AMZ Innovate 2019 in NYC

This was my first time attending AMZ Innovate and it was one of the coolest conferences I’ve ever attended located right in Times Square in NYC. Thank you Brandon for putting on such a great event!

How to use product inserts to revitalize your brand and why success in customer service is vital to 5 stars – Brandon Furhmann 

• Robert cialdini’s book presuasion 
  • https://www.amazon.com/Pre-Suasion-Revolutionary-Way-Influence-Persuade/dp/1501109804/
• How’s your packaging? 
• “Are you unhappy? – cult question? 
• “Do you consider yourself a helpful person?” 
• When people are primed to photos of togetherness – they are more likely to be helpful
• People love compliments no matter what 
• “You made a great choice”
• Use words like “You” not “They”
• Social proof – we typically follow the lead of those around who are like us 
• Customer input should be framed as advice – don’t ask customers to be critics 
  • “234 friends have helped. By giving advice, we hope you could help too!”
• Reciprocation 
  • Gift should be given before
  • Gifts should be
    • Meaningful
    • Unexpected
    • Customized
  • Gifts = happy reviews

How to “Win the Game” Of Selling Your Business by Scott Deetz

• Sold company for $4M and then lost the deal
• Mentors have done $14B in deals – showed him what he was missing 
• Took same company back to market 18 months later and got more than 3x that amount 
• More than 50% of the money you put in your pocket will come when you sell your business – is this true? Don’t think this is true 
  • You’re always increasing the assets of the Amazon business 
  • When you sell your business is when you can cash out assets
• It’s not what you’re selling, it’s what the buyers buying?
• Anatomy of a transaction
  • Purchase Price/Structure
  • Reps/Warranties
  • Due Diligence > Disclosure schedules
• Anatomy of a Purchase
  • TTM SDE
  • Multiple
  • Total Purchase Price
• People who buy Amazon businesses – businesses started to tank. Huh. 
• Model works for $500k deals –  get profit up to $250k year. 
  • TTM SDE – $1m
  • Effective Multiple 6.25x
  • Total Purchase Price (Est) – 6.25mm
  • Retained or Rolled Equity – $2.25mm (minus)
  • Equals: Cash Purchase Price  – $4mm
    • Cash Paid at Closing – $1.8mm (minus)
    • Balance Sheet Adjustment – $250k
    • Seller Financing $700k
    • Earnout/Contingent Payment – $1.25mm
• Earnouts vs Rolled Equity
  • Benefits of an earnout
    • Set payments
    • Generally over a short-period of time (1-3 yrs)
    • E.G: 15 cents of every dollar earned (profit?) over the next 3 years. That’s pretty high
  • Benefits of rolled equity:
    • A longer term “Second cash” opportunity
    • Ex: Buyer has cash and triples the size of the company. That drives a higher multiple (4x valuation increase)
    • If you roll 25% equity, your second payout could equal your first 
• Seller is only working 2 hrs/month but still rolled 20% equity.
• How to Position Your Business to be most attractive to a buyer
  • Achievable financials
  • Another fat slide. Why have a timed presentation if you can’t do it all in time 
• 4th Quarter Turnovers to Avoid
• Deliver on the Big Four
  • Strong profit margins (SDE >25%)
  • YOY Growth (20% Flat, 100% Future Multiple) & MOM Growth
  • Increase earnings size increases multiple
  • Product SKU & Channel diversification
• When to Sell?
  • When things are still growing 
• Know the Future Valuation if you hit your projections
• Build a Re-prioritized Capital Strategy?
• Supplier Partner Financing 
• How to Turn $1 into $5 
• Maximizing Value Before Selling
• Strategic Finance
• Action Item: Know your Profits on Page 1 
• Improving Product Profitability 
• Strategic Finance Output
• Key Takeaways
• scottdeetz@northboundgroup.com for slides ? 
  • https://www.northboundgroup.com/  

Using Product Innovation to Beat Copycats and Win Markets by Christine Self Krogue

