The D2Z Podcast

Amazon Success Secrets: Navigating E-commerce with Mike Begg - 105

• Brandon Amoroso • Season 1 • Episode 105

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In this episode of the D2Z Podcast, Brandon Amoroso speaks with Mike Begg, founder and CEO of AMZ Advisors, to uncover the latest trends shaping e-commerce on Amazon. They discuss the challenges and opportunities of launching brands on the platform, strategies to build strong client relationships, and how to leverage diverse traffic channels for long-term success. Tune in to learn the essential tactics for thriving in today's competitive Amazon ecosystem while getting a sneak peek at future trends in off-platform advertising and live-stream shopping.

Timestamps

🛤️ Mike Begg's Background & Journey into E-commerce (00:00:00)

🏢 Challenges of Building an Agency (00:03:00)

🌎 Relocating to Mexico (00:06:38)

🎯 Client Profile & Sweet Spot (00:08:16)

⚖️ Positive and Negative Changes on Amazon (00:11:42)

🛡️ Intellectual Property & Supply Chain Challenges (00:14:16)

⭐ Gaining Initial Reviews for New Brands (00:17:13)

📈 Media Buying On and Off Amazon (00:19:15)

🚀 Launching a Brand on Amazon in 2024 (00:20:53)

🌟 Growth Prospects for Amazon (00:23:02)

💸 Reducing AWS Costs via Investor Credits (00:26:07)

📧 Contact Information & Closing Thoughts (00:27:09)


Mike Begg

LinkedIn - https://www.linkedin.com/in/mbegg/

AMZ Advisers - https://amzadvisers.com/


Brandon Amoroso:

LinkedIn - https://www.linkedin.com/in/brandonamoroso/

Web - https://brandonamoroso.com/

Instagram - https://www.instagram.com/bamoroso11/

X - https://twitter.com/AmorosoBrandon

Scalis.ai - https://scalis.ai/

Speaker 1:

I'm Brandon Amoroso, and this is the D2Z Podcast building and growing your business from a Gen Z perspective. Hey everyone, thanks for tuning in to D2Z, a podcast about using the Gen Z mindset to grow your business. I'm Gen Z entrepreneur Brandon Amoroso, founder and president of retention as a service agency Electric, as well as the co-founder of Scaleless, and today I'm talking with Mike Begg, who's the founder and CEO at AMZ Advisors, which is a full service e-com and digital marketing consultancy of extensive experience in creating high growth strategies for brands and manufacturers on the Amazon platform. Thanks for coming on today.

Speaker 2:

Thanks for having me, Brandon. I'm happy to be speaking with you today.

Speaker 1:

So before we jump into all the things we want to cover today, can you give everybody just a quick background on yourself and your business?

Speaker 2:

Of course. So myself, I'm originally from Connecticut in the US. I actually live in Mexico now. I've been down here for about six years.

Speaker 2:

After college I wouldn't work at the big four, I wouldn't work in consulting at Deloitte. I kind of realized that I hated consulting. I went into real estate development. From there I worked on some really big projects for Sears and while I was at Sears I kind of started seeing that the writing on the wall for retail was there and e-commerce was getting more and more popular.

Speaker 2:

Amazon at the time had been buying up distribution centers, buying up malls and turning them into distribution centers, and it was kind of like why is that? And it opened up my eyes to selling products online. From there I kind of launched my own products, started selling my own brands, was importing products from China to sell them online, and at that point we kind of realized that we were competing against a lot of big name brands and we were stealing market share from them. So it opened up our eyes that these other brands don't know what they're doing. So from there we started the agency AMZ Advisors. These other brands don't know what they're doing, so from there we started the agency AMZ Advisors. We've grown it to about 60 employees today. Where we are today, and yeah, just continue to grow year over year.

Speaker 1:

Nice, and was this your first leap into the entrepreneurship arena?

