There’s been a lot of talk going on lately about whether or not Amazon is still a good or viable way for people to create an online business. Some people feel that crowded product markets and Amazon’s ability to change the selling platform at any time make it an uphill battle at best. Others feel there’s still lots of opportunity for new sellers and existing sellers alike. On this episode, Scott talks with his friend Jeff Cohen, a man whose company is neck-deep in Amazon related issues. He’s got lots of insight into what’s going on within the inner workings of Amazon and what it takes to build a new product on the Amazon platform successfully. You will get TONS of value from what Jeff has to share, so be sure you listen.
When Scott asked Jeff Cohen whether or not he feels Amazon is still a viable place for new sellers to get started with an online business, Jeff said that he’s still seeing lots of optimism when it comes to selling products on Amazon. He thinks the key is to learn how to minimize risk – which is what Amazon is doing with their ongoing policy changes – and work successfully within the rules that Amazon establishes. In his mind, the benefits of selling on Amazon far outweigh the negatives. You can hear Jeff’s view on this episode.
There are many people who have started a business on Amazon with the false belief that it’s a plug-and-play type of business. That means they think that putting their product on the Amazon platform will enable them to rake in the money without having to do much to keep the business running. Jeff Cohen says that Amazon businesses are no different than a regular brick and mortar shop in that business owners have to continually be tweaking, adapting, pivoting, and working to build a more successful business than they had the day before. You can hear how Jeff suggests Amazon sellers do that, on this episode.
There are many places in the product cycle where risk is part of the game. But as a business owner you have got to learn how to reduce your risks at every point you can. On this episode of The Amazing Seller, Jeff Cohen and Scott Voelker chat about what it means to run a true business as a private label seller, working hard to make your processes and products more successful as you go. You will learn a lot from Jeff’s insights as he works behind the scenes for Amazon sellers who use his software products.
The focus of your efforts promoting and marketing your Amazon private label products should not be about the money. Your focus should be about your customers. If you keep your eyes on what will make your products a better value to your customers you won’t go wrong. Jeff Cohen mentions this powerful point as he emphasizes the importance of working WITH the Amazon terms of service instead of trying to game them to your own advantage. You can hear his insights into how you can do that in this episode.
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He works for Seller Lab also the company Feedback Genius, they’re owned by Seller Lab. So it’s basically their software suite but he is heavily, heavily involved in our community within Amazon Selling. He knows a lot about this space because he deals with a lot of businesses in this space.
I wanted to get him on, I wanted to have a conversation with him and really get into his thought process as far as moving forward. The software that they create is for the Amazon Seller. They also want to make sure that there are still opportunity out there for all of us because we’re using software. They are using a lot of intel and a lot of thoughts I think that can help us move forward too and see where everything is starting to go. Now, it doesn’t mean that they can predict the future but there is a good chance that they can see a little bit further ahead just because they have some things that they can project by just maybe even some inside context that they might have.
I can’t wait for you guys to hear this conversation. Again, Jeff is a really, really smart guy so really excited to have him on. If you guys want the show notes to this episode head over to theamazingseller.com/278. You can get the transcripts there, all the show notes, any links that we talk about will be there as well. I’m going to stop talking now so you can listen to this conversation that I had with my good friend Jeff Cohen.
[00:01:52] Scott: Well hey Jeff, what’s up man! How’s it going? So glad to have you on the show.
[00:01:57] Jeff: Thanks Scott. Thanks for having me. Happy to be sharing with you and your audience.
[00:02:01] Scott: Yeah, you know this is funny. You and I had talked, well we’ve been talking a while and we’ve been going back and forth. We met actually at an event not too long ago. We had some good conversations but it was funny when we were getting ready to schedule this, this was before the whole Amazon review thing. You and I both talked and we said, okay now I guess we really have something to talk about. It’s just weird how things happen.
[00:02:29] Jeff: Yeah, I guess the joke I made was everything was good at breakfast and then by the time lunch had ended the whole world had changed.
[00:02:36] Scott: Yeah, pretty much. I think in some people’s eyes it did but again I got different opinions on that. I know you do as well but I guess what I really want to do is I want to talk today with you… You’re deep into the Amazon space. You have been for a while now with the guys over Seller’s Labs and I really just want to get into your thoughts just from talking to other sellers and even as people in the industry. Maybe we can talk about the Amazon opportunity and selling there still and then this whole review thing and we just dig into it. Let me ask you first before we actually jump in. Give people a little bit of a background about you and what you’re up to today.
[00:03:23] Jeff: My background I started in the mid 2000’s in ecommerce. My first site that I founded and was general manager was called TextBooks.com. I started in the text book space retail ecommerce. I met the guys from Seller Labs, it’s kind of a long story but the short version is one of the founders he actually used to be my programmer. As he was starting Seller Labs we were working together buying some wholesale lots, doing some arbitrage from USPS auction and just fell into and fell in love with Amazon back in about 2013. We turned the company from being Amazon Sellers to being an Amazon software company. So far in 2016 we’ve done business with over about 12,000 Amazon sellers and our sellers have done about $3.6 billion on the Amazon platform.
[00:04:23] Scott: Wow, that’s pretty incredible. That’s pretty solid stuff right there. It’s funny though. Again, I always like to highlight like you didn’t get into this space thinking you were going to be selling on Amazon. Obviously it wasn’t even really thought of when you were getting involved with any kind of… You worked your way towards that platform and then again meeting people and then connecting with people, that’s how it starts to shape your path and stuff. It think it’s interesting on how everyone arrives to where they are today. Okay, let’s now dig in. People really want to know from people like you and people that are in this space, that are working with that many businesses, what’s the thinking right now? What’s the buzz in the market place for like sellers? Whether it’s big sellers, medium-size sellers or small sellers. Just give me like the overall thoughts.
