044: Tactic Tuesdays: Money Is In The Problems

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Welcome everyone to the Brand Fortress HQ podcast.

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On this Tactics Tuesday episode, we're gonna discuss how do you find the money in the problems and turning those problems into cash for your business.

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So this is a topic that we were talking about before we record and we thought it was something that we wanted to share, especially at this time.

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You know, when we look at Amazon and e-commerce, there's definitely plenty of problems out there, so I think this topic is incredibly relevant.

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I know, mike, you kind of kicked off this conversation, so I'll let you start in kind of how you think about this and applying this to Amazon and your business right now.

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Sure, yeah, I mean first of all credit to Alex Ramosi.

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I mean, he's the guy that started the conversation with us.

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I talk about him a lot but at the same time he's got some interesting things to say.

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So you know, basically his point was that you know, in general profit lies behind the problems, because if you're not solving a problem, then you're not really doing anything useful.

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That's the whole point of business.

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If you're in business and you're not solving problems, then you probably got a short-lived business.

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So you know we need to be solving problems in our business, both with our products in terms of developing new features or additional things that our products do that other products in our product vertical don't do but also in terms of the services that we offer our customers on the backend, in terms of customer service.

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I know, for us within our business, one of the things that I think is really a good example of that profit behind the problem sort of thing is that one of the problems in the pool industry, and especially pool products like tools and things like that, is that most of what's out there is very commoditized.

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It's super cheap, it's as cheap as you could make it, basically, and I think that because of that A customers are fed up with low-quality products.

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So that's a problem that we're solving with a more durable product, but, even more importantly than that, warranties within not only our product vertical but many other product verticals I think that customers are also fed up with because warranties are offered by a lot of companies but they're not stood behind, and so it becomes this situation where it's like that's great that you offer a warranty, but I'm nearly certain you're not actually going to stand behind it.

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You know, when it comes time that I need a replacement, you're going to find some way to wriggle out of it, and that's one of the things that we don't do as a brand and have never done as a brand.

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In fact, we probably go maybe too far the other direction in terms of how liberal we are with that solution.

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But we are solving a problem for the customer, which is we're making warranties viable again because we actually stand behind it and we make it super easy for customers.

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And there's profit in that because by solving that problem for our customer, we create brand loyalty with that customer because we're so much different than every other brand in our category and probably every other brand that they ever deal with that.

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If there's something that we sell, they will come back and buy.

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We're solving a problem for them.

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That is a very painful one, and so there's profit behind that for us, because they will come back and continue to buy our products, anything that we offer.

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Yeah, I think the other thing that really comes to my mind and especially working with a lot of brands as an agency and helping them with ads and listing, optimization and catalog issues and those types of things is that, you know, while there is a never ending list of problems and things to solve on, you know, on Amazon, when you're selling on the platform, the other thing is is that there's an that creates an incredible amount of opportunities.

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You know, we have seen a lot of change that's happened over the last year or so when it comes to ads, when it comes to AI coming into the space and talking about how now Amazon is using a lot more AI to determine how your products are ranking or how relevant your products are for certain keywords, and really even moving beyond keywords and looking more at the intent there for customers.

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And while all those things are going to be a challenge to really understand and to do right, at the same time they're also a massive opportunity for a lot of the brands that we work with, because they might be second or third in their category and if everything stayed the same, there's no way for them to get to the top.

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But the reality of it is that with all these changes, if we can adapt and understand how to be effective with those changes as Amazon iterates, it gives us an advantage.

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So every change, if we can stay on top of it and figure out how to leverage that change in a positive direction for that brand, it's an opportunity to continue to grow and to be successful.

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And a lot of that is just framing how you approach those things.

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And I think Matt has mentioned it a couple of times in some previous episodes.

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Talking about something as simple as new ad formats I think is a perfect example of this of hey, those early movers to those new ad formats are going to get some really cheap clicks and some really cheap sales because they get that first mover advantage.

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So looking at solving those problems, I think there's a lot of opportunity, especially in the Amazon space because it is changing so fast.

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Speaking of advertising and problems that actually Amazon created.

