Building an Ecommerce Business, Part 11: Selling on Amazon

A fundamental decision for many ecommerce entrepreneurs is whether to sell on Amazon. The potential is high, but the competition is increasing tough, among other risks.

I am the founder of Beardbrand, an Austin, Texas-based ecommerce business that focuses on beard care and men’s grooming. This is episode 11 in my series on building an ecommerce business from the ground up. The previous installments are:

• “Part 1: Choosing Partners,”
• “Part 2: Selecting Platforms,”
• “Part 3: Early Days,”
• “Part 4: Copywriting Matters,”
• “Part 5: Paid Acquisition,”
• “Part 6: Hiring Employees,“
• “Part 7: Shipping and Fulfillment,”
• “Part 8: Customer Service,”
• “Part 9: YouTube Strategy,”
• “Part 10: Apparel Sales, Manufacturing.”

For this installment, I spoke with Mike Tecku, co-founder of Sky Solutions, which manufactures and sells Sky Mats, a floormat, in high volume on Amazon’s marketplace.

What follows is my entire audio conversation with Tecku and a transcript, edited for length and clarity.

Eric Bandholz: Tell us about your business — how it’s set up and what you’re selling on Amazon.

Mike Tecku: On Amazon, we started with roughly 20 products, and we’ve narrowed it down to five. Our best seller is the Sky Mats. It’s a floormat for your kitchen or your standup desk. Before that, I had an online company that sold photo booths for weddings — a franchise. So I have a long history of selling things online. This is our fourth or fifth year on Amazon.

Bandholz: So you got in early. Is it too late to start selling on Amazon, in early 2019?

Tecku: That depends. I’m not launching new products. It would take a complete dedication and a lot of money. The Amazon game has changed considerably. Three years ago I probably wouldn’t have told you what my best-selling product is. But now I don’t think anyone could beat me, meaning the system is entrenched. It’s hard to go up against someone with 4,000 5-star reviews and a long history of sales, which matters to Amazon’s algorithm.

Bandholz: So you’ve got to find a niche. Do you know of tools to help?

Tecku: Jungle Scout’s a good one. But I probably wouldn’t even start on Amazon. I would look at niches on a broader sense — camping, cycling, something you understand. To be successful takes a product that you’ve never even heard of, but there’s enough worldwide or nationwide demand for it to be successful.

If I were to start something now, I wouldn’t do it unless it could be a million dollar product. But to start a million dollar product today you would probably want to throw $100,000 at it.

Bandholz: Let’s dig into social proof. Reviews on Amazon are crucial. You have 4,000 reviews for Sky Mats. How do you get legitimate reviews?

Tecku: Well, it’s gotten much harder. Amazon has tightened the restrictions. There’s no way to pay for them now. It takes a great product and time. All of our reviews are real, and we’ve acquired them over in five years.

The best way to get reviews is to sell a lot of units. You’re going to have, perhaps, one out of 100 that take the time, even when you ask them in emails, and in inserts. And that’s probably a high conversion rate.

Bandholz: How do you identify a potential million-dollar product?

Tecku: Programs like Jungle Scout and DS Amazon Quick View will tell you what people are selling in a day and what their seller rank is. I don’t want to discourage people from selling on Amazon. Just have clear eyes. Is your company, Beardbrand, on Amazon?

Bandholz: No. We were on Amazon through a third-party reseller, but we pulled it at the beginning of the year.

Tecku: Right. It’s different with what you’re doing. You have developed social proof with lots of videos, building a brand and recognition. That allows you to charge a premium price on your website, at Target, or wherever you’re at. When you’re on Amazon, you’re a commodity in many ways.

Bandholz: Let’s talk about fulfillment — Fulfillment by Amazon, fulfilling it yourself, or even selling directly to Amazon.

Tecku: Sure, I do everything via FBA. I have not found a solution that is simpler and cheaper. If you don’t provide Prime shipping, you’re not going to be successful on Amazon; the conversion rate for Prime sellers is 30 to 40 percent higher.

Bandholz: What about Seller Fulfilled Prime?

Tecku: Yes, you can fulfill it yourself and obtain Prime status. But you have to apply for it. It takes a history, a warehouse, and employees. Or you can have a third-party fulfillment company do it. And I just don’t think there’s a less expensive option than FBA.

Bandholz: So if someone wants to tackle Amazon, how else can they differentiate their products?

Mike Tecku: Your marketing is going to make 15 percent of the difference. You can take better photos and have extended brand content, such as the pictures right above the reviews. You need a trademark for your product, which takes about six months. You can put up a video, which is useful. But really, I think the biggest lever is coming up with a better product, and then communicating that it’s better.

Bandholz: Have you sold products directly to Amazon?

Tecku: I’ve watched a lot of my competitors do that. They are no longer my competitors because they don’t really sell. I would not recommend it. Amazon is run by people who are not entrepreneurs. They don’t understand their system and how to market products.

If you sell directly to Amazon, you can’t touch your own website, you can’t control the price, you can’t control the image, and you can’t control negative reviews. Amazon does not care about the tiny product that they’re selling for you.

Bandholz: Talk about like the team and infrastructure that you’ve built to support your business.

Tecku: I have a business partner and one employee, who works about 20 hours a week. We pay him full time. He answers the 10 or so customer emails a day and communicates with our factories and gets the product on boats and, when they arrive in Los Angeles, gets them to different warehouses. I handle the product design, the listings, and everything forward facing. My business partner handles all the financial stuff.

Bandholz: That’s amazing. It’s just three of you guys.

Tecku: My partner and I are working just four or five hours a week. That’s because we’re making new stuff, or implementing improvements.

Bandholz: Are you buying ads on Amazon or on other platforms?

Tecku: A little bit. But when you’re the number one for all the keywords, there’s no point in advertising. Being ranked highly on Amazon is incredibly important. The difference between being ranked number three and number four is probably a doubling in sales and the difference between being ranked number one and four is probably a 10-times in sales.

From my experience and my peers’ experience, the only factor that matters for high rankings is sales — the number of people that search on a keyword and then purchased the product. That’s it.

Bandholz: This conversation has been refreshing. You’re making millions on Amazon and doing a great job, but it’s always challenging to build a better product than your competitors.

Tecku: You can’t just throw something up on Amazon and think it’s going to work. I don’t think you can successfully have an Amazon-only company anymore — not a new one, anyway.

See the next installment, “Part 12: Acquiring Companies.”