• $6mm Amazon seller
  • Super open about what I sell
  • Dryer balls – Everyone is selling them now
  • #1 party game in amazon – Double ditto
  • Launching shoe brand on Amazon 
  • From Utah
• Your Uniqueness is your advantage – be different
  • Inventive Mindset
    • Writes down 5 different product ideas/day
    • Products you love or wish you had 
  • Differentiate
  • Missed this
  • Manufacture
• Ways to Differentiate 
  • Pricy – Can I make a less expensive more affordable version
  • Cheap – Can I make a more high end luxury version
  • Large –  Can I make it compact
  • Ugly – Make it aesthetically pleasing
  • Aimed at adults – Aim at children. 
  • Childlike product – can this be fun for adults?
  • Can I meet the needs of a certain group? Pet owners. Retired. Large families. Plus sized clothing, teens, etc.
  • Can I offer a product that has more than one use. Combine two products for the same market
  • Read lots of Amazon reviews, especially 2 stars, see what people don’t like 
• Exercise: 
  • Write down a product
  • What market(s) might use this product?
  • What might each market want in the product? 
  • E.G:
    • For the same price, started selling more
    • Started making in a different place/material for cheaper
    • 3 packs used to be most popular, but now the 6 packs are most popular
    • Even if the smaller sets were cheaper, people wanted bigger sets
• Easiest way to start expanding your hero product – ACCESSORIZE
  • Complementary products
  • Variations
  • E.G:
    •  Double Ditto Expansion Pack
      • Did nothing to launch but started selling right away huh
    • Turned a toy into a bath toy 
    • Dryer balls – sell 500 to 700 units/day lol
      • Scenting spray
• Do different brands. 
  • Inspiration and Play – toys
  • Sell in one amazon account 
• Don’t forget about seasonal products
  • Spring
    • Gardening, easter, mother’s day
  • Summer
    • Swimming, road trip, vacation, hot weather clothing
  • Fall
    • Back to school, lunch boxes, gardening, halloween costumes, backpacks
  • Winter
    • Christmas, home decor, games, new years, goal oriented, weight loss products, STOCKING STUFFERS FOR 3-4 WEEKS. 
    • If you have a product that’s a great stocking stuffer you can sell 1000 units/day for a month
    • Hit that keyword and advertise it right for christmas 
• 3Ds
  • Disruptive – different, eye catching, you can only get me here
  • Demonstrable – easy to demonstrate via visuals or copywriting. If you have a product that’s hard to explain, it’s going to be a hard sell. I get why that’s fun, etc. Basically easy to sell
  • Democratic – something you can sell to everybody
    • Dryer sheets etc – theoretically everyone is my customer
    • Games also has a large market
    • Doesn’t have to be democratic to everybody but something you can sell to all moms, all teachers, all women with blonde hair, etc. 
    • Aka make sure your market is big 
  • Make sure you can hit all 3. ⅔ being the best case scenario
• Avoid
  • Flashy trendy products. Look for everyday lasting products with long shelf lives 
    • Monopoly still sells today, etc. These games have been selling for 30 years 
  • No unicorn squishys etc
• Love products with barrier to entry
  • Needs to be made in 2 to 3 factories
  • Hard to manufacture 
  • Love high hanging fruit and avoid the low 
• Produce a prototype
  • Find a good freelance designer
    • Industrial designer. Don’t skip it. Find some on upwork. $50-70/hr 
    • Similar to experience with toys, or whatever I’m looking for
    • Clothing = fashion designer
    • Check portfolio
    • Talk to them on the phone
    • Make sure they’re excited about what you want to do 
    • I have some ideas for you, excited for you, that’s the type of person you want to hire
  • Get Drawings Made 
  • Research Materials 
    • Washability
    • Eco friendliness
    • Brightness of colors
    • Durability
    • Does it last in the sun
    • Does it crack and if it cracks will it be sharp?
    • If you’re making for children, make sure it passes something
• Make a prototype
• Find a factory 
  • Alibaba
  • Networking
  • Attend trade shows in the USA 
  • Don’t always have to go to China 
• Mold – Secure an exclusive and comprehensive MOLD OWNERSHIP AGREEMENT
  • Hire a fucking lawyer lol 
  • Specify damages
  • Have your mold engraved with your name in chinese
• Make 6 prototypes
  • Send them out to target audience. Don’t give to neighbor, friend, etc
  • People who don’t give a shit about your feelings but are in your target market
  • Have them try it for a few weeks. Send it to them. Give survey
  • How long did you play it? How much would you pay? What is the age range? Did anything break? How would you improve? Do you like the name? 
  • If you’re getting the same feedback from everyone, you know you need to improve it
  • If everyone’s saying the same good things, good
  • 2 or 3 prototypes – do it in rounds. Try to do at least 10 people. The more the better. 
  • You can also do a focus group 
    • Invite people and buy them lunch
• Test your product 
• Make a good first impression – Packaging 
• Premium pricing model – price high 
  • Amazon = crazy race to bottom
  • I’m not even a competitor in the race to bottom 
  • Price 50% margins – go after high value customers
    • They know it’s better, different, and they don’t care that you’re worth more 
  • Get low value customers too by running constant sales throughout the year  
    • Run sales often
    • Lightning deals
    • Deal of the day
    • Personal deals for holidays 
      • Earth day
      • Hip2save – good website to get picked up on facebook deal groups
• Time to make it happen – let’s launch
  • First small test run – break even goal
  • Set up listing. Use photos. And write description
  • List Product. Sales will help with both rank and reviews
  • Once selling steadily, order larger quantities
• Review emails 
  • Want to tell a story. Make a connection with your customer
  • Designed it because I’m a speech therapy etc, – tell a human story 
  • We hope you love it too. 
  • Something that people can relate too – human element 
  • My dryer balls are made in Nepal using traditional, hire work at home moms.
  • Doing good in the world, we’re trying to help out, and people want to help you out 
  • Experimented with time slots for reviews. Fridays at 9:15pm Mountain standard time = highest return rate? What does that mean? 
• Experimented with pricing 
• Getting competitors removed for copyright violations 