[00:05:19] Jeff: I think there’s still ton of optimism around Amazon. Everybody in the space still believes that Amazon is at its infancy which is still scary to think about. If you look at Amazon and you look at their 2015 Q4 numbers, they saw a 60% growth over 2014, which means we could almost expect about the same between 2015 and 2016. The opportunity at Amazon is still crazy and good. It’s harder, everyone agrees it’s a little bit harder to get into the space today. We also believe that our kids have it easier today than we had it. It’s one of those natural things that you say as you’ve been in something longer than somebody else, yester were good old days and they were times that were easier but I think the businesses that grow, the businesses that thrive are the ones that are able to overcome and adapt.
I remember speaking to a conference and I was sharing some stories about sellers from China and how there’s been massive growth of sellers from China. One seller came to me and said, “Well, if all this is happening in China then I should just stop doing what I’m doing because my Amazon business isn’t going to exist a year from now.”
I said, “How long have you been selling on Amazon?” She said, “Two years.” I said, “How many ASINs do you have?” She said “two.” I said, “When was the last time you elevated your ASIN? You made a product update to it, a feature update to it, a package update to it?” She said, “I haven’t.” I said, “When was the last time you went to a grocery store and bought a product that you buy on a regular basis and it looked the same that it looked two years ago?” You have to think of Amazon as a business and you have to think in the same way that you would if you were running a physical store business or any type of business and you have to build your business to adapt over time.
[00:07:23] Jeff: It’s not a plug and play business. That’s what I think a lot of sellers who get into this business and die off quickly, that’s where they fail as they believe that it’s a plug and play business and the ones who are able to build and succeed and grow are the ones who realize that it’s a learning process and you have to adapt your business practices as your business grows.
[00:07:48] Scott: Do you think…? I don’t know your answer to this but I’m going to find out now. Do you think that people that go in this thing thinking they are going to build a business on just Amazon, do you think that there’s people out there that are still thinking that that’s their model or do you think that the people that are thinking a little bit further down the line where I’m going to start there I’m going to, like you said, get feedback from my customers and be able to innovate and all of that stuff and then test and validate the market and then move outside of that? Do you think that that’s what people are still thinking or do you think people are still thinking I’m just going to ride Amazon? What’s your thoughts there?
[00:08:26] Jeff: A lot of people get into this with the initial thoughts that they can ride Amazon and I don’t see anything wrong with that. I believe that you can build a very profitable and you can grow a large business by riding Amazon’s wave but you’re also then beholden to Amazon. It’s a natural evolution that as your business grows, you learn to reduce your risk. This is any type of business. You’re going to learn to reduce your inventory risk by having multiple suppliers that can produce your product or can import your product. You are going to learn to reduce your financial risks by looking to take out loans.
There’s all these things that you have to do as you go to grow a business. I have a seller that I’ve been working with for three years. He does $350,000 a month selling a single product line and I'm not going to share… You and I have always touched on this. It's the process, not the product. I remember he swore to me forever, “I'm Amazon, I'm Amazon, only I'm Amazon, I’m Amazon only.” I ran into him about a month ago and I said, “What are you up to?” He said, “I'm launching QVC Ads and infomercials.” I was like, “Wait a minute. What happened to Amazon forever?”
He said, “Well, I wanted to grow my business bigger than what it was. I finally felt I was ready to make that investment and so I started looking at channels off of Amazon.” This is somebody who got a very large business. He was doing $3 to $4 million a year with two employees. He could have been very happy and staying in doing what he was doing but he personally decided he wanted to put more into it. I think that’s what Amazon sellers have to decide is. Is this a lifestyle business? Is this a full time business? Are they trying to build a business empire? If you look at Anker, everyone likes to point at Anker because if you’re familiar with Anker, Anker does somewhere I guess rumored because nothing’s reported between $35 and $40 million a month on Amazon.
[00:10:32] Jeff: They are a Chinese company that are former Google executives who came into this space and they’ve built their whole business on process and a formula. They built a whole model for scaling everything that they did. It’s the total extreme. If that’s your goal, you can do that. They’re not looking to expand their business off of Amazon. There are plenty of people and I think it’s a definite strong attitude within the United States than Amazon is kind of their side business while they’re also doing something else. I met a guy at a conference back about two months ago.
I happen to go to like five conferences in four weeks. So if I keep saying about months ago there were really more than one conference. This guy had a full time job as a CFO of a large medical system group and he runs an Amazon business on the side, it’s doing around $200,000/$250,000 a month. You can run very large Amazon businesses while having full time jobs but you could also build full businesses around running those business. That obviously requires a lot more business intellect when you start getting into adding staff and personnel and systems and processes.
[00:11:57] Scott: I guess the thing that scares me about that is that it’s one channel and if… It’s like Google, back in the day. Everyone knows like Google was the… You could go right the gravy train, you could rank sites very easily. You could start getting some AdSense, you could start selling Click Bank products, you could start all that stuff. We all know about that stuff but then overnight, boom. The back links were no longer good for the sites that were helping them rank. Then all of a sudden they lost their traffic overnight and they lost their income. That’s the only thing that worries me about saying like I’m going to ride the Amazon wave. I’ve got a guy right now actually someone that was in my class or is in my class and basically he’s doing over $200,000 a month as well and he hasn’t gotten off of Amazon yet.
I keep telling him, “Listen, it’s great but you gotta protect yourself because of, God forbid, you get that notification that says some of your listings are suppressed or maybe your accounts have been banned for whatever reason, you’re done.” I just actually interviewed a guy the other day and that exact thing happened with him. He had two products, crushing it. Again, I believe it was in the health space so pharmaceutical type line and he only had like two products. He was doing like 60 grand a month. He had a couple of claims from people saying that the product was not authentic. The only thing that wasn’t authentic with it was the product has a wore off logo.
