Podcast

Learn from Fast Growing 7-8 Figure Online Retailers and eCommerce Experts

EPISODE 43 51 mins

ClinicalGuard are $3 million+ a Year Amazon Sellers w/ Yale Zhang



About the guests

Yale Zhang

Kunle Campbell

Yale Zhang is a Co-founder at Clinical Guard, a health and personal care devices distributor that started off it's ecommerce operations from its own site, www.clinicalguard.com and then moved onto Amazon in 2008. Now approximately 80% of their sales is derived from Amazon, but it’s not without its ups and downs!



Clinical Guard are a 7-figure ecommerce business that distribute and sell health and personal care devices. In 2008, they followed the lead of their customers to Amazon.com, where they now generate 80% of their sales today.

Co-founder Yale Zhang joins us today to run us through various aspects about their successful business model and strategy for selling on Amazon. We talk about what tools they use, deciding to sell their own brand vs another’s, what to deliver using FBA, and how they are able to create a successful listing.

We also discuss firsthand some major challenges and concerns with a business that is now so reliant on Amazon. In particular, the malicious players on Amazon who are unscrupulously gaming the system, as well as a worrying scenario of Alibaba making a big push into the US marketplace in the future.

Key Points in E-commerce Email Marketing Success

1: General Overview of Amazon:

I would say Amazon is really where the future is but having said that, I have 3 Major Concerns:

  1. New Amazon sellers, especially ones who don’t abide by the rules, that’s the biggest worry. (See Point #4)
  2. Customers being fickle and moving on to another product. From my experience, it’s nearly impossible for the customers to create a long-term experience with us from within the walled gardens of Amazon. And someone who’s extremely comfortable with buying stuff on Amazon because they’re Prime subscribers may not be of the mindset to continue a relationship with the seller through their own website, unless they received a significant discount
  3.  Is the big 800lb gorilla, at least in the United States, is Alibaba (See Point #6)

2: Tools Used With Amazon

  • Originally Amazon had an Amazon Seller Tool for desktop, but unfortunately it only worked on Windows XP, and only on the 32-bit version of that. And that was great for both creating listings and also updating listings. It was very fast, it was much better than the web interface and we were able to use that for quite a few years. Now because our entire office is now on a Windows 10, we have had to go back to the web interface because as our catalog and products have matured we really don’t have to do too many updates to that.

If you’re not a numbers person and you’re trying to sell things on Amazon, that is not something that you should do.

  • We use a tool called ShipWorks, which is a multi-channel shipping solution software that is quite powerful. It pulls e-commerce orders from our own website as well as clearance items that we sell on eBay, as well as all the Amazon orders, and puts it all into one place where our staff in our warehouse are then able to print the labels, and grab the appropriate boxes and invoices.
  • We have our own in-house script that does the automatic repricing. And the thing about repricing is that we know that our competitors do it as well, so it’s not about getting the lowest price because that would really be driving it to the bottom, but it’s to at least match the prices of the other sellers.

3: Branding and Marketing

  • Deciding: Whether we use our own brand or not is decided at the very beginning. When we set up a new product, if we believe that we can eventually build enough cachet for it for where it makes sense for us to sell it under our own brand, we do it. Otherwise if there is already a large presence of that other brand online, then we just get authorization to use whatever brand the customers are familiar with.
  • Advantages: By selling with our own brand it’s a way for us to dissuade other sellers from selling and helps build an exclusive distribution for that specific product. However, you have to invest a little bit more in Amazon marketing to get the product in front of people’s eyes. You also still have to sell it at a discount versus the incumbent brand because people on Amazon want something for a good price. So it makes sense for us to do it, but only because we have the scale.
  • Marketing on Amazon: We limit it to just Amazon Marketing Service. And that just promotes the placement of the item in line under a search results as a way for us to get our product in front of customers. But at the end of the every week, we actually do a ROI report internally to see whether it’s worth spending the extra money on marketing, because that cuts into product margins as well. You definitely have to at least know how to use Excel, or at least be able to calculate the margins. Because there’s Amazon fees, there’s charges for shipping, and on top of that if you using Marketing Services you have to account for how much you’re spending versus your unit sales from that week.

4: Malicious Players on Amazon

There are two examples of malicious players on Amazon that have been very frustrating for us. We have had to add to our overheads keeping one of our employees full-time to be vigilant in dealing with finding and reporting. And as much as I love Amazon as a selling platform, it’s a pretty big challenge.

  • The first is sellers who sell a different product off of a brand listing. This phenomenon really peaked a couple of years ago and is not happening as much. But there will still be some sellers who list a product under our brand listing, because that’s something that Amazon allows everyone to do. When that happens, we make a few test buys and purchase the competitor’s products and when we receive it, we shoot a short video opening the package and showing that it’s obviously not the same product. And then we send that video to Seller Performance to get it that product removed. During that time of approximately a week, that seller is making money off of our brand. We always have to be vigilant with the hundred SKUs that we have on Amazon, and we’re not even a big seller, we have to basically monitor and see which ones have new sellers placing their wares on there.
  • The second is counterfeit sellers. They are using a different logo but because Amazon’s search is so image driven, they have their own photos of their counterfeit product which looks exactly like ours. If we have a product that leads the category and is always the first product that people see, we have had recently a couple of bad actors enter into our space with that product. These bad actors make copies of our leading products and then create a new listing, pushing that listing to the front page by employing some type of third-party system and whilst simultaneously running a drip campaign where thousands of Amazon accounts are created with usually two positive reviews for their products, and one negative review for competitors’ products. And we’ve been reporting this to Seller Performance each time but unfortunately they’ve been very, very slow. And that I would say is the number one frustration for me as a seller, seeing these unscrupulous bad actors getting away with cheating by pushing their product up through these back channels. The Seller Performance team is really quite nebulous and seems to be placing a blind eye on these tactics that they’re engaging.

