Experts Guide to Increase Your Profit Margin on Amazon

Get ready to supercharge your profit margins with our latest episode where we’re joined by the brilliant minds of Mark Botha and Ryan Shields, co-founders of Seller Vue. We delve into the nitty-gritty of cost per unit for Amazon Sellers, dissecting the holistic approach to cost of goods sold and understanding how this strategic approach can be a game-changer for your profit margins. 

Shifting gears, we bring the future into focus as we equip Amazon sellers with the knowledge to ace future valuations and even potential business exits. We talked about the complex maze of tracking fees and costs, underscoring the importance of having your numbers at your fingertips always. 

Mark and Ryan also shared a real-life success story of Maria, who made an impressive 3.4% margin recovery for her Amazon business.

Ponder over the 'growth over profitability' puzzle and learn how understanding your true numbers could be your golden ticket to securing capital. Come on board, and let’s transform the way you look at profitability!

00:00:00 Intro
00:12:28 Maximizing Future Evaluation for Amazon Sellers
00:20:11 Maximizing Profit and Planning for Exit
00:26:40 Amazon's Impact on Seller's Profit Margins 

Ben Smith's Social Media
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LinkedIn: https://www.linkedin.com/in/skipwithben/

Business Social Media Links
Website: https://www.sellercandy.com
Facebook Page: https://www.facebook.com/SellerCandyPro
Instagram: https://www.instagram.com/sellercandyamz
LinkedIn: https://www.linkedin.com/company/sellercandy/
Website: https://sellercandy.com/

Mark Botha's Social:
Facebook URL: https://www.facebook.com/SellerVue/
Linkedin URL: https://www.linkedin.com/in/mark-botha/
Instagram URL: https://www.instagram.com/sellervue/


Episode link & contact info
Shareable episode link  - https://bit.ly/3RuBdpk
For content collaborations, please email us at: grei@sellercandy.com 

Never Talk to Seller Support Again.

Seller Candy is the expert operations arm of your Amazon business. We provide outcome-driven support for time-consuming and challenging Seller Central issues so you Never Have to Talk to Seller Support Again! With Agency-Level security practices and an experienced team who’s been through the thick of it, we give sellers bandwidth on demand without the hassle of hiring, training, or managing.

#amazonseller #amazonbusiness #ecommerce #amazonpodcast

Never Talk to Seller Support Again.

Seller Candy is the expert operations arm of your Amazon business. We provide outcome-driven support for time-consuming and challenging Seller Central issues so you Never Have to Talk to Seller Support Again! With Agency-Level security practices and an experienced team who’s been through the thick of it, we give sellers bandwidth on demand without the hassle of hiring, training, or managing.

#amazonsellercentral #amazonsupport #ecommerce #amazonbusiness

Transcript

Speaker 1: 0:00

I think what people need to do is pivot like we've been talking about this whole time is if you know your numbers and you know where you can find Percentier in there and in that back, I think you can grow properly.

Speaker 2: 0:16

All right, hello, I'm your host, ben, and welcome back to season two of the Amazon strategies show. So this is the show. That's all strategy, with no hacks, no silver bullets and no magic pills, just real, practical strategy for serious amazon sellers. Today I have the pleasure of being joined by the incredible mark and Ryan who are the co-founders of seller view. But, guys, I'll just read quickly a company bio. So seller view helps sellers keep more of their profit margins Very important these days by taking a more holistic approach to cost of goods sold and essentially they look to find ways that sellers can add back profit from the cost per unit efficiency, as a mouthful to say, to the granular skew by skew profitability. So we're gonna get into all that, but I want to first say, mark Ryan, welcome to the show. Thank you so much for being here today. How are you guys?

Speaker 3: 1:04

Yeah, great, that's it, that's the event, thanks.

Speaker 2: 1:08

Love it. So we're. Uh, we were talking a little bit before the show, but where in the world are you guys both right now? I'm in kind of can you tell us a little bit more about your, how you guys met, because I know you guys have a Kind of a crazy story about that.

Speaker 1: 1:21

I'm in there. I'm in the Cayman Islands.

Speaker 2: 1:23

And I'm in sunny Colorado right now Love it and take us back. How'd you guys meet in your, your this wild past life story?

Speaker 1: 1:32

So in my previous life I was a chiropractor. In my previous Skill, I went to school to be a chiropractor and actually Ryan was a patient of mine in the practice. And in 2013, I decided to buy a course and learn to, to learn to sell on amazon, and at the time I was thinking about moving to florida. So I solved my practice was on the way to florida and in between the move, my Amazon business took off. So I actually didn't end up setting up another practice. I just carried on with with e-commerce and you know, long story short, you know, fast forward to like 2016.

Speaker 1: 2:11

I'm ready to sell my business, um, and you know, I ended up selling it and the due diligence was way more than I expected. Um, and you know, and my goal was to, you know, build Amazon businesses and sell them, build and sell, build and sell, rinse and repeat. And I thought to myself, wow, if I'm gonna do this again, I gotta. I gotta solve my problem because, like, I actually can't go through that stress again. And Ryan, um, who had just exited his software. I'm really happy with development business. I thought it was a perfect partner. So we went out for lunch and here we go.

Speaker 2: 2:49

Nice, that's an awesome story because you went uh, mark, you at least went from kind of fixing people's bodies to now you guys are fixing profit margins.

Speaker 1: 2:56

I want to say, which we'll get into a little bit more yeah, I mean it was actually a funny story because I remember, like 2013, you know, I found my product. I was ready to go. I was super excited and I think I went to the bank and I said, all right, I want to send some money to china and the bank manager said, no. I was like what do you mean? No, you're like no, no, it's risky. So I had I ended up going to western union, you know, filling out that long, long form of where the money is going, and I mean it took me hours to fill that form out. Um, you know, eventually got my product down. You know, I didn't. I didn't, in fact, get my product, but yeah, it was just. You know, now it's now you're going online to tick a button and offer money.

Speaker 2: 3:36

Guys, yeah, well, so I've I've been selling, you know I've been in various roles in kind of the amazon world. I've never gone through the exit process right. So I know that there's unique challenges there and but I'm curious, like what was there Like a really hard breaking point during that process that led you to start seller view after or during that amazon journey?

