The Ideal Platform for Emerging Entrepreneurs with Amazon Expert Adam Hudson-EP047
Many aspiring entrepreneurs get overwhelmed in the face of a very long to-do list that includes designing a website, building a customer base, and establishing trust in order to draw traffic to your site. If your business involves the sale of a product, the logistics of manufacturing and distribution get thrown into the mix as well. What if there was a platform that would take care of the majority of those things for you?
Adam Hudson is the founder of Reliable Education, a resource for entrepreneurs that teaches its clients how to establish reliable online income streams via the Amazon platform. Adam developed these strategies in the conception of his own homewares brand; its products are sold exclusively through Amazon in more than 30 countries. A serial entrepreneur who has built a number of multi-million dollar companies, Adam also leads an Amazon marketing services firm. He has been featured in countless national publications, including USA Today, The Wall Street Journal and Newsweek.
Adam’s interest in online entrepreneurship began when he was running an animation studio in California. He realized that selling his time was not the optimal business model, so he started looking for opportunities to generate reliable income through product development. He discovered the Amazon platform and realized its potential as the go-to site for consumers. Today he outlines the reasons why Amazon is a good fit for new entrepreneurs, how to choose a product for sale, and the process of selecting a manufacturer. Listen and learn how to make your product stand out on the site and generate reliable income!
Why Amazon is a good fit for new entrepreneurs
- $1 of every $2 spent in online retail is through Amazon
- Revenues expected to grow from $300B to $1.5T in next decade
- Builds website for you and takes care of logistics, distribution
- Trust already established with enormous customer base
How to choose a potential product
How to differentiate your product and avoid oversaturation
- Consumers judge based on quality and content of picture
- Compete based on design to stand out visually (i.e.: brightly-colored car cover)
Adam’s advice around choosing an industry
- Avoid beauty, supplements
- Consider an industry you understand, have a passion for
- Ask yourself what’s missing
- Look for areas with unsophisticated sellers who aren’t doing anything to stand out
The next steps once you’ve selected a product
- Research demand
- Be sure ranked in top 20,000 on Amazon
- Make use of tools like Google AdWords and Google Trends
- Reach out to suppliers via a Request For Quote
The process of packaging and shipping
- Usually packaged and prepared completely by manufacturer
- Entrepreneur establishes Amazon Seller Account
- Amazon provides seller with PDF to place on box
- Seller emails PDF to supplier
- Freight forwarder ships boxes directly to Amazon warehouse
Common mistakes made by novice sellers
- Negotiate cheaper price and receive poor quality product
- Adam recommends spending more for product, selling at 5X what paid
Adam’s best advice for potential Amazon sellers
- Don’t overthink and never start
- Learn the fundamentals by opening free account, investing $100 in one or two AliExpress products to sell through Amazon
Connect with Adam Hudson
Adam Hudson is a serial entrepreneur who has built several multi-million dollar companies in both Australia and the United States.
Adam has been featured in; Sky Business News, the Brian Tracy show, Eventual Millionaire, USA Today, The Wall Street Journal, WebRetailer.com, Inc.com, and Newsweek.
He currently owns an Amazon marketing service firm, a homewares brand (that sells its products exclusively through Amazon into more than 30 countries) & Reliable Education, an online education company which teaches students across the globe how to build profitable Amazon businesses which generate reliable income streams.
Laura Pennington (Host): Hello everybody and welcome back to the Better Biz Academy Podcast. My guest today has a very unique niche and it's definitely something you need to consider if you've been thinking about expanding your online business or even starting your very first online business. My guest tonight is Adam Hudson. He's a serial entrepreneur who has built several multimillion dollar companies in both Australia and the United States. He has been featured in Sky Business News, The Brian Tracy Show, Eventual Millionaire, USA Today, The Wall Street Journal, WebRetailer.com, Inc.com and Newsweek. He currently owns an Amazon marketing service firm, a homewares brand and Reliable Education, an online education company which teaches students across the globe how to build profitable Amazon businesses that generate reliable income streams. Welcome to the show.
Adam Hudson (Guest): Thank you so much. Lovely to be here.
Laura: Awesome. Well, I'd love to know how you got started in this whole industry? There's usually always an interesting back story so I'm curious what yours is.