The number one frustration as for me as a seller, is seeing these just unscrupulous bad actors in this ecosystem that are really getting away with just cheating.

5: Listings, Fulfillment, and Team Size

Four elements for a successful Amazon product page:

  • You have to have great photos; photos that are detailed, high-resolution, and that show the product. And while it’s great just to see the product photo, it’s even better for the customers to see other customers who are using that product. You have to engage the customer, so that you can ask them to also upload their own photos of them using the product later. On our invoices we have a statement that says, ‘Feedback is very important to us and it would be great if you could take a picture of your product as you’re using it, if you enjoy it. Because we live and die by feedback,’ so that when they open up their package, that’s the thing that they see.
  • Be an active participant in the Question & Answers section on the bottom part of the listing, right before the reviews. That’s where a lot of customer engagement comes in. It’s important to answer those questions and then, by looking at those questions that are answered, adjust the description accordingly.
  • The instructions and the descriptions have to be very clear.
  • Whenever you see a review that’s not absolutely great, write a comment using your account telling them to reach out to you. So through this we’ve had a small number of customers who we’ve either given them a replacement product or we would have a phone call with them to help troubleshoot their issues, and then subsequently they would go back and improve their reviews.

Fulfillment By Amazon: It’s really dependent on what products and the pricing of the product. So when it reaches a certain threshold you know, around $20, then we will do FBA and that’s a tactic to win the Buy Box because they give preference to the FBA. If it’s under $20, then we will generally just ship it out ourselves, we have our own warehouse where we have workers downloading the Amazon orders using ShipWorks and then shipping them out.

Team Size: We have a pretty small team, only about five people, and that’s mainly two people on customer service and one person on procurement and two people in the warehouse. And the thing is even though we have a fairly sizable revenue on Amazon, I have to warn the listeners, that does not mean it’s extremely profitable. Because the thing is there are overheads in terms of Amazon Marketing Services, AdWords from Google, and running a warehouse. It is also quite capital-intensive: we have to be very lean throughout the year in order to stock enough inventories for Christmas, during which we do upsize our staff to approximately 8 people.

6: Alibaba vs Amazon

Because we’re in such a low margin industry to begin with, we are thinking about the existential challenges every week.

  • We are waiting for the day when Amazon is going to have a run for its money, in having to compete against Alibaba. We’ve heard that Alibaba is building its own network of warehouses and distribution centers in the US. And so they’re going to be able to stock their inventory of sellers from China.
  • Being able to fulfill from United States locations is going to create a lot of opportunities for big sellers on Alibaba in China, allowing them to sell a lot of their products to the consumer side. And sellers based in the United States with our higher overhead because of labor and warehousing and all that, they may be giving us a run for our money, literally.
  • Now that’s not to say that we’re going to go ahead and start a store in Alibaba. We have, we’ve tried it: very low margins and very competitive. But we really have to go where customers are going. And if they choose choose to use Alibaba, then we will have to switch to that at one point or use that as an additional sales channel to Amazon.
  • Kunle’s response to a question of Amazon bypassing sellers: With my conversation in episode 26 with Rick, Amazon are trying their best to sell direct to consumers on behalf of brands rather than middlemen, and they are working on specific verticals. Obviously they get data from sellers and wholesalers and if the figures look enticing, they have it on their list to reach out to manufacturers.

7: Parting Advice

  • If you are thinking about doing business on Amazon, it’s important to look and read all the seller guidelines. Make sure you actually abide by them. So if they said you have to update the tracking in 24 hours or get back to customers in 24 hours, it’s a good idea to do that. So it’s easy to be lazy and ignore the requirements of Amazon, but when you do that you are definitely threatening the viability of your business and your account.
  • The biggest growth opportunity on Amazon right now is in baby products. I’ve seen some other sellers do extremely well. Especially now that people having less children, the individual spend per baby as they’re growing is just tremendous. And the fact that Amazon gives Prime membership to new mothers as a way to entice them to join the system also helps. So if I were to start over again, I would go into baby products.
  • I’m sorry, I don’t know the title but it’s an American Express book on how to advertise online and it was sent to us because we were using American Express credit card. It was the summer of 2008, I read it, and we changed our tactics because of that, and that’s what got us into joining Amazon and becoming more proactive and imaginative.