Speaker 1: 3:56

you know it's really the back and forth, uh, especially when it came to. You know, because when you, when you sell your business, that typically the buyer is going to buy your inventory for the value, so what. What they want to see is how you came up with your cost per unit. And you know, because that's where they're going to take. You know, x amount of units times the cost equals what they're going to pay you. So you know there's a lot of verification in that process. So there's lots of spreadsheet going back and forth. There's pdfs and invoices going back and forth, conversations about how I, how you, come up with the cost per unit. Um, so I mean, honestly, I found that part the most, I wouldn't say, you know, frustrating, but I was just like this could be a lot easier.

Speaker 3: 4:40

Yeah, yeah, it's very tedious. Yeah, I think that that's probably the best way to describe it is the tedious attention to detail that is required, uh, to get those numbers crisp. Yeah, sure, I mean it.

Speaker 1: 4:52

Yeah, it's. I think it's the opposite. It's, you know, guilty to approve an innocent where they're, like you know, a little suspicious. So if you're like in your numbers, yeah, and then they're looking a lot too good on top of the spreadsheets and like the multiple formulas happening, you know that.

Speaker 1: 5:06

I just thought you know, I just thought you know if this could be transparent in in such a way that they could log in themselves and look at the supply information, be like, okay, that's legit. Okay, here's the cost per unit. I can clearly see how you know where this 340 a unit came up with. Yep, here's the value. Okay, there's the check. Right, and it definitely was not that easy. Yeah, you know, I mean, that's what my vision was, but it certainly wasn't that easy. It was, you know, weeks of back and forth when we got to that portion of the due diligence.

Speaker 2: 5:42

Yeah, I was gonna say I feel like there's so many times I've thought, just you know, and I've worked to previously I was, um, working as an account manager when an amazon agency, so seeing a lot of amazon brands and just there's so many Processes and things that we were doing like on a weekly basis. Even that I that always came into my head Like this seems like it should be way easier, like why is there not a solution to do? Xyz, you guys just went and actually did create the solution to essentially help sellers with the problem that you faced in your business, right mark.

Speaker 1: 6:10

Yeah, well, I Honestly like I built it for myself at first, you know, I was just gonna like this is I'm just gonna use this and I'm just gonna yeah, then I can just scale faster and sell. Maybe I could sell two at a time. Sure, actually, what ended up happening? Because I, you know, sold that business, we built it, yeah, so the x-bing. Another one when the app was ready, I should have my team, and my team went back Three years, I think I had them actually put in every single invoice, so I wasn't quite sure they enjoyed, but Anyway, yeah, they're just not every single invoice.

Speaker 1: 6:41

And we, yeah, went through every line item, split in the sign any cost, boom, boom, boom. And so when we came to you know, putting it through a to x and back into the pnl, uh, I sent the new customer accountant and said, hey, could you go back 12 months and put the data in? And you know, a couple days later I get an email. You're like what, what did you do? And it's like well, there's an extra 78,000 sitting on your, on your, on your pnl from From these new costs. And I explained what I did and what we built and how you did. And he was like, oh, this is amazing. Um, and my BroCo was super pumped because that added an extra $275,000 to the valuation.

Speaker 1: 7:25

So, yeah, and then, right now, I mean I'm pretty meticulous when it comes to my costs and when you looked at those costs, on average it wasn't a lot. It was only like, I think, like $0.22 a unit, but on the volume of units sold, it added up to that amount of money. And that's when, right now, we're like you know we're doing that, definitely other sellers are doing that too Right, so that we shifted gears and starting on private clients and reorganizing their costs and we found, on average, people are getting back 2% and 3% on revenue just from dialing in their cost better.

Speaker 3: 8:06

You know we took the experience of Mark just really going through the Sellogu method and you know a lot of the app has really been built around Sellogu method, which is really based on how Mark has meticulously dialed in his numbers to maximize his profits and his valuation and therefore his multiple exits.

Speaker 3: 8:29

So you know we figured that okay, well, that's, if we can, you know, create this as a you know a service but then also build software to support that service, that becomes software as a service.

Speaker 3: 8:43

So then a lot of it isn't I don't want to say self service, because it's it. I don't want it to make it sound like it's ongoing work. There is some upfront work to get all of your numbers in to Sellogu and then I'm not going to go so close to say it's on autopilot, but it takes very, it takes monitoring. We have a load systems in place to let you know if anything's out of kilter, because you know the numbers don't lie, but the wrong numbers will absolutely lie to you and you know when you're exiting a business. I think a lot of sellers just try and confuse the buyer with the chaos because they're lazy and, quite frankly, scared about what their real numbers might be. So you know, I refer to ourselves as kind of like the exit, exit strategists, and an exit doesn't mean that seems like it should be a title or a real term.

Speaker 3: 9:36

Yeah, yeah, exactly, and we, you know we're not trying to take equity in your company and all that stuff we're just putting you into. I'm not even going to say it's a program, it's more of kind of like a and I wouldn't even say it's a curriculum. But there is its habits, essentially, that we can train you to do, and there's that we have the app and the software to support you in doing that, and the app is continuing to evolve. We have an AI strategy as well. So down the road we. The goal for this is to be completely automated, with minimal oversight, so that you know. The dream is you can be on a yacht in the Cayman and checking your Apple Watch with any updates on your increased profit.

Speaker 2: 10:19

So you can live like Mark does, pretty much Exactly exactly this is the get to Mark app, not yet Well, I was going to say, you know, it's ever.

Speaker 2: 10:29

You know anyone who's selling on Amazon, right, they're. I want to wager that they're all trying to get to the point where they exit. But until you've ever gone through that experience, you know and I'm speaking to somebody who's never gone through an exit experience there's things that you're not going to know until you get there and get out the other side. Right, and most people might only exit once in their life if they're going to have an exit. So I think that's like one of the cool things about what you guys have gone through in the experience you bring to the table when you've kind of gone and built this service is essentially that you've gone through that process.

Speaker 2: 10:58

And there's another podcast I listened to my first million. They talk about having like a deal doula when you're trying to go through the due diligence and exit process. Yeah, yeah, yeah. And I thought that that like totally resonated with like the concept to me a little bit is like you really do kind of seemingly need an advisor or someone who can walk you through like hey, what are those really critical things that you have to have dialed in to actually get the most out of your business when you go to an exit right.

