got a thousand units sitting at Amazon and I got another 2,500 in my 3PL and I’m done with this thing. You’re saying that they can handle the transfer internally of those thousand. However that works, and then I would just ship in the others. And what kind of deal would I need to be pitching?

Steve:

Or they could even drop ship it. Have you drop ship the remaining balance? So it depends on the velocity and whether they trust you to be able to do all the fulfillment yourself. But that is an option to fulfill it directly or ship it into the same warehouse as you have the inventory, but under different ownership.

Kevin King:

What kind of a discount am I looking at having to do?

Steve:

Yeah, so it depends on the scope. Similar think of woot.com as like a Daily Deal on Amazon. It’s got to be a pretty aggressive discount if it’s a daily deal, like 30% off the everyday price or more, and if it’s a flash sale, a collection of products probably in the 15, 20% off of the lowest price. But we’re not talking just one sales channel. They will look all over the internet and if they find a cheaper price it’s a no-go because they’ve built trust with their customers.

Kevin King:

So are they buying everything outright, or is it just as a consignment deal?

Steve:

They can do both. So if they have a high confidence, they may buy it all outright. If it’s something where they’re just not sure if it’s going to work, they would take it on consignment, essentially, and they can flip the inventory back to you if they don’t sell through it, depending on their level of commitment.

Kevin King:

Are individual people going to Woot and buying these? I’m buying one garlic press, two garlic press. Are these people buying in bulk? They’re buying 10, 15, 20 units to supply their store, or something like that.

Steve:

It’s almost all individual consumers going to the website making individual purchases, but they do have wholesale teams because they will do things like liquidating inventory for their own overstocks and Amazon overstocks to wholesale relationships and those are more of the suppliers or the liquidators that they would have relationships with.

Kevin King:

So that whole industry. I mean, since we’re going down this path, might as well talk about a little bit that whole industry I’m assuming you know a little bit about outside of just Woot liquidation.com. I know here in Austin there’s a warehouse drawing a complete blank. I think it’s Texas Liquidation that I’ve actually sold some of my products to just drove up there, you know, and a big U-Haul truck and dumped a bunch of stuff to them. That’s a whole business that a lot of people don’t even realize exists. A lot of sellers get stuck with stuff and I was just visiting a 3PL company up on the Northeast coast last week and they’re telling me they’ve got $180,000 on their books of unpaid invoices from Amazon sellers who started a business and just, for whatever reason, it didn’t work out and they just abandoned their inventory and didn’t pay their storage bills, didn’t pay their bills. So there’s a series of things they go through before they can do this, but they they end up usually liquidating that stuff out or donating it. If you donate it, sometimes it’s actually worth more than liquidating it because you can donate it at cost and write that off on your taxes versus selling it for 10 cents on the dollar. It might be actually better to donate it. So what else is in that industry that you’re aware of that? Who’s like competing with Woot or what are some other options that when sellers get into a bind, either they’re going to close up shop or they just need to get out of some stuff? What are some other besides Woot? What are some other options that you know about there?

Steve:

So I have had a lot of experience in this category and we’ve actually done consulting for some of the leading liquidators that are we’re talking billion dollar brands that take returns from retail and liquidate them and refurbish product and so forth. There’s a lot of different options but I would say for the average seller that you and I probably come across, contacting Woot is probably the first thing I would consider. There are other smaller competitors and there are some products that may do better on Groupon or other similar sites, but if you’re trying to move a large quantity in a very short amount of time, there’s not much competition against Woot because that’s kind of their. They kind of started the industry and they’re still one of the leaders in the industry. They kind of started the industry and they’re still one of the leaders in the industry. What we do oftentimes see success with is people that are deal oriented affiliate sites like slick deals, so deal news, slick deals. You know those types of websites. Oftentimes it doesn’t really matter if it’s on a particular website. They’re bringing attention to the product, they’re getting a commission for advertising it and they will specify this is the lowest price we’ve seen. Like Deal News anyways, they try and specify this is the lowest price we’ve seen, by $10 or $20 or whatever it is. So the customers kind of said someone else did the research for me. There’s more built in trust. And then you’re paying them a commission to, or an affiliate commission, basically sending the traffic to either Amazon, where Amazon’s paying them the commission, or to your own website, where you may have deeper discounts that you can offer and you would have to have an affiliate relationship with them yourself.

Kevin King:

You mentioned that you some of your clients. So you run a company called Prime Guidance, right? Are your partners in that or what’s the story?

Steve:

No, I founded it back in 2014.

Kevin King:

So while you were still at Woot or you left Woot?

Steve:

Right after yep. So I left Woot and founded Prime Guidance. I had a deep e-commerce experience background. So basically I started in retail in 1992 in sporting goods retail, grew through management, moved into corporate office buying and basically oversaw teams of buyers at a company called GSI Commerce, which was bought out by eBay Enterprise or bought out by eBay and renamed eBay Enterprise, and it was an early stage startup that really took the internet by storm. And when I started there I was employee number 40. And when I left 11 years later, we had 5,000 employees, $3 billion in revenue and we were running websites for businesses that you didn’t realize were run by someone else. So when you went to DickSportingGood.scom, for example, we were the ones behind the scenes running it all and even buying all the product and merchandising it for those websites. And over time the business model evolved and we started just kind of operating the back end for these retailers but not sourcing all the goods for them, and they expanded into companies like Ralph Lauren and other big brands. It was hundreds of brands that we ran and that’s when Dick’s Sporting Goods wanted to kind of take things back over and hired me to lead their e-commerce initiative, did that for a few years, for the second stint at Dick’s prior to Amazon. So I had a really deep understanding of e-commerce and Amazon really gave me that marketplace experience. And I saw that there was a lot of sellers that didn’t realize how much business they were leaving on the table, didn’t realize how much business they were leaving on the table they’re growing 30% riding on Amazon’s coattails, thinking that all is great, high-fiving each other, but the reality is they were under-penetrated, they weren’t growing in market share and so forth. So I saw this kind of behind the scenes and realized that they’re not optimized, they’re not doing all the right advertising tactics and so forth. And I started assessing other agencies that were out there and they were all full service agencies. You know, just let us run it for you, hire a team overseas and do it all. And you know, Amazon kind of taught me that it was all about if you do what’s good for the customer, then their loyalty and satisfaction will follow through. So I thought, well, let’s do something different, let’s not be like everybody else. Let’s create a consultancy where we can actually teach people how to succeed in this space and take on whatever they need us to augment. So instead of, for example, we help them build up their team, create roles and responsibilities and expand their team, teach them, train them one-on-one, not a training course or anything and then if we understood that, hey, they’re lacking in graphics or they’re lacking in advertising, or they’re lacking in operational support or something, we would fill in those gaps, but with a lens of trying to truly fill in the gaps until they could fill in those gaps, but with a lens of trying to truly fill in the gaps until they could fill in those gaps themselves, and truly created a consultancy where we are a partner in their growth, helping them succeed in marketplaces not just Amazon, but Target and Walmart and eBay and others and we help companies expand globally. So that’s what I founded back in 2014. And we’ve never advertised. A lot of people don’t know us, but we’ve helped hundreds of clients, and many that are billion dollar brands, and some of our clients do over a hundred million dollars a year just on Amazon. So we’re kind of running under the radar a little bit.

Kevin King:

Are these mostly when you come in? Are these people that already have some deep pockets, they’re already doing something in other channels and, like I don’t know this whole e-commerce thing? You just kind of what you were doing when you’re doing the websites, you just guide them through that. Are these startup guys that, hey, I want to start up an Amazon business and I don’t know what to do, cause it seems like two different approaches there.

Steve:

So it’s interesting because if you ever talk to someone that runs a full service agency, the first thing they’re going to ask is how much revenue are you doing? Because they’re likely going to charge a percentage of your revenue, and what I wanted to do was not have that tie in, so it didn’t really matter if you’re a startup company or a multi-billion dollar brand. We could help you accelerate your growth. Now you have to be willing to pay a monthly engagement fee with us, and that differs based on the scale. Do you need us to just provide a small level of coaching and support to help you grow your business, or you need us to fill in like we work a lot of private equity firms where they will acquire a portfolio company and say, hey, can you help step in and lead this until we can build a team and get it off the ground, and anything in between. But it’s always monthly engagement fees. We don’t charge a percentage of revenue and hence we can help them understand. How would we think about this business holistically? Should Amazon be where you start? Of course, most of the time that is the case, but it doesn’t end there. What about Target? What about Walmart? What about international growth. What about your retail channels? Are you doing the most? We’ll help them evaluate their product packaging and we’ll help them understand how do I get more customer loyalty and what’s your lifetime value of your customers? Is it worth essentially losing money on Amazon at times because you have a subscription revenue product where you can generate all of this long-term revenue because those customers become loyal and are subscription customers, whether that’s supplements or electronics that have some sort of a subscription tie-in. We help them holistically figure this path out and get the most of all their sales channels, not just Amazon.

Kevin King:

So how many clients are you typically actively engaging at any time or helping out?

Steve:

Yeah, somewhere in the 40-ish range during most periods of time, but it varies. And because we don’t have long-term contracts, many of our clients come back to us again and again, so we help them get off the ground, and then they want to launch a new sales channel or expand international. They come back to us to help them with their next endeavor.

Kevin King:

So you’re basically like their own little private consultant that comes in as needed and gives them that guidance of what they need to do next, or how to set the systems up, or the SOPs or whatever up.

Steve:

Yeah, absolutely so. Most of our clients, though I mean many of our clients they stick with us for years because they were constantly adding value, but in different ways. So we may not, they may not need us to continuously help on Amazon anymore, but they’ll pivot and say we need your help on target or international expansion or what have you. But yes, we’re someone that’s at their disposal all the time. We’re always going to be basically suggesting what we would do if we were running the business for them.

Kevin King:

You’re not actually running it. Your team, unlike a typical agency that’s actually doing the actual work. You’re just saying this is what you need to do and this is who you should be doing it with and the procedure to do it basically.

Steve:

Most of the time, yes. So there are times, like I mentioned those private equity firms. They may make an acquisition and want us to run pretty much what I would call full service light. We’ll do everything except for like customer service and stuff. We don’t employ anyone overseas. It’s all domestic resources and they’re all highly paid experts that are truly experts in their field and can do things 10 times faster than the clients can do themselves a lot of times. So our sweet spot is partnering with them, because they know their customer better than anyone else and they know their product better than anyone else. But they lack the marketplace insight and a lot of times they spin their wheels. What do I do? Am I doing this right? And there’s Amazon launched this new program. How do I get the most of it? Or they make mistakes and they get their account shut down or something else, and we become that partner in crime to say we’re going to get through this together. We’re going to strategize. What’s the path, what’s the roadmap you need to have? What are the team members you need to have? What are the operational components and systems you need to have? What are the software providers you’re partnered with? You know, are you doing all the right things and then we just fill in the gaps, because a lot of times, you know, clients come to us and they’re really good at their marketing like their creative design and their product design and packaging and everything else but they just they lack awareness on keyword research and PPC advertising and DSP advertising and things that are new to them. They’re not yet good at that. So they need us to step in and fill the gaps originally and then teach them along the way, and it may be that we run it for a while and then they take it over, or it may be that we just provide the coaching.