Adam: Yes. Well, actually I was running an animation studio that I owned in Hollywood California which I started in 2011. I basically knew that at some point I wanted to get out of that. Not that I didn't love the business but as I've gotten older I've realized that selling time is not the best business model in the world and effectively my whole entrepreneur career I've sold services. And so, when somebody writes a check they're either buying my time or the time of somebody else. So, I was looking for something that I could start while I still had my other full time business that I could build around on the side in the little spare time I had, which probably like a lot of you listeners who are starting out and trying to find a way to [00:02:13] into entrepreneurship. And so, I discovered Amazon back then and somebody said, "hey did you know that you could sell products on Amazon?" And that really drew me in because the idea of having a physical product that was sold online and waking up the next day and seeing the sales and the income in the bank really excited me. So, that's what drew me to Amazon initially.
Laura: Wow, that's fascinating. So now you teach other people how to do it. Why do you think that Amazon has so much potential for new entrepreneurs or people who want to become entrepreneurs?
Adam: I think there's a few reasons. Number one is that one of the most important things in business is to be in the right thing at the right time. And a lot of times we can - I'm sure everybody listening can relate to knowing somebody who's definitely less intelligent than they are who's making more money and that's because they're in the right thing at the right time. So, Amazon is the - the timing for Amazon is exceptional and I say that because of the data. Amazon now accounts for $1 in $2 spent in America in any online retail environment. Every second dollar is spent on Amazon and it's growing at a phenomenal rate. But we're only really at the beginning. In the next decade, it's predicted that online retail will grow from a $300 billion market to a $1.5 trillion business and a lot of that money is just shifting from brick and mortar retail into the online space where Amazon is the undisputed king. But the other reason, to answer your question, I particularly think it's exciting and the reason I actually got into teaching other people is because it's one of the few businesses that I think solves a lot of the problems for new entrepreneurs, namely, they build the website for you; people already trust them; they do all the logistics and distribution for you; they, most importantly, have the customers, because so many entrepreneurs have an idea, they build a website and then they don't know how to get customers to the site. They simply can't afford to. So, Amazon solves all of those problems and allow you to have a business where you be wherever you want to be, put their inventory into their warehouse and they handle everything. Today I literally don't touch any of my products. I get straight from China to their warehouse, they run the website, they bring the customers, I just get paid every two weeks. So, I think it's a really exciting thing for people who are just learning entrepreneurship.
Laura: Absolutely. And I think so many people are already familiar with Amazon from the consumer end. It's usually where we go first when we're doing our research on anything and for no other purpose than to see what reviews people have left about a particular product. So, it's such a go-to in today's environment. But I don't know that a lot of people think about it from the perspective of being someone who's actually selling things on Amazon. So, tell me more about the very basic. So, somebody who's never done this at all. I mean, I know some people who do this but it's like, how do you identify the products or the type of store that you're going to have?
Adam: It's a great question and the first thing I would encourage people to do, just for fun, is to go to their computer and open three tabs. In the first tab, open up Amazon and in the second tab open up a website called Alibaba, which is a sourcing website. So, if you want to buy anything from a manufacturer in China, you go to Alibaba, you put in what you're looking for, and you can see where people are getting their stuff. And then in the third tab, open up a website called Zen Guru which basically will tell you, you put in any Amazon listing, you add it to the software and it will tell you how many units a day that person on Amazon is selling of that product. So, in tab one you put amazon, tab two you put Alibaba, and tab three you have that software open. Let's say you look up yellow rubber ducks and you'll see on Amazon they're selling for about $10-$15. Then you go to Alibaba, you see you can buy them for 50c to 80c and then you go to Zen Guru and you can figure out how many units they are selling a day. Having those three tabs open, you can quickly start to see what people are making, in very broad sense obviously, there's other costs apart from the manufacturer cost. But most people, when they do this, they go, "oh my goodness, I didn't realize that I could sell yellow rubber ducks." And people’s brains then start to click into gear and realize that everything around them in their home, somebody is selling it on Amazon and somebody is making good money on it. So, that's sort of the first thing I think for people to start to get their head around.