Financing Your Growth in Ecommerce by Michael Tannenbaum

• Founders of Brex, 
  • Net 60 day payment terms with no interest
  • No personal guarantee
  • High credit limits based on historical sales 
  • Expense management functionality
  • Perks: up to 1.5% back on spend (uncapped), discounts with ecommerce providers
  • How does this credit card work? How can you offer this? 
  • brex.com/amzinnovate 
• Ian Sells, founder of Million Dollar Sellers Private Mastermind (MDS) and founder of RebateKey. 300 people 

Top 5 Tips to Save $15-20,000 on your taxes in 2019 by Rachel Michaelov

• Tax tip #1: Entity Selection 
  • Switched from LLC to scorp – $200k net, saved $20k in taxes ~15% 
• Tax tip #2: Income Shifting
  • Hire kids from 7 to 17 years old
  • Up to $12k/yr and pay no federal taxes 
    • $5500 to kids IRA in their name 
    • Total $17,500
    • $17,500 x 2 = deducted as business expense now 
  • Must file payroll returns for children
  • Check to see if you need workers comp insurance for children
• Tax tip #3: Augusta Strategy
  • Rent your own home to your business? Daily rate up to $1000/day – $14,000/yr
  • Lease agreement
  • Must write check to individual name for rent expense
  • Make sure daily amounts are reasonable & have backup of how you calculated the daily rate
  • Rent during july 4th weekend – check local hotel rate 
    • Christmas, Thanksgiving, etc
• Tax tip #4: Retirement Planning
  • Put at least $5500 into your IRA 
• Must have bookkeeping in perfect shape to discuss tax planning strategies. Strategy for $100k net income vs $1M+ net income. 
• Ecommerce sellers get audited for inaccurate records
  • Audit period/statute of limitations is 3 years
  • If you’re making $50k/yr above – you should be using Quickbooks?
• Do not commingle your personal and business together – the irs hates that 
• Bookkeeping best practices
  • Set up your bookkeeping using QB online
  • Reconcile your bank, cc, stripe, loans, paypal every month
  • Make sure your inventory is updated monthly
  • Categorize all expenses according to IRS 
  • Never do bookkeeping yourself
• Tax tip #6: Sales Tax and Payroll
  • If you’re doing more than $100k/mo or have more than 200 transactions, etc 
• Payroll Tax Tips
  • Always be paying any independent contractor, always pay it to their corporation or LLC to avoid any DOL audits
  • Collect W9 forms
  • Have workers comp before hiring employees
  • Have backup of how you calculated your salary

The Perfect Launch Strategy by Brandon Young

• Secret sauce/I’m too lazy to edit my notes for this talk. Message me if you want the notes or better yet just reach out to Brandon and buy his online master class, because it’s worth it. 🙂

Building a World Class Team and Scaling It To 8 Figures and Beyond by Fernando Cruz 