Kevin King:

A lot of listeners to this are all in the Amazon space, so we think everybody knows Amazon, but it’s not the case. There’s still a lot of people and a lot of big brands that either are not on Amazon at all or, if they are, they’ve just dabbled a little bit and it’s just a placeholder, basically, and they don’t know how to do it. I was just, when we were recording this. I was just last night at BigCommerce. They’re based here in Austin. The software platform is kind of like a Shopify, if you’re not familiar, and they’re hosting an event and they had a little happy hour. I was at this happy hour and there’s quite a few agencies there that all they do is help people on Shopify and they were telling me not Shopify, BigCommerce and Shopify and they were telling me that they have a lot of clients that want to go to Amazon but they don’t know what to do. They have no clue and they fumbled it around or maybe hired some intern at one point to try to manage it that really didn’t have a clue, maybe had a business degree but still didn’t really have a clue how Amazon works. So there’s a big need for this out there. And there’s a lot more of it, I think, than what people realize.

Steve:

There really is. In fact, it’s really. It’s kind of funny. It’s some of the biggest brands that you think they’ve got their act together that they are so in their lane. They only know wholesale sales to retailers or they know direct brand sales or something, but they don’t know other marketplaces. It’s completely foreign to them and a lot of times when that’s the situation, they avoid it. They’re like no, we don’t need to be on there or it’s going to be disruptive to our other retailers, so we’re going to kind of stay away from it. And that’s oftentimes where they get into trouble. We’ve had clients where they’ve had 40 different sellers selling their brand and it’s the wild, wild west. They everyone’s selling for different prices to try and steal the buy box. There’s no added value for all of those added sellers to a brand, and we’ll help them understand how can you be the seller that has full control over your brand. Build a channel control policy to keep these sellers off of the channel if you want to authorize a few Sellers. Have a good map pricing policy which is a minimum advertised price so that everyone’s playing by fair rules, and only do that if you’re going to have added value. I like to say, if you’re a brand, you’re selling to all of these people that each have their own stores that have foot traffic or they have their own e-commerce website, they’re advertising in those markets and they’re offering some sort of value or reason for the customer to buy there. But on Amazon, not so much. It’s really that your brand is searched and being purchased and Amazon customers really don’t even know who they’re buying from a lot of times. We know it because we know what the buy box means. A lot of customers, when you talk to them, they have no idea. They just think they’re buying everything from Amazon and those are not added value offerings unless there’s a strategic reason to have them as added values, like inventory. You’re doing a poor job managing inventory yourself. You need others to kind of fill in the gaps. But it’s real messy and a lot of times we’ll help them along that journey of controlling the channel and building the brand the way they need to. So it’s well portrayed on Amazon and then accelerating it, and we’ve had some examples where we’ve helped clients save over $3 million in EBITDA just by taking control themselves versus selling wholesale on Amazon and when they could be selling at the full retail price on Amazon and actually doing a better job presenting their brand. So I forget the original question you asked, but I think I didn’t fully answer it.

Kevin King:

You got it, you got it, you got it good. So a lot of these big brands you said some of them they just they stick in their lane, that’s what they know, and they’re kind of afraid to go over. But what are some of the reasons? Do a lot of big brands and a lot of brands just still see Amazon as a flea market, as a? You know, that’s where the cheap prices are, and we’re not a cheap brand, we’re a prestigious brand or we’re a luxury brand or whatever, so we don’t need to be on there, even though 60 plus percent of all e-commerce sales are made on Amazon. That’s not just marketplace, that’s across the board and it’s the shopper card of choice First place. People, most people, go to look for something. What is that still in today’s world, that resistance for a lot of them to make that leap over?

Steve:

Yeah, it’s. You know, I think it’s less of a oh, it’s Amazon. We don’t want to be associated with them like it used to be. It’s more of a fear that that’s a channel that is scary and out of control, in my opinion, and I also don’t want the perception that I’m selling either direct to customers. That’s something that they don’t want to look like. They’re taking business away from their retailers, which I respect. Retailers should get like, if they’re going to put a big Nike portion of your store with all this branding and special, you know, attention, you should be loyal to them and try and get business for them. But when it comes to Amazon, it’s a different beast and so that’s one is they’re afraid to to be a seller themselves or they’re afraid of hindering these relationships they’ve already been allowing to sell on Amazon. Some of the sellers that were authorized in some of our clients were selling over a million dollars a year on brands that were just letting them have at it, and when you go to them and say, hey, we’re no longer going to allow you to sell on this channel, it can be really disruptive. It could potentially put them out of business. So it’s something they don’t want to take lightly. They need to have a strategy of how can I better support that seller outside of Amazon if I’m not going to allow them to sell on Amazon. And it needs to be a very thoughtful process. But I would say fear is usually the situation, not upsetting the apple cart and a lot of times big brands they move slow. You know we think in Amazon age, you know everything moves fast. You know, and that’s something that Amazon run fast and they pivot fast and I love that about them. But there’s so many big brands and big retailers out there that certainly don’t do that.