Speaker 1: 11:23

Yeah, that's a great point because you know when you're looking at selling. You know often sellers take the foot off the gas. So it's important that you keep your your numbers active and even be able to show growth during an exit phase. But in order to do that, you need to. You know it's hard. It's hard. You know it's like having two different hats, like I'm exiting but then I got to drive my business and you keep on like going back and forth. Yeah, so you need someone who's there to kind of kind of steer the due diligence, get the documents, get the you know, the necessary documents ready and available. So when the, when the buyer goes hey, I need this, hey, I need this, hey, I need this, hey, I need this, it's ready, available.

Speaker 1: 12:06

And you aren't like scrambling, calling your country like hey, I need a balance sheet, hey, I need a P and L. Hey, what's the proper on this? The situation where they can just come in, look great, I like it and move on. Because, like anything, calm kills deals. So if we can get that data as quickly as possible and they can see it's a solid, the numbers on transparent, the documents are transparent and this guy's on it, you know, deal closes quick, quick.

Speaker 3: 12:34

Yeah, and you know piggybacking on that. I was on a call with a popular marketplace to buy and sell businesses you know including Amazon, fba, private telebusiness is a major part of their list portion of the listings and I was shocked to hear that they reject nine out of 10 applications to have their sellers listing their businesses because they don't have the numbers in order. They profiteability isn't where it should be. So that is absolutely shocking to me that you know one out of 10 businesses that try and become trying exit are essentially rejected from the exit. Yeah, it's a while, it's a lot, yeah. So you know we're there for the 90% and you know there's probably a small, you know, a subset of that 90% who are actually all prepared to do the work.

Speaker 3: 13:26

And when I say the work, it's the effort, it's the energy to put your, you know, get your business and your business in order to get those numbers crisp, because then you're going to get an exit quicker. And again, an exit doesn't mean leaving the business. It could be. I want to get out as an operator and I want to get, I want to run the business and I want to expand the business and I want to focus on selling. So I need to raise capital and good luck raising capital. I would say raising capital is probably harder with the wrong numbers than exiting with the wrong numbers. Well, the bad numbers, they say bad numbers.

Speaker 1: 13:58

Yeah. So you know, I always like the idea that if you're exit ready, whether you're going to sell now or in 10 years time that if you're focused on on exiting, that means you're focused on your numbers, you're driving your business, you're, you are prepared, and that's how you, that's how you, I mean, that's how you kind of grow properly. But if you aren't ready to sell at any point, then you know the complacency does kind of creep in.

Speaker 2: 14:29

Sure, but I think also, you know so many, so many people get into the Amazon world and if it's maybe their first kind of foray into running their own business or anything like that, they've also got so many other things like out of the gate that their their mind's thinking about Like getting the product right and all these other components of actually launching the product and then growing it, scaling it, launching more products. And so you know, I know for me, for example, like I hate dealing with any of the financial side of the equation. I always say that when we're on these shows, so that's something I always look to kind of outsource and take off my plate. But also, you know I I talk to a lot of Amazon sellers. I've worked with a lot of Amazon sellers over the years and I've always found it pretty remarkable that so few of them know like the transparency in terms of what their numbers actually look like Is challenging to kind of figure out. You know, especially when we're talking about like importing and getting stuff at different rates, and you know Amazon's fees constantly shifting and then, but even beyond that, like just not having their books right. And you know, if Amazon's your only channel, maybe that's a little bit easier.

Speaker 2: 15:27

But once you then start kind of thinking about oh well, now I also have these other channels that I'm selling on, you know, it gets more and more complex, and I guess what I've always been a blown away by is is you know that there's such a big percentage of the people I talk to that just they don't really know what their true numbers are. Maybe they're close, maybe they kind of have it pretty dialed in, but it's not always very clear or easy to get to. So, mark, that was something you and I, I know, talked to on our first call ever chatting. But yeah, I know you guys know this too. So, ryan, mark, are like do you guys have a lot of clients that you work with that come to you and it's the same situation?

Speaker 1: 16:02

or yeah, I think, like what's kind of happened over the years is there's a lot of tools that are coming to the market and I'm not going to, like you know, tell you about the tools, but I think it's data overload, yeah for sure. Analysis, analysis, where there was so, yeah, there's so much data and it looks so pretty on the dashboard. And then you kind of go well, what do I do next? Right, where all I mean, you know, I run an Amazon business as well and all I want to know is what's winning, what's losing and what should I do next. So, and that's really where we kind of guide with set of you, and you know we do have a minimum kind of threshold with our clients. Obviously, like, if you're willing and we can chat, you know we'll take on clients. But you know, with our clients, what we want to do is give them kind of like in the bio is here, like the granular, skew by skew efficiency, and what we want to do is make sure every single cost that you're that, or fee, your charge, is assigned to a skew so that you know exactly what that, that cost, that that cost is and what your profit margin on that product is. No way to. It's not real good going. Okay, this is my price. Amazon takes this much. This is what my cost per unit was. This is what my advertising was cool. This is, this is my net profit.

Speaker 1: 17:26

What you want to do is we're going to add in, you know, long term storage fee, you know returns, you know, maybe you did removals, what, what is the actual inventory? And go, okay, listen, you, you, you spending more an inventory because of your products, have kind of crossed over that, that new threshold of 180 days, I think with. I think we should pull some of that inventory out and that will kind of lower that inventory number. But oftentimes, oftentimes, you find like a new client come and go, yeah, my margins are 21%, and then we go cool, and then we do the. You know, we do the audit and go through everything, assign every person, go Well, with all the fees, those little side fees, your margins actually like 10%. Yeah, yeah, definitely an eye opener when you act, when you, when you're able to put in every one of those little fees that add up and go, oh, okay, it's not what it was.

Speaker 2: 18:23

It's an eye opener but and also sometimes you guys are probably the ones who forced their eyes to be able to. You know there's a certain people they don't want to necessarily acknowledge that, some, I know. Sometimes that's me like I don't know if I want to go do that calculation because I don't want to see that.

Speaker 3: 18:35

I'm wrong. Yeah, no, exactly, it's like it's like a paper cut. You just like, okay, well, yeah, but this is, it's literally death by 1000 paper cuts if you don't pay attention to this. Because imagine you let that, you go into tax season and you declare this profit and you tax on that, only to realize that, oh wow, you're over declared.