They thought that it was a generic product being reproduced. He literally went through four to six weeks of not having those products selling. That stuff scares me. That stuff just, I’m just the type of person I am anyway, I want to make sure that I’m covered. That’s why I come from the online space as well even after my brick and mortar business where you build an email list, you start to learn the audience and all that stuff. You can still do that with your Amazon business. That’s smart for people to start building that external channel whether it’s your own channel or not, something other than relying on that one source of traffic and customers because they have you, they have you.
[00:14:04] Scott: I just think it’s really risky for people to only bank on… I think it’s great place to start, don’t get me wrong. I think it’s a great place to build but also from there you should be thinking about the external. What’s your thoughts on that?
[00:14:15] Jeff: I’m going to give you two thoughts. One is I’m going to play a little devil’s advocate with you. First off, it’s hard to argue with you that that thought is a bad thought. That thought has a lot of logic, it makes a lot of sense. I think the thing that sellers have to be aware is that Amazon makes it easy. They have this massive amount of traffic. Once you go off of Amazon, your challenges become totally different. Your challenges on Amazon are, they all start with picking the right products and then controlling your costs once you’ve picked the right to product to produce the product, inspect the product, manage the importing and get it on to Amazon.
With very little advertising dollar you can be successful on Amazon. Once you move off channel, you now have to become the expert in the marketing side of the business. When I started TextBooks.com, it was all about customer acquisition cost. That is not a concept that we talk about in Amazon in any way, shape or form. We talk about our average advertising costs. We don’t talk about customer acquisition costs. Now, the reason off channel works, the reason and the concept that sellers have to understand to make off-channel work is that you have what’s called lifetime value of a customer. If you have a product that requires refills, purchased on a regular basis, that channel can totally make sense because once you acquire the customer and you spend money to acquire the customer you get repeat purchases from that customer.
If you’re starting to build out a larger product line that makes a lot of sense because when you launch your next product let’s say you have something and you made a really cool product for a bicycle. Now, all of sudden you make another product for a bicycle. Well you have an audience that is most likely going to be interested in the new product that you buy. That is the positive of that.
[00:16:21] Jeff: The negative of that is obviously that you have to have a different skill set than what you would have on the Amazon channel. It’s not say that it’s right or wrong, it’s that it may be right or wrong for certain people based on what their skill sets are.
[00:16:38] Scott: I agree 100% and that’s part of the problem that we fall into as entrepreneurs. We like that easier way and Amazon is very easy and it’s very like simple to be able to just go out there and do what we’ve talked about. It is pretty, and it’s gotten harder, don’t get me wrong but it’s still easier than going to basically starting from scratch with no traffic, with having to learn paid ads and all that stuff. Literally, if you do the product research right you can launch a product with very little reviews to a little bit of pay-per-click and you can be getting some sales. I’ve had it happen and time again from a lot of people that even listen to the podcast. It’s possible.
[00:17:24] Jeff: Let me add one thing. Your fears of being suspended are legitimate. As a business owner and something they teach during business school is that you have to look what’s called your SWOT analysis. What are your strengths, your weaknesses, your opportunities and your threats? Depending on what product line you go into within Amazon, you have different opportunities and threats. If you’re selling anything right now into natural supplement category, Amazon is cracking down on that. One of the best places to look at what Amazon is doing or is planning to do is to look at their job openings.
See what type of people they are looking to hire. By looking at what type of people they are looking to hire, you’re get a sense of where they find their concerns and their issues. If you look at a lot of job hirings, a lot of the job hirings are around product quality and product testing. If you have a product in the health category, if you have it in the natural supplements category, if you have it in the baby category you should be concerned about your product. Now let’s not just throw a bunch of fear out there without giving people an answer of what to do with it.
What this means is that when you’re sourcing your products, you need to ask your manufactures some additional questions and you need to spend a little bit of extra money at the beginning to do proper testing for your product. I believe that you can actually eliminate these risks because… I don’t know your friend’s actual situation but if… Here’s what happens. I go on, I buy a baby product from a manufacturer. That baby product gets a complaint on Amazon. Amazon’s automatic reaction to any complaint from a customer is going to be the shutdown the product.
[00:19:22] Jeff: Customer’s service is first and foremost with everything at Amazon. If I can go back to Amazon and say, “Hey wait a minute. This is my product, I can prove it, I have brand registry, here’s my record of import, here are all of my testing that I did to prove that it doesn’t have red paint, that it has the right strength, that it meets the right requirements.” My ability to get back online in a faster manner is significantly better than somebody who doesn’t have any of that testing in place. If you have something and you can potentially have an inauthentic claim put against you or a safety claim put against you, then you really need to have the backup from the manufacturing.
Here’s a mistake that I think a lot of sellers make. They will say, “Well, my manufacturer told me that they have the proper testing.” Now, understand that that doesn’t mean that your product has the proper testing. That means the manufacturer does. Your job as a contract manufacturer, because that’s who we are when we are private label, is to make sure that the manufacturer is making your product to your specifications. It’s something that I think we gloss over during some of the early, how to get started on Amazon type of training and it’s something that you get into in the deeper training which is that manufacturers are going to produce a product based on the price that you pay and based on the specs that you give them.
They might produce that same product for ten different countries. If you are not specifying to them what requirements they need to meet, then they’re going to do it to what meets their bottom line of their profitability. If you give them a really RFP, a really good request for proposal and it includes a lot of specifics in terms of the strength or the type of testing that it needs to pass or the type of controlled environment that it needs to have and it all really depends on your product as to what that needs to be.
[00:21:35] Jeff: Then you’re going to get a product that is going to be safer for the consumer and one that you can more easily defend if something comes against you.