Kevin King:

If I’m listening to this and I’m going to go on to Amazon, I haven’t been on there. Maybe, like you said, maybe there’s 40 people selling my stuff now competing for the buy box. Besides map price, which stands, that means minimum advertised price. So that basically means that if you allow someone to sell, they can’t sell. They can’t advertise it under another, below a certain price. You can still sell it below that price, but you just can’t advertise it at that price. That’s why, you see, sometimes you have to add something to the cart before you actually see the price, so it’s technically not advertised on some websites or in some deals. But besides that control mechanism, what other controls can you do to help them put in place? To clean this up? And, like you said, you’re going to some of these guys. You’re going to knock them out of business. They may be. That’s their whole business model was buying your product and selling it online. Others are just selling some stuff out the back door, some extra inventory or whatever, just as a separate channel. But what are some ways that you can regain control of your brand besides just map price?

Steve:

Yeah, so it’s easier said than done. It is not simple. Amazon used to aid in channel control to some limited degree. They used to let you message sellers and stuff and say you’re not authorized to sell on the channel. They don’t allow that anymore. You have to take everything offline and one of the ways that you can do it is serializing your product. So if you have Garmin products and you have a serial number on it, you know exactly who purchased that product and you can shut down their inventory supply and say that was not an authorized channel for you to sell. We ordered a test order. It has your serial number. We sold it to you two months ago. You’re no longer going to have access to our inventory and there’s usually a multi-phase warning process.

Kevin King:

Amazon Transparency or something different?

Steve:

In this case, it’s their own serialization process. But Amazon Transparency is a really good fit, especially if you have any counterfeit issues. If you have counterfeit issues, it’s the way to go, because it essentially is that serialization. It’s a QR code. For those that don’t know it, it’s a QR code called the transparency code that Amazon operates and you apply that to every single product. Now, it’s not just like a UPC code, it’s the same for all of those products. It’s an individual code behind it that’s translated into a QR code and printed on the package or on a sticker that you apply to the package. And then Amazon will not allow a seller to sell the inventory without scanning that inventory in or ship it into FBA without them receiving it and scanning it and verifying that it’s authentic. So if there’s counterfeit issues, that’s definitely the way to go. If it’s not counterfeit, there’s nothing that Amazon will do to control it for you, unless you’re a Nike and you’ve got some special privileges or someone which speaking we should talk about with Nike, because they’re another big brand that’s been fearful of Amazon and there’s a long story behind that. But you really have to have a good monitoring process in place alerts when people sell, because you’ll have people that will start selling your products in the middle of the night, when you don’t see it, just to try and get around it. So you need to understand, when the products come onto the Amazon platform, if they are violating MAP, who violated first, because a lot of these guys have repricer in place and there’s a violator and a follower and you need to understand those things. And then you need to work with your legal counsel or a company like Vories or something that can send cease and desist letters to those companies. They’re very good at doing investigative work, finding out based on the business entity that Amazon discloses, and doing some trailing who that seller is and kind of threatening them from a legal standpoint. But it is easier said than done. It’s a little bit of a whack-a-mole process but it can be done successfully. It’s just something that can’t be done without persistence and the right tools and technologies.

Kevin King:

Now there’s a lot of people that you see them. A lot of times it’s mostly the smaller sellers where they’re like, oh, someone, I’ve got a hijacker on my account that’s a common term that’s used and that’s someone that’s bought the product. A lot of times it’s someone that’s bought the product and are just reselling it, or they maybe got it from a deal or a lightning deal, or they got it from someone was doing some sort of launch or rebate or something that you’re really not supposed to be doing, but they did that anyway and they just turn around and resell it and they feel that that’s counterfeit or that’s illegal or something. But in the United States you have the right to resell and so how do you knock somebody? So if I’m a brand, and how do I prevent? I can’t really prevent someone from selling. I can maybe prevent them from selling in bulk. I say I’m not going to sell to you if you sell to Amazon, or I’m going to cut you off if you turn around and sell to Amazon, but ultimately you can’t really control that.

Steve:

So you just mentioned it. It’s all about cutting them off, but you’ve got to control the inventory supply. They’re buying it from someone. A lot of times it’s distributors. You’re selling to a distributor and that distributor is selling to anybody that wants to sell the product, and you need to control that distributor and say you’re only allowed to sell these authorized sellers, or something of the like, if you know who they are. That’s the hardest problem is just finding out who they are. If you know who they are, you should have already had them sign a channel control agreement and they agree that if they violate that agreement they don’t have, you’ve not given them express written permission to sell on any channel other than their e-commerce website or their retail stores. Then they violated. Here’s what the penalty first phase, second, third, fourth and eventually it leads to just cutting them off and they’re no longer allowed to buy your brand at all. That’s the way you have to control the channel and with map pricing it’s very similar in that you can’t tell a retailer what they have to sell it at. All you can do is say if you sell below this retail price, then I’m going to take away some privileges, and one of those privileges might be that you have access to the inventory, or maybe that they don’t give you back-end marketing funds that they were granting to you like co-op and so forth. So there’s penalties, but you can’t, due to regulations, you can’t tell them what they have to price it at.

Kevin King:

I think one of the best companies out there and correct me if you know somebody better at controlling map pricing is Apple. I mean Apple, I know Apple, I mean one. They sell direct and they sell through their stores. They sell some things on Amazon, but not other things. But they have maintained this high price point and heavily, heavily controlled that and even their authorized dealers. I know a buddy of mine owns a couple of authorized stores. They’re not Apple stores, but they’re authorized. They do the repairs but they also sell and their margin is like 5% or something like that and they’re not allowed to to sell it below that for any reason, not even to liquidate it, and so they’ve done a really good job. I think is there someone else that’s done a really good job out there. That’s a good example of controlling that map price.