Speaker 1: 18:55

Yeah, yeah.

Speaker 3: 18:56

Well, so, like the ripple effect of bad numbers and best guess numbers, it's crippling to your business and it can be a slow bleed and it generally is a slow bleed but it really catches up to you when there's there's eye opening moments, when you're trying to change.

Speaker 2: 19:15

Sure, well, I know the other side of the coin too. It's the if you don't, if you don't have the right information, like the right data in your face to understand, hey, here, like on a granular level, where your costs are, you can't go go to work to get those costs, you know, to lower those costs right. But once you can see a breakdown, like, hey, here exactly are all the costs, which ones can I actually maybe go and try? Oh, it looks like my Amazon dimensions are wrong and that's causing it, and I know we'll talk a little bit more about this, but so that's causing my Amazon fee here to be a little bit higher. But if you don't have that data, like on a granular level, very present, it's hard to know that this is something you need to go and actually dig a little bit deeper into right, yeah, exactly, well. So, guys, let's formally kind of switch into what we call like our Q&A section, which is some of the questions.

Speaker 2: 19:59

So this is our much awaited Q&A segment, where we address some of the burning questions from our clients, from audience members, some questions that you guys have submitted and essentially get your guys kind of take and response on them, so kind of piggybacking off a lot of the stuff we were just talking about. I just wanted to talk to you guys about in general. What should we I be doing now as an Amazon seller, or just any Amazon seller to kind of maximize that future evaluation? So whether you're, you know, maybe a year out from where you want to really seriously start thinking about exiting, or maybe you're just starting your business, like what are the things that you really should be thinking about?

Speaker 1: 20:34

So the way we restructure and the way we look at it is kind of a phase. So we want to go okay, let's start with a margin recovery, let's make sure the gap between expenses and revenue as big as possible and get back as much money as we can on to the P&L. So once we've got that and you know exactly what your margins are per skew, and kind of picking back on what we kind of just tell you about all the variable fees and making sure that we aren't overspending on the variable fees and we adding back that money over the next 12 months, that's going to reflect back onto the P&L, which is obviously going to boost the trading 12 month profit. So once we know that right, then we can move to, like you know I would say, phase two, which is okay. How our process? Yeah, are we? How's our inventory? Are we ordering enough? We're staying on top of, we running out? How's our listings? How is listing optimizations, our listings as good as they can be to convert.

Speaker 1: 21:39

And then I'd say, like, phase three is right now, now that we know this, now let's start advertising, let's start maybe using repressing tools to capture as much profit as we can to keep driving up that trading 12 month profit and then that's awesome. That's what I would say is like the hierarchy of things you know often do find clients with. You know they don't know their margins but they're on phase three and they're advertising like crazy and you know. You know it's kind of like you've done the wrong order. So we're gonna make sure, we're gonna make sure that you have a much margin as possible. Your systems are in place so that when you do scale you aren't running out of orders because again that's going to reflect on your P&L, that's going to come back and do diligence. How come this month wasn't so good and then you're going to go. Well, you know, ran out of, ran out of stock.

Speaker 2: 22:34

Yeah, yeah, what I'm curious to like where? What's kind of the. I guess, like when should you start thinking about these things? Like, obviously, if I'm a new seller, you know I don't necessarily need to be thinking I have a lot of stuff on my plate. But you know, you as a you as an Amazon seller, in general have a lot of stuff on your plate. So, like, assuming that you're at the, you should always kind of have that idea of like hey, I want to get to an exit, right, but when is it really time to buckle down and make sure that you're doing all of this stuff?

Speaker 2: 23:03

Well you're coming back to like, exiting isn't always selling.

Speaker 1: 23:07

You know it's. You're finding the right funding partner right, like my margins are good. I know my costs, everything is dialed in right, my listings are good, I'm ready to go. Yeah, I've reached out to a couple funding people and they go through their own due diligence and find out that you're on top of your stuff, you know what you're doing, and they and you have an awesome plan in place and they go. Yes, yes, the money. Let's grow together. So and then and then, just in general, like you know, the person that one doesn't want funding or person isn't exiting. You know, just following that step by step process, you know you're keeping as much money as possible should be at the forefront of every seller's mind. Yeah, yeah, like you know who doesn't want to keep all their money.

Speaker 3: 24:00

Well, yeah, so you know. To that I would say you know the ideal time, the optimal time is day one. You know, set it up and it, you know, it will just absolutely accelerate your, your, your success and if exit is your goal, it will accelerate and optimize your exit. So you know, you don't know the more you kind of leave it, because you know, if you leave it 12 months, for example, and then you know it's a pretty big effort to load in 12 months of data and then get the aha moment, start off and, like you know, and we'll know as an Amazon fellow, how competitive it is to start and it's survival of fitness, that is the it's. The survival of the profit is Wow, I just get up with that.

Speaker 3: 24:50

Yeah, I need to write this down more often. This is a quarter, right, but yeah, but. But. So you know, if you are serious about doing this and you want to rise to the top of a very competitive landscape, maybe the most competitive landscape, then start right away. You know, if we could get customers, you're like, wow, I'm ready to invest in my education about how to be profitable and it's an ongoing journey of in a building of habits. You know they will be 678 figure exit accounts in three to five years if they do it right.

Speaker 2: 25:30

Yeah, 100%. No, that makes sense to you because you know Amazon's become more competitive, but we, you know, if you don't know day one what your margins are going to be, of course they're going to change over time, but you can't make an informed decision on how much to spend on. You know how, what your advertising strategy is or what these other things are, and I think a lot of people it's. I've certainly been guilty of this. It's just I kind of just go in blind and then I'll figure that out, as I'm one time at the point where I need to exit or where I need to go raise capital or something. That's the wrong approach, right? Certainly, if you've gone through maybe that process before you don't, you're not as naive, no, as I was when I was starting. But that totally makes sense, I think.

Speaker 2: 26:09

The other question I was going to ask to her what are like the I know there's pretty much everything you guys touched on are places where people can improve, do things to improve, you know, and their margins and obviously a future valuation. But what are kind of the most common things that people miss or that are coming to you and you're like clearly can see, hey, fix this one thing. It's going to be a game changer for you. Are there any like really common kind of categorizations of things?

