Rolando Rosas 6:18
I want to unpack what you just said. There’s a lot there. Amazon is still the dominant player when it comes to the online marketplaces. And one of the things that just struck me, did I really point this out like they’re still dominant no matter what’s happening, is this post that I want to share with you in a moment. But before we go to the post, you were an MMA guy, right? So you know what it’s like to get knocked down. You know what it’s like to be in the pros, in the in the big leagues, on the big ring and the big stage, right? And you know what it takes to get to the top, if you want to be one of the top MMA fighters, and to get break into the league and do well, right? You know what it takes, I think, and I believe that Amazon, in terms of a league, is now the big leagues. You can be on eBay. It’s not Amazon. You can be on your own website, like you’re saying, direct DTC. It’s not like being on Amazon. You can be on all those other platforms, Etsy, Walmart, all these they still do not compare to Amazon. And what Amazon can do for you. And in order to succeed there, you gotta treat it like that. It’s the big leagues that post from LinkedIn. The founder of marketplace pulse, he had this on LinkedIn the other day, and this was from similar web. If you’re listening to this, on the audio, on the video we have on YouTube, it ranks some of the top ecommerce websites out there, marketplaces, and as of this year of 2024 Amazon is still number one, number one. What was even more surprising to me Mina is that temu jumped into the second place, jumping eBay, but Walmart is not even in the top three, and of those, the only one that probably has the dollars and an infrastructure set up closest to Amazon is Walmart, but they’re still number seven to me, that’s I was blown away when I saw this, and it shows how difficult it is to even touch what Amazon is doing today in terms of the marketplace 100%
Mina Elias 8:26
and and let’s also mention that Amazon has four of the top 10 placements, like Amazon is number one, number five, number eight and number nine, amazon.com.japan.de and then dot India. You know what I mean. So it’s like you would be joining be German, not only is it ranked number one, but it ranked four times in the top 10, which means no one’s going to come close, but even if other people came close, right? It’s like, you think of a business model that’s better, like, it’s hard to think of one, right? Because, again, if you’re selling product, you can go to stores, right? A liquid IV story. He started off in Whole Foods. And he started off trying to sell the product is he was giving it away in Whole Foods and all this stuff. And it was able to get it to multiple Whole Foods. And then he went to direct to consumer, and then he went, did a lot of influencer stuff. Then he went to Amazon. That’s one option, right, going through retail. Another option is, like we said, DTC. Another option is other marketplaces. But when you start like playing it all out, Amazon comes back as the easiest one. It’s, it seems like the most competitive, but I don’t think so. I think it’s actually the easiest one to succeed in. You just need to know what you’re doing and the skills that you need to learn. So first of all, you don’t even need to worry about your logistics at all. You’re just sending pallets into Amazon. Amazon’s fulfilling everything, so you need to worry about the marketing of the product. That’s the only thing, having a good product, and marketing it on Amazon, as opposed to if you’re a DTC, you need to worry about logistics. If you’re in retail, you need to worry about logistics. So if you’re DTC, you need to figure out how to do marketing on Facebook or Instagram or. Or paid search or SEO. So you have to figure out those things which are way more complex than trying to figure out simply, how do you do PPC, or simply, how do you optimize your main image or listing images with DTC, you have landing pages, and you have so many different variations of landing pages that you have to figure out right with Amazon, you’re limited. You have one main image, like five or six supporting images, one video, one brand, story, premium weight, plus content. That’s it, and it’s the same modules you just the only thing you can do is change the creatives. And the beautiful thing is, you have competitors where you can directly compare your creatives to those people and say, Can I just one up my top competitors? Right? You can’t really do that with DTC because it depends on the audience and depends on where they’re coming from, which ad they’re coming from, and what’s the landing page, and you can have different funnels. It’s so much more complex, I think Amazon’s still the easiest, even though it’s gotten harder and more sophisticated. Stop comparing it to what it used to be. Why don’t you just compare it to its alternatives, which is, it still remains number one, the most dominant force, and number two, the easiest to figure out.
Rolando Rosas 11:06
What would you say if there are folks, whether they’re starting out or they’re further along and they’re like, I mean, I hear you, it’s the easiest of them all. It’s got the most traffic. It’s still dominant. What are you seeing as the biggest pitfalls when it comes to being an Amazon seller. And you talk to a lot of them, you have your own agency, so you get to get a front row seat to many sellers that are talking to you about this where what are the biggest pitfalls right now when it comes to Amazon?