Steve:

So Apple’s by far the example I would lean on. There’s other brands that have done a good job controlling their price points, but Apple’s the shining star. Everybody should lead by example, but the problem is you’re in a different situation when you are a powerhouse like Amazon I’m sorry, like Apple, where they can’t not have you. You don’t want to go into a T-Mobile store, an AT&T store and say, I’m sorry, we only sell Android. That would be an embarrassment for them. They have to have Apple products available. And same thing with Best Buy and so forth. That’s. It’s so important to them that they will not violate it. You know, like I’m a big fan of Costco. I buy a lot of stuff at Costco. I had an accessory, an Apple accessory that I needed to return. I think it was Air Pods or something. And Costco, which will take back anything, said, oh, no, we can’t take this back because it’s missing the cable. And I said, oh, here’s another cable. And they’re like, oh, it’s not exactly the same. If we don’t send it back exactly, we don’t get credit for it. And the reality is they’re worried that they’re going to be a problem for Apple. They don’t want Apple to say you’re not worth the, you’re not worth the effort, like I don’t need to be in your channel. You know you’re already, you know kind of packaging some stuff together and, and you know, being cheaper than other sellers because of that we’re just going to pass and walk away from the business. So they’re very careful, they’re on their tippy toes making sure they don’t violate any map pricing or return procedures and so forth, because you know Apple’s the 800-pound gorilla, they have all the control.

Kevin King:

So Costco though they’ll do unique packaging. They’ll put two things together, or three things together, or it’s instead of 17 ounces, it’s 15 ounces or something like that, just so that the brand wants to make the brand feel comfortable. Hey, we’re not competing against the other guy because it’s technically not the exact same product and it also prevents sometimes price comparing. You see, I mean, Costco is a great company and they do things well, but they make money. So don’t think they’re not making money and there’s a lot of creative ways that they make money. There’s a really good podcast called I think it’s called Acquired, where they do about a three and a half hour, four hour talk about Costco and their entire business model, and it’s fascinating to actually get into that and just to hear exactly how all those levers are working, that they make this, they make it work.

Steve:

They have an exact science to it. I mean, you look at footprint they’re basically the same size footprint as Sam’s Club with twice the revenue and their profit margins I think last time they reported was like 12.7% margins but they’ve got a loyal customer base that’s paying them a membership fee and they’re partnering with people that are selling something a little different for them so they can pass on value without being disruptive to the brand. And that’s something that I think a lot of people that are brands that are not really thinking through and that’s something we help them understand is okay, you want to start selling on Amazon, but you’re also selling in Best Buy and Walmart and other places don’t offer the exact same thing, offer a slightly different variance so that Amazon doesn’t price match. What happens when Walmart drives a price promotion or Best Buy drives a price promotion or something, and now Amazon has either followed with the pricing if they take their own price actions, which they can do or they will suppress your product because it violates their marketplace fair pricing policy and it can really be problematic. So if you can have a slightly different variant, let’s say you’re selling supplements. One channel, you’re selling a 90 day supply. One you’re selling 120 day supply. Costco, you’re selling a 200 day supply. Whatever you differ it so that there are different price points that are attractive to different customers and oftentimes its kind of right size for the customer’s expectations. You can go to a grocery store and buy a two liter bottle of soda, or you can buy a can of soda in a vending machine. Or you go to a sports game and you pay an outrageous amount for a soda and the consumers understand that they’re buying different portion sizes and different levels of convenience at different prices and oftentimes that is underutilized by brands, if you ask me.

Kevin King:

I agree, sometimes a consumer doesn’t realize it. I mean, consumer’s going to know the difference between a bottle of 200 supplements versus 60. But sometimes it’s subtle. It’s like at Walmart, if you go get I don’t know, one of these protein power bars, maybe it’s usually sold in a box of 6, but at Walmart it’s a box of 5. That way it actually looks like it’s a lower price but it’s also less quantity. A lot of times customers looking at the ad in the Sunday paper if they still do that, and some of Walmart’s customers still look at the ads in the Sunday paper they’re like oh, that’s a box for a 327, versus on on Amazon it’s 419. This is a, this is a good deal, when actually, when you break it down on a per unit basis is actually maybe not such a good deal, and but they don’t perceive that. So perception is reality a lot of times in marketing and so a lot I agree with you a lot of brands miss that.

Steve:

Costco and Sam’s Club are really known for that. I have a subscription or a membership with Bolt and I bought this mat for my workout area and it was cheaper at Sam’s Club but it had less quantity than Costco. So the initial gut instinct is, oh, it’s cheaper at Sam’s Club until you realize the package contained. These are like squares that you like pop together that are padded, and it contained less squares. I didn’t happen to need more squares, so it was. The better value for me was at Sam’s Club, but if you needed more, the true value was actually better at Costco on a per square basis. And customers really aren’t as savvy as we might. Give them credit to you a lot of times and they don’t pick up on that. So you have to pick what is the key price point for your product in each channel and how do I be attractive there? And there’s also ways to do it without even variating it at all. Really just different packaging. Amazon has frustration. Free packaging that could be a different product altogether than something that you’re selling in Walmart, target or elsewhere, and if you are really determined to make it clear to Amazon’s algorithms that it’s a different product, they won’t match it. The problem is a lot of people put up their product on their website and they have a real simple short title. They don’t put the UPC, they don’t put the part number, they just tell you what it is and Amazon might match to that and think it’s a six pack or they might think it’s you know some other variant, because they’re matching to the wrong item. So it’s really important to make sure you put your UPC code, your part number, any kind of quantity count, and then Amazon, if you can show, hey, this is different, even with different UPC and different part number, they may not match it because they don’t see it as exact like items.

