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November 20, 2020

Episode 11: FBA Private Label Success

Sell Rank Win Episode 11 Secrets to Private Label Success

In This Episode

Paul Walsh is a successful Amazon seller who channeled his expertise into a UK-based Amazon agency that manages over £20m in revenue per year. Paul shares his Amazon story and talks with Tommy about failures and success during COVID times.

TRANSCRIPT

Tommy Beringer:

What's up, you data-hungry Amazon sellers? This is your host, Tommy Beringer of the Sell Rank Win podcast from MerchantWords. And in this podcast, we give you the answers to your most burning questions, actionable insights that you can take away and implement into your business today. So let's go ahead and dive right into today's episode. What do you say? Let's go.

All right. Welcome everybody to the Sell Rank Win podcast. Thank you so much for tuning in. I have a very special guest on with us today. He is an account manager for multiple Amazon brands and brings in over 20 million pounds in revenue per year across all of these brands. And without further ado, we're going to bring on my good friend, Paul Walsh. Paul, how are you doing today?

Paul Walsh:

Good, thanks Tommy. Thanks for offering me a few minutes with yourselves. The podcast has been great so far, it's been a learning curve for me listening to the other experts as well in the field. So it's been great so far.

Tommy Beringer:

All right. Awesome. Well, let's go ahead and dive in. Paul, why don't you tell us a bit about how you got into managing these large brands on Amazon?

Paul Walsh:

Yeah, I'm based in Ireland, I've lived in Ireland and my whole life. I live just on the Irish border with the UK, which is a hotly contested zone with the Brexit negotiations going on. Not that effects Amazon that much at my end, things are ticking on as normal at the moment, albeit what is normal now with COVID and dealing with the virus and the impact of that. But I've been working on Amazon for about 14 years. I originally started selling stuff and working for a couple of different companies when I was just coming to the end of school just before college. And that scaled up over the years. I went from Amazon into Amazon and eBay, and that moved on.

But I stuck with the marketplaces, just to make sure that I'm working in a field that I know everything about. Whereas my worry was, if I stretched myself into Google and websites, I'd probably start losing a bit of the knowledge because I do think you need the complete focus on marketplaces to really stay ahead of the game and to keep up with everything. So I've been just growing the clients I work with over time, as well as growing my own private label brand on Amazon. And the reason for that is, I claim to be somebody who's in-the-know on all this and yet not have a brand.

So about two to three years ago, while managing other brands, I launched my own and doing these things alongside each other, and really focusing on Amazon and on eBay and some of the other marketplaces, just gives me a really good place to work in, and it's a really cool area to focus. So I really enjoy the jobs, the job's a dream, and I look forward to getting stuck in every day.

Tommy Beringer:

Very cool. Very cool. So are all the brands that you manage private label as well, such as your own brand? All private label?

Paul Walsh:

100% private label. That's been something which I suppose I've worked towards working with private label brands because it's a bit of a longer-term vision for want of a better explanation. What you've got with private label brands is they're in complete control, give or take, and they're thinking about the future and they're thinking about the customer and they're thinking about what they want to do. Whereas the retail arbitrage side is a bit more short term, and don't get me wrong, it's more skilled in some ways in the negotiation and the pricing and the margin analysis, but I like the long-term and as do the brands that I work with, and that's what we focus on, and that's why we stick with private label.

Tommy Beringer:

I absolutely agree, Paul. I have a private label brand myself on Amazon. And it's a lot of work being an Amazon seller as you know, but just, I think that the retail and the online arbitrage, that model, you're doing way too much work for a little amount of margin. The private label is just like you said, it's lending itself to becoming a full-on brand on Amazon, which is where Amazon wants you to go right now. They don't want you to come on for a one-off. They want to make sure a brand...

They're even reaching out to people to be verified by them, by you even going to one of their headquarters or something like that, or not a headquarter, but just meeting up at one of their offices or something to verify who you are and verify the brand, even get on a phone call like a FaceTime or something. They're taking those steps to make sure that these are legit brand selling on Amazon, and also, to get getaway all those counterfeiters and everything as well. But I agree with you, private label FBA model is definitely the way to go on Amazon, for sure.

Paul Walsh:

Yeah. I really enjoy it. You don't often wake up to find that somebody's taken your entire business away because of undercutting you and winning the buy box. I don't want to live in that world and I respect the people that do, because they're playing a tough game, but I like this one.