Key Takeaways

(02:08) Introducing Yale Zhang

(07:36) General Overview of Amazon

(12:28) Tools Used with Amazon

(16:40) Brand and Marketing with Amazon

(20:49) Malicious Players on Amazon

(37:39) Alibaba vs Amazon

(28:33) Personalization

(43:36) Parting Advice

Transcript

On this episode of the 2X eCommerce Podcast Show I am going to be talking to the founder of a 5-person, 7-figure ecommerce business that generates 80% of its revenue from Amazon.com. We are going to talk about how to compete and grow your store on Amazon. Do stay tuned!

[Intro clip] Welcome to the 2X eCommerce podcast show where we interview founders of fast growing seven and eight figure eCommerce businesses and eCommerce experts. They’ll tell their stories, share how they 2X’d their businesses and inspire you to take action in your own online retail business today. And now, here he is, the man in the mix, Kunle Campbell.

This episode is brought to you by Remarkety. Remarkety is an email marketing platform specifically built for eCommerce businesses. With Remarkety, emails are automatically triggered by shopper behaviour and purchase history. With a few simple clicks, Remarkety allows you to recover abandoned carts, win back inactive customers, make product recommendations, deliver newsletters, and a whole lot more. In other words, emails you will send through Remarkety will be highly targeted, with glaring improvements on your open rates, click rates, and most importantly, conversions. You are also able to track revenue generated from every single email sent by Remarkety.
Try Remarkety absolutely free for 30-days. No credit cards and no contracts.
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Kunle: On today’s show I have with me Yale Zhang. He is a cofounder of Clinical Gaurd. It’s a health and personal care device distribution business that generates 80% of its sales from Amazon. Yes you heard that right, 80% of its sales from Amazon and the remaining 20% from its website. They are multi-million, seven-figure e-commerce business based in the States, Atlanta I believe, that predominantly sell on Amazon, and have been doing it since 2008. Yale is here to talk about talk to us about how to manage and grow Amazon business, your business on Amazon, how to handle competition, how to win the coveted Buy Box, and a few things to be aware of in Amazon. Without further ado I’d like to welcome Yale to the show. Welcome to the show Yale, it’s a pleasure to have you on.

Yale: Hello everyone.

Kunle: Hiya. Could you take a minute or two to tell our listeners a bit about yourself?

Yale: Yes. So I stumbled into e-commerce distribution for health and personal care really by accident, back in 2006. My friend Jackie called me one day and said, ‘Yale would you like to go to a medical device show?’ Now it was the day of, it was happening in Atlanta which is where we’re based. And so we put on a suit, we didn’t have registration, and we were able to get into the show because we looked the part. [laughs] So we went into the show, we saw a few manufacturers who were making their debut in the United States and they needed a distributor. So with one of those companies, they had really been looking for someone to represent their product in the US. So I told Jackie, I said, ‘We really should help them out. We should distribute their products.’ So I went home, I went to the bank, I took out all the cash that I had, and the next day I went back to the show and I bought all of their merchandise. And that’s really how we started. So two months later we sat set up a website, an e-commerce website, to start selling these products. That’s how we started and for the first two years we were almost 100% just regular e-commerce, not on Amazon. But then in 2008, that’s when we saw that a lot of our competitors had started to go on to Amazon and we decided, okay well, it’s time for us to start an account and start selling. And there’s really not too much of a mystery behind the selling on Amazon, it’s really about just being competitively priced. So a part of it is making sure that our own operations are smooth enough. Because as a lot of your audience probably know, who are selling on Amazon, they have a lot of very strict rules on when things should be delivered, how late you have to wait to reply to customer service, and when you should upload the tracking number and all that. So originally we were beginning with a manual process and it was taking a long time. And over about two years we were then able to start automating it, and that’s really where things started getting better.

Kunle: Okay that’s quite exciting. Let’s backtrack to 2006. You pretty much gatecrashed into this industry, into selling online. Prior to that, I’m on your LinkedIn profile, prior to that what did you do? I see you have a background in Siemens, On Power USA, Wintao. Were you working at the time? Because I think you were the VP of Marketing for a company prior, were you working at the time and then doing this part-time and then you got into it full-time? Or were you at a transitionary period in life where you said, you know, ‘I’m looking to go into retail or go into business,’ and then you’re look looking for opportunities and that’s what that used to this the tradeshow?

Yale: Yes, so I went to the tradeshow because I was just curious. I wasn’t planning to become an e-commerce retailer at all. It was just, I saw that there are these products that were quite innovative and they were priced, you know, and they filled a niche in the market that my friend, Jackie, told me that it was a good place to start. And I took a gamble, really. It had more to do with luck that I stumbled into it. And when we first started, the first year I would say, in 2006, we didn’t actually make any money. We actually lost about $30,000. And it was in 2007 we had revenue of about 400,000, and then by 2008 our revenue had already increased to 1.2 million.

Kunle: And what’s your revenue now?

Yale: It’s almost 3 million. So this year hopefully we’ll be breaking that barrier. And this is in dollars, for your audience.

Kunle: Yes, USD. Absolutely. Okay, right. So you were doing pretty much about 1 million direct from your website, selling from your website. How has the distribution of revenue changed and what’s the split like at the moment? Do you do distribution? Because you introduced Clinical Gaurd as a distribution business, so do you do a bit of distribution, do you sell direct to consumers on your websites, and obviously you sell Amazon… But what’s the distribution of revenue from that perspective?