Kevin King:

Is that one way? Is that maybe this is a little hack here? Is that a workaround that you see people use where you want to sell it on your website for 19.99 but you want to sell it on Amazon for 20.99 but you don’t want Amazon to take the buy box away because they’re cron jobs are out there scouring their spiders, out there scouring the internet and find your 19.99 one. If I just put a different UPC, if it’s the exact same product and either I put a different UPC on the box, or maybe I don’t even have to put a UPC on the box. I can just pay for or get a second UPC and just list that and just maybe it’s the same UPC in my warehouse, but who cares? It never goes into Amazon. Will Amazon still pick up on that, or can that actually? Is it UPC first? Or do they actually say, okay, these are due for UPCs, but the title is exactly the same, description is exactly the same. This looks like a dead on match.

Steve:

So my experience with this has been that you can’t just variate one thing. You got to variate multiple. So the title should be slightly different, the image so maybe on Amazon your image is just the bottle and on your website it’s the box with the bottle inside it as the main image, and then the title is slightly different. Of course your price is different that’s kind of the point of it and your part number I would also differ as well and UPC. UPC is something that Amazon’s not necessarily looking for as much, because a lot of people don’t put it on there, but it’s a higher confidence level because UPC shows it’s a different variant and they don’t want to compare apples to oranges. Their system’s just not that good at deciphering it sometimes, and sometimes you need to do this effort just to keep them from making a mistake. When you’re truly like you’re selling singles on Amazon, you sell a six pack and they say, oh no, it’s too expensive, it’s against our marketplace fair pricing policy. No, it’s not, it’s different items, and in other cases it’s so that you can truly sell at a different price, kind of without Amazon catching on.

Kevin King:

You mentioned earlier. Nike is a good example of a brand that was selling on Amazon and doing well, and then they’re like to heck with this time.

Steve:

Amazon convinced them to sell to them and Amazon made a bunch of promises that they would control the channel and if you become a brand that sells to us directly, we’ll control the channel and make sure that your brand’s better represented. And I think these are based on assumptions, based on looking at it from the outside. In is that Nike didn’t get what they were promised, essentially, that their free market policies still allowed sellers to sell the brand and there wasn’t enough done to make the brand more premium or set aside or whatever. And Nike had an aspiration to have I think it was like 50% of all their business through direct to consumer. So they said, no, we’re walking away from Amazon. They did that thinking all of those customers would shift over and buy from their D2C channel. The reality is that just doesn’t happen the way brands think. And here we are two years later or something I don’t remember exactly what period of time it was, but Nike’s back. Nike said, okay, we need to sell on this channel because their stock price dropped. The DTC initiatives did not pan out as they anticipated, and I always like to remind brands don’t neglect the channel. Don’t just say, no, I’m not going to sell there and I don’t care what happens there. That’s the wrong thing to do and that’s essentially what Nike did. They thought if they leave that you know, basically the consumer’s going to realize that Nike’s not selling all their products there and they’re just going to find the product. But there’s a lot of customers that might favor Nike, but they’re on Amazon just searching for gym shorts or athletic t-shirt or, you know sack pack or whatever it is that has a Nike brand offering, but it’s just not there anymore. They’re going to gravitate towards the competitors or they’re going to gravitate towards other third-party sellers. And if you looked at the period of time when Amazon and Nike did not have a partnership, there was a huge amount I don’t want to misquote the number, but I’m talking like hundreds of thousands of products that were being offered by unauthorized sellers. So, instead of the brand looking good and being attractive to the customers that are already inherently shopping on Amazon and they’re just determined to make a purchase on Amazon and they don’t want to be inconvenienced to leave, then they were not seeing the product and they were choosing, in a lot of cases, alternative products. Now, if you were looking for a Nike Air Jordan and you don’t go and find it on Amazon, you’re probably going to look for it elsewhere because it’s something iconic that you really want, but that’s just not the reality for the vast majority of your product sales. And what I like to say is these brands should embrace the traffic and visibility that they can get in a marketplace like Amazon, but control it. If you avoid it now, it becomes the wild west. But if you embrace it and say, okay, I don’t really want to be there, but X percent I mean Amazon’s like 39% of all e-commerce sales, you can’t avoid that anymore. So you really need to be there, but control the brand with a good brand store, a plus content, videos like really present your brand well, maybe be the only seller on Amazon. There’s not a lot of competition and then just you can throttle it. You don’t have to offer everything, you don’t have to be cheaper, you don’t have to do things to accelerate it, but at least you’re doing business on Amazon under your terms, not Amazon’s terms or a bunch of third party sellers that are kind of hacking it essentially.