Speaker 2:

It was. I mean, obviously, selling my own products was technically the first step, but the agency was the first business that I really built, and I never had the intention of being an entrepreneur. I never wanted to go that route. It was more coming from working at Sears with the company failing at the time and coming to the realization that there's no such thing as a secure job. Do I trust other people's decision makings or the leadership of Sears to make better decisions than I trust my own decision making? And that kind of is where it got me to the point of well, no, I need to do something on my own because I think I can make better decisions than other people for myself.

Speaker 1:

I feel like there's always that one catalyst or push that sort of gets you over the edge and you sort of end up falling into it, not even necessarily intentionally, it's just out of a force of necessity.

Speaker 2:

Yeah, exactly, and I mean I went from consulting to real estate, to marketing. I have no background in marketing, but it was something I was interested in. E-commerce was something that I was good at and I was like, hey, let me just turn this into a business.

Speaker 1:

So what's like one thing that you didn't expect, uh about you know going out and building your own agency. Uh, that that surprised you Uh.

Speaker 2:

Oh, man, that's a tough one. Uh, I think the first thing I didn't expect was man, that's a tough one. I think the first thing I didn't expect was how picky some people are about things. I guess it makes sense, like not coming from the men from. Like I said, it was my first venture into entrepreneurship the idea of what client expectations were going to be.

Speaker 2:

I was working at consulting in Deloitte. I was working with big companies, so the expectations and the way that people work is much different. They aren't the business owners. A lot of the businesses we're working with on the e-commerce side are the entrepreneurs themselves or the founders, and it's a one or two person operation and every dollar counts and they want to see exactly where it's going and they're just super picky and super demanding. And I think that was really tough to deal with initially. When we started focusing more on larger companies or more established brands is where it started getting a lot more comfortable, because it's tough when you have a lot of really high expectations from clients or really high demands from clients and it leads to you creeping outside of the scope of what the original work you're you're doing for them is.

Speaker 1:

Yeah, and I think it's easy to do that when you're small, like when I started, I would do pretty much anything, and so some of our early clients got used to that.

Speaker 1:

But then as you try and grow and scale like your own business, you need to stay within scope. You're paying other people, there's clearly defined deliverables and the scope creep is not I mean, it's harmful to the business bottom line, but it's also not something that some of the team members can even support because they're not an expert in this other area that the client is trying to push them into. But it is an interesting dynamic how the largest businesses are actually the easiest to work with, because you know I can't even tell you how many times I've done work and audits for you know hundreds of millions of dollar businesses and you know they may never even see the light of day, but those are the easiest engagements in the world. Whereas you know you're working with like the very low seven figure e-com brand and you're meeting with the founder every day and they are just busting your balls the whole time about this and that, and it is a. It's an interesting transition for sure.

Speaker 2:

Yeah, I mean, it's always part of the dynamic and that's exactly what it is. It's when you have someone who's complaining about spending $1 more on the budget than what you agreed on. It's just like dude, you wasted my time Like I don't need to put up with this, and I think that's part of it.

Speaker 2:

Uh, it's kind of realizing how much uh of that type of nonsense you're willing to accept. Uh, and once you realize that you're not going to accept little things like that, you start shifting your focus on who the ideal client is, and then how, and then it just becomes how do I get more of these ideal clients, how do I service them better and how do I keep them for longer?

Speaker 1:

So yeah, what prompted the move down to Mexico?

Speaker 2:

So, like I said, I'm from Connecticut and Connecticut's great, but during the winter it sucks, it's freezing cold, and I'm a big skier but like the closest mountains are like three hours away, or the closest big mountains are like three hours away. So I was like, well, I can either live here and be miserable for three months and like on the weekends, drive up to the mountains, or I could just be warm and live somewhere where I want to. And uh, when we were starting, when myself and my partners were starting the agency, uh, we moved down to play del carmen in mexico, um lived there for about three months while we started getting traction and then, once the company started taking off, I decided I wanted to go travel. I wanted to go see more of Mexico, but also of the world, and I ended up coming to Guadalajara, which is where I live now, and I met now my wife, but she's from Guadalajara.