Yale: You’re right. When we first started, we were more heavy on the distribution side because the products themselves had a higher margin. But as more players entered the market, driving the retail price of our products down, we noticed that it was much better for us strategically to be more towards commerce, for B2C. And thus we did more ad spends on Google for our website. But the caveat of that is that what we noticed was that more and more of our customers were going to Amazon to make their purchase, and that’s where we went, where the customers were. So we actually invested less on our site and more into Amazon and that’s how we currently have this 80% sales on Amazon. About 15% on website, and then 5% of our old customers on a distribution site. So it’s a very eclectic mix that we inherited from our old business. But I would say Amazon is really where the future is and there’s also certain pitfalls to that, which I’ll get to later.

Kunle: It’s a very, very interesting statement, Amazon being the future. Does it give you a cold sweat at night given the fact that 80% of your business is from Amazon?

Yale: Yes and that’s actually one of the biggest challenges. Because demand is…you can somewhat predict it, but the thing is there’s always going to be things that you don’t know. And there’s the three things that are always on my mind are: new players in this business, especially ones who don’t abide by the rules, that’s the biggest worry. The second one is obviously customers themselves being fickle and moving on to another product. And the third one, which I don’t know if it’s on anyone’s mind is the big 800lb gorilla, at least in the United States, is Alibaba. So those are the three things that are on my mind.

Kunle: Before we go into Alibaba and also the malicious players on Amazon, I wanted to ask you about what your thoughts are on the fact that you do not get contact details like email addresses through Amazon. Amazon pretty much controls all of that, the retention bit of the business. How do you build long-term relationships on Amazon? Is it even possible, from your experience?

Yale: Unfortunately I have not listened to your earlier episodes of your podcast. I can only say from personal experience and I can say that it’s nearly impossible for the customers to create a long-term experience with us. Of course they can always use Google and search for our company name, because it’s the same as our seller name on Amazon, and then they can see our toll-free website and call us, or email us using the contact form. But if they are inside the walled gardens of Amazon, it’s very hard for them to go outside of it. And they may not be comfortable doing that. So, someone who’s extremely comfortable with buying stuff on Amazon because they’re Prime subscribers may not be of the mindset to continue a relationship with the seller through their own website, unless they received a significant discount. And that’s not a tactic that we use, it’s actually very hard so, I would say that’s a pretty big challenge.

Kunle: Okay. So, well, Amazon is making it habit for people to come to their store again and again and again. They’re synonymous to selling, to buying, really, from a consumer standpoint. It’s a no-brainer actually being on Amazon, and selling through Amazon, and dominating that space. Okay, so let’s move into the challenges. Well actually, before the challenges, let’s talk about the tools. Because you said you started out pretty manually on Amazon. So since 2008, have you been through a number of tools you use for managing your listings on Amazon?

Yale: Yes. Yes, absolutely. Originally Amazon had a Amazon Seller Tool for desktop. Unfortunately it only worked on Windows XP, and only on the 32-bit version of that. [laughs] So we had to maintain a desktop computer in the office that was old enough to use the Amazon seller desktop software. And that was great for both creating listings and also updating listings, it was very fast, it was much better than the web interface in my opinion. And we were able to use that for quite a few years. Now because our entire office is now on a Windows 10, we have had to go back to the web interface because as our catalog and products have matured we really don’t have to do too many updates to that. But one thing that I do want to point out in terms of software tools is we did have on the shipping side, we actually had numerous adventures with that. The first thing we did was we wrote our own scripts…so the good news is that we all have a technical background…wrote our own scripts to download the orders from Amazon. And then we had a second script that we ran to update the tracking numbers for all the orders using their API. And that worked really well from 2010 until probably 2012. So for those two years we just had our own script that we wrote. And then later in 2013 we actually finally stepped up and we actually kind of like you did, we didn’t listen to any podcasts but we did talk to other retailers, and they recommended a tool called ShipWorks, which is a multi-channel shipping solution. So they would pull our own e-commerce orders from our website as well as some of our clearance items that we sell on eBay, and as well as the Amazon orders. And they would all put into one place where our staff in our warehouse would then be able to print the labels and grab the appropriate boxes as well as the invoices. So it is all done in one place and that’s actually a very powerful piece of software. I don’t know if it’s available in the UK, I believe it is.

Kunle: It is.

Yale: Yes, ShipWorks. So that’s what we use. And that’s what we have used and has really sped up our e-commerce on the fulfillment side.

Kunle: Okay, interesting, very interesting. What about from a marketing or a bid adjustment standpoint, so like for repricing. I had someone, Shmuli, he was from Feedviser, and they’re a repricing platform and they’re all about winning the Buy Box. I was just wondering if you had any challenges trying to claim the Buy Box? And whether you automate any of your repricing on Amazon?

Yale: We do. We actually still have our own in-house script that does the repricing. And the thing about repricing is that we know that our competitors do it as well. So it’s not about getting the lowest price because that would really be driving it to the bottom, but it’s to at least match the prices of the other sellers. And the reason for that is because there are still, you know our biggest challenges really aren’t the other sellers of our products, because it’s a fair market and there are still sales for everyone, we believe. You know the biggest challenges are really going to be the bad actors who are in this space.