I suppose where my job blend in is I don't actively manage the 20 million myself. I work with some really smart teams who manage aspects of these brands on the operations side, on the customer service side and on the sales side as well. And then what you've got as well on the side of that is you've got your purchasing people and your R and D people and the whole mix. It takes a real team to put a real Amazon brand together. And what I do is I weave between these teams for these companies as the Amazon person, and it's ultimately my job to just really follow Amazon as it changes and help communicate how best these brands and these teams within these brands can work with Amazon. And that's what I love doing. That's what I enjoy, Tommy.

Tommy Beringer:

Absolutely. As we all know here, that you're a very busy guy, so we would love to hear about what is your typical work week or day? Just walk us through if we were following you around, walk us through what that looks like.

Paul Walsh:

So for anyone new to Amazon, the week starts on a Monday, which is the toughest day of the week. And it's the toughest day of the week for a lot of people in life, because the weekend's just over and you're just back to work. But if you think about a Monday, brands who aren't inside FBA, as in brands who are doing MFN or FBM as it's known in the community, people who are doing that are having to get up on a Monday and they have to ship all of the orders from lunchtime Friday, all of Saturday and all of Sunday, which is two and a half days of normal work inside one. So that's tough. That asks a lot on Mondays.

Now, as I'm mainly focused on the sales side, I have a step back from that, but for a lot of people and for a lot of the departments that I work with, you've got that real push on a Monday to clear and to get through, and that's a big part of the week. As soon as that's over and you've handled the weekend orders, you're through a chunk of the depth of work there. But I would typically get up, I would check the sales and just see that everything's going okay, coasting along. Things are always up and down, so what I would recommend is checking the sales and if it's 30% done on the day before, that's where you start getting concerned, but anything less than that's pretty normal. Things go up and down like all aspects of life. So you just kind of have to go with that.

I do an urgent priorities check after that and see if there's anything that needs dealt with immediately. I then move on into weekly progress check-ins with different people in different teams and just checking how everything's going. Are all the new products that have just arrived from, I don't know, from South America, are they all listed and correctly put up with our eight images to make sure that the customer's seeing every aspect of the product? And after these kind of check-ins with specialists in their fields, I move on to the big key agenda and strategy that I'm focusing on that month and which things I really want to get across the line.

Some of the bigger pieces, like a real investigation into FBA and where its limits are and what we're going to do with that as the next step. For example, as the IPI starts to control more of what you do and your storage is really down to your IPI, we have a lot more focus on with the FBA. We really got to run a healthy ship. And what Amazon has started doing there is they don't want slow moving products. So all this needs to feed back to strategy. And that's what I move into around lunchtime in the day after I've gone through some of the key tasks.

Tommy Beringer:

Very cool. Yeah. Very busy guy, as we just heard right there. And so you are 100% fulfilled by merchant, or do you do any FBA?

Paul Walsh:

Yes. About 30% FBA. So the UK and the US is very different, and people can correct me if I'm wrong here, but this is my take. All parts of the UK, including the North of Ireland are reachable within 24 hours in terms of shipping product. And so FBA basically gets everywhere within 24 hours. Whereas I know in the US, you've got your zones and you've got your East coast and West coast, and you've got the likes of the areas that just aren't covered within that one day to two-day block, and maybe take a bit longer.

And I know obviously Amazon is putting a lot of work into that. But what we also have in the UK, which is a big opportunity, and I do know that it's there in the US but it's just not as wide-spreading, and there's not as many people on it, but we have Seller Fulfilled Prime, which I suppose is a halfway house between MFN and FBA, where the MFN seller uses Seller Fulfilled Prime to reach the customer and the customer's eyes, they're still getting them within the prime window. So we've got a bit of that over here as well. So we're talking, one, two, three, 4% maybe seller Fulfilled Prime, we're talking maybe just shy of 30% FBA. And then the rest is MFN. But that's a rough breakdown and different businesses require different things.

Tommy Beringer:

Yeah. That Seller Fulfilled Prime is great. You're saving money on overhead there, for sure. You're increasing your margin there, you're fulfilling it by yourself, and you still get to have that Prime logo, which is awesome.

Paul Walsh:

Yeah. And it's cool that way. I think the learning curve unfortunately, has been that Amazon's economy to scale with the couriers and the carriers and the postal services, they're able to achieve a 24, our price significantly easier than for example, myself, some guy in Ireland who's ship shipping much, much, much, much less items than Amazon is. So that's the only place where we can get stung. You might lose a bit of margin because you're having to pay for a 24 hour service. So it's hit and miss, Tommy. It goes both ways.