[00:21:50] Scott: I agree but in the beginning when people are getting started like if that’s kind of overwhelming. You don’t even know what you’re supposed to be getting tested or checked or this, that and the other thing. Again, I think when people are starting think about that stuff before you jump in to say, “Am I going after a product that I’m going to have to be more careful, is it more liability, is there…” These certain things that come into product selection and even market selection for that matter… Again if you’re going into a baby market, again you’re messing around with a baby here. You’re going to need to make sure that things…
[00:22:22] Jeff: You just can’t go Alibaba and pick the first supplier you see and buy the products and put it online. In certain categories those days are over. If you want to do that in sports and fitness, you’re probably get away with it without as many problems.
[00:22:38] Scott: Or a hardware item. Something I think like you said, obviously nothing you’re consuming like you’re putting in your body. I would always tell anybody, always stick to the safe side for that stuff.
[00:22:52] Jeff: Yeah, let’s talk about the garlic press. Nobody thinks about the fact that the garlic press touches food. Any time I see you at a conference I try to use garlic press in my presentations. Garlic press touches food. If you have any product that touches food, it has to be food safe quality, which means you’re buying that product. If you’re buying that garlic press and you’re not having it tested it for food safety, then your product is at risk.
[00:23:27] Scott: Yes, I agree 100%. I think just people have to be smart when they are doing that stuff. Going back to the guy that I was mentioning that had an issue, his issue was that he knows that it was his fault. He went ahead and he… This was actually a re-order. On his re-order he was in a hurry. He didn’t do the inspection as he normally did and on that inspection they would have picked up that the logo on his product was wore or it was light, it looked like it was old. What happened was, as people had gotten the product maybe re-ordered another one and now all of a sudden it looks like it’s not the same. Because three people out of a hundred complained, it all of sudden drew up a red flag and all someone has to say in there is generic or it’s not authentic.
Then instantly the filter goes in place, boom, Amazon shuts it down and now you have to start proving yourself. Sometimes that’s a challenge because sometimes you’re not talking to the right person on the other end that can help you either, which I think Amazon needs to fix that. It’s like you can talk to someone that they don’t even know the system. They’re just stay there for basic customer service not like this type of claim. It think there’s got to be just a little bit of an easier way to actually communicate back and forth. That’s for a whole other thing. That’s something you and I are going to be able to I’m sure.
[00:24:49] Jeff: Let’s talk about problems we can solve.
[00:24:51] Scott: Let’s actually dive into the big one. I say the big one and I think a lot of people like… And it stirred up the community. Let me just say it, it stirred up and it kind of flipped it up on its head and I understand that. But let’s just really talk about what happened, why it happened that we think it happened and what it means for us moving forward. Maybe just, what was your reaction when you heard this? Were you surprised?
[00:25:23] Jeff: Anytime Amazon makes an announcement there is what’s in the industry called FUD. FUD is fear, uncertainty and doubt. It runs rampant because Amazon makes a change and you as a seller are trying to figure out what does that change mean and how does it affect me. What was different about this change was that Amazon didn’t just come out with a policy update. They actually came out with a full blown announcement. Amazon came out with an announcement, an FAQ and a policy update. Personally, it was… I’m Jewish and it was the day of Rosh Hashanah and I was taking the day off and my phone exploded with messages of what’s going on? What are you thinking?
Obviously we both have lot of friends who are influencers in the space and everybody was pinging each other to try to understand what this was, what does it mean and what’s next? Amazon had a Women's conference in August of 2016. At that Woman’s Conference, we had a couple of our clients told that changes were going to come within the product giveaway review process. We had an inkling that something was going to happen. But nobody had any details of what was happening. None of my contacts at Amazon had any full warning that this was happening. As I’ve shared with Scott in the past, sometimes we do get warnings of things that are coming and we can prepare a little bit for how to deal with the clear uncertainty and doubt that exists within the market.
[00:27:20] Jeff: What happened in this case it’s different was because Amazon got bad press, they were forced to act in a way that was very defined, very concrete and would get the press nightmare that they were having over with. For those that are not aware what happened is there is a company called Review Matter who had analyzed like 7 or 8 million Amazon reviews and they looked for the term, ‘this product was given at a discount’. They were looking for terminology that was wrapped around what they defined as an incentivized review. What Review Matter did was they looked at all these incentivized reviews versus these non-incentivized reviews.
They determined that the average star rating, the 5-star rating for Amazon reviews was 4.7 for these incentivized reviews versus 4.3 for the non-incentivized reviews. They created a really cute video about how Amazon incentivized reviews were giving a skewed perspective to sellers and it went viral. It had a massive Reddit post, it was getting picked up by newspapers all over the country and Amazon needed to address this immediately because this was an attack on the integrity of their customers.
For those that don’t understand the principles of Amazon, it’s something you should read if you’re going to sell in the space, you should read the Amazon readership principles because it’s the governing body by which all Amazon staff work under. Within their circle, the customer is everything and the integrity of their relationship with the customer supersedes any other relationship that Amazon has. By taking this swift action and effectively banning incentivized reviews Amazon got exactly what they wanted.
[00:29:23] Scott: If you go to Google today and you type in Amazon reviews, everything is about how Amazon banned reviews. I don’t if it will be when this comes out in a couple of weeks but that’s what Amazon wanted. They wanted to change the story and to give credibility back to the system that they were building. Now, Amazon built their own problem because August of 2015 Amazon came out and said, “If you’re going to give these products away at a discount yet you have to add this disclaimer and a lot of…
[00:30:052] Scott: That was FTC though, right?