Mina Elias 11:37
Yeah, so number one, I think creating a product and then stopping the innovation of the product. So Amazon is a marketplace, and it’s essentially a direct comparison of multiple products. So I’m looking for a, you know, gallon water jug, right? So I’m typing in gallon water jug on Amazon. Results will show up. I’m just going to be drawn to the image that is the, you know, most attractive to me, with the most attractive price, with enough reviews that give me confidence in the product. And I’m simply comparing what’s that product versus the other product. So if all of them are gallon jugs, whatever, right? But if this is a gallon jug that, for example, has something special in it, maybe it like hydrolyzes the water, or something like that. So it puts more hydrogen in the water, making it even better for you, or something, just giving an example, and the price is in line. Now, immediately you have a better gallon jug than everyone else. And so I feel like a lot of brands, I have a lot of clients, 100 over 180 clients, and I do not recall off the top of my head, any of them who have innovated in the last year? Maybe a few, maybe a few. I know one of them
Rolando Rosas 12:47
you attribute that to. I don’t want to gloss over what you just said, yeah, you have 180 clients, and not one of them has iterated something new and innovative. What do you think that is?
Mina Elias 12:59
I think it’s it’s difficult. I think it’s difficult to constantly have like a research and development system, right? Because if you think about it, what do you need to do? You need to first understand the market. And so understanding the market means you need to be going out and asking people, people don’t want to do that. They just want to rely on give me the helium 10 keyword search results, and let me look at my competitors. You need to be in touch with your customer. You need to understand your customer which is hard. You need to talk to them which is hard. And then from there, you need to constantly figure out, okay, what is that new innovation that I can put into my product that is going to make it better than everyone else, and that’s also hard, so I think it’s just a difficult thing, and people don’t like doing hard things. You’re
Rolando Rosas 13:41
right. I want to highlight what you just said, because it is a very hard thing. You can succeed on Amazon. This comes from a marketplace pulse from 2022 and we have some newer numbers that just I was looking at this morning. They’re very similar in terms of where the money is being made and how much somebody sells in a given year? The vast majority of sellers are in that $100,000 range in terms of annual sales on Amazon. And that’s not a lot if it’s a if that is a business versus a side hustle, that business is not really generating a lot of profit, even if you start moving up the pyramid to the $1 million level, that only represents around 4% of sellers, which still is it’s definitely 10 times more than 100 but it’s only 4% you move up into the 5 million, less than 1% so above 5 million, fewer than 1% of sellers in the marketplace for Amazon are commanding that much. And highlighting what you said about the difficulties of Amazon, I believe I saw something where today they’ve have a total worldwide about 9.7 million sellers, and roughly 2 million are active. If it were that easy, if it was. So easy, almost all 9 million should be active sellers, versus the almost 2 million worldwide that are active. And so of the 2 million, of the 9 million, only 2 million, there must be a lot of churn. There are a lot of people that throw in the towel. People give up competition, all sorts of reasons, suspensions as well. You throw that in there from Amazon, because Amazon is Amazon, but it shows that if you want to be on Amazon, you can succeed, but you’d have to master all those things that you said, PPC, SEO, images, a plus content. All of this is not set and forget it. I haven’t seen anybody yet that’s told me, yeah, come on in. Except for the guy selling courses. I want to make this seem like passive income, and set it and forget it. Don’t worry about it. Go to Alibaba. You found it for a buck. Sell it for 20 you see the guy on helium 10. That’s number one. Similar image. Put it on Amazon. You’re going to be there, selling easily 50 grand a month. I’ve never seen anybody come back to tell me that they did that and it worked exactly,
Mina Elias 16:02
exactly. You’re right. It’s only the course people because they’re selling a dream. But absolutely, man, I think with Amazon, it’s just it’s gotten more sophisticated, but, but I also feel like the entire world has gotten more sophisticated. So I don’t think it’s anything unusual. I just think now, if you want to succeed on Amazon, it used to be easy. You used to make a product and find like something that’s selling and whatever, get a bunch of reviews, and all of a sudden, there’s more demand than there is supply, so everything is good. Now the supply has overcome the demand, so there’s more supply than there is demand. So when that happens, the only way to succeed is competition. You need to compete, and you need to compete at the highest level. And again, I don’t think it’s that hard, right? I think it’s traffic and conversions. So when it comes to conversions, I would say that’s where you want to start. You want a main image that is very attractive. You want your listing images to be beautiful. You want really good brand story and premium A plus content. And you want all of your images to do a very good job of selling your product. You want everything to be like sales, language infographics, you’re not just, Oh, this looks attractive, but more this is convincing me why this product is better than everyone else. You want a competitive price, you want to be getting reviews, you want to optimize your SEO and your title and your bullet points, and that kind of covers 90% of what you need to do to improve your conversion rate, right? And then, when it comes to traffic, it is simply a matter of testing different keywords