Kunle: Okay. I have a question with regards to the kinds of products you sell. The fact that you said that your suppliers were actually looking for representatives in America, in the US, and whether you’re the sole sellers, exclusive sellers of that particular product, of Clinical Gaurd. Are all your products Clinical Guard branded? So, do you actually own your brand or do you source a number of brands and sell a varied number of brands on your Amazon store?

Yale: You know that’s a good question. Some of them we actually use the manufacturer’s brand, under their authorization. Some of them we use our own brand, which is Clinical Gaurd and that is a registered trademark. And whether we choose to use our own brand or not is really done at the very beginning. So when we set up a new product, if we believe that we can eventually build enough cachet for it for where it makes sense for us to sell it under our own brand, we do it. Otherwise if there is already a large presence of that other brand online, then we do not put it on own band, we just go ahead and use the manufacturer’s brand, or whatever the brand that they’re familiar with.

Kunle: Okay. What’s a net effect on the business on the bottom line on selling your own brand versus selling of the brands?

Yale: Well, really the best part of it is that by selling our own brand it’s a way for us to dissuade other sellers from selling these brands, because you know we do own the brand. And so that helps build an exclusive distribution for that specific product. However when that happens, you still have to invest a little bit more in Amazon marketing to get the product in front of people’s eyes. So you still have to sell it at a discount versus the incumbent brand, and you still have to spend a little bit more on marketing. So it makes sense for us to do it, but only because we have the scale. If it’s a smaller seller, you may be leaving money on the table. And not just by having to make a discount off your own brand because people on Amazon do value a good value, they do want something for good price, but you also have to spend money on Amazon marketing in order to get that product in front of people’s eyes.

Kunle: So how do you spend money effectively on Amazon marketing? What channels would you use within the Amazon ecosystem I suppose?

Yale: Well, that we actually limit it to just Amazon Marketing Service. And that just promotes the placement of the item in line under a search results. And I guess that’s a way for Amazon to make some money, and it’s a way for us to get our product in front of customers. But we’re always, at the end of the every week, we actually do a ROI report internally to see whether it’s worth spending the extra money on marketing, because that cuts into product margins as well. So if you’re not a numbers person and you’re trying to sell things on Amazon that is not something that you should do. [laughs] So you definitely have to at least know how to use Excel, or at least a pen and paper and calculator to calculate the margins. Because there’s Amazon fees, there’s charges for shipping, and on top of that if you using Marketing Services you have to account for how much you’re spending versus your unit sales from that week.

Kunle: That makes a lot of sense. I’m sure you live and breathe on spreadsheets on a regular basis to manage your business. So moving into owning your brand, are there other sellers that creep in. Are you pretty much protected on Amazon when you sell your brand or, you know are there intruders? Do people still try, despite your brand being trademarked; do other sellers still try to list their products on your listing?

Yale: Yes and there’s two examples. The first one that you’re talking about which is just other sellers selling off of this brand listing, that phenomenon really peaked a couple of years ago. It’s not happening as much now because Amazon has gotten really good about protecting the brands that belong to the actual sellers, including the ability to register your trademarks under your seller account so that you get to have a say in how the product is listed on Amazon. That’s a great thing that they’ve done. But there will still be some that will try to list their product under your listing because that’s something that Amazon obviously allows everyone to do. When that happens, we do on our side make a few test buys. So we have to purchase the competitor’s products and then when we receive it, we shoot a video, just a short one of us opening it showing that it’s obviously not the same product. And then we have to send it to Seller Performance at which point then they would be able to take a few more days to get it removed. So during that time, approximately a week, that seller is making money off of our brand. And as much as I love Amazon as a selling platform, that’s a pretty big challenge and we always have to be vigilant with the hundred SKUs that we have on Amazon, and we’re not even a big seller, we’re pretty tiny seller with only 100 SKUs, we have to basically monitor and see which ones have new sellers placing their wares on there. I’m sure that in your experience there are tools that can do this kind of reporting, I am just not aware of those right now, and I’m sure there’s ways for us to be even more efficient which is why I’m looking forward to definitely listening to your 2X eCommerce Podcast because I just started yesterday, it sounds very interesting and I’m really looking forward to listening to previous episodes.

Kunle: Definitely listen to episode 26. It was from the chaps from CPC strategy, I spoke with Rick Bachus and it was just exclusively on Amazon product advertising that he shares. He shared loads of tools and shared lots of tactics on there, that would be quite interesting. But thank you for the comment. Okay so, 100 SKUs generating $3 million, not bad at all, not bad at all. But going back to this issue, they’re pretty much counterfeiting your products.