[00:30:07] Jeff: It is FTC but the FTC is somewhat vague into what it means to give away a product at a discount. Now, it’s very clear that if you give a product away for free the disclaimer has to be there but if I run a coupon ad in a mailer, is that giving a customer a discount to try my products and knew they have to disclaim that in the review? What amazon was saying back then and what they’re even saying today is if you’re giving a product away at a discount with any type of direct or implied contracts for a review that those reviews are now illegal and that they don’t want to see them on their system.
[00:30:48] Scott: Right and that’s what I mean. It’s kind of like reading the rules and then interpreting them, that’s the hard part. We can sit here and think and guess of what we think it means which that makes sense to me but then there’s a work around. There’s always a work around on how you can kind of get around that. I think the same thing, I think the big problem was because there were trained people even in their own system like we’re saying just go out to the top 10,000 reviewers, that’s a whole community and a culture in itself.
[00:31:25] Jeff: Right.
[00:31:26] Scott: There’s people right now, I’m not sure if you’re aware of this, you probably are… There’s people right now in that community of reviewers that are so devastated that they can’t get products at a discount for their Christmas this year.
[00:31:39] Jeff: Yep.
[00:31:40] Scott: Devastated.
[00:31:41] Jeff: I think there’s a petition on petition.org from their side of it and hey, you’ve shut us out now.
[00:31:47] Scott: “You’ve shut us out. I’m on disability and I can’t get a full time job and because of that I relied on these people wanting me to review their product and I was getting product at a discount so I could give my family a great Christmas” or “I could get things I normally wouldn’t be able to get.” There’s that side of it too so I get all that but the thing is I think it’s the people that were… Not even just the people but groups that trained people to do this which I think that’s fine because people all raise their hand in this group.
They’re like, “We want to receive product at a discount.” The problem is they’re also trained to leave in a disclaimer and they’re trained to do everything by Amazon’s guidelines and now technically that’s what’s throwing up the red flag because you’re giving the product away at a discount in exchange for the review. That’s the thing I think that made… I have my own thoughts on this too. I’m like well, this was a way for amazon to get the FTC thing out of there so now it’s not you’re not going to know. If you’re a regular buyer, you’re not going to go there and see, “I received this item at a discount,” anymore. At least you shouldn’t because you don’t have to do that anymore. But also as a seller I’m not supposed to give away a product at a discount for a review, does that make sense?
[00:33:02] Jeff: I think that’s a very keen interpretation of exactly what has happened. Amazon has shown a tendency over the years to avoid anything legal. It’s been very well documented with nexus and tax and how…
[00:33:18] Scott: 100%.
[00:33:19] Jeff: This is the same exact thing. And that’s why Amazon is sending you… They’re going to send you a letter out as a seller and say, “If you’re giving these products away at a discount, you are violating FTC rules.” They’re going to say, “This is your problem. This is not mine because these type of relationships are not allowed on our system so we don’t have to deal with it, it’s not our problem.”
[00:33:50] Scott: It’s not our problem.
[00:33:52] Jeff: They did exactly what you said was they put the people like review [inaudible] out of business because theoretically, no review from this point forward will be posted with that data except for Amazon buying.
[00:34:07] Scott: Exactly, exactly. Now then the next question would come into is amazon going to have a certain percentage that if you give off, you will not be able to leave a review?
[00:34:19] Jeff: Yes. I think that is what’s completely up in the air right now. There’s a thing called the law of reciprocity. I’m going to use the law of reciprocity really in two ways here to demonstrate. The law of reciprocity says that if I will do something for you, you will do something for me.
[00:34:42] Scott: Exactly.
[00:34:43] Jeff: You’re walking through two doors, if I hold the first door open for you, you are more than likely going to move forward to the next door and hold it open for me. That’s the most simple way to explain the laws of reciprocity. That is what a lot of sellers were banking on with incentivized reviews that I’m giving you a product at a discount therefore you will write me a good review. The laws of reciprocity usually work and it’s been strictly proven.
[00:35:11] Scott: They do, yes.
[00:35:18] Jeff: My recommendation today, just after this all occurred is that your strategy as a seller should be to look at giving products away to drive brand recognition and to build a base for your product as one process and soliciting reviews as another. When you’re looking at that, you cannot look at it and say, “Well, I’m going to use one system to give my products away and another system to ask for the reviews.” You really need to do it completely disconnected and not expect reviews from any products that you’re giving away.
Now I think the first thing that we saw was that a lot of sellers that were giving products away for 80, 90% all of a sudden started changing their discount to 40, 50% because if they’re going to be giving the products away and not getting the reviews they didn’t want to give as much of a discount. That’s a natural reaction from the marketplace. The point of discounting your products is that you want to test your products into the market and see what the reaction from people are. That process has never and will never change. That’s the concept of Costco. You walk through Costco and there’s a reason they’re giving all these free samples because people will end up buying those products once they’ve tried them.
[00:36:47] Scott: Sure.
[00:36:49] Jeff: The example I like to give is if you open up a pizza store, you’re going to walk around and hand out fliers to get people to come in and try your product. So whether you’re launching a product or you’re trying to build a product or expand on your product, discounting should be part of your strategy. You just need to change your overall mentality wrapped around that. I personally changed my email structures that come from my product giveaways. I still do product giveaways but within my emails I only focus them on customer service.
What I’m trying to do is create a chain that I can show to Amazon if I get in trouble that says, “Hey, listen, yes I gave this product away at a discount but I also followed up with the customer and I never asked for a review. I only offered customer service to that customer.” If you use a system like Feedback Genius and I know there’s other systems who do this as well, you can actually target your message based on the price the product was sold at so I can send a different message to somebody who paid a full price for the product versus somebody who paid a promotional price for the product.