so you can show up in different search results in different positions, identify which position works for you. And if none of the positions are working, stop spending money on that keyword and try a different keyword. And then you just keep investing again and again all the different keywords until you figure out which keywords and at which positions work the best. And then that’s where you’re driving traffic to your listing, and it’s converting profitably, and then you just work on 1% better every single day. How can I make my main image a little bit better? How can I make my listing images a little bit more convincing? How can I make my premium a plus a little bit better? How can I get more reviews? Most sellers that I talk to do not have a review strategy. They don’t have a hey, I’m confident and know what I’m doing for the next 12 months to get, let’s say, like, 10% of my orders as reviews. So if you’re selling 1000 units a month, they don’t have a strategy to get 100 reviews a month. You know what I mean? And I understand it’s, again, it is difficult because everything’s against Terms of Service. Some people are afraid to do anything. Gray Hat, right? Go out there and actually ask people, hey, I’ll give you the product for free and exchange for free and exchange for review because it is against Terms of Service. But do something, you know what I mean, like, maybe include a warranty and have them opt in, and then start engaging them and ask them, like, Hey, how’s the product, whatever. And then develop a relationship and ask for review. If it’s one person’s full time job, they need to just have four conversations a day, and or, yeah, four conversations a day. What is that? Four times five is 20. So 80, 8080, a month. So that’s you’re going to get 80 reviews a month. And that’s imagine someone like a virtual assistant that speaks good English emailing four customers a day. Or, let’s say they email eight customers a day and they get four responses back. And they can convince them like that. This is a company that cares about them, whatever. Please leave a review. That’s if you want to do it fully within Terms of Service, right? People like they want to focus on the PPC, because it’s almost like gambling. It’s like blackjack, right? Like you’re immediately getting a response, I bet this much. I hit, I didn’t hit. I stood whatever. And this is the result, and that’s what PPC gives you, that immediate dopamine of yesterday, I spent $50 I made 80. Yesterday I spent 100 I made 200 they don’t look at the images, which is, it’s not as simple to know, okay, I’m optimizing. If you’re optimizing your images, you need to keep PPC pretty steady, optimize the images and see the impact on your total revenue. People don’t want to spend a lot of time doing that, and we optimize images for our clients. And when we do that, I’m like, Okay, six months later, I’m like, Hey, like, we should optimize again. And they’re like, we just did the images. I’m like, we did them six months ago. Let me show you your top competitors. And they’re like, oh, wow, they look better than us. I’m like, yeah, like, they saw you looking better than them, and they. And now they want to be better than you, and so now we have to beat them. Very
Rolando Rosas 20:03
true, very true. You said something that I want to come back to, because it’s important to what you just saying right now, which is, if the average, let’s say the average seller, improves 1% every year, that means that in five years, the average seller has gone let’s just say they were at 50. We were, if it was a barometer, or they’re at 50 now they’re maybe at 55 so your game has got to come up to that new level, because all the other sellers below you started getting better, and that requires, like you said, Nah, we gotta go back six months, or three months even, because the competition sees okay. He made a change, or I’m going to make a change, or this new player came in and they they’re knocking out of the park, and we got to adjust. And I think that what you’re just saying, it’s, it’s a constant refresh of what’s working, what’s not working, and evaluating it. So that becomes part of the workflow. It’s part of the process, just everything else, just like ordering product. You got to reorder product right? When you have to do an audit process in order to keep your listings towards the top end? Yeah.
Mina Elias 21:05
And, you know, be honest with yourself, because it’s almost one of those things, like where you, like, kind of stand naked in the mirror, type of moments where you just have to be honest with yourself and say, Listen, what do I feel like I’m strong at, and I feel comfortable there and I’m doing and what am I weak at? And I had those moments where I was like, Okay, I’m really good at PPC. I’m amazing at PPC. I’m pretty decent at reviews, but I’m like, Okay, what are my weaknesses? I wasn’t doing SEO. I wasn’t investing in SEO at all. I wasn’t doing images, I wasn’t doing video, I wasn’t investing in Premium Plus content, like my listing, I kind of I would just do it once, and I would leave it for a year. And so I said, Okay, I need to understand. Mina, let’s grade Mina. Okay, so Mina, how are Am I in my supply chain? Probably not that good. How am I in my product innovation? Not that good. How am I in my product branding innovation? Not that good. How am I in PPC, amazing. How am I in running promotions? Decent. How am I in my images? Not so good. And so on. And okay, I graded myself. And I said, let’s start making each one of those things a strength. So what do I need to do so I can get really world class at SEO? Let me go look up the best guy, Brandon Young. In my opinion, Brandon and Data Dive are amazing at SEO. I absorbed everything he knows. I talked to him a lot. I watched his videos. I started using Data Dive. I made it a strength, and now SEO is one of our strengths. Okay, images, I’m weak at that. Let me go talk to Daniela for mindful goods. She has a really good process. Let me understand what she’s doing. Let me see how she’s researching. Let me talk