Speaker 1: 26:35

Yeah, I mean the easiest one is the pick and pack these Gotcha. Yeah, the Amazon is notorious for just randomly changing your, your dimensions or your weights. And actually I did find out. I mean I'm gonna give Amazon the benefit of the doubt and say you know, it's not necessarily you know. I think what I find out is it's the way the products are scanned on the conveyor belt and they have a. I think there's a camera, it's called the QB scan camera, and as the product comes along the conveyor belt, if the product isn't quite sitting the way it should be, it scans it and it changes the dimension of the product.

Speaker 3: 27:20

So, and and Amazon's not saying hey, you know our bad.

Speaker 2: 27:26

Definitely not. That's, that's not in the vocabulary.

Speaker 3: 27:28

I don't, I don't believe exactly, says you know, amazon never loses. So like that, that's you know like kind of like. Our mantra is like Amazon hosts unprofitable sellers all day long, amazon still gets paid.

Speaker 1: 27:40

Yeah. So I would say that's like the lowest handian proof, like no, that's the easiest thing that you can stay on top of.

Speaker 2: 27:46

Right, and I know we see we see the same, like we see a lot of clients of ours that the same thing has. They come to us and have Either they've they've picked up on it like hey, I'm seeing these constantly happen where my products getting moved to different category or just In the fee structure changes or it's being, you know, the measurements are off and that that I've never heard that before, so that that's a new thing that I've learned today. But and that's now causing my fees to be off. And again, it's not a big deal if you're it's on a product that's not doing a lot of volume, but the second year doing it on a cross, a ton, a huge catalog, with all these small, you know, discrepancies, or on any high volume product, that's can be a lot of money, right.

Speaker 3: 28:22

And it's more likely to be on a high volume product, because the more scans, the more whoopsies.

Speaker 1: 28:29

Yeah, that's a good point. Yeah, so we have actually a change log feature so it tracks every, every single time there's a dimension change and prior to that I actually had no idea how many times it was getting changed not necessarily the fee changing, but dimension changing. Dimension might go from your 10.1 to 10.2, back to 9.9, back to 10.5, down, and then hits 11, and that's when you get changed, that's when you get charged, right, yeah, so it's, yeah. I mean, I like to your point. I think this is somewhere you know sellers can really, you know they, they dialed it in they can go back and find some, some diamonds. But what's an interesting point is you used to be able to go back 18 months and claim on the pick and pack. Now it's 90 days.

Speaker 2: 29:19

Yeah, I know they've been changing the categories in the timelines quite a bit.

Speaker 3: 29:24

And.

Speaker 2: 29:24

I'm not surprised, to be honest. I'm not surprised Amazon's doing that.

Speaker 1: 29:28

Well, I don't know why, because back back in when I did it In 2019, 2020, I think, yeah, I got 90 grand back, yeah but that was over 18 months. That was over 18 months of errors, right, yeah.

Speaker 3: 29:43

Yeah, Amazon doesn't like that on their Bellachy.

Speaker 2: 29:47

Absolutely not. Well, yes, I think, like for for anyone and for the sake of anyone just watching this too, like I'll put my kind of two cents in here too is, but you should kind of always be monitoring, you know, your, your weight dimensions, have some kind of alert system. I know you, you guys offer one on your, with your service right, for that's modern at the skew or ace and level. There are other, there's others out there, but you know, having an alert system is key and that then allows you to actually go and take action and as soon as you see those changes, you need to then go and address them. Whether it's I think you've been open a case to request Amazon to go do a what should we call it? I'm blanking on it right now to go to brass.

Speaker 2: 30:26

Yeah, to e-ball for the reimbursement, but also to go and manually pick up one of the units, re-measure it, re-way it and then correct that. And then, after you get them to correct this structure, the fee structure, sorry, the dimensions and everything in the fee structure, you can then actually request that reimbursement. Historically now 90 days back, right, um, so if you're watching this, make sure that you're doing that and have an alert system of some kind check seller views out. Um. So, aside from that, I think I just, you know kind of a blanket question here, but what is the number one thing I could do to improve my profit margins? My head immediately is thinking, oh, try to negotiate better terms or, you know, reduce costs for my supplier if I'm doing a private label kind of products. But I want to get your guys take, like, what do you guys kind of recommend as like the number one thing, and maybe we've already addressed it.

Speaker 3: 31:13

But yes, you know it's dialing and you'll cost a good sold like that should be your laser focus. You know to. To Understand what you're saying, what your profit is, you have to understand what your expenses are.

Speaker 1: 31:26

So it's kind of like looking at it through that lens sure, and then you know being able to lay everything on the table. So once you have an idea of where the money's going, how much is going to suppliers, how much is going to design, how much is going to you know local freight and that's like that's a big one as well. You know getting it, getting it from the factory to the port. So you know, oftentimes you know if we can see that number. You know you have there's a bit, maybe a little bit, of negotiation In there. Be like hey, if I order some more units, if I can, can you include that local freight? Now, oftentimes the suppliers I mean oftentimes they just put it on the invoice, knowing that you're not going to ask, but sometimes you just ask Can you just include the freight and they go yes, sure, yeah, you know.

Speaker 1: 32:14

Oftentimes. You know suppliers, unless you're going to do like a massive order volume, they aren't going to like badge on there on their price. But the biggest one is shipping. You're shopping, you know for quotes and getting an idea on your quotes can drastically change your Unit costs. Like, for my example, we. We switched to a different carrier and for years we'd been using these, this carrier, and they were amazing. They're like customer service was good this and that and I was like, let's just try someone else which they were just as good, but the cost was a dollar less.

Speaker 2: 32:53

Right, yeah, which has a huge impact at the end of the day. Yeah, it's crazy what you get just by just doing a quick search or an exploring, or just by asking to like I've had that so many times, so I just like can I get a discount on that when I get something? And then, but you know what? Let me see. Oh, I have a coupon code.

Speaker 2: 33:09

Let's say you know I have got. I've personally gotten into habit of doing that, but that's a great point. Like Again, you can't know that stuff until you can have a clear picture. But yeah, there's a lot of opportunities. Probably like that.