Yale: Yes, that’s the second problem. So if we have a product that leads the category and it’s always first product that people see because it’s been there for a while, it’s priced attractively, it’s got a great description, good pictures, it’s got thousands of reviews, we have had unfortunately recently a couple of bad actors where they would take the product that we have, they would bring it to another manufacturer in China where they would actually counterfeit the product, copy it to look exactly like our product, create a new listing, and then push that listing to the front page. And we’ve been tracking this bad actor for a couple of years and they’ve done this with other products. So they’ve really come into our space. And we’ve really had to be not only vigilant, but we’ve had to now…and as much as I love e-commerce, I really don’t like to have to call people or email because you know it’s very easy to sit back behind your computer and get things done at your own pace… so we’ve actually had to reach out to other sellers who are in this space and ask them for what their experiences are. So the bad actors, what they’ve been doing is not only are they creating a counterfeit product to sell… it still works but it’s counterfeit product, it’s not FDA cleared, it looks like ours, it’s got thousands of reviews. And then we looked at ourselves and said how did this person who came out of nowhere have this many reviews? So we did our own investigation and we looked at who’s creating those reviews and it looks like they are employing some type of third-party system where thousands of accounts are created. So these are Amazon accounts; thousands of Amazon accounts are created where the Amazon accounts themselves only have two or three reviews. Usually two positive reviews for their products, and then one negative review for either one of our products or one of our competitors’ products. So I think the term that comes to mind is a drip campaign of some kind where they’re just promoting their own products through positive reviews and bashing everyone else’s. And we’ve been reporting this to Seller Performance. And whenever we see this we do that, but unfortunately they’ve been very slow. Very, very slow. And that I would say is the number one frustration for me, for our company, as a seller, is seeing these just unscrupulous bad actors in this ecosystem that are really getting away with just cheating. Or ignoring the rules or gaming the system in their favour in a way that’s I would say it’s unfair, simply because you know we are doing the traditional way where it’s by advertising through marketing services or just doing good, reaching out to our customers asking them to leave feedback. They are literally spending just, I do know how much, to push their product up through these back channels.

Kunle: Gotcha, gotcha. Are they actually using the Clinical Gaurd logo or are they using something more generic?

Yale: They are using a different logo but because Amazon, the search, is so image driven, they have their own photos of their counterfeit product which looks exactly like ours. So because we and them are now 1 and 2, we’ve seen a decrease in sales from their product being there. So that’s one of the frustrations, and unfortunately we’ve had to keep one of our own employees full-time to deal with these types of issues on Amazon. So when you’re doing an e-commerce, you now have to think about the overhead of maintaining another staff member just to do these kinds of reporting of bad sellers, or bad products.

Kunle: Okay. So backtracking back to Amazon Seller Performance team, have you successfully followed through, actually raised a case with an unscrupulous seller in the past and followed through to the end, and did you come to a resolution with them? Or has this never happened?

Yale: You know it’s actually, I would say the success rate is pretty low. The Seller Performance team, at least from what we know and from friends who have worked at Amazon or who are working there, the Seller Performance team is really quite nebulous. From what they say, even internally it’s cordoned off from the rest of Amazon and they have very little influence on what the Seller Performance team does because there’s only one way to contact them which is email, and maybe a phone call. It’s very hard to raise a case. We have to basically put all the evidence in front of them and explain the steps we took to gather this evidence, how we were able to find out what they were doing and present a case. And even then it’s still a good chance that they would do nothing. And for all the good things that Amazon has done, which is bring great-priced consumer products to customers, one of the things that they really do not quite as well is really take care of their sellers. And especially if a seller that is now ranking pretty highly, even if they are making these violations to the seller policy, the Seller Performance team really seems to be placing a blind eye on these tactics that they’re engaging. And I don’t know if it’s driven by the bottom line, I’m not here to speculate, but that’s the frustrating part for us.

Kunle: It’s certainly a challenge.

Yale: Yes. Yes.

Kunle: Right. Should we track back into your product listings on Amazon. So, obviously since 2008 you’d tried and tested various formats. And from your perspective, with a hundred SKUs, which is a good sample size to actually do a lot of testing, what are the ideal elements for a successful Amazon product page?

Yale: There are several great things. One is you have to have great photos; photos that are detailed, high-resolution, and that show the product. You have to engage the customer, so that you can ask them to also upload their own photos of them using the product later. And that helps because it’s great to just see the product photo, but it’s even better for the customers to see other customers who are using that product. The second thing is the instructions and the description has to be very clear. And the third thing is to be an active participant in the Question & Answers section. So on the bottom part of the listing, right before the reviews, there’s a part where customers can ask questions about this product. And there’s an opportunity to answer those questions, and that’s where a lot of customer engagement comes in. And so they’ll say, ‘Oh, are batteries included?’ And then you can answer, ‘Yes, batteries are included,’ or ‘No, batteries are not included.’ It’s important to answer those questions and then, by looking at those questions that are answered, adjust the description accordingly. So it’s really a matter of not being lazy, you know it’s important to be vigilant about looking at your own listings, what customers are saying, and then addressing those. And the final thing that we’ve found to have been a little bit effective is, whenever you see a review that’s not absolutely great, it’s to look at the review and write a comment using your account and then tell them to reach out to you. So through this we’ve had a small number of customers who we’ve either given them a replacement product or we would have a phone call with them to help troubleshoot their issues, and then subsequently they would go back and improve their reviews. So those are some of the non-digital, analog things that we do to help drive sales to what’s ultimately still a digital platform.