to Kevin King. I talked to a bunch of people, downloaded a bunch of information. Okay, perfect. Now let’s test it. Test, test, test, test, okay. Now I have an amazing, robust process that is, you know, I figured it out myself. I built a system and SOP around it, gave it to someone, hired someone very talented in creatives. Now they’re handling it. Now, I have multiple people, but, you know, I’m just talking like, initially, when I first did this, I’m like, Okay, let’s move to the next thing, supply chain. What I need to worry about, product innovation and just like, logistics, okay, perfect. Who can I learn logistics from went learn logistics. Okay, here’s the things that I need to do. I just essentially needed reminders in the calendar. I needed to implement better quality control, things like now we have someone that goes to the warehouse, checks bunch of different products before it ever gets sent to Amazon. I also kind of over invested into inventory, and I had to pay a little bit more and for a couple months not take any profit, just so I can be ahead by a few months. So now I feel a little bit more comfortable. I can say, hey, this batch was not run correctly. I’m seeing issues here. Please rerun it. We can afford two weeks or three weeks later to get the inventory things like that. So it just took a moment of me being very honest with myself and saying, What are my weaknesses? Writing it down and saying, these are all the categories in Amazon. This is where I’m weak at. And if you’re not sure what are all the categories of Amazon, just write everything down that you think. And then go watch a few of my videos and see what I’m talking about. Go watch a few of other people’s videos, maybe Stephen Pope, maybe Elizabeth green, your podcast, and then see what are those people talking about that you don’t really feel like I have a very strong grasp and a mastery of this, and write it all down and then say, Okay, I’m going to go deep in one thing, figure it out, build a system around it, delegate it out, and then move on to the next thing, and the next thing and next thing. And this process might take you, if you’re aggressive, a year, six months to a year, if you’re not so aggressive, maybe two years, but because you have a plan and you have a destination, by the end of two years, you’re going to be very confident. You’re going to have a system, and that’s ultimately how the business grows. It doesn’t grow by Hey, I’m doing this one thing, and that one, that thing, after it’s done, I’m going to reach success. It has to be a living, continuously improving process. That’s how a business grows. So MMA Nutrition now is like very different than it was when we first started. And now, reviews are always coming in, images are always improving. We’re always testing different A plus modules. We’re always testing different coupons. We’re always testing the price dynamically and all this kind of stuff. And so a lot of those things, it used to be okay. I’m going to do it once and then stop and. And okay, if you’re not doing it at all, and you do it once, good, but then ask yourself, Okay, when’s the next time I can do it? And then when’s the next time? And then eventually, you build a system, delegate it to someone, and now it’s running without you, and it’s just constantly improving.
Rolando Rosas 25:12
That is amazing, because for us, couple years ago, we’re doing well on Amazon. But one of the things we found was, like you said, you do some self evaluation, is we need systems. We need systems in place. Because there’s a philosophy like next man up. Type of thing, this is Seattle Seahawks that for football, as well as the New England Patriots, who very successful football organizations, is that you need to be able to replace things that come off or fall off, people, personnel, and the way you do that is by systemizing everything. And one of the things that we realized so we we need a system, but I didn’t really look at our organization like a project management type of organization. But when you’re on Amazon, you’re so like all everything you rattled off their projects for that they’re projects to get the a plus content, and it’s a consistent flow of that. So we started our path of systemizing using clickup, and that made us so much better internally to systemize things, to make sure that we don’t have as many screwups, to make sure there is some quality to control, to make sure that there is some consistency from person to person in departments. And so yes, I would put a pin on that, and would say absolutely, you want to have systems in place. You mentioned a person in there. Rounded off Kevin King and Stephen Pope. I had Stephen Pope on the podcast a couple months ago, and he told me that he sold his private label, and he did it because he tried every trick to in the book to move sales and this and that, and he found himself starting to decline every year in terms of profits. And when he said that, I was like, You got to come and talk about it. But one of the things since he’s been on the show is I’ve talked to a lot of people the last couple months, and it seems like there’s more of an emphasis now than ever before to look at profitability rather than just how much am I selling, how much am I cranking out? Because you could sell a lot, but if at the end of the day, you don’t have enough to buy more inventory, you don’t have enough to pay the people, you don’t have enough to pay the bills, over time, those profits shrink, and then you just go out. And Stephen mentioned a lot all the reasons, what contributed to the eroding profits. What are your 180 or even some of the other people that you’re talking to say to you about profits, as it relates to Amazon. Now,
Mina Elias 27:25