[00:38:04] Scott: Okay, let me ask you this, this is my thoughts because Amazon really said we don’t want you soliciting the people that you give a discount to. We don’t want you basically going after the reviewers, is what they’re saying. They weren’t even saying solicit. We just don’t want you to get a review from that particular thing but now if someone buys your product organically and they pay full price or maybe you discounted it for a week and you lowered your price by 4 bucks and they still came through or maybe you gave a discount on your website to go over to Amazon to buy your product, no matter what way that person bought whether it’s through a giveaway promo, a discount or even regular price, I believe, this is my opinion, that if you send them through your same follow up, there’s no difference, I don’t know how that can be wrong. I’m not changing it up.
I would think if I changed it up and I said, “I’m giving away discount so now I’m going to go and hit these guys over the head with getting a feedback review,” my first message is always customer service related, nothing about a feedback, nothing about reviews. The second one would be more about again just checking in, making sure everything is okay, “If you have any questions, let me know and hey could you do me a quick favor, we’re a small local business and we want to make sure that you’re happy and Amazon wants to make sure that you’re happy as well.
Could you do us a favor, could you go over and let them know how we did and give us some feedback?” That’s it. You’re not saying, “Go give me the review, go give me the feedback.” You’re basically just saying you want to make sure that you’re doing what’s right by them and you want to let Amazon know that you’re doing a good job as well, that’s it but it’s the same process for anyone that goes through the system. Maybe I’m wrong but that’s my thought process moving forward, correct me if you think I’m wrong or… I’m fine with that.
[00:39:45] Jeff: I think the answer is that we don’t know.
[00:39:48] Scott: Yeah.
[00:39:51] Jeff: Ultimately Amazon uses machine learning to make a lot of its decisions. Machine learning is when you teach a computer system to act and react based on certain things that occur. It’s very clear that if anybody uses the terminology ‘offered in exchange for a discount’ that review is going to be removed. We can all agree upon that.
[00:40:16] Scott: Yep, 100%.
[00:40:18] Jeff: I think that once you get beyond that Amazon is going to hang their hat on the term excessive.
[00:40:27] Scott: I like that too, yeah.
[00:40:28] Jeff: At that point what I look for is what I call a natural curve. You’ve heard this in my presentations that I do but you have impressions, you have sessions, you have conversions and you have reviews and it is not natural to have an equal number across all of those. So for those that are not familiar, let’s just go through it for those that might not know all the terminology. An impression is typically a keyword, something that describes your product, garlic press and how many times your product shows up for that keyword. You’re going to typically find impression data by using sponsored ads, that’s probably the best way to get it.
Session is once they actually come to your product detail page, conversion is where they move from the product detail page to an actual purchase and then review is obviously when they leave the review about that. Amazon is looking for a natural curve amongst those things and so by discounting your product and by putting it out into a community for people to buy you will increase your number of sessions on your page and you will increase your conversions and you will increase your reviews but everything should be proportionate.
If you’re getting a… What was happening before was that you were giving away 100 coupons, you were getting 100 conversions and you were getting 85 reviews. What Amazon is looking for is something more like you gave away 100 coupons, you got 85 conversions, right because not everybody that took the coupon actually bought it and you got 15 reviews. If they get that natural, maybe it’s 20, maybe it’s slightly higher but it’s not 85% like it was before.
[00:42:21] Scott: Exactly.
[00:42:22] Jeff: And then Amazon is also specifically looking at systems like Snagshout and other systems that are out there and it’s looking at their processes. What happens is if Scott, you get caught, Amazon is going to come to you and say, “We think you’ve been excessive, we’re suspending your account.” For you to get uncaught, for you to be released, Amazon is going to say to you “Tell us everything you did.” Now, they don’t tell you what they know and what they didn’t know. They just want to know everything that you did.
[00:42:53] Scott: Yeah.
[00:42:54] Jeff: You then are going to say I gave away products here, I did a promotion on Facebook, I ran this on Reddit and you’re going to tell them everything that you did. They’re going to then start to look at those individual things that you did and they’re going to look at every one of those and say, “Okay, you gave it away on a review club in Facebook. Here’s the name of the review club. By the way, we’re already members of that because we’re everywhere and we know that they’re still implying a discount in exchange for review therefore this is illegal activity and you deserve the suspension that you’re getting.” They’re going to make that determination for each of these groups, organizations and such.
Amazon came up with an update, I believe it was in June of 2016. It was a very minor update but I actually thought it was pretty major. Within the update, they said something to the effect that as a seller on the Amazon marketplace you are responsible for the third party software companies that you choose to do business with or the third party systems that you choose to do business with and that’s everything from something like inventory labs to Feedback genius to Snagshout to Scan Power, whatever system you use, you’re responsible. You can’t cry, “I didn’t know they were doing that.”
[00:44:20] Scott: Right, right.
[00:44:21] Jeff: That’s what I say ignorance isn’t an excuse to break the law.
[00:44:25] Scott: Yep, yep.
[00:44:26] Jeff: Your job as an Amazon seller is to understand who you’re working with, how they’re protecting you as a seller and whether you agree with it. Don’t just go sign up for Snagshout because you heard Jeff Cohen talk on this podcast and say, “I want to go use Snagshout.” Ask the questions about what we do that’s different. I think that any site that gives away product at a discount and is talking about the review in any way, shape or form is a red flag in my opinion. That includes the URL, that includes the language that they’re using to speak to their consumers.
We had a lot of people, we made a decision at Snagshout that we were not going to talk about the review at all. We had a lot of merchants come out to us and say, “We don’t agree with you. We believe that you should tell everyone that buys a product on Snagshout that they’re not required to give the review but our merchants would appreciate it if they did.” We said we believe that at that point we’re making a decision that can put our merchants in harm’s way. We made a pretty dramatic change to the Snagshout platform that completely removed anything and everything related to reviews from the site. Our shoppers can’t see reviews that they’ve left, there’s no tie to leaving reviews and being able to use the system more. We actually got rid of the ability to tie into any social channels. They can’t even leave comments on other social channels because we kind of believe that that left an implied leave it here then also leave it there.
