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…here in TAS headquarters here in a hotel room while we’re getting ready to hang out with some of our high-level Inner Circle members. But we just wrapped up an episode about fourth quarter and I said, “Chris, we need to mention this trillion-dollar breaking news thing that's been headlines in the news about Amazon,” and I decided to fire up the recorder here again and I just wanted to kind of get your thoughts on it, Chris, but I also wanted people to understand what this means, at least to me and to you. And moving forward in e-commerce, should we even build an e-commerce store? Should we even focus on building a website? Why don't we just launch our whole business on Amazon and just let them do all the heavy lifting? Why wouldn't we? I mean, they’re just a monster. They’re a beast.
[00:01:07] Chris: They sell Christmas trees now too.
[00:01:08] Scott: I was just going to tell you that. I can’t believe – I’ve seen that in the bank. I was at Wells Fargo and I'm sitting there, and the news thing was going across and this says Amazon announces they’re going to ship real live Christmas trees.
[00:01:19] Chris: Right. Do we have a chance to compete against the behemoth that is Amazon? Well, first for me, I think it means that Jeff Bezos is actually a cyborg. However, I think it's important to know, Amazon is the first trillion-dollar company or that they are a trillion-dollar company and that sounds…
[00:01:35] Scott: What does that mean? So, what does it mean?
[00:01:38] Chris: That they’re worth $1 trillion. It’s a lot of zeros.
[00:01:43] Scott: But that’s what I’m saying. I mean, Apple I think too was also – were they at a trillion too?
[00:01:48] Chris: They're close.
[00:01:49] Scott: They’re close. Okay. I thought that there was because…
[00:01:51] Chris: And Alibaba is close too.
[00:01:53] Scott: Okay. All right. So, again, what does that mean, right?
[00:01:57] Chris: That they’re huge.
[00:01:58] Scott: It means they’re humongous. So, the question is this. Let me ask you. So alright, Chris, I’m thinking to myself that I want to either start an Amazon business or I just want to start a business in general like what do you suggest I do?
[00:02:10] Chris: Well, that's one of the things that you and I have talked about. We’re talking about in the past is if you're going to be selling a physical product, something that is a tangible thing that people will hold and have in their homes. Amazon is the place to start and they are the 900,000-pound gorilla in the room of the e-commerce business. They already have all of the attention. They have all of those things. And more people start their search for a physical product on Amazon than they do on Google, believe it or not, and so it's absolutely the place to start. But that doesn't mean that we can't compete against them. Them being the 900,000-pound gorilla in the room doesn't mean that we can’t compete against them. But in my opinion, there's not really a reason to compete against Amazon.
[00:03:01] Scott: No.
[00:03:01] Chris: There's a reason to partner with Amazon and be side-by-side with them, but also have our own thing. Because they are the 900,000-pound gorilla in the room, it basically means they can do whatever they want, and I don't want to be dependent on anybody like that long-term.
[00:03:17] Scott: Yeah. I agree. And here's the deal, like why would you not want to partner with Amazon? Like, of course, you would. And do you hear what we said there though? We said partner. We didn’t say build our entire business or our home on Amazon. That's not what we said. We said we want to partner with them. You could partner with Etsy too. You could partner with eBay. You could partner with Walmart. Partner with all of these different channels and we can also have our own which we should because we have a lot of control. The interesting thing, I had a conversation with Andrew Youderian from eCommerceFuel. We had a podcast episode recently and I asked him specifically because he has people in his community over there in eCommerceFuel that they're doing six-figure, seven-figure, some are even eight-figure e-commerce brands. And I asked him, I said, “If people are starting their businesses and they come into your community, how are they getting traffic?”
Because I know a lot of those people were and probably in the past couple of years I heard were kind of like anti-Amazon, not all of them but I just heard a lot of people don't want to rely on that and they’re kind of old-school e-commerce people. And you kind of want to resist it a little bit because you don't want to, but you probably should at least partner with them because it’s traffic like why wouldn’t you? But I asked him, I said, “So, how are people getting traffic? What's compared to, you know, what are the top traffic sources that e-commerce businesses are getting?” And he told me, “Google search,” like they're still ranking their websites for search. Now, does that mean that they won't find you and then go over to Amazon and look for you? Sure. That could happen and then you'll be there. You should be. But they were found because they did a search on Google, which I thought was interesting because nobody hears, “Uh-oh, Google changed everything too now just like Amazon can. They slapped everyone. We lost a whole bunch of rankings,” this, that, and the other thing.
[00:05:19] Scott: That’s why you should really build a legit website with legit links and all of that stuff that you do for SEO. But so, I just found it interesting that here's all these successful brands that are inside of his community and a lot of them are saying like, “If I was to start again, I would still build my ecommerce business and I would go after organic search and I would build that because it's a long-term strategy as well. And then yes, I would put my products on Amazon. So, I think people right now need to understand that, yes, Amazon is a beast and you want to partner with them and you want to launch. Like, if you're starting from scratch, I would say, “Yeah, launch your products there.” That's what we teach. That's what we talked about. That’s what we would do. If I was starting a new business today, I would say, “Here's our strategy. We’re going to figure out the market, we’re going to figure out the products that they want to buy by looking at Amazon products that are selling, looking at Google shopping, all of that stuff, and then I'm going to make my decision on that and then I'm going to launch on Amazon. It’s so super easy.
[00:06:21] Chris: And the reason I'm going to do that is so that I have capital to bankroll the other stuff because the other stuff takes time, energy, and effort to…
[00:06:29] Scott: Sure.