Tommy Beringer:

Yeah, no, definitely. But of course also, if you're SFP, Seller Fulfilled Prime, you just got to make sure you hit those metrics or they just rip it away from you too, as you know, I'm sure. But I'm sure you guys are meeting all that criteria in the backend, what it sounds like. You got a well oiled machine over there. So Paul, how about we dive into what's going on right now with the pandemic in regards to Amazon selling. COVID-19, again, hope everyone is doing well out there. So as an account manager of large brands, what has been one of the biggest pain points regarding COVID-19 that you have dealt with, if you want to just stretch on that?

Paul Walsh:

I think that's a good question, Tommy. I'd have to give that some thought, but off the top of my head, which probably answers your question because they are the biggest bugbears, two of the key issues that we've really had here are the purchasing side of the product, and as I've said earlier on, this is private label. So we're buying from factories or manufacturers that are dedicated to our private labels in a variety of countries. That's been tough, as has the logistics, and I'll dive a wee bit into each.

On the purchasing side, what you've got there is you have items coming from numerous places all over the world, and each country has been hit at different times by this pandemic. So you've got your China delays are different from your Thailand delays and they're different for your Vietnam delays, so each aspect or each group of your products that's coming from a different place has been slowed down at a different stage. COVID at the beginning, intertwined with the Chinese New Year, and the Chinese New Year ended up then stretching out for it got to two and a half months, which meant that there was a lot of delays. And then it was a big surge after that was stuff coming out of China.

And because of that, that then hit the second thing that I was going to talk about, which is logistics. I've been reading some of the statistics and some of the listeners may know a little bit more than me, but it seems that the container price, the shipping price and freight price from certain locations, mainly Asia Pacific to the US and to Europe is significantly dearer than it was pre-COVID, we're talking 30, 40% increase. And that's because of so much more product on the move now because of the delays of nothing moving or virtually nothing moving for two to three months, we're talking February, March, April time. So that's had a big play on logistics.

And the other end of logistics is the more localized end, the last mile, as it's called. We're talking here, USPS, UPS, and FedEx. If we're looking at Europe, we're talking about the likes of Royal Mail, GLS, EPD. What we're seeing with the couriers and with the postal services is you don't just have temporary price increases due to COVID, you now have some price increases that are planned for the Q4 and Christmas period, and what you've got as well as you've certain providers that are pretty saturated and having to maybe step back from services. I've even heard recently that Amazon Logistics in the UK are having to pull back from a few of their offerings. And I saw as well in the US Amazon Logistics stalled on some of the shipments that they were doing for people.

So down to your question, we've had a lot of disruption on the purchasing and logistics sides, which are totally key for these businesses. I think the reason for that is they're the most external parts. We've got our teams who are able to sell on Amazon, and to be honest, they all just started working from home and they were safe at home and everybody was glad of that. Some of them had to work from the warehouse, but these people were able to work from home very quickly. So we can carry our Amazon sales side of things on, but these external sources like the purchasing and the logistics, we have no control over that. And a lot of those guys had a tough job as well within the likes of the logistics companies, they suddenly had to deal with much higher demand and it's been tough for them, but I guess that's been the hardest part for all sides as businesses to manage is just keeping on top of those external aspects.

Tommy Beringer:

Yeah, absolutely. And for me, I've seen some freight costs go up myself, so it's not just you guys for sure. But hopefully they come back down, who knows if they'll come back down, but... Another thing I wanted to ask you was, did you see any increase in sales due to COVID? I know that some spaces have definitely gone down, but there's some spaces that actually started trending upwards. I wanted to see if you saw that in any of your products or your clients' products?

Paul Walsh:

Yeah. That's a good question. I've been following the industry trends and what it looks like is the UK has grown quicker than the US, perhaps because the UK has more room to grow in terms of Amazon probably has more market saturation in the US than the UK. So definitely UK growing at a faster rate than the US. But I think across the board, the numbers that are coming out is that e-commerce has increased by somewhere between 40 and 60%. Thankfully for us as a group, we've increased by about 120%. So we've managed to really move on this. And I think part of the reason for that was when things got tough in March, we didn't close our doors. We started working more because we looked at this and thought as businesses, we need to really make this work here. It's make or break time.

So we started shipping on more days, we started offering more services and we started just pushing ourselves a bit more to get through. And that carried on with a lot of Saturday and Sunday work across the board. And to be honest, we're coming out on the other side, having taken a step forward, probably because we've maintained the levels of services that the customers want, and I think the algorithms in the marketplaces have reacted to that. So we're very happy with our position and we worked for it and we built it as has been done with numerous steps in the business' development over the last 10 to 15 years. But we're very pleased with our position and now it's a case of just holding that great spot.

Tommy Beringer:

Oh, definitely was great to hear that you guys are doing well. And it sounds like that most of your revenue is coming in from the UK marketplace. Is that correct? And if not, what other marketplaces are you guys possibly looking to scale into?