Kunle: That’s quite interesting. I have a question with regards to the customer photos. How do you nudge customers to actually take a photograph of the product when they get it? Do you give them any incentives or do you just send them messages or do you let Amazon use their system to encourage them to upload images?

Yale: On our invoices we have a statement that says, ‘Feedback is very important to us and it would be great if you could take a picture of your product as you’re using it, if you enjoy it, because we live and die by feedback.’ Something towards that regard on the invoice itself, so that when they open up their package, that’s the thing that they see. And when they read that, it will encourage them. Now that doesn’t happen for all of our customers, it’s a very small percentage of our customers that actually put the photos on there, but we do try to encourage them through the invoice. I don’t know what tactics other Amazon sellers use but that one is something that we do ourselves.

Kunle: Okay, fantastic. I guess so, the next stage after when customers actually purchase is how you fulfill. Do you use the fulfill by Amazon, the FBA, or do you have your warehouse where you fill from? And what kind of talk what kind of shipping times do you adhere to?

Yale: Okay, so because our products are fairly low dollar amount, we do use FBA for some of our products and that’s a tactic to win the Buy Box because they give preference to the FBA. But for some other products, because they’re so low priced, we still have to fulfill them first party, from us. So instead of having FBA, we do also have our own warehouse where we have workers there downloading the Amazon orders using ShipWorks and then shipping them out. It’s really dependent on what product that they’re buying and with the pricing of the product. So when it reaches a certain threshold you know, around $20, then we will do FBA. If not, then we will just ship it out ourselves.

Kunle: Okay, that makes sense. Could you give us an idea of the size of your team and what kind of roles they are, what major roles or departments they are in your company?

Yale: We have a pretty small team, only about five people. And the thing is even though we have a fairly sizable revenue on Amazon…

Kunle: Revenue per head: 500,000.

Yale: Right. But the thing is I have to warn the listeners, that does not mean it’s extremely profitable. Because the thing is like I said there is overhead in terms of Amazon Marketing Services, there’s AdWords from Google, there’s the cost of running a warehouse. So it is quite capital-intensive because we also have to have a sizable inventory and stock at all times in order to meet demands because we know that Christmas is coming and it’s always a big deal for buyers and for sellers, so we have to be very lean throughout the year in order to stock enough inventory for Christmas. So the important thing to know is that during Christmas we do upsize our staff to approximately 8 people. And then usually year-round we only have five, and that’s mainly two people on customer service and one person on procurement and two people in the warehouse.

Kunle: Okay, make sense, a pretty good team. Pretty compact team, rather. Let’s talk about…okay so in Europe, what I’ve noticed is Amazon is King. So I was reading a report today: Amazon is number one in Germany e-commerce, number one in Austria, it’s number one in the UK. It’s just everywhere, right. However my East-end European friends/colleagues, freelancers I work with, they tend to use Alibaba Express quite a lot. Alibaba Express or Alibaba is making moves in the UK. It’s dominant, but predominantly from a seller standpoint, from a business to business standpoint at the moment. I was just wondering what your thoughts are on whether Alibaba through Alibaba Express going to be what Amazon is today at some point in the future?

Yale: You know that’s a topic that is on my mind and that’s something that I hope a lot of potential e-commerce sellers are keeping on their mind. Because there is a significant wage gap between the folks in China and the folks in Western countries like the UK and the United States. And one of the things that we’ve heard of even when we go to trade shows is that Alibaba is building its own network of warehouses and distribution centers in the US. And what that’s going to do is they’re going to be able to stock the inventory of sellers from China, you know their inventory. So even though we may have distribution agreements for say in some products in the US, these Chinese sellers will stop at nothing to sell to this market. Which means that once Alibaba does a big push in the e-commerce side, they may be giving us, you know sellers based in the United States with our higher overhead because of labor and warehousing and all that, they may be giving us a run for our money, literally. Which I don’t know if that’s a topic on any other sellers mind, I don’t know if that’s something that other sellers care about, but for us, because we’re in such a low margin industry to begin with, we are thinking about the existential challenges every week. Because there’s always news and we do know that by Alibaba working with customs, creating a express method for them to both ship and warehouse their items to the United States and then being able to fulfill from United States locations, it’s going to create a lot of opportunities for big sellers on Alibaba in China. And that’s going to allow them to sell a lot of their products to the consumer side. So we are waiting for the day when Amazon is going to have a run for its money, in having to compete, and maybe even a fight to the death against Alibaba. Kind of like Uber and Lyft. [laughs] Not to bring a bad example from another arena, but that’s something we have to be mindful of. Now that’s not to say that we’re going to go ahead and start a store in Alibaba. We have, we’ve tried it, we haven’t really mastered it yet, but we really have to go where customers are going. And if they choose choose to use Alibaba, then we will have to switch to that at one point or use that as an additional sales channel in addition to Amazon.

Kunle: What’s been your experience so far with Alibaba, with trying to sell on Alibaba?