Speaker 2:

We didn't start dating at that point. I left, went and traveled, came back and then, after a few more months, we ended up dating, starting to date and now we're married. But that's how I ended up here and that was like six years ago, seven years ago almost, and it's been good. I mean I can't complain. It's like the coldest it'll get here during the winter is like 45 at like 2 o'clock in the morning in January, when I'm not even awake, and the warmest it is on average is like 75 during the winter and like as hot as like 100 during the summer.

Speaker 1:

Yeah, that's a little bit better than Connecticut, that's for sure.

Speaker 2:

Yes, definitely.

Speaker 1:

So, in terms of your client profile, what types of brands are you typically working with?

Speaker 2:

So we've found that we get the best success and actually this is kind of a caveat of what you were saying before is that bigger companies are easier to work with? Is that bigger companies are easier to work with? We worked with, we went really big. We worked with some fortune 50 companies on their e-commerce side, and it was tough to manage because there were so many stakeholders at that point and the stakeholders were, like you know, every different department wanting their own thing, and that got difficult to manage.

Speaker 2:

So we found our sweet spot was really between like one to 20 million a year online and with those companies, we're pretty much able to double or triple their sales within a year. So that's kind of the sweet spot we're looking for. I mean, when it comes to like product categories, where we see some of our favorite categories are like consumable products, so food products, supplements, baby products, pet products, you know that type of stuff because it's all about customer acquisition and customer lifetime value, and those are two metrics that we can use to benchmark our performance and show hey, we added this many new customers at this much cost and they're going to provide this much value in the long term. So that's something we really like focusing on and in those niches, those types of products and that size company.

Speaker 1:

Got it? Yeah, I think even. I mean, some of those products don't even make sense, like off of Amazon. You know we had some clients on Shopify, like kombucha clients, or you know low cost per unit, you know high shipping costs and um, they've just completely gone to only Amazon because they couldn't make the margins work. You know, trying to acquire customers on their Shopify website, the Amazon efficiencies were just much greater.

Speaker 2:

Yeah, I mean you see conversion rates that are two to three times higher on Amazon versus like a Shopify website and, like you said, the cost of shipping is a big determinant as well on how sustainable it's going to be. So when you're selling something that has a low cost and a high shipping cost, your margins are just going to get eaten away by any little thing.

Speaker 1:

They're negative. Typically, it was the wild west during COVID, when every brand just made a Shopify store and didn't really think about whether or not the financials made sense long term.

Speaker 2:

and didn't really think about whether or not the financials made sense long-term. Yeah, it's like every DTC food brand like I even tried my own that I pretty much saw or like followed on LinkedIn or whatever, it's like doesn't exist anymore.

Speaker 1:

So that was one of the interesting outcomes of COVID. There's a few that have made it and all because you know they're in Whole Foods now, they're in Kroger's, they're in the brick and mortar and that omni-channel experience with that component Amazon, shopify, sort of all working in unison together.

Speaker 2:

But it's very difficult obviously to achieve scale within that particular channel. For sure, and, like you just said, it feeds back into each other. Once you get into retail, then your brand awareness and your customer acquisition on Amazon and online becomes so much easier because people are already aware of the brand, versus trying to convert someone who's never heard of some whatever kombucha brand that he brought up that they saw on an Instagram ad or a TikTok ad or whatever it is.

Speaker 1:

How has Amazon changed since you got into this to today, both from positively and negatively?

Speaker 2:

and negatively. I would say the biggest changes on the positive side is obviously the ability for brands to get up and running, like it's gotten easier and easier to some extent. The negative side is that the platform has become more pay to play, so like you can launch a brand and be very niche and if it's very niche you're going to see sales. But if you're competing in a main category the you're going to have to spend a ton on advertising just to get the visibility. So that's like the biggest trade-off is.

Speaker 2:

Like when we look at the different ad types that come out, like six years ago, seven years ago, I guess eight years ago, when we were starting the agency, there was mainly like sponsored products, which was like the ad results that came up in search results.

Speaker 2:

Those were like the standard ones and those are still pretty much the standard ad on Amazon I mean, it generates about 80% of the sales on Amazon and those types of ads.