Speaker 1: 33:20

Yeah. So once you know like you know it's with what's that said of you you know exactly what your unit costs are, the per unit cost on the factory, local freight design. You know product samples, you know shipping, inbound shipping, you know whatever, whatever the category might be, you can have a look at that and go, okay, where can I trim this down? And then you go through the phases and go supplier what can I do with the supplier? Do I need to switch suppliers? Do I need to maybe organize different terms with the supplier? And then, like I said, local freight shipping, you just go through those line items and you just go for it, you just push the envelope a little bit.

Speaker 2: 34:05

What are the normally the biggest expense categories that you see for most Amazon sellers? Is it cost of goods sold, or are there other categories that you're really seeing stand out there?

Speaker 1: 34:15

Well, I'd say, inside the cost of goods sold, there are three main categories. There are your landed costs, the transactional costs and then your variable costs. So I would say transactional, or what Amazon takes on the pick and pack and the delivery and the referral fee are the biggest expense. Then your landed cost, and I'd say the landed cost is where you have the most control over, where you can actually make a difference. The transactional costs you're not gonna get the referral fee done.

Speaker 2: 34:46

You're not gonna convince Amazon to give you a discount on your fee.

Speaker 3: 34:50

Do me a solid.

Speaker 1: 34:52

You can make sure your fees are correct, but that's about it. And then the variable fees is making sure that you're not sending too much inventory to Amazon and that you're getting loaded up an inventory fees. And then you need to do a cost analysis on whether your a lot of people have like a little 3PL or like a staging warehouse, and recently I would say, the cost of selling from your staging warehouse to Amazon is more than shipping from China to FBA, yeah, directly in gotcha, so sometimes so you're seeing, that as a shift, that more sellers are starting to shift directly into FBA.

Speaker 1: 35:33

Yeah, I mean like for us as well. I mean I got a huge warehouse in Florida and lately I had I've negotiated with my supplier to do smaller reoccurring orders that are just constantly flown to FBA and if there seems to be maybe a little lag in sales or something, and then I just delay the shipment to FBA. But again I mean I'm saving now a dollar on the partner carry free from my warehouse to FBA and I'm saving a dollar on the shipment. So that's two dollars just by doing those two things Right. But again, like if you don't have the data, you don't know that.

Speaker 2: 36:15

Yeah, yeah, and I was just thinking on the Amazon point too, like, yeah, it's too bad. I know they have a couple like programs that you can get. You know, if you know about them, you can put your products into like what's the they used to have for? I think they saw the small and light program, although I know they've changed some of the fee structures there and aside from like that's a great program. Yeah, did they recently make some adjustments too, cause I think they well I know, they're always adjusting it a little bit, but I think they changed what the qualifications are.

Speaker 1: 36:42

I think the price has to be a certain amount. The moment you like increase the price to something up, like over the threshold, then it goes back to the regular category.

Speaker 2: 36:50

Yeah, gotcha, but yeah, you know it's a bummer that besides that, really there's not a ton you can do.

Speaker 1: 36:55

Yeah. So, going back to the question, yeah, through those of the three months, the biggest leverage you have is on your landed costs and the variables.

Speaker 2: 37:02

Got it. Well, that makes sense. So I just kind of fast forward, like, let's say, I'm now at a more advanced stage and I'm actually starting to kind of go through, you know, that process to sell my Amazon business. I'm selling right now. Is there anything that I can do? Let's say I'm like already in the midst of it. Is there anything I can do right now to actually immediately try to make, you know, maximize that sale and maximize the value?

Speaker 1: 37:27

You know it depends on your broker, I would say but you know, if you're ready, if you really got like a letter of intent and you've agreed on the price, what I would say is what you can do is make sure that due diligence is as seamless as possible.

Speaker 2: 37:40

Do you have any tips like just again, I'm asking selfishly because I've never gone through that process Do you guys have any tips for that process or what that looks like? Give us a call, okay, call. Seller view.

Speaker 1: 37:53

So yeah, so we'll do the same process. That we'll do if you had called us, you know, prior to talking to your broker or a year ago is that we will go through the process. You know we will comb through the cost of goods sold, make sure everything is particularly it's where it should be, highlight how much they can save, and then I would just tell the buyer or the broker, like I would offer this as a value add for the business, like this is what we did, this is what we found, and you know let's have a great exit together.

Speaker 3: 38:27

Yeah, yeah, was to go on post purchase and kind of navigate, because the exit isn't, you know, both feet out at the same time. It's like one foot at a time, sure, so yeah, for sure. So the best time is, if you're getting in exit mode is at valuation. I would say kind of like that's the latest comfortable time, you know. But if you go to evaluation elsewhere or you get your evaluation from your broker or from the marketplace, you know I would it always pays to get a second opinion. Worst case scenario is your profits are actually worse but you don't tell the buyer that.

Speaker 2: 39:02

Right, yeah, I think that makes a lot of sense. Like getting a second opinion is good for most things in life. But yeah, that totally makes sense.

Speaker 3: 39:10

Yeah, and hopefully, if you're getting in the, in the mode to exit your business, you don't have surprise products where you're like, oh wow, I thought we were doing X and we're actually doing X minus yeah. But I'm confident in that we can always recover some profit and if the profit we recover does not match our fees, you don't pay.

Speaker 2: 39:31

Yeah, that's awesome. So I was going to ask you guys this a little bit later, but I actually want to now ask because it seems like a good time Do you guys have like a good kind of success story or just an example of maybe someone you've worked with that's either gone to this process where you guys have really helped out, or just kind of navigating as they get closer to it in terms of understanding their true margins and helping to maybe reduce costs or increase their, you know, improve their margins? You guys share maybe like an example and kind of what that looks like?

Speaker 1: 40:00

Yeah, so we actually do this thing that's called the profit makeover show. It's kind of fun.

Speaker 2: 40:04

So, nice.

Speaker 1: 40:05

So we have you know, like, like we do a, we do a company you guys have like a.

Speaker 2: 40:09

That's the one in they have the house makeover, one where they roll. At the end they roll the house and pull it away. So you can see the the new redone house.

Speaker 3: 40:16

You guys know that, yeah, we're like Chippin' Joe and again, yeah, there you go.

Speaker 2: 40:22

Here's your P&L before and after.