[00:46:17] Jeff: We got rid of the merchant’s ability to see whether reviews have been left by customer, we’ve never let the merchant pick which shoppers get their products. Our shoppers used to have to give their reviewer ID to be qualified to use the site, we removed that. We really stripped all of these pieces out to really kind of model a traditional deal site and say, “Hey, these are deals you want to promote them we’ve got a really big audience that is interested in buying products at a discount, put your products on here we’ll promote them.”
I think that as a seller you have to decide how much risk you’re willing to take and put your account up for grabs so to speak and then evaluate each of your suppliers to determine if they put you at risk or not.
[00:47:13] Scott: I think the only thing there that’s tough for me right now is the dust hasn’t settled and there’re still people in those groups that they may not even be aware what’s going on. They're just people there that want to get deals but they’re trained to leave reviews and they’re… How do we un-train them to not have to do that? They might just go like the old way. I just got something from Snagshout and I’ve just always put in there the disclaimer I’m just going to put it in there. What happens? Those people have to be retrained or reeducated in a sense.
[00:47:46] Jeff: I don’t disagree with you and I think that a lot of sellers were looking for kind of like, “What’s the immediate, what do I do today?” I have to agree with you that part of it is taking a deep breath when these things happen and… You and I talked about this last week and seeing where they settle out before you determine what your strategy is. Different sellers are in different parts of their lifecycle and you have to kind of determine, if your product just hit Amazon and it’s your first product and this was your strategy you may need to take a little bit of risk and do it now because you don’t want to wait and miss to afford.
But if you’ve been selling for a while and this was a supplement strategy to what you were doing then maybe it’s best to sit on the sideline. Maybe this is your time that you go and experiment with Facebook ads or you go and experiment with building out your own Shopify store. I think that the retraining will happen over time, we personally at Snagshout have told all of our shoppers that Amazon changed their policy and if they’re going to choose to write a review it’s completely up to them and to not use that disclaimer. We also reiterate that during the checkout process just so that they’re very clear that no review is required in any way shape or form.
But you’re right, there are going to be people who are just kind of used to doing it, they don’t understand all of the rules and in all honesty not everybody was leaving the disclaimer in the first place. We actually used to have processes that went back and told people to add the disclaimer. But Amazon updated their policy with regards to asking people to change reviews so they actually… You’re not allowed to ask them to manipulate the review in any way shape or form. Technically you can’t even ask them to remove that line from that.
[00:49:48] Jeff: But that’s where I feel that if you have a communication process that can… Amazon has a record of everything that occurs within the buyer messaging system. Any automated messaging system that you use is using Amazon’s buyer messaging system because that’s the only way to communicate with Amazon customers. By having this backup trail within there that shows that you as a seller are doing the right things you have a way to kind of come back and say, “Hey listen I never asked for the review, I never implied a contract for the review, I actually only offered customer service.”
That’s why I believe what I’m doing is the best path for me today but I don’t necessarily think that what you’re doing is wrong because you’re using a totally different system for requesting the review. I think that the future, as we look to the future everything that Amazon does has what I call unintended consequences. Their August 15th update of 2015 actually caused what happened in October of 2016. Everything that occurs within Amazon has unintended consequences and it’s still yet to know exactly what those unintended consequences are. As a seller we need to make sure that we’re not driven based on fear, uncertainty and doubt but that we’re putting a solid business plan together to build quality products that are unique in some way shape or form.
That we’re building beautiful listings and we’re optimizing them and that we’re providing amazing customer service and that we’re doing things to market and promote our product and those things are all within Amazon’s rules.
[00:51:43] Scott: I think you’re spot on with all that I think it all comes down to building or using that channel the way it was intended to be used. There are ways that you can, I don’t even want to say manipulate but you have ways that can allow you to get more reviews but doing it ethically, doing it honestly by following up with good customer service. Just doing the good old fashion like you don’t even have to tell them they’re going to do it because they’re going to want to. I think it goes down to Amazon’s mission, their customer’s number one like you said.
Any company out there that’s focused solely on the customer usually wins. I think that that’s a huge lesson for everyone. I just think that people when they get started… Anyone, we all fall into that, I’ve fallen into that, it’s like you want the short cut. We all want the shortcut, we don’t want to go the long way. But the long way a lot of times is the better way and there’ll be other shortcuts along the way and we have no idea what Amazon’s going to do tomorrow.
There could be another update that comes out tomorrow that does something else that all over a sudden it tips it on its head. Who knows, I’ve even thought of this, maybe in a year from now they’re going to make it where you have to do at least 6 figures a month or they’re not going to let you even open a store or whatever. I know Walmart is kind of hard to get into now because of those stipulation stuff, we have no idea. I would just say anybody right now that’s thinking about getting started like, yes it’s a little bit harder than it was yesterday but it could be harder a month from now too.
I just say to anyone, put together a solid business plan, go after a market not just a product that’s my thing and then I would say as soon as possible try to start creating your own email list at least or your social following of some kind for that market that you’re serving and that would be my bits for advice. Anything else you want to end up with or end the interview here with or the conversation… I don’t even want to call this an interview. This is a conversation. Is there anything else that you want to just let anyone know?
I know you’ve got a ton of resources on Seller Labs that you can direct people to, we can link it up in the show notes. But anything else you want to just make sure that people are aware of or that they maybe just getting started or people that are… They got hit with this thing and they’re like, “Now what?” Is there any words of wisdom there?