• Was failing at Shopify, pivoted to Amazon. Fernando decided to start driving for uber at night. Wow! Rather than taking a job! 
• Pride in trying to do everything yourself 
  • Inflection point = learning how to delegate
• Getting to 7 figures, 1 man or woman show is easy 
  • Getting 8 figures is when you need a team supporting you and whatever your core competency is 
• Hire super experienced people in the Philippines at 10-20% of the cost of local people
  • Going to hire an army 
• Knowing what we wanted to grow into
  • If we were a $100m company – what would our team look like? Would we have a training and development department? 
• 75 employees, 250 products, grew 2.5x in the last year 
  • Confident that we will hit $60m next year
  • Looking at getting into retail 
• Having a strong manager is key if you want to have an overseas team 
  • $700/mo is cheap
  • Stopped hiring generalists, did not refer to VA, refer as colleagues 
  • Focused on building a culture. 
    • PTO
    • As if they were a US team member
  • We have 12 managers give or take mostly based overseas
  • Hold team accountable, preserve culture
  • Will hire and fire people for us
• How can we get to $100m by 2021 
• Book called Traction, quarterly initiatives, how organize business
• 90 day, quarterly initiatives
  • By team, what are the 3 most important things that this team needs to be focused on
  • Spotlight – give each team one huge spotlight
  • And you’ll know that one of those 3 things will get done
  • If it’s not highlighted, it won’t get done
  • E.G: Want to do $2m in revenue this quarter.
    • What needs to be done
    • What’s the measurable outcome
    • What’s the due date
    • How many products need to be launched
• If there are delays – get the smartest people in that room every week to make sure we’re hitting goals 
• Basically manage through initiatives
  • One Google sheet, know exactly where teams are
  • How to follow up with direct reports via 1 on 1s
• Where do I need to be at the end of Q3 – to where we want to be next year?
  • Expanding to Walmart, Japan, etc. If they’re not going to help you hit your big goal, forget about it 
• Decided to diversify via product lines – just launch more products.
  • Get really good at launching products. 
  • Once you hit something, start dominating that category 
  • Fastest way to scale if you’re trying to hit revenue numbers 
• What is your hourly rate – $100/hr? If you can outsource any task for less – then you can focus on the highest $/hr work
• Understanding your cash flow formula is critical 
  • Margin – Ad spend = “Contribution margin”?
  • Aiming for 20-30% contribution margin
  • Across our portfolio – spending 8% on ad spend? 
    • Only 8% tacos? 
  • Cash conversion cycle 
    • Difference between getting paid by Amazon vs when you need to pay your supplier
    • Net30 terms 
  • Hire a part time CFO or finance to help walk through this 
• Shifted away from training to hiring people who’ve done this function before 
  • Training people = they were capped at my knowledge
  • Where am I going to find this logistics person that loves it and gets it? 
• CEO coach
  • $5000/month
  • Want a 9 figures CEO 
  • I’ve done it, don’t want the stress, but want to help young entrepreneurs how to get there 

DBS Tool: AI Powered Automation by John Zhu

• From China
• Spoke last year about internal algorithm 
  • Can’t talk about it because it’s a little more sensitive?
• Been an Amazon seller for 8 ½ years in china 
• Hobby to develop software for amazon sellers 
• Review Analysis – ngram analysis
  • Usage scenarios
  • About the product performance quality
  • Usage period
  • Positive
  • Negative
  • Frequency of use
• Business Report 
  • Payment Return Rate?
    • The money that goes into your bank/sales 
    • Below 50% = losing a lot of money 
  • ACOAS = Tacos 
  • Inventory Ratio = how fast is your inventory turnover 
• ASIN Report
  • Download manually every day 
• PPC – Time parting, auto bid rules 
  • Around lunch time, maybe they’ll shop 
  • During these 2 hours – can increase bids or budgets
• PPC automation rules 
  • Semi automated rules are best
• PPC ads monitoring 
• Fb /iokjohn 
  • Iok.ai 
• The worst part about PPC is checking it everyday. So notifications when ACOS or CPC is high is helpful 
• Conversion rate for the whole website???? Huh?