Laura: Sure. And of course, this raises a lot of questions like as you were talking I was like thinking of all the potential objections that somebody might say because I feel like with the internet atmosphere today, there’s a lot of people who are genuinely making good money doing something that they love or some way that they have found a system like you're talking about, but there’s so many haters who just think it's not possible. So, I was kind of playing devil's advocate as you were answering, and thinking like what would people say. So, my first response would be how do you not have over saturation in particular things? If you've discovered yellow rubber ducks and then tomorrow somebody's undercutting you by 50c and selling it, how do you avoid that problem?
Adam: That's great and I would encourage you to grill me because these kinds of questions people want to know, right? Everybody should be a devil's advocate when they're going into any online business. Anything that's going to take your time and your money, you definitely want to play devil's advocate. So, to answer your question, the most important thing to realize is that there's different strategies that people teach on Amazon and they broadly fall into two categories. A lot of people teach what I call a paint by numbers approach which is just go to Amazon, find out what the bestselling items are, and then go and sell those products. But the problem is with just a paint by numbers approach, it doesn't really require any talent. You know you can get a piece of software to tell you how many units are selling, but what you really want to know is and be able to answer is what is your business case for having the best rubber duck and why will people buy your rubber duck and not somebody else's? What is it, and preferably, what is it that's visual about the product? And the reason I say visual is because Amazon is a dating site for products. And if you think about a dating site, when we do a dating site, we go there, we type in, a man, a woman, whatever we're looking for, the photo comes up and we judge - the first thing we look at is the photo and there's the two elements; there's the quality of the photo and then it's the actual content of the photo. And at Amazon it's the same. We look at the quality and then we look at what's actually the design of the product. Because Amazon is a visual platform, if your product is better but you have to read about why it's better, it's not going to be as quick a breakthrough as if you have a unique design. So, to give you an example. If you go to kayak on Amazon, you'll see page one, nearly all of them are black, white or blue. So, the way to breakthrough would be to create bright pink one with a silver tiara printed over where the front windscreen is and write Princess Mobile on the hood. Because it's going to stand out immediately on Amazon. So, you're creating what I call a blue ocean which means you're not competing on price, you're competing on design. And design is something that takes a little bit of thought and a lot more effort. And so, I teach people to go, if possible, and visually differentiate, put themselves in the shoes of the consumer and ask themselves in the cold heart light of day what aside from price is going to be the reason to buy from you because price is a game that you'll usually lose.
Laura: Yeah, absolutely. That was my first thought there was if you're competing on price, it's only a matter of time before somebody swoops in and kind of take that away from you. So, for a total beginner, they're looking into this, they're doing your research process with the three different tabs that are open, but is it better to focus on one specific type of industry like beauty products or sports gear or do you kind of have across the board approach?
Adam: So just on that, I'll probably recommend people stay out of - people always ask me is there any categories you shouldn't go into and the two I would say not to, especially because I have experience is beauty and cremes and cosmetics and supplements. And the reason I say it is because you need a fair bit of capital to break into those now and they're the two of the most competitive niches in all of Amazon. So, just setting that aside, where should you start? I encourage people to first start, if possible, in an area where they understand or have a passion. Now don't be restricted to that because sometimes there’s many many opportunities that you don't have a passion particularly for the product but they make a lot of money. So, start where your passions lie. If you're into gardening, look at gardening shears or gardening gloves or gardening aprons and start to look at Amazon and think what's missing in this product? What could I do to innovate? What would I like if I was buying this product that's not hear now and how could I visually show it on the platform? So, start where your passions are and then look at Amazon. So, in that first example I gave of the three tabs is really just a cursory level of investigation to just start getting people to realize where the margin is. But start where your passions lie and then expand beyond that if you want to. What you're really looking for is unsophisticated sellers on Amazon that are not doing anything really creative to stand out.
Laura: So, that differentiation is pretty important. Now, what are the sort of steps someone should take after they identify a product or line of products they're interested in selling on Amazon?