Speaker 1: 40:26

That's a good idea. I like that. Yeah, so we had one client, maria. So you know, same thing looking for valuation, yeah, kind of goes through, the goes through, the process goes through, you know. Or it all starts with like a free or complimentary audit where we double, we have a look at your training 12 months and kind of see, is there a way that we can help you, can we recover margins? And you know, if we can't believe, you know if we can. But we'll tell you. And, like Ryan said, if you don't cover the cost, obviously you don't pay. But Maria came, she did the, did the audit, we go through. She chose to continue with the full 12 month orders. We go ahead and do that. We ended up finding 3.4 percent margins back for her, which in her account was, when I was looking at, 97,000.

Speaker 3: 41:13

Yeah, that's significant.

Speaker 1: 41:15

Yeah, which, let me just get the fired up?

Speaker 2: 41:18

Was she when she?

Speaker 1: 41:20

you let her know that she was pumped because I mean 97,000 was amazing, but when she went for the valuation that number was that you know, and a 3X multiple was 341,000. Yeah, nice.

Speaker 3: 41:35

Yeah.

Speaker 1: 41:36

Yeah, and like, for someone you know like 3 percent. You know our goal is to find between two and 3 percent. You know like, even if you find 1 percent, you know, on a million dollars, that's an extra 12 grand. On a valuation, that's an extra you know 50 thousand dollars. I mean that's a free car you got when you sell, when you sell your business.

Speaker 2: 41:57

Yeah, or or or taking you guys out to a very expensive dinner or something in between, something like that. Yeah, like it's.

Speaker 1: 42:03

It's not big numbers Like 1 percent is not a big number, but the consequence of that number is huge. Right, someone's going to get that money, you know. Oftentimes, you know, we've had had a couple buyers call us and I just have a double check at their accounts and you know that's money. I mean, I'm a seller so I would hate that, you know, yeah, of course. So I want the seller to get the money right. So you know, imagine you sold your business and learned that you could have got an extra 300k out of it. That'd be quite upset.

Speaker 3: 42:35

Exactly, yeah, we have been approached by buyers as well, just being like hey, we're looking for, you know, latent profit, profit, and you know we're like, ok, well, yeah, there's 3, 3 percent hiding here.

Speaker 2: 42:48

Well, I'm sure they're pretty excited about that. I would assume yeah. That means that they pretty much got a good valuation on the business and then Exactly, so you know instant equity.

Speaker 3: 42:59

They don't even ask to flip it, they don't have to even do anything, they just have to rework the numbers.

Speaker 2: 43:04

So, yeah, for any anyone who's just bought an Amazon business might also be worth it to reach out to you guys. Yeah, guys, I want to switch it. So that was awesome. It was great to learn a little bit more about Maria and just ask those questions. First, I'm going to ask you a question that's going to lead into our next kind of segment here. But do you guys believe in pineapple on pizza? Is that a thing that you think is OK, or is that not?

Speaker 1: 43:26

I'm going to throw something out here that you might think is very, very weird.

Speaker 2: 43:31

But I just got back from South Africa.

Speaker 1: 43:34

We put banana on pizza Wow.

Speaker 2: 43:36

Yeah, I was not expecting that today, ryan, have you had that as well?

Speaker 3: 43:40

I have not, and I'm a pineapple on pizza. I put on pizza hater, oh brutal, and I don't even like bananas. So if you put them on pizza, it's, it's sacrilege.

Speaker 1: 43:52

I mean, I like Hawaiian pizza.

Speaker 2: 43:55

OK, so we're half or 50, 50. Here Was the banana on the pizza. Good though that doesn't sound like it's that would be that appealing to me, but I'm open to trying it, so I was actually there for a wedding on the sauce. We can, and then and that was at the wedding.

Speaker 1: 44:09

Well, that was for like the you know, the best of the party. We go out, you know we're going to get this and we need a little snack. And there were a few guys from the states there, you know, and then South Africans and obviously South Africans were like we've got to get a banana pizza. So a couple of guys were like we're not eating that. And guys were like, yeah, eight to month eventually tried it and this is actually pretty good.

Speaker 2: 44:30

Like we need to start a business in the US with this banana pizza. That's interesting. I've never heard of that before. Guys, that's going to lead me into what I call the controversial take section of the show. So essentially, just asking you guys to give us kind of a debatable topic or a controversial opinion related to Amazon or just the e-commerce industry as a whole that you guys hold that maybe other people don't hold the same belief in. Do you guys have anything that comes to mind?

Speaker 1: 44:55

Well, I mean, I definitely have one in mind, and I think this is probably the hot topic that everyone's discussing is Growth over profitability, and you know, like I got a goal. All it said of you is to grow profitably. You know, wow, what? What is that? It's a foreign concept. I believe that was post-2020, where I think that was a natural thing, and now I just I think I think we've lost sight of that. That's possible because of the you know, their abrupt fee changes and everything getting a lot more expensive, especially during the times where shipping containers were like 40 grand.

Speaker 1: 45:36

You know, like you know, well, I think we try to block that out of our minds and I think we've got into this, this, this, I would say rut of thinking that you can't grow profitably. So I think what people need to do is pivot, like we've been talking about this whole time is that you know your numbers and you know where you can find. You know a percent here and there and in that back, I think you can grow profitably. I think, over time, you know, if we go back to, like 2015, where the margins were like whatever, let's do this thing, you know not being dialed in on your margins and being OK with losing two or three percent wasn't necessarily a big deal. But you know, if I could go back to my former self in 2015 and go yeah, make sure you're as profitable as you can and keep as much cash as you possible, because these margins are going to be like this forever, I think everybody would have been in a different boat.

Speaker 1: 46:30

But I think now you know, like we have discussed, though, if we're doing everything we can to maximize the margins through the cost of the good, solid cycle, then yeah, why not grow profitably Sure?

Speaker 2: 46:43

Yeah, I love that. I think you know we were well, we were talking a little bit right before the show started, just about the Prosperity show, for example. That was everyone was talking about like the year of profitability, right, and that's especially kind of coming out of the post COVID. You know buzz around e-commerce and everything and just also the weird costs associated with all the things going on. But also I feel like there's been so much hype around, like you know, selling your business for these huge valuations and that kind of bubble that was happening around that time with some of the aggregators as well, and it just, you know, the stories that get reported on are always the ones that are like raising a ton of capital to grow faster, to exit and maybe you're never really profitable, but you had a hyper growth and that gets you to the exit faster. But that's not really working as much anymore with Amazon as we've seen, especially when they're continuing to increase the fees. It's just not a strategy that you can really follow. So I like that.