Paul Walsh:

That's a really interesting question, Tommy. So the difference here again between UK and US is the US is the biggest Amazon marketplace by a long stretch. And I think because of that, US sellers or sellers who originate and began to sell on Amazon.com or Amazon US, I think they're much happier with where they can get to with Amazon US alone. Whereas in the UK, we know that the UK, Amazon is only the second or third fast marketplace to sell on. So there's much more of a pool from as soon as you launch to get internationalized.

Now, what we also have as well is we have four very significant other countries in Europe connected to us, and very close to us in terms of the shipping time, in terms of a flight time, and that as France, Germany, Spain, Italy. Now, those marketplaces in Amazon has been established a long time. You've got some of the younger ones like Sweden and the Netherlands, which have only come on in the last 24 months, but those marketplaces have been going strong and we've been going strong in them for a long time. And also, we know that the US is a big opportunity, so we've been going strong there for a long time.

The breakdown is about 70% UK, seven zero. It's about 10% European sales, which is a combination of those four countries, and it's about 20% US sales. The European side may sound very small, but you're dealing with translations there and you're dealing with four different translations and that really as a big barrier to entry. Some of the French guys and the French sellers, they're the much, much easier route to sell on Amazon France than the likes of us who, I don't speak French for example, so it's much harder for me to conduct keyword analysis in a language I don't speak. It's much easier for me to do that in English, which opens the UK and the US doors to us. So that's your buyers to entry you're looking at with internationalizing, but and we have a decent spread, I'd say probably better than average.

We know US customer looks for different things, and we work to that, same with the European customer. But we've been very happy with the spread and we look at Amazon as a seven marketplace, or maybe 12 marketplace puzzle, but for us there's seven big countries in that, and there's still another five for us to really work on and start to try and develop. So that's what I'd recommend to any listeners is just look on Amazon, look at its depth in other countries, and just think what are the obstacles that I need to remove to be able to sell in that country and their fulfillment? Really spending a lot of time working on Amazon and will eventually get you there.

Tommy Beringer:

Yeah, no, definitely. And that is a bit of a barrier to entry there, getting those listings translated. Because I started selling in Mexico myself and I saw that Amazon actually had translated my listing for me, which is pretty cool. It wasn't the best translation, but it worked. I'm getting sales over there, so it is working. And my MerchantWords team had made that translation a bit better for the Amazon marketplace, for sure. I mean, for the Mexico marketplace.

So I wanted to ask you, what are your thoughts on trying to scale off of Amazon too, like bringing in sales, but not having all your eggs in one basket, as they say, just on the Amazon marketplace? Do you see any value in obviously keeping your Amazon brand, but then also maybe scaling outside of Amazon as well, like maybe on a Shopify or something like that?

Paul Walsh:

Yeah. I think the work that Shopify has done, especially in the past two years has been incredible. And I think where they step in, Tommy is they look like they're really bridging the gap between the marketplace people, which is people like me, on the website people, which is people who are very, very good on former Magento or what is now Shopify in terms of the market share, and very good on the likes of Google AdWords and PPC and Google based SEO. I think Shopify is really bridging the gap there. So I've been very interested in not development, but what I've done is I've really stuck to what I know, and there is experts in the Shopify field and the Google ad words field and the Google based SEO field, and I kind of let them be at it.

And what I would recommend is obviously for every seller, especially with private label to take those steps because that money is out there, and I'd say it's harder to achieve perhaps on the likes of the Shopify end, because you've got so many parts. Amazon has only got one part, which is Amazon. It's broken up into a variety of things, but once you know Amazon, you know Amazon, whereas what I find with Shopify is you got to be a bit of a website person and you kind of got to be a bit of a Google AdWords person and a bit of an SEO person on a bit of an email marketing portion. Whereas Amazon's a bit more of a one contained box kind of thing.

So that's the way I'd be looking at the Shopify and the website side. But what I would say about the other marketplaces is, if you look at some of the big lists in terms of revenue of which marketplaces are doing what, you've got Amazon, you've got eBay, and then you've got some pretty good country-specific ones. You've got the likes of Newegg and I think it's Australia and New Zealand they cover. And to be honest, each country has taken its own liking certain marketplaces.

But if I really had to give a tip, what I would say is Amazon and eBay, they've got the majority of the market and they have held that in terms of marketplace sales for a very long time. I think if you really master them, you'll be in a really good place. And then once you've got teams and people working for you, and you're at a much broader range as a company, I think that's the time to maybe look beyond them. So where I'd be looking right now is Amazon, eBay, Shopify.