Adam: So, what they should do is - a good starting point is look at how many people are searching for that product generally online. So, make sure that there's demand for the product, right? And in most cases, you can tell if it's ranked in the top 5,000 of a category - so when you go to Amazon, there's like 20 categories there. There's like sports and outdoors, health and beauty, so on and so on. Anything that's in the top 5,000, they're selling a lot of units of that. So, if it's in the top 5,000 or even the top 10,000, you know that people are buying this stuff because there are actually 470 million products on Amazon, which is quite extraordinary. So, if it's in the top 10,000, 20,000, you're in good shape. So, make sure there’s a demand for the product. Go to Google, use that AdWords tool and just type in that product and see how many searches a month they have in Google. And while you're in Google, open Google Trends which will show you where the searches peak and whether the overall trend of that product is down. Like say if you're selling inflatable pool beds - this is a good example of the guy I met in Las Vegas last week at an Amazon convention - the guy sells inflatable pool beds and they look like slices of pizza and swans and $100 bills so that visually differentiates as $100 million a year selling inflatable pool beds, which is just extraordinary. But if you would look at that niche in Google Trends, I'm sure it goes up in summer and down in winter and it's quite seasonal. So, do that little bit of research about seasonality, general search demand. Once you got that sorted out, you know there's demand, you've got an arguable business case that you can - if I was the investor I'd say, "why are people going to buy yours and not someone else's" and you say "because I've got this unique design and I know this market, I think people will love this." There's your business case. Then what you want to do is start reaching out to suppliers and getting some samples so that you can actually get them in your hand. And you do that through Alibaba, and you do what's called an RFQ - a request for quotations - so you put up what you're after. If you're after a thousand rubber ducks, you put that up, you describe what you want and then you'll start getting submissions from rubber duck manufacturers.
Laura: Okay so from that point, now that you have someone who's going to give you the quotation and you're ready to move forward, who is actually handling the shipping? Is that you as the seller, you're getting this bulk order and then you have to package all these and ship them out or is there a more efficient process?
Adam: Well, it depends on the product of course, what the degree of packaging. So, my product is gifted and my box costs me twice as much as what's in the box so it depends and it varies from product to product. But generally speaking, the product is packaged and prepared completely, let's say China. In China, your manufacturer will prepare, put it into cartons, and then what you do is you've got an amazon seller account set up. There's two levels; you get a free one which will pose slightly high fees or you're going to a professional level which is $40 a month. Anybody can open it up, there’s no long-term commitment. Once you have that account, it's called a seller central account, takes about five minutes to open. You say to Amazon, "alright I'm going to be selling rubber ducks." And they're going to say, "okay cool. Upload a photo here, give us a description, the bullet points and so on" and when you’re ready to send it in, you go to a section of seller central and say, "hey I'm going to ship some stuff in." They go, "okay, how many of these rubber ducks do you want to send", and you'll say, "a thousand", and they go, "okay cool. Print this PDF and put it on the side of the box." And you simply give that PDF to your Chinese supplier. You email it to them, they print it off, they put it on the box and then they ship it straight to Amazon. So, that's basically, you'll need a freight forwarder, depending on how big the order is. But a freight forwarder is a company that will get it from your Chinese manufacturer and deliver it all the way to Amazon's doorstep for you. So, that's the only other party that you need.
Laura: Wow, that fascinating. Because I was going to say that'd be my next hesitation is I don't want to have a house full of a bunch of stuff that I may or may not sell. But I see what you're saying. It's actually being directly sold by Amazon. So, what do you think some of the biggest mistakes people frequently make as they start off in this process are?
Adam: I will go to that. I just want to make one point which I think you and the listeners will find really fascinating here. It's a secret so where you hear these big numbers like yesterday, I interviewed a young fellow. He's 25 years old, he's got a full-time job and he's been on Amazon for 18 months. Started with $1000, has reinvested his profits over and over. This past December he did $240,000 in sales for the month and the average is about $150,000 a month now. And people hear that story and he has half a dozen products or so, and the reason why he was able to achieve that is because of that fulfillment process that I just explained to you. Shipping directly to Amazon in America and then directly the European warehouses in as little as just two warehouses of Amazon's holding inventory, we're in front of - with my business, I'm in 35 countries, close to 800 million people see my products on Amazon every day and I only have to ship to two Amazon destinations. That's massive massive leverage and why people cannot have - I mean I have less than 15 products listed on Amazon and I'm doing seven figures a year and it's because I'm in front of so many people. And Amazon is what makes that possible. So, to answer your question, what was your question around that?
Laura: Sure, so what do people usually do wrong? Because I imagine that there are some common missteps that people might make if they don't have a training or somebody walking them through this process.