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I don't know if we've talked about this specifically on a previous episode, but broad match modifiers Broad match has changed significantly in the past six to eight months and for people that aren't paying attention to, like, what has changed and what are my keywords now showing up for, like, you just might have taken that, as you know, broad match doesn't work anymore, or I'm I'm going to turn this off because it's showing me up for weird things.

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But, like, in reality, if you were to actually dig into, okay, what is there's a problem.

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The problem is is that it's not working how we used to.

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It used to.

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How is it working now and how do we?

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How do we solve that?

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So, you know, putting these broad match modifiers, which I don't know, like I've never.

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I don't have a lot of experience in Google advertising, but I think that broad match modifiers are a thing in Google.

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Maybe I'm wrong, but I think that's.

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I think that's where you know, I think with that plus sign, like I didn't know that until I started actually playing around with it, but now my broad match campaigns are, in a lot of cases, a lot more profitable than a lot of my other campaigns, but that's because I use this broad match modifier now that it was a solve of a problem that Amazon created, that now has turned into a better way for me to make my broad match campaigns work a little bit different.

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And again, it's first mover, right.

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If you can be one of the fastest brands to figure out the solution to the problem and implement that solution before everybody else, you have the opportunity to take advantage of that, and I think the beauty of that is is that what it means is every single problem is a brand new opportunity, and so one of the things that can be sometimes.

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I think it's easy as an entrepreneur sometimes to get frustrated with yourself that you weren't at the head of the curve on certain things, right, like you got beat to the punch by your competitors on this thing and on this thing, whatever.

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And the beauty of these new problems that arise is because, even if you weren't first mover the last time around, you know the last issue that Amazon came up with, you know put in your way and you didn't manage to figure it out before everybody else.

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And maybe you are now number five, number six on the page where you were number one, or you know whatever it is.

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Every new problem is a new opportunity for you to take advantage of that and be that first mover.

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And you might not be first mover every single time, but as long as you can be first mover as many times as possible.

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You have that opportunity to take advantage of that and turn that problem into profit.

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I'd also add that.

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So being first mover is probably the most the easiest way to do that, but there's an additional opportunity to do things or to do some testing, to discover or to find different ways of doing things and solving problems that way.

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So what comes to my mind?

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Well, there are a couple of things I mean.

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The first one is, Matt, you talked about broad match and one of the things that we have found is that exact match CPCs have gotten incredibly expensive in a lot of different categories and so, yes, there's still value in those.

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We look at those and we look at it.

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Okay, they're great for ranking, but if we're looking at incremental profitable sales like you said, something like modified broad match there's just not a lot of people that are really using that ad type so we can actually get incremental sales at a very profitable margin to help increase sales volume, Because there's just not a lot of people solving that problem that way.

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Because, like you said, a lot of people they saw their broad campaigns not working anymore, they didn't take that extra step and they just said broad match doesn't work anymore and stop there, and so it's been a big win for us to add that broad match modifier into a lot of different campaigns to add those incremental sales that I think there's a lot of competitors that still haven't implemented that process.

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We take this all the way back to product research and I remember when I was searching for my first products and I remember watching all the YouTube videos that all basically say the same thing like don't sell any electronics, don't sell any products that are above a $75 price point.

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Like all of these things that they told you not to do are things that I learned later on that the reason why they told you not to sell electronics is because that's another thing that could go wrong, another, another you know another break point that things could go wrong.

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But I mean, when I started to actually pay attention to that, you get all the same people watching the same YouTube videos and everyone's staying away from electronics and everyone's staying away from electronics.

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Those problems create an opportunity to get into that space and be able to understand, like I mean, there's things that you can do, like we're actually getting ready to launch a product in a new category.

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For us, that is a.

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If you look at the reviews, yes, it does have mechanical pieces to it.

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If you look at the reviews, most of the people that are leaving negative reviews are that it either didn't work when it got here or it broke after the first couple of uses.

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So, again, these are challenges that if you were to listen to the masses and listen to the same thing that all the other sellers are listening to, you would just stay away from that category.

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But what we see it as is an opportunity to make that product better.

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There's a ton of search, demand for it, but nobody's really solving the need with a product that actually works.

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So that's we.

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We see that problem that other sellers are having as an opportunity for us to come in and make it better right out of the gate and get all those sales that are there to be had but actually have a product that's better than the masses.