yeah, yeah, I think Stephen’s not the only one that’s experiencing it. I think the entire market is experiencing and I’ve seen it. I haven’t experienced it personally. MMA has been kind of growing, but it’s something that we’ve noticed is profits are eroding, and number one, there’s also inflation, right? So inflation is hurting profitability, but also competition, especially Chinese competition, like, for me, I don’t have to deal with that. Like, I think Stephen had to deal with that, and I think that’s one of the reasons why I feel like MMA Nutrition hasn’t eroded that much and has actually been able to improve, is because I’m not getting competitors that are coming in and undercutting me, and even if they do, people won’t buy it. And so that is one of the things that I was a light bulb moment for me, is like, there are certain categories where, if you are a $30 product, and I come in with a $15 product, people are not going to buy it. And that’s supplements, you know, if you’re buying a commodity zinc, if the average is 15, and someone comes in with a 799 zinc, you’re still going to be a little bit weirded out. You’re going to be like, this, zinc is very cheap. This is something I’m putting in my body. It’s a commodity, I understand. But like this just sounds like off. It’s a little bit too low. And so there’s a little bit of like, pricing psychology there that is in the favor of things like supplements, cosmetics, skin care, any sort of health stuff, there is a little bit of protection of it’s not about the cheap product. It is more about what’s going to give me the most benefit, and it’s still reasonably priced. Now I think with what we’re experiencing with our clients is the margins are shrinking. Now I always try and tell them, hey, listen, keep in mind, our main goal isn’t profit margin, it is total net profit bottom line. So when you look at your P and L statement, month over month, that profit at the end of each month, it needs to be growing more and more. Now, if we were selling 60,000 and making 30,000 in profit, and now we’re selling 80,000 only, making 32,000 in profit, and then we’re selling 100,000 making 38,000 in profit, it’s fine. It’s obviously not ideal, but this is what we’re going against. Is competition, pricing issues. Manufacturing is getting more expensive, so inflation there. So the competition is squeezing down, pricing, the cost of everything is rising, so your margins are shrinking. Ad cost is increasing a little bit over time, obviously, nothing crazy, but it’s also increasing. Also increasing, so you’re getting kind of squeezed. Now, the one way you can hedge against a lot of that stuff is constant product innovation. So doesn’t matter what your competition is doing, if you have a product that is far superior, you’re now almost in a subcategory of one. So yeah. Was going to buy a gallon jug and yeah, there’s 30 of them that are all $15 however, there’s a $23 one that does this extra benefit thing that no one else is doing. Okay, I’d be open to it. I’d be open now. That’s not going to protect you too much from the rising cost of the ads, right? It’s not going to protect you too much from the rising cost of goods, but it will increase your conversion significantly, which will then make all of those things as a percentage a lot better. And the one thing that can fight the rising cost of ads is better cookthrough and better conversion rate result in more organic sales, which means that your total ACOs, or your percentage of your ad costs overall to your total revenue starts to go down, so your margins start to come up with cost of goods. There’s really not much you can do. However, over time, as you’re ordering more and more, you get a little bit more leverage to say, hey, let’s bring it a little bit down. So let’s say you were buying 1000 units a month, and now you’re able to buy 4000 units a month. So you just go to the manufacturer and say, hey, I’ll make a deal with you. I’ll place an order for 50,000 units for the next 12 months. Obviously, I’m not going to pay for the entire order, but I will sign the purchase order. So you know that I’m buying 50,000 units from you, but just give me a really good price. So maybe you were priced at $5 that works. That
Rolando Rosas 31:16
works. I just want to park it for a second on that, because that’s a tip for folks that haven’t negotiated like you have this negotiation tactic working for you?
Mina Elias 31:25
Yeah, yeah. So for me, this is what I do. I’ll tell you my negotiation tactic. So I care more about terms than I do about, like, pricing. So okay, what I’ll do is, first, I’ll spend some time with them selling, and then I’ll come to them, and I’ll say, listen, here’s my projection. And I’ll hype up my projection a little bit, but I’ll say, let’s be conservative. In the next 12 months, I’m going to order from you 35,000 units based on I’m selling whatever, 2500 units a month, or something like that. I project that I’m going to need 50,000 units from you, but I’m down to place a PO right now for 35,000 units. However, I need you to come down on the pricing, because this is a big order. So they’re like, Okay, cool. I can come down from $5 to $4 I’d be like, Come on, let’s go down to 350 say, Okay, fine. I can do 350 I’m like, okay, cool. And also, I want to pay net 30 after you send the product out to Amazon. So once the shipment goes out of 2500 units net 30, I’ll pay you, and then it’ll be like, No, like that, 30 whatever. And say, Okay, fine. What if I come up to four, 425, but you give me the net 30 terms, and then they’re like, Okay, fine, I could do that. And so even though I’m losing whatever, 75 cents a unit, which I don’t care if you think 75 cents, even $1 after a year, is 35,000 but now my cash flow cycle becomes almost negative, which means the manufacturer makes the product, sends it to Amazon. Amazon sells it. Amazon pays me the money before I have to pay the manufacturer the money, which allows me to constantly keep scaling without needing to worry about too much cash flow. Or I can have a little bit of cash like that. I use initially, and then everything takes care of itself a lot better. That is, that’s my advice on negotiation. Is like, start with like pricing, make them think that’s what you care more about, and then add in terms, and then pull off the pricing, and then their mind is probably more on the pricing versus the terms.