Secret Hacks and Tips from The Professor of Amazon by Howard Thai

• Started selling in 2003 
• AOEA: Add to Cart Over Existing Add to Cart
  • Weight: 59.53% – very specific where did they get this data?
  • The number of customers that add your product to cart via a specific keyword search should be greater than your competitors who you are trying to rank against you for that target keyword 
  • 2.5x add to carts over estimated daily sales
• Searched and Page Views
  • Weight 15.17%
  • The number of customers that view the product details page of your product via specific keywords search should be greater than your competitors who are trying to rank against you for that target keyword 
• Poep: purchase over existing purchase
  • Weight 12%
  • ?
• Phrasedoc score: onpage optimization
  • Weight 8%
  • Your product details page is “optimized” for the target keyword per Amazon’s algorithm (eg the keyword should be in your title, product description, bullets search terms and is well designed (quality images or EBC)
  • If you have any blank spots – they can upload a flat file and upload it with bad info to take it down 
• 4 variables = 95.7%
• The truth about brand analytics 
• SFR vs PFR
  • Search Frequency Rank: Like Amazon’s BSR, in that it calculates the popularity of one keyword relative to keywords around it. This means that the keyword with a SFR of $3 is more popular during the given timeframe than a keyword with a SFR of 5. Amazon does not provide the number of searches for a particular keyword, btu the relative rank is still very helpful
  • Purchase Frequency Rank (PFR): Like BSR in that it calculates the popularity of one keyword relative to keywords around it. Amazon does 
• Only 26% of the PFR keywords are on top 60 SFR
  • Which consist of only 32.5% of units sold for that product
  • ???
  • How do you calculate PFR? 
• Data on Brand Analytics
  • #1 Click Share
    • Can try to reverse engineer it? 
  • #1 Conversion Share
• Viral Launch: If you see conversion share 0% – there must be something blackhat going on 
  • Add to carts trigger a conversion on Amazon’s backend? 
• Two ways to rank products without giveaways
  • Add to cart strategy
  • “Stealth ranking” – something he created…. 
    • See new products no reviews that are very high on the first page without that many sales? 
    • Outside traffic, social signals 
      • Pinterest
      • Youtube
      • Facebook
    • That’s why there’s a lower conversion rate in the BSR
    • If you see products in the Amazon Brand Registry with low conversion – it’s this “stealth strategy”
• How to be a 7 figure seller in 7 days with stealth rank
  • Ranking 12 keywords to the first page
  • $299 product, $70 profit 
  • Back in April…. 
• First 7 days – sudden incline of traffic, social signals 
  • Traffic from real people, buyers with trust scores
  • Credits? what software is this guy using? 
  • Maybe Kevin King knows?
• Facebook search Professor of Amazon
• How do we map our asin with our competitors keyword 
  • Go to their listing, buy your product, get some of their keywords ?
  • Brandon said something about having someone add two different products to a cart- your product and your competitor’s product, letting it sit in the cart for 30 mins, and then checking out with your product…. 

Mindset ROI by Shawn Michael

• Missed this.

Trump’s Tariffs: Overview of the Product Exclusion Process by David Adelman

• Statistics on exclusion requests 
• Product Exclusion Request Process 
• US trade representative – 
  • Description of products
  • Revenue 
  • When you provide that information, you can do so with confidentiality protections. Like trade secret – under seal. Very important. Almost all product exclusion tariff exemption requests – some part is made under protection
• Standard applied by USTR
  • A comparable product can be sourced domestically or from a third country
  • The requesting company has attempted to procure the product from outside of China
  • The list 3 tariffs will cause “severe economic harm” to the requesting company or other us interests 
    • Loss of jobs, like if you have to let someone go because of this, this counts as severe economic harm 
  • Strategically important or related to Chinese industrial programs (made in china 2025)
• Three key takeaways
• Random notes 
  • Two rounds of products that have been adjudicated
  • Was US ambassador to Singapore – trade heavy
  • Trans pacific trade, us – chinese related trade 
  • Data that has been published by the ustr – and the experience of my clients in the metals. Clients who have products in list 1, 2, and 3
  • Many product exclusions have been granted… 
  • Administration grants tariff exclusions retroactively
  • So if you paid tariffs and it your exclusion was granted, the government will give you a check. Clients have gotten checks for millions of dollars 
  • Worth looking into for Thrasio and our legal team
• Stakes are high with a 25% tariff across the board for Chinese goods 
• A quarter to 40% of product exclusion requests have been granted and many are still pending
• If you’re on list 3 – you have up to September 30 
  • PUT A PLACEHOLDER APPLICATION 
• If you have a product that’s identical to your competitors, and they’ve been granted an exclusion, yes it should be granted for you too – with the same HTS code 
  • When granted for one, granted for all
• The US trade agency is the smallest agency in the government. Most people have never even heard of them until these trade stuff. They are overloaded and they can make administrative errors 
• There is so much more industrial capacity in China that it would be the only reasonable place to get it 
  • For some products, China is such a dominant producer, that companies cannot reasonably source from outside of China 
• Common product exclusions
  • A lot of heavy equipment like forklifts have gotten a tariff exclusion 
  • Components that go into products that are ultimately manufactured in the USA
• “These tariffs will put me out of business”
• How do we search applications that have been filed? You can electronically look at applications that have been filed… 
  • Competitors that are trolling the website and objecting… Exaggerating the constraint on their ability to source outside of China LOL 
• Usually takes around 6 months to get a response but since the next lists are so much bigger – unsure how long it might take for these 2 new lists… Maybe a year 
• Reed Smith LLP 

Random

• Gs1.fr – $200/yr
• “What can we do to help” – great line to get people talking