Adam: Yeah sure. So, one of the common ones is that the most important relationship in this business is your supplier. Without question. And so, the first thing I do is I go get an RFQ from a Chinese company and I get like 20 quotes back. And I can see from the quality of the responses who the best and who the worst are. And usually the worst are the cheapest and the best are the most expensive. Surprise, surprise! And of course, they go to the most expensive person who has given the best quote - sorry, the most expensive quote but the best service - and I say, "hey listen, I really love your quote but I can get it cheaper over here. Unless you bring your price down, I'm not going to be able to go with you." So of course, the person says, "okay, look I'll give you a discount." But what they don't tell you in China is that there's always a way to make things cheaper, right? So, in the case of the rubber ducky, you'd be amazed, and I'm not joking, how many things can go wrong with a product as simple as a rubber duck. They can use a low-quality rubber, the dye that they put on could be a cheaper dye so that when you put this thing in the bath, it literally pees in the bath and turns it yellow. The sealant they use could leak. So, may point is when you're first starting out, you're not an expert in whatever it is you're selling so the last thing you want to be doing is negotiating on price when you don't fully understand all the ways that you could be screwed over. Does that make sense?
Laura: Yeah, absolutely.
Adam: So, I teach people to not try to get the cheapest supplier because if you're buying something for $1 and you're going to sell it for $5, and as a rule of thumb, you should be selling something for 5 times what the Chinese supplier is quoting you, right? And if you do that, by the time you've paid your freight, your import duties, amazon's fees, all the rest, you'll end up with about 30% to 40% net margin which is a nice margin to have in this business. So, if you're buying something for $1 with the intention of selling it for $5, is it really going to kill you when you're first starting out to pay 20% extra, pay $1.20 and get the best one you can? Because when you get to Amazon, that 20c could mean the difference between all one, two and three star reviews and stellar five star reviews. So, you're always better off to instead sell it for $5, sell it for $5.50, pay $1.20 for it and then you'll be able to be what they call me - in Web Retailer they did a story on me and they called me the Lazy Amazon Seller - but I'm only able to be lazy because I have an amazing supplier with quality product. I don't have too many issues.
Laura: That sounds like a really important thing to keep in mind as you consider the products and go through the process of choosing which supplier you're going to work with because that's ultimately a potential long term relationship and it could really cause problems for your business if you don't select the right person to begin with. I've learned so much. I didn't know anything about this so this was just so interesting to hear from you. So, I have your three-step process and all of these things that you recommend that people do. If there was one action step that a person should take next if they were thinking about doing this, what would that be?
Adam: So, I think the most important thing with all of this stuff is that where people go wrong is they overthink things and never start. And I think that's so true in so many things in life. So, what I would encourage people to do is this should always be a side gig, like a hobby, like you're traying to learn piano, you're trying to learn to cook or something like that, right? So, what I would do as a starting point, a challenge, is find a friend who wants to do this and hold each other accountable. And just go to Ali Express - Alibaba is for bulk orders and Ali Express, which is a subsidiary, you can go and get stuff from China super cheap, not quite as cheap but super cheap, and you can buy one or two things. You can buy in very low quantity. Get $100, buy a bunch of little things, get them shipped to your house just to start with and open an Amazon seller account, a free account. And then what I want you to do is send them into Amazon, create a listing page, send them into Amazon like I described you with a pdf document, and see if you can sell them. And if you do that, even if you lose a little bit of money and you don't make a profit, you will have learned the fundamentals of exactly how to export a product, deal with a supplier, get it into the country, create a page on Amazon, and get paid. And those things, once you understand that, it becomes far less daunting and it's a hobby that you could probably complete in about 30 to 60 days if you just did like 30 minutes a day, and if you do that, you'd be way ahead of most people.
Laura: Such excellent advice. Well, I've learned a tremendous amount. I know this will be helpful for my audience as well. Where can people go to learn more about you and the courses that you offer about this?
Adam: Just go to www.reliable.education. So, there’s no .com and it's not .edu, it's reliable.education. I give away a free course there. It's four videos taking you inside my home. I show you my products I would sell and wouldn't sell and why, teach you the mathematics and a whole bunch of basics and then if they want to learn more, they can from there.
Laura: Wow. Thank you so much for coming on the show and sharing such valuable information.
Adam: Of course, my pleasure. Thank you for having me.
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