[00:54:02] Jeff: Yes. There has clearly been weeks and weeks of just new policy update or changes from box content labels to new storage fees to closing Amazon to new FBA sellers to the review. That’s just part of Amazon and as you look to… Remember this and as you look to 2017 understand that this is probably going to happen again, don’t be scared by fear uncertainty and doubt. Try to become educated consumers, don’t be what I call a fear monger where you’re just kind of saying that “the world’s ending, the world’s ending.”
Try to understand what it actually means for your business. I always go back to, your job isn’t like… On Amazon, off of Amazon. You job on Amazon is to understand impressions, sessions, conversions, reviews. Understand where your gap is, where your problem is. If you have a lot of impressions and you don’t have a lot of sessions you might need to improve your product listing to get more people maybe try your photos or something like that. If you have a lot of sessions but not a lot of impressions you need to add to your bullet points and your descriptions to get more keywords built into your listings.
If you’re getting the sessions but not getting conversions, we can make sure that you’re actually giving features and benefits, that you’re actually giving reasonable information that would drive somebody to make a decision to buy a product from you. If you’re not getting a lot of reviews but you’re getting a lot of conversions then look at your follow up sequence and what you’re doing. The beauty of Amazon is that you can actually control each one of those four things. You can get more impressions by running more sponsored ads if you aren’t getting them naturally.
[00:56:00] Jeff: Sellers I think need to understand if you had all four of those on a wall in front of you, what are your numbers? You have to know your numbers. You talk a lot about knowing your numbers on the product discovery and production side but now that you’re listed know your numbers. Now, find out where your problem is and then focus on your problem. I always like to start like to start at the back of the funnel and move forward. If I can fix my reviews first then I fix my conversions, then I fix my sessions, then I fix my impressions, I know that as more people see my product they’ll move through the whole chain. I want people, tend to start at the beginning, I need more impressions, I need more impressions. But if you’re driving more people in but the conversion suck then you’re wasting the money driving people in on the front end.
[00:56:56] Scott: I agree, you’re always reverse back. I like that as well. It’s like you said if you don’t have that part in place well then you start getting people through, you’re kind of letting them slip through the cracks and not capitalizing on that extra traffic. This has been awesome, I know we could talk for another hour, two or three, we can just sit here and keep rapping about this stuff because we love talking about this stuff. Maybe we’ll have to have you back on again and we can discuss some other aspects of this. But why don’t you give people a way that they can get a hold of you or Seller Labs and we can link all that up in the show notes as well?
[00:57:28] Jeff: Yes, sellerlabs.com/theamazingseller is a landing page we have for this community and we’re going to have some special resources on here to kind of talk about some of the topics that we talked about. Some blogs to kind of go into this and a little bit more in depth. If you’re kind of like I didn’t catch this part of it or I didn’t understand how that part… I didn’t understand how this update affected something, we’ll link to those within this page. We obviously have tools that you guys can use, Feedback Genius and Snagshout as well as our newest tool called Scope.
We welcome anybody to try what we have. I am pretty readily available on Facebook. If you are friends with people in the community and you look for Jeff Cohen you’ll find me with like minded friends. I’m also pretty active on LinkedIn. I make myself pretty open, Scott knows I speak at quite a few conference. I probably spoke at 12 or 13 conferences this year. If you ever see me at a conference please come up and say hi. Give me your feedback. Ultimately I want to know if I’ve provided anything of value to you by coming onto this podcast.
If I have please share that in the show notes. That gives information back to Scott and I as to whether we talked about something that was worth your time. Your time is your most valuable resource and hopefully I gave you something today that will then help you improve your business and help you drive more profits.
[00:59:05] Scott: I love all of that and I just want to echo that obviously the tools and everything that we’re using they’re a convenience for us and I only really recommend companies or people that I’m friends with and that I know. You and I Jeff have been talking for a while and then now to have you on the show is great. Jeff represents a really great product suite of tools. Like he was saying if you’re going to use tools you want to make sure that the tools you’re using are backed by good people and they definitely are.
Definitely go check out the show notes. There’s a ton of resources on their blog and like you said we’re going to kind of put them in together and make it easier for you guys on one page if you have any questions there. Of course reach out to Jeff if you have any questions about what we talked about or anything for that matter, he’s always available. Jeff I just want to say again thank you so much, it was great meeting you in person. I’m sure we’ll across each other again at another conference and I just want to say thanks a lot for coming on. You always are adding value to the community so I just want to say thank you personally here today in front of everyone that’s listening. Thanks again Jeff.
[01:00:12] Jeff: Thanks Scott, I appreciate it.
[01:00:15] Scott: There you have it. When Jeff and I got on we really didn’t know 100% of the direction we were going to go and you can just tell like we could sit there and talk about this stuff for hours because we have actually when we were in person and we could just continue to do it because he does have so much knowledge in the space. Again he doesn’t have all the answers but he does have a good idea of how this business operates and works. Just to have him on to be able to really dig into some of his experience talking to other sellers and stuff I think is really, really valuable. Hopefully you go a lot of value from this episode. If you want to download the show notes or the transcripts head over to theamazingseller.com/278.
Like Jeff said they created a page over there for us to be able to really connect the dots and kind of go through some of that information that’s there that they’ve already published over on their website. You can head over to sellerlabs.com/theamazingseller and you’ll get all those goodies over there. Like I said to Jeff and to you guys I really do only endorse companies that I feel good about or that I’ve worked with or that I know personally and Jeff is definitely a huge component and a huge part of Seller Lab. Definitely go check those guys out.
All right, that’s it guys. That’s going to wrap up this episode, remember the show notes theamazingseller.com/278. One last reminder for this episode, remember guys, I’m here for you and I believe in you and I’m rooting for you, but you have to, you have to… Come on say it with me, saying it loud, say it proud, “Take action.” Have an awesome, amazing day and I will see you right back here on the next episode.
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