Rolando Rosas 33:14
I love that. I absolutely love that, because it took me years to pull off what you just said. And I think it’s the confidence to know that you can negotiate terms with whether they’re a supplier in Mexico or supplier in China, and to be able to say, hey, look, I can order this much in the year, but I’m not going to take that. I’m going to take 50,000 now, but let’s make a deal. I will be willing to take 10,000 units now, but I need you to give me some runway. And 30 days is nice. 60 days would be even better, but somewhere in between there, because the I gotta tell you, for me is I’ve been talking to more and more sellers. When I look at why a lot of sellers run into trouble, it’s the cash flow. I can’t keep up with the orders, right? You’ve done the PPC. You the people are buying it. They’re doing the they’re clicking all that stuff. I can’t keep up, and I can’t fund my own inventory. And part of that is because Amazon, between the time the stuff ships from supplier to FBA to then when you get paid, can take 30 or even 60 days, even from Unit One being sold. And so if you’re constraining your operations by having to put the cash up front and then get paid 60 days later, it can spell doom. You know, I’m talking to the CEO of the former CEO of blockbuster, and he said to me, and I will never forget this now, so it wasn’t Netflix that killed us. We killed ourselves, as well as the downturn of the market in 2008 but he said, cash flow. Cash flow. Cash. Cash Flow. If you don’t have that, you’re going to go down. And he said, when the market went down, the financial market went down. All of their suppliers, where they bought CDs at the time were DVDs. They forced them to go prepaid instead of a 90 day net. And that just started a cascade effect. So where they were cash flow positive and being able to pay everything, they then became cash flow constrained, and it started choking them slowly to the point where they had to close stores and knew all the rest. Everybody knows the rest of the story, but the genesis of what’s the downfall? At the heart of it was cash flow.
Mina Elias 35:38
Yeah, I can totally see that, right? Because they probably built their entire business model on terms, right? So they’re getting paid and then they’re paying people later. But it’s like, can you survive if you didn’t have terms? And if you can survive without terms, when you add terms, you’re skyrocketing,
Rolando Rosas 35:56
indeed. And so cash flow for me has become my new mantra. Profits have become my mantra, and trying to figure out how to improve that. And right now, every single supplier, and we’re in the IT side of things, they’re all seeing issues. It has been very constrained with spending. Spending hasn’t increased dramatically over the last two years, and you know what? That’s the perfect time to negotiate, because if you’re still alive and you’re still selling, you’re still chugging along, they’re more likely to negotiate because you have an upper hand in the sales process. Hey, look, you see that I’m still ordering from you, I’m still around, I’m still kicking it. How about we sit down at a table? Because we haven’t talked about negotiations or terms in a long time, and that’s worked out really well for us the last six months.
Mina Elias 36:50
Yeah, and you know, also, a big thing is sell the dream of like, the partnership. Don’t do this via email. Don’t send them an email and say, Hey, what about this or that? You want to get them on the phone. You want to get talking to them. You want to tell them like, hey, like, this is my business plan. I want to walk you through my business plan. Make a presentation. Say this is where we’re going. This is the market size. This is how the competitors are doing. This is how much percent of the market share I used to have six months ago. This is how much I have now. This is where we’re projected to go in next 12 months. This is the products that we want to launch, make them feel like this is a real business, and they are a partner in that business, and they’re the core manufacturer of that business. And when they start feeling like that, and say, Listen, like for me to hit those I want this, and you start negotiating, you’re saying, Hey, if you give me those things, like, I’m sticking with you, like the number one thing that I want as an agency is a customer that sticks with me for a very long time. Now, if the retainer is whatever, 4000 or 3500 that’s not going to matter that much. What I care about is a very long term relationship where we’re both benefiting, where I’m helping you grow, and you’re staying with me for a long time. Those are the most rewarding relationships. That’s what the manufacturers want, too. They’re not in the business of, okay, let’s bring this one guy in. Let’s do 1000 units for him. Okay, let’s kick him out. That’s also not beneficial for them, because, you know, churn, churn is never good for any business, even if they’re going to get a smaller out of you, but they can keep you for a longer time. That’s what they want. And so they want that assurance, like, Hey, I promise I’m sticking with you. Obviously you want to have in the fine print, Hey, as long as you’re providing this level of quality, this level of service, this level of X, Y and Z, deliverables, as long as you have all of that laid out, if they’re doing their job, you don’t need to be looking elsewhere. You know what? I mean, it’s like, you know, when you get married, you’re not going looking elsewhere, because there might be something better. Everything is good. You’re happy. Everything’s within the terms, and that’s what the relationship with the manufacturer. It is really like a very strong partnership, or like a marriage of two businesses, because your business tanks without them, and you do not want to be in the business of just constantly replacing your manufacturer. It is very painful.