Speaker 3: 47:39

Yeah, and strategy is key and you know there's you know, I don't know if this is controversial, but there's there are so many gurus, so called gurus, out there that will promise to like double your traffic, double double your sales and triple your profits and all that sort of stuff. They don't have the experience and it's snake oil. So you know, there I love the way you open up the show is, there's no silver bullet here, there's no quick fixes. It's diligent work, it's habit building and it's focus and it actually makes it more enjoyable, because none of us want to hate this. So let's have fun doing it. Believe me, you're going to have more fun when you're making more money.

Speaker 2: 48:18

Fact of life, absolutely, I mean. That's why. That's why I started my Amazon business back in. Also, it was actually in the same time it's like 2016, ish and I did. That's why I was saying like I didn't think anything about my profit. Margins are just like this see on my calculator, I've just done. This seems to make sense. Okay, I'll order the product Now. I could not get away with doing that now, like if I were doing that, I could, it just wouldn't work. I still failed at that time, but I learned a lot, but anyway.

Speaker 1: 48:42

I think what's actually happened and I think it's a really good thing is, I think, like back, you know, 2015, 1617, even before, it was almost like a sad hustle. It was like it was super easy. Yeah, you find a supplier, you sell a widget, you make some money, order some more and you don't really have to do a whole lot. You're listings don't have to be good, you don't have to be like repressing tools. I mean, repressing tools were available back then, but very few people use them. Sure, now, I think now it's become actually like a real business where you actually have to pay attention. Yeah, no, that's a. That's a good way of putting it.

Speaker 2: 49:18

I mean, I always say the same thing is. And I got into. I was just trying to do the typical thing of like, hey, I'm gonna. I found like what seems to be an opportunity I can get into in terms of the niche go, order the product, no branding or anything. And then it was always kind of like and hopefully I will evolve to the next step, which is like now I have enough money and I'm selling, that I can kind of maybe add some branding. Now it's like you really kind of have to go in with the intent to build a brand or you know, of course there's other models in there, but and that's just one part of it Now, like you also have to go in thinking about these, having alerts set up, having your, your finances, all this stuff dialed in. What's your, your go to market, your launch strategy going to be? So, yeah, I think it's a just as the space has gotten more competitive and fees have gone up, yeah, 100%.

Speaker 2: 49:59

Like we need to get back to actually what are kind of the basics, in a way, right, like a lot of it's just kind of doing the stuff day in day out that you need to do and not over complicating it.

Speaker 1: 50:09

Yeah, and finding ways to you know whether it's your team or your outsourcing it, finding ways to remove those things that you don't, you shouldn't necessarily be doing in the first place. Sure, yeah, I think, as cell is, I think we're almost like program that we have to do and have a you know figure on the pulse of everything. But I think if we're monitoring, we can, in chiropractic, be cornered, find it, fix it and leave it alone. You know, you find it, you fix it and then just keep on, you know, keep on, you know, following that process, yeah, until you need to revisit that process.

Speaker 2: 50:47

Yeah, 100%. Guys, we're reaching the end of the show. I just I did want to ask Mark one more question. I didn't ask you earlier, but so you know. You went down this whole Amazon rabbit hole and, you know, sold your Amazon business. You guys started to sell our view together, but you still have the chiropractor business as well. Is that something you're still actively doing, or is that also done away with?

Speaker 1: 51:05

No, I mean, I keep my license active, just in case.

Speaker 2: 51:08

Just in case, or just in case, ryan injures himself again.

Speaker 1: 51:12

Yeah, that's mainly for that Ryan always injures himself yeah, for sure, for sure, yeah.

Speaker 3: 51:18

And I don't know if Mark could ever go back, because that chiropractic doesn't mean you have to actually wear shoes.

Speaker 1: 51:24

Living on island is definitely where flip flops ever.

Speaker 3: 51:29

Love it.

Speaker 1: 51:30

Yeah, I'm actually. I really enjoyed chiropractic. I mean I definitely you know, you know like, I think by like your dream would have like a retirement. You know retirement, you know practice on the beach.

Speaker 2: 51:42

Okay, cool. Well, let us know when you start that I would definitely. I would definitely go there. I would be one of your patients, 100% If it's on the beach in the Cayman Islands.

Speaker 3: 51:50

Yeah, I would definitely get injured there, yeah.

Speaker 2: 51:54

All right, guys. Well, for everyone listening, I just wanted to say to all of you, first of all, thanks for tuning in and also thank you to Mark and Ryan. Seriously really appreciate you guys kind of going deep into some of the, you know, less attractive or sexy sides of the Amazon business, but some of the things that can really have the most meaningful impact on your business want to address. So really appreciate you guys for showing up and dropping your wisdom and I hope everyone who's been watching this has enjoyed this episode as much as I have talking to these two gentlemen. With that being said, guys, I want to give you kind of a chance, though, to kind of tell people where they can find you guys and you know, just get a little bit more information about Cell Review or if they're looking for help with any of the stuff we've kind of talked about today. Just please share that. That'd be awesome and we'll put it in the show notes as well.

Speaker 1: 52:39

Yeah, I mean you can head over to the website which is theCellViewcom Talk about in quarter. There's a free profit audit that you can just kind of take some minutes to pull out, and once we've got that information, we can go ahead and do the audit that we just kind of discussed and make sure that you're a good fit and that we can help you, and then we can come take it from there.

Speaker 2: 53:00

Awesome. So CellReviewcom, that's perfect. So we'll put that linked down below in the show notes, wherever you're watching or listening to this and any other parting words from you guys. Otherwise, I think this is an amazing show. Yeah, thanks for having us man. Yeah, this was great, amazing. Yeah, we'll have to do a round two and maybe once I start my next Amazon private label brand or something, so I can actually, you know, selfishly get the free information by talking to you guys. But, yeah, I really appreciate you guys coming on today. With that being said, I think we'll wrap things up here and thanks everyone for watching. If you have questions, comments, anything else, let us know in the comments, if you're watching this on YouTube or anywhere else, that you're watching this episode. So, without further ado, guys, thank you so much for being here and for everyone watching. We'll see you at the next episode, all right, thank you, Ben Bye.