Speaker 2:

But then they added in sponsored display, sponsored brands, sponsored brand video, sponsored brand, custom creative sponsored display on platform and off platform. So like all you see is like more complexity and it makes sense because Amazon, at the end of the day, is just a search platform and the way that they monetize is the same way that Google monetizes. It's from ad placement. So you have people that are going to Amazon searching for products. You need to pay to get the visibility and, with all of these additional ad placements coming out, you need to continue to pay more over time, and that's probably the most negative thing that's happened on the platform. It's still possible to find little niches to get into and launch brands in, but it's definitely a little bit more challenging than it used to be Because, like I said, in a lot of these main categories there's multinationals, multi-billion dollar companies that have almost unlimited ad budgets buying stuff up.

Speaker 1:

Yeah, it was definitely a different environment and the ease of creating, I think, storefronts. While good, it also adds in, you know, extra competition as well too, for sure.

Speaker 2:

Do you have to?

Speaker 1:

deal with. Do you have to deal with? Uh, I always hear cause I'm not super like involved in the Amazon side of things, but you know, maybe you have like a really successful listing and then, oh you know, next month three others pop up that are, you know, kind of similar to whatever the product is that you're offering. Uh, do you have to deal with that at all in any of your categories?

Speaker 2:

It happens from time to time, and the main things there I guess it's another evolution of Amazon that I wasn't really thinking about in the last question is that the brands need to become more sophisticated. So you need to have really tight supply chains. You need to have IP. You need to have ways to protect your IP, like brand registry on Amazon, so like when brands pop up that have the same product and you have the IP projection in place, you can be like nope, you copied my patent, you copied my design, whatever it is, take it down. That is one way to deal with those types of things.

Speaker 2:

But there's also other like challenges that come from the supply chain side of things. But there's also other challenges that come from the supply chain side. So if you're selling your product to a bunch of different distributors and they're selling it to a bunch of other resellers and there's no map agreement in place, then you have the issue where all these resellers start coming in listing below product price or below the map price or the MSRP price, whatever you want to call it, and they start undercutting you and now you're competing on Buybox and now you're losing sales that way. So that's probably more common than seeing like competitor products like pop up. I mean that happens as well, mainly if you're working with like Chinese manufacturers that are not very trustworthy, like I've had that happen to me personally before, where a Chinese manufacturer just ripped off our product and started selling it for half the price. But yeah, I mean that type of stuff does happen from time to time.

Speaker 1:

Yeah, I've definitely seen that before, where you have a bunch of random sellers that are offering the same product and some of them look very sketchy. Some of them actually don't. They look like they're real and reputable businesses. But I think having your checklist and making sure all your ducks are in a row before you try to start running on the platform is probably pretty important.

Speaker 2:

Yeah, it's more necessary now than ever, and there's other pieces that come into play there. So good examples of this is Amazon requires more documentation for consumable products now. So you need product testing, you need all that type of compliance stuff. So that's a little bit more challenging to launch in those categories. And the big shift that Amazon just made is now you have to buy your product testing from us or, through our platform, from the actual vendor. So now it's like all tied together and that has its own cost to it. So there's always like a markup, and that's part of the challenge with it is Amazon finds more and more ways to get more money from the sellers.

Speaker 1:

Yeah.

Speaker 2:

They're very good at increasing fees for people, and that's just part of the business.

Speaker 1:

When you're launching a brand into a, into Amazon, how do you go about getting those those first reviews, cause I know, like I'm never buying a product that's under, you know, a hundred plus reviews, and usually they have thousands. So how do you get to that point though?

Speaker 2:

I would say, uh, the first way is with Amazon buying. Uh, like, Amazon buying gets you the initial 30 reviews. I think it is. Uh, it's just giving product away to people that are, like, essentially certified reviewers by Amazon. That's the way to get the first reviews. Beyond, that is really challenging.

Speaker 2:

The biggest way to do it in my opinion is and within staying within the terms of service of Amazon is finding ways to get customers that are purchasing your product on other websites to leave reviews on Amazon.