Kevin King:

I had a brand experience where I got into, dabbled in licensing for a little while. So I actually we got the license and the pet space for Body Glove the surfing company Body Glove that does the surfboards and we ended up doing a dog. We developed an entire line of life jackets for dogs, the Body Glove logo on it, and we came out with that product thinking that all right, this is a brand name, this should differentiate, this should really help us. We’ve got a big brand behind it. They made all these promises that we got these influencers and these athletes. They have a million followers. They’ll promote it on social media. So we got all excited. None of that came to fruition. They didn’t promote it or squat and, like they had promised, we put it up on Amazon and did the normal marketing and launching and all that. And this thing, we just could not sell it. It just was. I mean, the people did buy it. But what I learned of that is that there are all brands should probably have a presence on Amazon, but there are brands that are going to do better and brands that are not going to do as good. And in the case of body glove, what I kind of a little formula that I came out with is like you’re not really a brand now, whether you’re your own brand or you’re on Amazon, unless you have 3000 or more searches branded searches per month. That’s kind of just a little rule that I said. So, going forward, if I was going to do another licensing deal with somebody, I would first I did not do this on the body glove when I just assumed, but on body I looked at keywords for life jackets and dog life jackets, all that kind of stuff, but not the branded ones. And body glove did not have a lot of search on Amazon so piggybacking off of that brands name on Amazon by paying a licensing fee, was not going to be a major advantage to us. And so there are some times where there are certain brands that just they just don’t work on Amazon. You look at some of the kitchen categories KitchenAid, and you know OXO and some of those big brands that are in. When Bed Bath Beyond existed they were in there. They’re in all the targets and they do really well, but on Amazon they’re not a lot of times, not even on page one of search results for some of their top products. What do you think is the reason behind some of this?

Steve:

So I think it’s where the consumers think to buy their product. When I think of certain brands, I think of buying them at a specialty retailer, not an online marketplace like Amazon. Or I don’t even realize that they sell the type of products that they may market. So, for example, there are a couple of brands in restaurants that they don’t do a good job selling the products that customers want to buy, like Chick-fil-A Whataburger. There’s a lot of different examples like that, where the consumers don’t realize that, let’s say, Chick-fil-A sauce is available to buy. They love it. They go to the Chick-fil-A restaurant and they ask for it by name because it’s so favored to them, but they don’t realize I can buy it in retail. Well, on Amazon, there are searches for it that are maybe not as great as you would imagine, because consumers don’t think to buy that. That would be a good example, like Body Glove. They’re not thinking to buy on that channel. But when consumers do think to buy on that, or when they do search on that channel, even in limited quantity, the assortment that they see is not controlled by the brand and it’s a very bad experience. It’s usually overpriced we’re talking two to four times higher by resellers that are going in and buying it at Walmart and reselling it on Amazon, and these brands don’t have their clueless it on Amazon and these brands don’t have their clueless that this is an opportunity. That is something we could actually get behind and tell people when they walk into a Chick-fil-A store there’s a window label Don’t forget your Chick-fil-A sauce. Sell it at the stores like, tell them, hey, you can buy it online chickfila.com, and, and also available on Amazon. And let them, you know, buy it while they’re sitting there waiting for their food or whatever, and also available on Amazon, and let them buy it while they’re sitting there waiting for their food or whatever. There’s just a lot of brands that they’ve never executed to allow customers to know that they’re in support of consumers buying their product online and especially on Amazon. And if they were to initiate a social media campaign letting people know their products available on these channels, get it whenever they want it, I think it would really succeed and people would start searching for it on Amazon, but it’s just not ingrained in them to say that’s where I should buy it.

Kevin King:

What other channel right now do you think in dealing with all your clients besides Amazon is the hot opportunity. I mean, TikTok is the buzzword right now. But there’s questions is TikTok going to make it or not? Under regulatory rules and stuff? So some people are a little gun shy on that. But where or is it? Is it Walmart? Maybe Walmart.com is the next? It’s emerging. I mean, their sales were 100 billion, I think last year, compared to Amazon’s GMB of like on, was it 700 or something like that? And, but out of that 100 billion on Walmart, only 10 billion of it was third-party sellers. The other 90 was Walmart’s their own wholesale home buying division. So that’s pretty small. Or you look at TikTok, I think last year it was $15 billion is what they reported was their sales, which is a prime day for Amazon. It’s one day of the year for Amazon. What do you see as emerging? Amazon’s still the big gorilla, but what do you see as the next emerging place or hot place that people need to pay attention to?

Steve:

So I think social media in general is something you’ve got to be paying attention to and, like I told you, be where your customers are spending your time and money. If your customers are engaging with your brand through influencers, make sure that you have transactional capabilities through there. It doesn’t have to be TikTok shop it could be linking to Amazon and making a purchase but either way, you should be trying to transact whenever customers are wanting to buy from you. Walmart is a category that boy. I just feel like people have neglected it, even though they’re doing a lot of the right things. I like to buy from Walmart when I know that I can place an order and someone’s going to come to my door and drop off a bag at my doorstep, like same day. It’s a level of service if something’s sold in their stores that’s beyond what Amazon can offer and I can return it at the store easily. It kind of makes sense and I feel like a lot of sellers are just neglecting it or, more commonly, saying I tried it, it didn’t work or, yeah, I sell there but it doesn’t produce any revenue. Well, if you lift and shift your category from Amazon or your catalog from Amazon to Walmart, you’re probably not going to succeed. Their algorithms are way different. Like you’ve got to have good reviews, there’s different ways you can ingest the reviews into Walmart, like Bizarre Voice and other partners. Review partners can allow you to synchronize reviews there from your website. You’ve got to have WFS or other two day or faster shipping. It’s really important to Walmart and you’ve got to train their you know, got to kind of work towards their algorithms. They like short, sweet titles, bullet points to be much more succinct, descriptions to be longer. The Amazon I mean Walmart has a listing quality score that they will basically spell it out what needs to change, and you can go in there and make changes in your listing and see the score go up right before your eyes. Essentially it’s not immediate, but it’s very fast and you could say, oh, that didn’t work. I’m going to revise it a little further. And you need to kind of have the right attributes in place and the right categorization and the right aspects to succeed and until you’ve done that, you really don’t know what the potential is. Now I will say I’ve seen great success, like some of our clients do millions of dollars on Walmart and you know they really succeed at it and others it is. It’s just a small percentage of their Amazon sales and part of it is because their product, just like we talked about some other brands that just have limited search volume. The consumer doesn’t think to buy it on Walmart. Like you’re not going to succeed as much on Walmart if you’re a more premium brand, a higher price point. But if you’re a lower price point, more value-oriented product, it might be something that they expect to be in Walmart but the category they expect to be in Walmart and then you can have pretty good success there. But Target and Walmart, I think, are two domestic partners that there’s just not a lot of utilization. But I still think there’s a lot of upside there and we’re seeing a lot of real growth come from Amazon International UK and Germany most dominantly. But really you know, over time on your roadmap you should have a plan to sell it all of Amazon’s international marketplaces and surprisingly it can be different than you might anticipate. You might say, oh well, you know, if I move international I’m going to go in UK because, English speaking, it’s one of the largest marketplaces. But you might actually find that you have this huge pent up demand in Japan because your products are really highly desired there and there’s not a lot of sellers selling your product. Do the research. So you know where do I need to. You know how do I need to roadmap this out.