Tommy Beringer:

Yeah, no for sure. Everything I have is on Amazon. That might be a mistake, but I don't know. But I like to find those niche products and then just survive within the Amazon ecosystem, so you're not competing so much in nutraceutical stuff, pet spaces, which are highly competitive. Just trying to find those niche products, some products that you never even heard of before. You can actually take the number one spot on the search engine results page pretty quickly and easily just driving Amazon sponsored ads. So that's what I like to do, but then also, those bigger brands of course, do try to drive that outside traffic in also putting up a different site outside of Amazon. But Amazon is where all the buyers searches start from. So you got to be a part of that if you want to generate some more revenue and scale up.

So Paul, we're going to go ahead and wrap this up. We try to keep these short and sweet. You have given us so much value here. And now here at the end, we always like to give our listeners one tip that can help them in their business. So maybe someone who's looking to become an account manager for large brands, what would you say, or even any type of tip, what would you say to that person who's looking into getting into the Amazon selling space or becoming an account manager? What would you say to them?

Paul Walsh:

I'll try and be quite useful and quite helpful. So I'll give a short term tip, one that's hyper-relevant at the moment. And from what I can see, Amazon opened the gate this week for everyone to a program called Remote Fulfillment with FBA, which is basically for anyone who's on US FBA, you do a couple of things, a couple of maneuvers on Amazon. But once you do that, your FBA stock in the US is available for Canadian and Mexican customers, which is a massive step for really opening up that market.

I think what it's excellent for is all the Canadian customers who've probably struggled getting access to certain products. I think they're going to suddenly have the flood gates opened, and they're going to have a hell of a lot more of what's available in the US. As a seller, it's relatively simple. It's just under the inventory tab on seller central, but that's really opened the doors for people, and I'm definitely one who backs the development of the likes of Amazon in Canada, because I think it just opens up the doors between the US and Canada and gives us as sellers a big opportunity here to take a very simple step that will go quite far.

So that's the short term one. And the long-term one is, I've been working on Amazon for 14 years, and if I had to be honest with you, I know now after all these years, how far I am from that knowing everything about Amazon, and I've never felt further. But the thing that I've taken away from that is I'm able to look at this now and say to myself, "I'm weak in this area. I need a lot of help, and this is my barrier." Whereas I think a few years ago, I thought that I just knew you Amazon and here I was, and I could either do good at it or I could do bad at it, but it's much more complicated than that. I suppose that's a life lesson, but what I would say is it's taken me 10 years at Amazon to really crack it, and it's only now that I realize how far I still have to go.

Tommy Beringer:

Yeah, no, totally. And you know what? With Amazon, it's always a learning curve every day, I think for every seller and brand out there. I don't think there's any way that we're going to be able to know everything. And it's always good to continue to learn, because if you're not learning, you're dying in a sense. But Amazon's always coming out with something new in their TOS or whatever it is. So it's like learning something new every day. That's what they say. You're learning something new every day and you're probably learning 10 things new from Amazon every day in compared.

Paul Walsh:

Yeah, exactly. Exactly.

Tommy Beringer:

I feel like there's always something new. It's like, okay, I got to figure this out now, but it is what it is. That's the name of the game with Amazon. So if you want to play on their playing field, that's what you got to do. You got to stay in line with the TOS.

So Paul, we're going to go ahead and wrap this up. Thank you so much for coming on, much appreciated you taking time out of your day to come on with us at MerchantWords, for the Sell Rank Win podcast. And I wish you nothing but the best and hope to have you back on sometime soon.

Paul Walsh:

Thanks very much, Tommy. It's been great just having nice conversation with you. It always reactivates the mind talking Amazon. So I'm always one for talking shop.

Tommy Beringer:

Absolutely. And I'm here to talk offline anytime you need. And so also, that's the one thing I forgot to mention is if people wanted to reach out to you, how can they get ahold of you?

Paul Walsh:

Paul Walsh on LinkedIn. If you search my name, Paul Walsh Amazon, maybe on LinkedIn. Some combination of those words, hopefully, you'll find me. Paul Walsh, Ireland, Amazon, that will hopefully connect you with me.

Tommy Beringer:

All right. Perfect. Thanks so much, Paul. Much appreciated, and we'll talk to you soon.

Paul Walsh:

Thanks a lot, Tommy. Have a great day.

Tommy Beringer:

All right. Thanks, Paul. You too.

All right. Thank you guys so much for listening. And if you got any value out of this podcast at all, please let us know at the place that you listened to it at, whether it be iTunes, Stitcher, or whatever it is. Give us some love, give us an awesome review and let us know maybe some things you want us to talk about on the next podcast. Till next time guys, stay awesome and be awesome.

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