Speaker 2:

So, customers that are purchasing your product through Amazon, you can't incentivize them to leave a review on the platform, but if the customer bought through your DTC website or you have them on your email list or a different way like that, you might be like, hey, can you consider leaving a review on Amazon and we'll give you a discount code for you to purchase the product.

Speaker 2:

That is not against terms of service, because those people came from outside of Amazon and you push them to Amazon. So that's one way to try to push more reviews that way. Another way is like and it's a little bit tricky because it doesn't work a hundred percent of the time, but like the influencer approach you could have do like influencer marketing. Have influencers leave product review videos on your page and start pushing traffic from their channels to Amazon to try to get their customers to purchase and leave reviews. There are ways to do it. It's mainly with driving traffic from outside of Amazon, versus trying to game the system within Amazon and get more people to leave reviews from people that are buying the product on Amazon. It kind of has to happen organically.

Speaker 1:

When you're running your sort of media buying programs for these brands, is most of it going through Amazon, like the ads are displaying on Amazon itself? Or I think I saw like they maybe partnered with Facebook now so you can run Facebook ads to Amazon and have attribution there? Are you doing any like off platform media buying?

Speaker 2:

So about 95% of what we do is all on Amazon. We don't buy much media off Amazon. It is possible but, like when you're looking at those types of ads, it's more about brand awareness or top of funnel than anything. So and the clients we work with are very concerned. You know, in a way we're a performance marketing agency so they're very, they're very concerned about performance. So if we're dedicating a large percentage of the budget to brand awareness, it's not going to have the best return on investment in the short term. In the long term it will. So it's very difficult to get them to kind of shift that mindset and start thinking that way. It's like, hey, I'm spending this money now I want to start seeing a return on it and that's fine. And there's plenty of opportunities to do that.

Speaker 2:

On platform, you mentioned Amazon Attribution. You can use Amazon Attribution with a variety of off-platform networks. So we do it with affiliate marketing for our clients. So, like we do it with affiliate marketing for our clients, so we recruit affiliates, we give them the links, they push traffic to Amazon. They get a referral fee for every sale we get through their links. And that's like one use case of it. Other use cases could be like, like you said, Facebook meta ads could do Google ads, all of that, pushing through the attribution links to tie it back to the channel. So it is possible. It's just not a big part of our strategy.

Speaker 1:

Got. It Makes sense. So if you were going to start a new brand in 2024, today and like launched on Amazon, I guess, for starters, are you even doing it, Do you think it's, do you think it's worth it? Or are there particular like verticals where maybe it is and maybe it's not? And how can somebody think about you know which verticals have opportunities versus those that that don't? And then, second, with launching it, like you know, what are the three things you're going to be doing to set it up for success?

Speaker 2:

So I've kind of alluded to some of them already and I would say the first thing to focus on would be categories that are consumables, that have high customer lifetime value and where you have a good margin on your customer acquisition costs. So the types of categories that are like that tend to be cosmetics, tend to be supplements, pet products, like pretty much all the categories I named earlier. Those are the categories that I would launch in, and I actually am launching a supplement brand as we speak. We've just been getting quotes right now on the production costs. But, like, those are the ones I would focus on.

Speaker 2:

Focus on Now what I would do to help gain attraction or get going on the platform is I would focus a lot on bottom of the funnel ads to make sure I'm converting on people that are searching for non-branded keywords or generic keywords. So if I'm selling a supplement let's say it's protein powder, it's a terrible example because the cost per click on protein powder is extremely high. But I would focus on those types of keywords because that's bottom of funnel. Then I would start focusing on outside traffic. How can I start building traffic to Amazon? That's going to help me Uh, that's going to help me acquire customers at a lower cost or a lower cost per click ads. I run on Google ads, I run on Pinterest ads, I run on uh, you know, whatever other platforms are probably going to be cheaper Affiliate marketing, influencer marketing, all that type of stuff pushing traffic to Amazon is where I would be focusing a lot of my time and that's where I am going to be focusing a lot of my time on the new brand I'm launching.