Kevin King:

Well, this we’ve been talking for a little bit here. We could keep going, I think, for a couple more hours, but this has been been good. Steve, I really appreciate you coming on and sharing today Great, great conversation. If people want to learn more about what you guys do or reach out to you, what’s the best way to do that?

Steve:

Yeah, they can go to primeguidancecom, which is our website. You can also email me directly at steve@primeguidancecom or text me at 972-505-1647. Be happy to set up a free call to kind of evaluate your listings, talk, shop, whatever you know, just to get to know you and share some thoughts with you about your brand and if it’s a fit for us to help you, we’d love to help you.

Kevin King:

Appreciate it. Steve fellow Texan to another fellow Texan giddy up, giddy up.

Steve:

Thanks, Kevin. Thanks for having me on.

Kevin King:

You know a lot of podcasters, when they sit down and create the podcast, they have a set of interview questions that they do. Sometimes they even send it to the guest in advance. But here at AM/PM Podcast we don’t do any of that. Every single podcast is completely ad-libbed. A lot of times the guest will come on, like today. Steve’s like what do you want to talk about? I was like I don’t know. We’re going to go wherever we, and that’s the way I run the AM/PM Podcast. There’s no prep work in advance, there’s no list of questions that we’ve got to get through. It’s just we’re going to have two guys, or a guy and a gal talk and shop and that’s just the way it works. And so I hope you enjoy the way we do this AM/PM Podcast, because I think you’re like a fly on the wall. You’re like being in a conversation. It doesn’t feel like an interrogation or something or painful like a lot of our podcasts do. So, as you can see, the conversation with Steve today went really well. We talked about a lot of really cool stuff and had no idea we were going to talk about any of that before we started the podcast. We’ll be back again next week with another awesome episode 414. You don’t want to miss this one. It’s a couple and their story about what happened the day they went to sell their businesses, the day that Thrasio was going to wire them multiple millions of dollars. They had to call the deal off because their listing got suspended and the story about how they got it unsuspended is amazing. It’s really cool. You don’t want to miss this episode. It’s going to be really cool, really enlightening, and they talk about what they’ve done next and how they bought a $2 million brand for 40,000 bucks and are now just growing the heck out of it. Fascinating stuff. So make sure to tune in next week for the AM PM podcast number 414. We’ll be back again with that episode, but before we leave you, I’ve got some parting words for you. You know, if you’re not willing to learn, no one can help you, but if you are determined to learn, then no one can stop you. See you again next week.

Enjoy this episode? Want to be able to ask questions to Kevin King live in a small group with other 7 and 8-figure Amazon sellers? Join the Helium 10 Elite Mastermind and get monthly workshops, training, and networking calls with Kevin at h10.me/elite

Make sure to subscribe to the podcast on iTunes, Spotify, or wherever you listen to our podcast!

Want to absolutely start crushing it on eCommerce and make more money? Follow these steps for helpful resources to get started:

Get the Ultimate Resource Guide from Kevin King for tools and services that he uses every day to dominate on Amazon!
New to Selling on Amazon? Freedom Ticket offers the best tips, tricks, and strategies for beginners just starting out! Sign up for Freedom Ticket.
Trying to Find a New Product? Get the most powerful Amazon product research tool in Black Box, available only at Helium 10! Start researching with Black Box.
Want to Verify Your Product Idea? Use Xray in our Chrome extension to check how lucrative your next product idea is with over a dozen metrics of data! Download the Helium 10 Chrome Extension.
The Ultimate Software Tool Suite for Amazon Sellers! Get more Helium 10 tools that can help you optimize your listings and increase sales for a low price! Sign up today!
Does Amazon Owe YOU Money? Find Out for FREE! If you have been selling for over a year on Amazon, you may be owed money for lost or damaged inventory and not even know it. Get a FREE refund report to see how much you’re owed!
Check out our other Amazon FBA podcasts including the Serious Sellers Podcast, as well as our Spanish and German versions!
You can also listen to the AM/PM Podcast on YouTube here!

0 Shares

#413 – Omnichannel Online & Retail Strategy Advice For Big Brands with Steve Yates

Transcript

Related Posts