Rolando Rosas 38:46
It is you. It takes a while to get to a point where you’re not only established, but the important people at that manufacturer know who you are, because you’re not the only one buying from them, right? They know who you are. They know what you’re doing, and it really helps smooth out some of those potholes. Speak, I want to ask you about something just pivoting a little bit here, because you talked, you hit on a word that’s really interesting and fascinating. That’s the word marriage. We’re seeing some interesting marriages take place with Amazon in the last six to nine months, they have signed an agreement with meta on the PPC side, they did the same with Pinterest, and just recently with TikTok. So that you can stay inside of all of those platforms. You see the Amazon ad, and if you if your Amazon account is linked to any of those platforms, you can buy. What do you think about what’s happening with Amazon and on the ad side that they’re now in these what would be kind of frenemies, these new kind of relationships or marriages that are forming, especially with TikTok, because we thought TikTok was going to save everybody and lift all the boats, and you can everybody go run a TikTok Shop, and then Amazon’s out. Now they’re. It together.
Mina Elias 40:00
Yeah, yeah. I think it’s a very smart move on Amazon Spark, but I think all of the platforms were aware this is what they did. Is the ultimate win. Because anyone like Facebook, they knew that their biggest issue is attribution. They’re like, Hey, we’re advertising on your platform. We’re making sales on Shopify, the attribution is not clean. Or not 100% sure. As a result, their advertisers are probably not spending as much money, because Facebook makes money on advertising. So how do you make someone spend more money on ads? You make the ads work better. Okay, so how do you do that? Well, you attribute the sales correctly, and you can optimize better for conversion. And if you do that, if I can get my conversion where it needs to be, keyword here, conversion, if I can get my conversion where it needs to be, then I’m going to spend more. Okay, what converts the best Amazon. Amazon. Everyone trusts it. So people are seeing ads on Facebook and then going and buying from Amazon. And Facebook knows this. And so, you know, with TikTok Shop, it was the exact same thing. It was like people see the product on TikTok, and then they go and convert on Amazon. Amazon was defined as the best conversion for products, and then Facebook and TikTok Shop, or more Facebook, more meta, right? They were aware that their bottleneck was their attribution, because a lack of attribution means a lack of being able to understand where the sale is coming from, and the less we understand about that, the less we can scale so for them to make more money, and the Amazon’s, oh, yeah, sure, we know we’re going to convert. So just give us the sale like, they’re like, why are you giving Shopify the sale? Who cares? Right? They’re just kind of there. Give us the sale, you’ll convert better. They’re going to spend more money on your platform. There’s an ultimate win win, and I think that’s the way things are headed. Again, Amazon is being solidified once again, as the strongest player in the entire market. There’s nothing that’s going to come close. Walmart couldn’t pull any of that off, right?
Rolando Rosas 41:54
No way. There’s no way you convince Facebook to let you use Walmart ads on you know what? They’re never any absolutes in life. Things could change. But as far as I could see, I agree with you. I think it creates a bigger mode around Amazon. So if you’re temu or shine, it’s going to be harder. Obviously, the Timu shine are going after that low end, under $25 shopper that’s looking for something cheap. But overall, Amazon’s nobody’s going to beat them on logistics right now. And I thought Walmart would do a fighting chance, an MMA fighting arm hold chance to do it, that last mile where they invested billions is hard to pull off, hard to pull off. And they’re doing it. And now they’re taking what I call social commerce. You know, TikTok could have done what Amazon, but you got to spend that money on the logistics warehouses. FBA, type of program. They’re not going to do it. I don’t think so. I don’t think so. They’re saying they want, they got a few little warehouses. I don’t think they can get to where Amazon is, which is last mile I got clicked. I got my photo. Oh, I see I got the product. It was at my doorstep earlier this morning. I’m gonna go pick it up.