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So you know, if you, if, if you, if you do the things that everyone else is telling you not to do, then you're going to miss out on some of those opportunities on the other side of it.

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Well, I think you know it's.

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It's interesting because the the solutions.

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A lot of times people are looking for the quick buck.

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Right, A lot of people originally got on Amazon because back in the day it was right.

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A lot of people originally got on Amazon because back in the day it was pretty easy money, realistically, you know.

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And so for a time that was the way it was.

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But I think now it's like the hack contest right, they're great.

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You know, I learned some things from those.

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There are some hacks that I've implemented and they've been pretty effective for me.

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So I don't want to disparage you knowage, those hack contests because I think they're interesting and there's some good stuff that comes from that.

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But I think it breeds this idea that there's this quick little lever that I'm going to flip and I'm going to double my income, right, because I got this one hack and it was going to solve everything.

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And it kind of breeds that mindset within a lot of entrepreneurs, especially in the Amazon space.

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And the problem with that is that solving problems takes effort.

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It takes mental effort, it takes time.

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It's a grind because if it's an actual problem that nobody yet has solved or isn't solving, they probably haven't solved it yet because it's difficult, because it takes effort and it's going to take time and patience to do it.

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And so if you're of that mindset that I just want this lever that I can flip today and tomorrow I'm going to double my income, you're not looking for problems to solve and so you're missing out on those opportunities.

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And so I think one of the things that I would say is the biggest takeaway from this is to really get away from that mindset of finding the hack that's going to solve my business in a sense, and looking for what are the problems in my category, what are the problems on Amazon that other sellers are not solving and how can I solve them.

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And one of those things that's interesting is that we were talking a minute ago about that whole broad match modifiers and stuff.

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It's indicative of a lot of other things, which is there are still a lot of sellers on the platform that are relatively new, relatively inexperienced, and don't fully know what they're doing, let's say.

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And so when problems like that arise, it creates a lot of fear and a lot of anxiety and sometimes paralysis.

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You know, in that situation and if you're somebody who doesn't give into that and steps through it.

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There is probably 80% of the sellers on Amazon that you're going to step over like that because you actually invest at any time at all, and if you invest significantly more time and effort in solving that problem, then you leapfrog over the next 15 to 18 percent of sellers on there.

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So it's one of those things where you can get some really solid benefits from even just a marginal solution to a problem that many other lesser sellers are not even going to attempt to solve.

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Yeah, and I think what also probably makes that a little bit more painful that I would add to that is that a lot of sellers just speaking ads specifically are looking for that piece of software out there that essentially does 95, you know 95% of the effort for them.

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And the problem with a lot of those softwares is is that you know they're built around a generic model and they don't adapt quickly to you know an app.

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So, for example, talking about this specifically for the broad match modifier, it takes them in a lot of cases for a lot of those different software platforms, a lot longer than it would somebody who's in there on a day-to-day basis to adapt to your rules and your campaigns.

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Because we ended up doing a lot of work because of that change of essentially switching a lot of our broad campaigns that were working before into broad match modifiers.

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But then we had to do a lot of our broad campaigns that were working before into broad match modifiers.

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But then we had to do a lot of work to say, okay, is this campaign still giving us the same level or better performance as a broad match modifier?

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And it was an 80-20 scenario where, yeah, 80% of them ended up doing the same or better, but there was a 20% of them that just call it the randomness of Amazon, you know.

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Just continued to get worse, even after we switched it over to the modifier.

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Right.

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So it's, I think, having some realistic expectations too.

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Like you said, that there's not, you know there's not going to be a set it and forget it solution.

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There's not going to be a silver bullet in a lot of the cases, and what that normally looks like is you work on a lot of, you know, essentially base hits or, if you want to put it into bullet terms, a lot of lead bullets before you find that silver bullets.

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And then every once in a while, you know, you find that one lucky thing, that 10 X or 20 X or whatever the result that you were getting out of your ads or even your entire business, and those are great.

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I'm happy to take those any day of the week, but I don't want to be reliant on hey, if this thing doesn't work out, I'm in serious trouble.

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I need this thing to 10 X my business.

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Yeah, for sure, it's just.

