How many times have you seen YouTube ads from “Amazon” gurus who claim to have the “secret” to success? You’ve seen the claims and the eye-raising sums. You’ve probably seen the “proof” (although, in most cases, that proof is little more than an Inspect Element trick) and there’s no doubt you have been tempted.
The bad news is that most of those courses are nonsense. People who can make millions buying and selling Amazon businesses don’t waste time creating $99.99 courses.
The good news is that Neil Twa really is an Amazon business guru. He really does know how to create and flip Amazon businesses, and he has made countless millions doing it. And in the latest episode of This Week With Sabir, he revealed his secrets and his process, covering topics such as:
- What to Sell: The first step is finding a product to sell. Forget about selling what you know or what you like. It’s all about selling what people want to buy, and there are tools and processes to discover what those products are. They include asking questions like, “What product can solve a common consumer issue?” and using tools like Helium 10.
- How to Optimize for Amazon FBA: If you’re moving into Amazon FBA, you need to be prepared, and that means optimizing your listing and your operations. Focus on the margins and remember that you’re building toward an exit strategy and not a career.
- How to Sell: You’ve built your brand, now it’s time to sell. Your business doesn’t need to be perfect, as buyers will look for ways to optimize, improve, and get more than they paid. However, you need to have multiple products with a history of sales, and it helps to support these with a Shopify/WooCommerce platform.
For more information, and for elaboration on all of the above points, check out the full article and video below.
Building, Optimizing, Growing, And Selling Your Amazon Business
Neil Twa is an Amazon business expert. He has launched, bought, and sold countless 6- and 7-figure businesses and knows this platform better than most.
I also have a lot of experience on the Amazon platform. My work as a consultant typically revolves around Amazon and I have helped many companies to get started here and to grow their businesses.
On the latest episode of This Week With Sabir, I sat down with Neil Twa to talk about optimizing for Amazon FBA and launching businesses with an exit strategy.
The ultimate goal is to show you how to launch, grow, and eventually sell an Amazon business.
Whether you’re still in the ideation stage or you have an established brand that’s ready to move to Amazon, the following guide will help you.
How To Build And Sell Your Amazon Business: Your Exit Strategy
The ultimate goal of many Amazon gurus is to sell a business, and that’s true whether they are building it from scratching or buying an existing business and optimizing it.
In my discussion with Neil Twa, we talked about how to build an Amazon business with a view to eventually selling it.
It’s your exit strategy, and if you keep it in mind from the outset, you can sculpt your business into one that buyers actually want to own.
The following guide will also help you if you’re looking for long-term success on the platform and need to optimize for Amazon FBA.
1. What The Hell Do I Sell?
What is the best product to sell on Amazon?
The answer is not as straightforward as you might expect.
There is no “perfect” product. Sure, there are gurus out there who will claim to have found the perfect product and will even sell that information to you, but they’re making the same sale to everyone else.
Even if there is a “perfect” product right now, it’ll lose that status once thousands of competing Amazon sellers are trying to buy from the same manufacturers and sell to the same consumers.
Neil Twa recommends focusing on the consumer first.
The perfect product is one that:
- Has a high margin ($12 as a minimum; $40 to $50 as the ideal)
- Doesn’t require a major initial investment
- Isn’t being sold by everyone else
- Solves a common problem
The final point is key, as it’s something that holds true for everything that Neil Twa sells.
All good products solve problems, and they do so in a way that appeals to a wide variety of consumers.
Imagine, for instance, that you have a toothache. It’s debilitating, crippling, and making your life very difficult.
You go to a dentist, and they tell you that they can fix the tooth for $300 in 3 weeks. However, at a cost of $1,000, they can remove it tomorrow.
You have the option. Do you have the budget needed to push for the $1,000 and is that extra amount worth it to get the problem dealt with immediately?
For some consumers, the answer is a clear and obvious yes. For others, it’s just not something they can consider, and they need to wait.
Of course, there are also consumers who will drop $5 on a bottle of clove oil, numb the pain, and then spend the next few weeks hoping it will go away.
All of these options provide solutions and that’s what you must do as an Amazon seller.
During our discussion, Neil made it clear that there is no “perfect” product category, as they are subject to change and are dependent on a multitude of factors.
But he did add that there are millions of potentially great products out there and if you can find one that solves a problem—whether you’re the one selling quick-fix clove oil, expensive solutions, or sensible options—you’ll have your perfect product.
There are a couple of caveats, though:
Do Plenty Of Market Research
The first step is to find which product to sell. You can use tools to help you with this and Neil recommended a few during our discussion:
- Helium 10: A complete solution that contains everything a first-time Amazon seller needs to get started on the platform.
- Jungle Scout: A tracking and management tool used by many Amazon sellers.
- Phoenix: A tool that Neil uses to improve the quality of listings and bridge the gap between data and action.
These tools will give you the data to help you find a gap in the market. You’ll learn what consumers are buying and what way the trends are moving.
Most of your early work will be looking at data and doing market research. It’s important to get this step right because you’ll need to buy, ship, and prepare your product. It’s expensive, and if you ultimately sell something that people don’t want, your business venture will turn into a money pit.
When you eventually find a product, it’s time to source it.
If the product can be sourced cheaply and with the right margins, you are ready to move on to the next step.
If the shipping and sourcing costs are too high and other Amazon sellers are pricing you out of the market, go back to the drawing board.
Don’t be too emotional about the process. If you find a product that you love but it’s ultimately impractical, you need to drop it and move on.