Mina Elias 43:05
Yeah, and I believe that TikTok Shop is the biggest threat to Amazon, not because it is a better platform, but it is because you and I are in a different generation than Gen Z and Gen A, and their shopping behavior is changing. So you know, our parents used to shop in stores. And I bet you, if I talk to my mom or my dad every day, I call them, they’re like, oh, yeah, we just got back from the store, and it’s always, they’re always at the store, and that’s their generation loved to go to the store and see things and feel them. Our generation didn’t like that. We just wanted convenience on the phone. I don’t care if I see it, as long as the pictures look convincing, I’ll buy it. If I don’t like it, I’ll return it. Right for them, they couldn’t fathom it. But the next generation, in my opinion, the way that they’re going to shop is through social shopping, which is TikTok. My wife is at the border of Gen Z. She’s always like starting her search on TikTok Shop. We’re going to Mykonos. Let me look up where to eat. Let me look up which beach clubs to go. Where should we go eat this weekend? Let me see top la cafes or top la restaurants. So they’re starting their search on TikTok. And so I think that’s the biggest threat is because if that changes, and people no longer want to type in a keyword and see a bunch of results, but they would rather see it from other creators, and everyone is now a creator, and they’re all creating content, and they want to really see it and hear feedback and testimonials and all this stuff on the product before they buy it. Then, you know, that’s the only way Amazon falls down, because Amazon is great, but they have to either acquire or partner with the biggest social platforms that have the attention. And so that’s why the partnership with TikTok is ideal, because TikTok Shop right now is the biggest social platform for all Gen Z and under, it’s the number one. Nothing even comes close. Meta does not come close as those people start getting older. Or they’re the ones. They’re gonna have all the purchasing power if you can just Amazon. Can just create a social platform and say, we created Amazon. They’re
Rolando Rosas 45:08
trying, but it’s not working like TikTok. It’s different, right? Amazon is ecommerce first, social, very far. Second, TikTok is the other way around, right? And social number 1e, commerce. It’s coming along, but certainly not at the level of Amazon. There’s this is amazing, because you couldn’t have dreamt this up five or even 10 years ago, that Amazon tick tock, get together somehow we find a common ground where we can help each other and make more money. I think Amazon just reported something to the tune of almost $13 billion that they made on ads the past quarter, up 20% from the previous year. That’s not going to stop. And Amazon, the way they’ve been trending, they’re the number three only behind Google and meta and so yeah, so only Google, and I think Google does about 200 billion. Would it be 200 B 13 billion? So 13 billion for Amazon and 200 billion for Google, they’re still far behind Google, but still they’re in the number three position above X and everybody else. So I think it’s going to be very interesting. What happens, because they’re going to want to keep that revenue stream coming. It’s a lot of money to them. It’s what helps them be profitable. And I think, as a seller, I don’t know what’s going to happen next with ads on the Amazon platform, but I think you have to keep an eye on it. You have to monitor it. You have to pay attention to wise folks. There’s a bunch of good, really good folks out there that people can look that got their finger on the pulse when it comes to ads, and so I think it’s going to be very interesting.
Mina Elias 46:44
My advice is just stay very close in touch with your ICP, because that’s who you want to follow, right? If that person, if your ICP, all of a sudden, is now buying on TikTok Shop more than they are on Amazon. You want to start getting into TikTok Shop, because as brand owners, as agency owners, I’m following my ICP, which is I’m following the brand. So where are you going? I’m gonna serve you. And so as the brand, you’re following your customer, where are you going? I’m gonna sell to you there. And I think as long as you can keep your finger on the pulse of where your ICP is going and where they’re shopping, you should be fine. All right,
Rolando Rosas 47:21
Mina, you’ve said so much today. You have been wonderful. If people want to follow you, they want to check you out there. Hey, look, give me some help. I can use more of that. Help that you, that you spotted here on the podcast. Where should people go?
Mina Elias 47:35
Yeah, definitely go to my YouTube channel. It’s Mina Elias, M, I N, A, E, L, I A S, that’s where I put all the value, long form, like, very detailed, like, you’ll learn everything. And then I don’t hold anything back. Then if you want to follow me on Instagram, at the Mina Elias and then LinkedIn is also Mina Elias, so follow me there. Ask me questions on LinkedIn or Instagram, whatever, always happy to answer questions. If you have any questions about Amazon. If you feel like you’re stuck and you just you’re like, hey, what do you think I should do? I’m always happy to send messages, voice notes, whatever.
Rolando Rosas 48:07
Awesome. Thank you very much, Mina, I appreciate you coming, and I want to invite you. If you’ve enjoyed this podcast, this information that’s come to you today, go ahead and hit that subscribe and like button. Drop us a comment if you want. You got some more questions about the show, or you want to see something in particular? Go ahead, I look at a lot of them, and my team sends me the ones that I don’t look at, but I bet if you’ve enjoyed this podcast, you’ll want to go check out that episode that I alluded to earlier, with Stephen Pope. He had an very interesting story. He’s probably one of the premier guys out there when we’re talking about Amazon, and he shared what led him to sell his Amazon private label Company, which was fascinating, understanding that because if he’s having a little bit of an issue, you may want to pay attention to why that was and to what you could do better. So go ahead and check that episode out with Stephen Pope, and I will see you in those episodes. See you next time bye, bye.
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