Speaker 2:

I think that's probably the biggest keys to success. So you got to be aware of margin. You want something that's high margin. You want something that has high customer lifetime value. You obviously have to have a good product. If your consumers don't like it, it doesn't matter. And then, yeah, I would just focus on diverse traffic sources to try to find a lower blended cost of customer acquisition by combining it across channels.

Speaker 1:

And where do you see the most growth coming for the Amazon platform as a whole, going into the rest of this year and next year?

Speaker 2:

It's tough to say. I mean, when we look at the platform itself, will continue to grow with the availability of ad space. A lot of the ad space you'll be buying will be placements off of Amazon, because Amazon's literally running out of inventory that they can put on the platform. I think that's where you'll start seeing the company continue to grow is trying to push you more and more to advertising off platform. That's probably number one. One of the challenges for growth, I would actually say, is that consumers are generally pretty concerned about the economy. Although spending in Q1 was higher than expected, I expect that consumers will continue to look for deals, so products that are low priced or competitively priced will probably perform better in the short term. So I think like that's a category which will see a lot of sales. It's going to be harder in higher priced product categories but again, this is where focusing on consumables and customer lifetime value can actually offset that change.

Speaker 2:

Uh, and then I would say the other big focus is just going to be on uh, video and live stream shopping. Uh, amazon live launched a few years ago. It hasn't really gained a ton of traction but, as we've seen, with TikTok taking off, there is the opportunity for it. So I think if Amazon continues to test new ways to improve live stream shopping or improve video shopping, I think we'll start seeing that becoming more and more popular, and I think I recently heard that Amazon's planning on launching its own social media network within Amazon. So I think I recently heard that Amazon's planning on launching its own social media network within Amazon. So I think that's probably going to be their push to try to drive sales from video.

Speaker 1:

That'll be interesting. I wonder whether or not that'll pan out or not. I feel like that's been tried before a few times and it hasn't worked very well.

Speaker 2:

Yeah, I mean, they've tried it themselves in a variety of ways with Amazon posts and I think this just can be the next evolution of it. But it's great, when you have that much money, that you can just experiment with different things and see what drives revenue and doesn't.

Speaker 1:

Or AWS, making you billions of dollars, so you don't really have to care about the profit from any of your other business units.

Speaker 2:

That's also true. That's a that's a big benefit.

Speaker 1:

It's crazy how expensive AWS is like for my other um company, uh, which is uh on the tech side like our. Our server costs are insane and we haven't even launched yet, like we launched at the end of May.

Speaker 2:

Like we're paying Amazon how much for this, and it's all starting to make sense. Fortunately, we were able to get some credits for our costs, for our software costs, and that makes a big difference. I think we've gotten like $35,000 in credits to date and next one is like a $50,000 credit that we're looking for. So that's one way to offset the cost. But yeah, it is insane.

Speaker 1:

How do you go about doing that?

Speaker 2:

I would try so. Normally you have to be a portfolio company of like an investor. I would reach out to investors and just see if you can get listed as a portfolio company without them actually investing in it, because that is kind of a backdoor way that we did it.

Speaker 1:

So nice, the uh. There's programs like that with like HubSpot, for example, I think we pay like 75% off as the like the startup as a part of one of their portcos, Um, but it definitely adds up over time, that's for sure.

Speaker 2:

Yeah, I mean that's something we did, I think it was. I think we got like, I think we got like 90% off when we did it that way. But it does save a lot of money when you're able to use that.

Speaker 1:

Yeah Well, thank you so much for coming on the show today. This was super insightful. I really appreciate you taking the time, but before we hop, can you let everybody know where they can connect and reach you online if they want to chat more about Amazon?

Speaker 2:

Of course, yeah. So the easiest way to get in touch with me is directly my email, mikeatamzadvisorscom. You can also reach me at amzadvisorscom or on my personal website, mikebeggme.

Speaker 1:

Awesome. Well, thank you everybody for listening. As always, this is Brandon Amoroso. You can find me at brandonamorosocom and I will see you next time.