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It's just a mindset, it's just a business mindset.

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I think the difficult thing, I think, for a lot of sellers on Amazon is that many of them don't have any about solving problems Like that's the whole point of business.

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And once you wrap your brain around that then it becomes much easier to address those situations and recognize problems for what they are, which really is opportunity.

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But as an individual who comes into, you know, selling on Amazon is just somebody who was like hey, I'd like to earn a little bit of extra money on the side.

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I'm not making enough with my normal business or I want to be more independent, whatever, and you have no experience in that.

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It can be very frustrating to enter into a scenario where there's so many problems to deal with and you don't know the solution to many of them.

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We talked about this the other day.

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But one of the big ones right now, of course, is Amazon and the whole inventory thing with the fees on both ends.

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Too much inventory charges you a fee, too little inventory charges you a fee.

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Well, for a lot of these smaller sellers who, again, don't have any business experience, haven't been doing this for a while, haven't had the opportunity to gain that experience on Amazon before this happened, which fortunately we have.

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They're in a world of hurt and I think many of them are going to end up experiencing some serious business losses and potentially loss of the business entirely as a result of some of these things, because they're just not prepared for it and they're not going to be able to solve that problem faster.

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Well, the big challenge with the two things that you just mentioned when they're fee related, and when they're fee related that have something else attached to it, like inventory or something along those lines the problem that I find with a lot of sellers at all stages of their business is that they're not paying attention to the numbers as closely as they should.

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They're not paying attention to unit economics, and a shift of 30 cents on an FBA fee doesn't sound like a whole lot, but when you times that by 1500 units over the course of a short amount of time, like that increase or that decrease affects your business a lot more than just whatever sense it is, and so like that's the biggest problem with this.

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That I see is like the inbound placement fees and things like that, where it's something that isn't going to show up, it's not a bright, shiny, flashy number in a report somewhere that says, oh, this is new, it used to be this and now it's this.

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Like, if you're not paying super close attention, a change like that could drastically affect profitability and the only thing that you know if you're looking at numbers at a high level are there's less in my bank account this month than there was last month, even though I have more sales.

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So that's the challenge with these types of problems that you're talking about is that, like you have to be really, really in tune with the numbers and what you're paying to Amazon every single month, and if you're not, stuff like this will sneak up on you and it'll be too late by the time you realize it.

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And to be fair to sellers.

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What I would add to that is that and to kind of double-click on what you said there, matt, is that I think part of the reason that's hard is because Amazon does not make it easy for you to find those numbers to see.

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Hey, I paid, you know, a thousand dollars last month in shipping fees and now I'm paying $1,500.

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Why did that go up?

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Or my storage fees last month were $500 and now they're $1,500.

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Like it's, it's hard to find that data If you don't put the data into an understandable, easily understandable format and trackable format to compare time periods and then also to just have a system in place to be checking that on a regular basis.

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So both of those things are really challenging.

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And then I would even add on top of that, I think when it comes to especially you talk about the fees is, from a brand perspective, you kind of feel like you really don't have a whole lot of power over it either, because, okay, amazon just increased their fees by 30 cents.

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Well, there's not really much you can do about it, in the sense of you're going to continue to sell on Amazon and then you have to weigh okay, how much price flexibility do I have in order to move that price onto my customers or to make up that $0.30 somewhere else?

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And so I think a lot of sellers just kind of get paralyzed in the sense of they're like, well, I have no control over Amazon raising these fees by $0.30.

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So I'm not going to dedicate a you know a whole lot of mind space to it.

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In reality, what probably is a healthier approach is saying, okay, amazon is going to, on a regular basis, continue to increase how much they charge for storage fees, how much they start charge for shipping fees.

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What is my plan to essentially mitigate that?

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Is that having another channel that's more profitable?

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Is that increasing my volume?

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Is that to get lower prices for my manufacturer?

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Is that increasing my prices or testing price increases in order to make up for that?

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And in reality, it's probably again back to what we were talking about earlier probably a number of different things in each one of those categories that you have to do, as opposed to one silver bullet, in order to solve that problem here to recognize is that what you just encapsulated there with the Amazon fee structure and how fairly arbitrary that is right.

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Amazon gets to make that determination and we don't have any control over it.