As Neil notes, it’s a data-driven process. You’re still trying to find a solution to a common problem, and you’re still focusing on selling a quality product, you’re just doing it from a data-focused perspective.
It means that you don’t end up selling designer sneakers just because you’re a collector. You don’t focus on gaming laptops just because you’re a gamer.
You also don’t want to turn into one of those desperate business owners that you see on shows like Kitchen Nightmares. Don’t throw everything you have at the business and then continue to funnel money into it when it fails.
Buy your initial batch of units, take them to market, and monitor the returns. If it isn’t working out and the data supports that, give up and move on.
Limit your risk in those early stages and you won’t lose a lot of money if you eventually need to pull out.
What Not To Sell
Although Neil Twa didn’t recommend any specific categories, he did warn against a few of them.
For instance, he recommends avoiding clothing unless you are an established brand. It’s a cheap commodity product that everyone is selling. Not only will it be difficult to find your place, but most of the consumers you’re targeting want to touch, feel, and try their clothes before they buy.
It doesn’t matter how watertight your returns policy is, no one likes re-packing and shipping clothes every time they don’t feel right or fit properly.
Supplements are another category to be wary of, as you’ll be contending with regulation issues and Amazon compliance, making it a minefield for new Amazon sellers.
Finally, Neil warned against going into electronics. It’s a tough and saturated market and as everyone wants the latest tech, you’ll constantly be updating your range and will need a lot of money behind you.
2. Is Amazon The Right Platform?
If you already have a brand, you could open an Amazon seller or Amazon FBA account, but first, you need to know if Amazon is right for you.
It’s not just a way to get your products in front of 100+ million more customers. You have to think about:
- Relevance: Are your customers actually using Amazon? There’s no point launching on the platform if the average Amazon user won’t buy what you’re selling.
- Cost: Does your product make sense in the Amazon marketplace? If your margins are very low or you’re selling a luxury item, it’s probably not a good fit.
- Fees: Can you continue to turn a profit when Amazon’s fees are included? This is why it’s important to find a product with high margins.
- Value: Will you be devaluing your brand by listing it on Amazon? Are you adding a luxury brand to a commodity marketplace?
For more information on whether Amazon is right for you or not, check out an earlier episode with Anderson Salgado.
3. Can You Cover The Shipping?
If you’re opting for Amazon fulfillment, you have to consider shipping costs, and these are not limited to the individual units shipped by Amazon.
Your products have to get to Amazon in the first place and that means paying a delivery company to ship all of your products to the distribution center.
The pandemic has skyrocketed the costs of shipping. It has been massively disruptive to the supply chain and that has created all kinds of delays and price increases. Those prices will eventually come down as the pandemic eases and things get back to normal, but it’s still not cheap and if you can’t cover those costs and make a profit, you can’t make it work.
4. Build On Shopify
Neil Twa says that he gets excited if the company has a separate Shopify store (or another ecommerce store), but only if it is well managed.
It gives the brand an extra outlet and it’s something that can support an Amazon business and interest a buyer.
It only takes a few minutes to create a Shopify store and if you’re handling the distribution yourself and not using Amazon fulfillment, it won’t create much extra work for you.
If it takes off and you find yourself struggling to handle the orders (a good problem to have), there are distribution and logistic companies to help you.
What To Look For When Buying An Amazon Business
What are the key factors to consider when buying an Amazon business?
Profitability is key, obviously, but diversity is more important.
One or two hit products is not what Neil looks for. He wants to see a business that has multiple products, all of which are doing well.
If the business is relying on a single product, it limits the opportunities for expansion. It means that the brand has gotten lucky in one specific category and has struggled in all others.
As a result, it’s always one competitor away from losing all of those sales and that success.
The speed at which a business can be turned around is important, as well. You need a business that you can turn around in 90 days or less.
Are there ways that you can optimize the business listings to increase sales? Can you improve operations to reduce costs and increase margins?
It’s okay if the business is a little rough around the edges. You can make those fixes and bring it up to scratch, but if you’ll need to spend the next 6 to 12 months gutting the business and building it from scratch, it’s not worth it.
Finally, the business must be well managed and show high-profit margins.
The lower those margins are, the harder your job will be.
The ultimate goal is to flip a business so that it’ll be worth much more than you paid for it. If that means you just need to optimize the pages, buy larger volumes of product, and do a little marketing—perfect!
If it means you need to rethink the approach, change product categories, find a new supplier, and change the branding, you should probably look elsewhere.
The good news is that many of the businesses that blow up on Amazon don’t really know why their products are so successful or what they’re doing right.
They might be making a lot of mistakes and may not have the capital needed to expand or the knowledge needed to optimize.
If they’re offered a lot of cash, they’ll take it, offload the responsibility, and focus their efforts elsewhere.
After just a few months, you can undo all of their mistakes, optimize product listings, streamline operations, and sell for a big profit.
The $100,000 Question
I always ask my guests for their “$100,000 advice”, a tip, strategy, or recommendation that could generate 6-figures in value.
As for Neil Twa, it all came down to what he calls the “Platinum Principle”.
The Platinum Principle revolves around building and selling a business. The purpose of this strategy is to build a business with the sole goal of selling it.
If that’s your purpose from the outset, you can prepare your brand accordingly and ensure that it’s ready for a big sale.
You’re growing a brand with an exit strategy in mind. If you grow a business that has at least 5-figures a month, you can sell it for high 6-figures.
You’re building an asset, not a job or a passion.
It’s a repeatable business, and after following the strategy once, you’ll have more cash the next time around, allowing you to invest more money and get a greater return.