Yell: It’s different. Very, very, very low margins; and very, very competitive. It’s going to be a challenge, and there’s going to be good equilibrium in that the wages in China are still rising, so hopefully through economies of scale and greater efficiencies we can be competitive. But we have to either accept a lower margin or we have to strive for greater efficiency on our part. And that’s always going to be the big driver, right, the spiral to the bottom. And actually, that’s one thing that… I don’t know if you have time for me to take another tangent here but there is one thing which… I had a friend who also did e-commerce on Amazon and one of the products that he sold, Amazon had reached out directly to the manufacturer, bypassing him entirely, and it became an Amazon…. and I don’t know if you’ve heard that story from other sellers as well?

Kunle: We discussed it with my conversation in episode 26 with Rick. Amazon actually has a special seller program for manufacturers, and they could actually get them landing pages. They’re trying their best to sell direct to consumers on behalf of brands rather than middlemen, from what he said. And I think they’re working on specific verticals now, you know obviously they get data from sellers and wholesalers and if the figures look enticing, I guess it rings alarm bells out the back somewhere in Amazon and they have it on their list to reach out to manufacturers, I suppose. Okay. This is the Evergreen segment of the show and it’s pretty much rounding up. And have a question for you which is in regards to your best mistake you’ve made to date, being an Amazon seller?

Yale: The best mistake… Can you elaborate on that?

Kunle: A setback on Amazon that’s giving you the biggest feedback, from that perspective, so an issue you’ve had or a mistake you’ve made but giving your best feedback to be better on Amazon.

Yale: Yes. So during the conversation I’ve talked many times about being vigilant and being mindful of your own listings. The thing is, unfortunately for us we were not as vigilant in the beginning. And we weren’t careful about managing customer feedback, we weren’t careful about responding to customers in a timely manner, we had let the shipping date slip a couple times. And these things were looked very heavily on by Amazon. So much so that we would get warnings on our account. We actually had our account, you know they threatened to ban it because of things that we were not doing to step up to meet the guidelines of Amazon. So if you are not doing business on Amazon right now, and you’re thinking about it, it’s important to look and read all the guidelines. Make sure you actually abide by them. I know that in the example I gave, that other seller was not, and they were gaming the system, but it’s important to make your businesses indefensible. So if they said you have to update the tracking in 24 hours, you probably have to do that. If you have to get back to customers in 24 hours, it’s a good idea to do that. So it’s easy to be lazy and ignore the requirements of Amazon, but when you do that you are definitely threatening the viability of your business and your account.

Kunle: That’s a really, really good point there, just that proactivity really, in every bit, from feedbacks to listings and to response time. Okay, good stuff. If you were to do do this all over again, sell on Amazon, what products would you sell again? If it was not medical equipment, what other products would you sell as an Amazon retailer? Where do you see growth opportunity, from an Amazon standpoint?

Yale: I would say if I didn’t do health and personal care, the only other category that I could think about would be baby products. Because I’ve seen some other sellers just do extremely well. It’s not an area…it’s tangent, it’s somewhat related to where we are but I’m not an expert in that field. But it seems that the number of baby products, and especially now that people having less children, the individual spend per baby as they’re growing is just tremendous. And the fact that Amazon gives Prime membership to new mothers as a way to entice them to join the system also helps. So if I were to start over again, I would go into baby.

Kunle: Okay, okay. That’s very interesting in terms of giving mothers Prime membership, I didn’t know that. Okay. So if you were to choose a single book… actually, have you read any books or did you read any books to help you become a better Amazon seller?

Yale: I have two say, I read a book that was written by…and it was sent to us because we were using American Express, we still have American Express, the credit card, and they sent us a book about how to advertise online. And I don’t know who wrote it because it didn’t have an author on it, but it was a book, it was written by American Express about how to advertise online. And it was the summer of 2008. I read it, we changed our tactics because of that, and that’s really what got us into being more imaginative, you know joining Amazon, becoming more proactive. And I don’t have that book anymore because I let my friend borrow it. And I don’t know the title of it but it’s an American Express book on how to advertise online and I’m sorry I don’t know the exact title.

Kunle: I’ll search for it and I’ll link it up on the show notes. Okay. On a final note for our listeners who want to reach out to you, how’s the best way to catch you? Are you on social media or is email…?

Yale: Yes, email would be fine and feel free to share it with your listeners, my email address. Also you can also share my Twitter. I’m not an active Twitter user but I do have my own handle, which is just @YaleZhang which is my first and last name together.

Kunle: Right, it’s been an absolute pleasure having you on the show, Yale, and thank you for coming on to 2X eCommerce.

Yale: Thank you so much. I’m looking forward to listening to the previous episodes that you have, they sound very interesting.

Kunle: Yes, please do, please do. Cheers.

Yale: Yes.

[End clip] Thanks for listening to this episode of 2X eCommerce. To help you get more actionable insights and eCommerce growth hacks that will help you 2X your online retail business, hop over to 2xeCommerce.com

It’s a blog dedicated to eCommerce and multichannel marketing run by the show’s host, Kunle Campbell. 2XeCommerce.com is packed full of articles and guides to help increase traffic to your store, increase repeat purchases and average order value.

Thanks for listening. Visit 2XeCommerce.com

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About the host:

Kunle Campbell

An ecommerce advisor to ambitious, agile online retailers and funded ecommerce startups seeking exponentially sales growth through scalable customer acquisition, retention, conversion optimisation, product/market fit optimisation and customer referrals.

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