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The one thing that we can know with almost absolute certainty, as you indicated, is that Amazon will continue to raise our fees.

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That's not going to change.

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They're going to continue to do that.

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They are's not going to change.

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They're going to continue to do that.

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They are the thousand pound gorilla in the space and they know it.

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And they know that pretty much every business really needs to be on Amazon.

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They need to take advantage of the volume of sale that you can get from there and gaining customers.

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The question is if the problem is Amazon is going to continue to raise my fees and I need to have a plan for that but again the problem presents profit because again, a lot of sellers are not going to effectively solve this issue.

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They are going to get run out of business by it.

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So the question is how do you make sure you're not one of them and that you make sure that you can continue to profit in that scenario?

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And the solution to that particular issue is you do need to know your numbers.

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You do need to have the pieces in place to make sure that you are able to see granularly exactly where you are getting billed and to figure out how you're going to make up for those losses, whether that's changing your logistics structure and you're shipping from somewhere else, whether that means you're implementing some additional 3PLs behind Amazon.

00:23:54.159 --> 00:24:52.594
Also, the idea of and obviously we talk about this all the time because brand fortress is what we do right Building a brand and building the predictability that comes with that, and part of that is having your customer base as your customer base and not Amazon's, because the one thing that is absolutely true is, if you are building a customer list and you have loyal customers and you have a way to communicate with them off Amazon, the worst case scenario is Amazon's fees get to the point where you can't find a good solution to sell profitably on the Amazon platform anymore, but you now have a customer list of loyal people who will buy from you and they don't care whether they buy from Amazon or whether they buy directly from your website, which means, ok, maybe your income takes a hit because you stop selling on Amazon, because you can't do it profitably anymore, but you can still sell, you still have a business, you still have profit coming in.

00:24:52.875 --> 00:24:55.181
It may not be the same, but you still have a business.

00:24:55.181 --> 00:25:01.830
And the other thing I would say is is that sometimes changing your mindset about how you use Amazon is critical.

00:25:01.830 --> 00:25:31.776
Maybe you're using Amazon strictly as a way to build a customer list and you can get the volume from there, and you've got the backend processes and the post-purchase process in place to build out that list.

00:25:31.776 --> 00:25:33.896
Maybe it's just a difference in perspective.

00:25:34.230 --> 00:25:39.136
Yeah, I think that's a great point and I think you nailed it on the head which is having that customer list.

00:25:39.136 --> 00:25:48.432
It doesn't even have to be something as dramatic as Amazon not being profitable anymore or your you know your account getting shut down or something like that.

00:25:48.432 --> 00:25:51.339
Having that customer list just has so many other benefits.

00:25:51.339 --> 00:26:03.295
When you talk about, you know there may be products that your customers really want and you want to make, but there's no way that you can make it profitable on Amazon because of all the fees and shipping and the structure involved.

00:26:03.295 --> 00:26:09.097
Well, you know, if you have that customer list, it could be a product that you only sell on your website.

00:26:09.661 --> 00:26:12.010
We're going to have a number of those products that we released this year.

00:26:12.010 --> 00:26:16.262
So I mean, that's precisely where we're moving to is.

00:26:16.262 --> 00:26:19.532
You know, profits on Amazon are decreasing.

00:26:19.532 --> 00:26:28.513
Fortunately, we're still profitable enough that it makes it well worth it for us to sell on the platform, but by the same token, why would we not start selling some products on the back end?

00:26:28.513 --> 00:26:36.510
Maybe we can't sell very profitably on Amazon, but we certainly can from our website, and we've got 35,000 people who are ready and willing to buy them.

00:26:37.772 --> 00:26:42.761
Yeah, I think that's an important point for listeners to really think about.

00:26:42.761 --> 00:26:52.281
So, as we kind of wrap this concept of taking you know taking how do we bridge that gap of taking those problems and turning that into money for our business?

00:26:52.281 --> 00:26:53.935
I guess what is?

00:26:53.955 --> 00:27:09.352
maybe you know one piece of advice that each one of you would have for our listeners that are listening to this I mean, it's really is a mindset shift and once you make that mindset shift, I think bad days in your business turn into good days.

00:27:09.352 --> 00:27:14.884
Honestly, I mean like that Hermosi video that we watched that sparked this conversation.

00:27:14.884 --> 00:27:21.186
That's what he sees problems as as opportunity, as literally cash on the other side of that.

00:27:21.186 --> 00:27:28.453
So if that's how you approach a problem in your business as once I solve this, there's cash on the other side of that it completely changes what a a problem in your business, as once I solve this, there's cash on the other side of that.

00:27:28.453 --> 00:27:31.300
It completely changes what a problem is in your brain.

00:27:31.300 --> 00:27:35.121
So I think it all starts there is understanding that it really just is a mindset shift.

00:27:36.009 --> 00:28:06.376
Well, I think the other piece of that, if you take that one step further, is if you're going to begin looking at problems as an avenue to profit, then all of a sudden it changes that scenario to where you immediately start looking at that problem as what is the solution to that problem that generates the most profit, because there are multiple ways to solve any problem, so you can solve it in any number of ways.

00:28:06.457 --> 00:28:15.260
Likely One of those solutions will likely be better than the other solutions in terms of how profitably it serves your business.

00:28:15.260 --> 00:28:25.951
And so once your mindset shifts to problems equal profit, then the question is now the in-between is what is the solution that leads to the greatest level of profitability?

00:28:25.951 --> 00:28:37.535
And that just becomes a whole different conversation, not only within your head, but then also within your brand and between you and your employees, in terms of how we're going to solve these problems, getting their input on that.

00:28:37.535 --> 00:28:52.137
And when you come to you know when you've got a team meeting or something and you bring your team together and you say, look, we have this problem that is coming up and maybe it's a problem specific to our brand, or maybe it's a problem specific to our product vertical, or specific to Amazon or whatever it is.

00:28:52.771 --> 00:29:00.358
The way that you pose that problem and present that problem to your team makes a difference in terms of how they respond to it.

00:29:00.358 --> 00:29:11.499
And if you propose it as we have a problem that if we solve it, we know there's profit on the other side for the business and for the brand and we all benefit from that let's put our heads together and find that solution.

00:29:11.499 --> 00:29:18.079
I think you're going to get a lot of good ideas from your team, but psychologically you need to present it in the right way.

00:29:19.190 --> 00:29:36.920
Yeah, I'm going to kind of borrow from that framework a little bit, mike, and adjust it in my recommendation or something to think about, which is look at the problems in your business and then look at the one that is easiest for you to solve, based on what your superpower is.

00:29:36.920 --> 00:29:40.434
We all have our different superpowers, things that we're really good at.

00:29:40.434 --> 00:29:47.491
Kind of look through that inventory and say, okay, where's that happy spot, where, yes, this is a big problem for our business?

00:29:47.491 --> 00:29:58.791
But based on the skills that I have or what I'm really confident in doing, I think that I can solve that problem, you know, either really quickly or to have a massive positive impact on my business.

00:29:58.791 --> 00:30:06.653
And start looking at it from that aspect as well, because that'll get you a big win pretty quickly.

00:30:06.653 --> 00:30:11.471
That will kind of help you propel your business forward.

00:30:12.374 --> 00:30:41.671
Well, and not to extend this out too far, but as an extension of that also, if there are significant problems within your business that you don't have the skill set to solve or that you don't have anyone on your team with the skill set to solve, then if it's a problem that really does have significant profit potential on the other side of it, then you should start looking for somebody to bring onto your team, or an agency to bring onto your team, or whatever that looks like that can solve that problem for you, and not to just look at it as well.

00:30:41.671 --> 00:30:45.438
We don't know how to solve that, so I guess we're going to move on to something else, or we're going to ignore it or whatever.

00:30:45.438 --> 00:30:50.855
Find a solution, and maybe that solution isn't on your team, but somebody out there knows how to solve it?

00:30:50.875 --> 00:30:51.577
Yeah, absolutely.

00:30:51.577 --> 00:30:58.803
I think that's a great recommendation and a place to kind of wrap for this particular episode for our listeners.

00:30:58.803 --> 00:31:13.300
So, yeah, I think a number of great ideas there for listeners to take, and hopefully one of those ideas on how to transition or take a problem and turn it into profit for your business works well for them.