[00:06:30] Chris: Right? And quite frankly, a lot of capital. Even ranking organically for free traffic and I’m throwing as many air quotes around that I could possibly can.
[00:06:37] Scott: I can see. They can’t but I can see you.
[00:06:42] Chris: Is something that either takes a lot of time or a lot of money to pay someone else to use their time to help you with that. So, there’s zero reasons that I can think of unless you just can't make it work with the fee structure, even warehousing yourself for doing, you know, if there’s just zero…
[00:06:58] Scott: Your margin is that terrible if you can't though.
[00:07:00] Chris: …zero ways to make it work with Amazon then maybe you don't want with Amazon. But for everybody else, for 99.99999% of the world, that is the place to start because it is the lowest barrier to entry. What I don't want people to be dependent on, as Amazon continues to grow into a multi-trillion-dollar company, is the heroine that is also Amazon. The Amazon crack if you will because…
[00:07:24] Scott: It is. It’s a drug. We’ve heard that so many times. No, seriously… And from our Inner Circle like…
[00:07:32] Chris: Yeah, it just seems like it's drugs because it’s so easy. Not everything else should be that easy. Well, it's not that easy, and neither is everything else. But if we can set that up, we can make that of our foundation, we can then be partners with the 900,000-pound gorilla.
[00:07:50] Scott: Absolutely.
[00:07:51] Chris: And we can go find a 50-pound elephant and whatever else we need to find whatever other weight and animal we want to insert there, and we…
[00:07:59] Scott: A large animal.
[00:08:00] Chris: Yeah. We can start to diversify a little bit. Even if it's only 30%, 40%, 50% of the business, if Amazon were to completely change their algorithm or completely get rid of third-party sellers or do something else that affects you, you're not 100% dependent on them. But they are going to continue to grow in size and scope and scale in a number of countries that they serve, in the number of people that buy from them. We just passed Prime Day and they said like in the first few hours, it was bigger than Prime Day 2017.
[00:08:34] Scott: Yeah. It’s crazy.
[00:08:35] Chris: Right? Like, that happens every year and that will continue to happen for the foreseeable future. The thing that's really interesting with e-commerce even in the US right now and it seems like I buy almost everything on Amazon until I think about groceries and I think about some of those other things, e-commerce, in general, is only a very small percentage of total retail sales of products. So, whether it's Amazon, whether it's our own store, whether it's ClickFunnels funnel, however, we’re selling them online, we’re going to continue to grow. But to continue to grow, we also need to be in multiple channels, taking advantage of that growth in every place that we can. We don't want to do all that at once obviously so let's start with the highest return on investment, and then work down the line. Let's use the Pareto principle. Let’s use the rule of 80/20 with 20% of effort, what's going to give us 80% of results? All right. So, we’re 80% all the way there. Now, what's the next thing that we can do that’s 20% of effort that's going to get us another 80% of that, right?
[00:09:38] Scott: That’s a good point. Yeah.
[00:09:39] Chris: So, let's start with Amazon then let’s build our site, then let's go do whatever else it is that we’re going to partner with Walmart, partner with Etsy, do whatever it is that we’re going to do there. And that for me tends to make the most sense even as Amazon continues to grow and I would say especially as Amazon continues to grow, because the bigger they get, the harder it's going to be good partners with them because they're getting smart. They understand what we’re doing, and I think it's interesting because even when Amazon sells the product and I look at some of the people in Andrew’s community, and I know some of the stuff that they sell, and they might not sell on Amazon, but they sell the same exact products that are available-for-sale on Amazon by other people. They can still make money, they can still compete even though Amazon is selling the same product direct. Well, we don't have that concern because we’re private labeling generally speaking and so we can partner with them and do all of that stuff and there’s zero reason not to from where I sit.
[00:10:39] Scott: Yeah. I mean, again, we talk about just you want to protect yourself. You want a stable business and when people are relying 80% to 90% on Amazon, it's scary.
[00:10:53] Chris: And if you're not scared, it should be scary to you.
[00:10:55] Scott: Yeah. And if you haven't had any close calls as far as like you get an email that says, “Your listing’s suppressed because of this,” or, “It's 30 days locked because of this,” or, “You got hijackers,” or whatever it is, you’re experiencing that fear now that things are running smooth but then they’re not running smooth because there’s stuff that's out of your control and there's nothing you're going to do about it. And that's why as you’re taking advantage of the traffic that's there today and the sales channel and all that stuff, you should be acquiring your own customer and that's the one thing that people always gripe about is like I don't get my customer information. Well, there's ways that we can do that and kind of get information and then from there retarget those customers or even just put insert cards and, yeah, you might get a less of a percentage, but it's something and you just have to be creative with that. Like, we had someone in our Inner Circle and I’m not going to say exactly what they did because I want to respect their privacy, but they did something really clever and they’re getting a really good response.
Now, it took a little bit more time to put that piece together but it's worth their time because they’re getting such a good ROI on it so why wouldn’t you do that? So, you just have to think creatively but my thing is, is we want to figure out how we can get, again, we go back to the PACE model, the attention, and the cultivation, and the reason why we want to do that is because even though we still might even push them to Amazon, I mean, we just had a sale. We did a Labor Day sale not that long ago and we pushed three emails, a little three-email profit push we call it, and we basically sent out three emails and we sent them directly to Amazon. We basically said, “Hey, we’ve got these items. They’re 30% off. There's just two items we wanted to push. We’re going to send directly there.” Why would we do that? We already got their email address, so we don't need to do that. We already know that they’re a potential customer. So, why not push them? We've already qualified them.
[00:12:55] Scott: But my point is this, we have those people now that we’re constantly bringing into our ecosystem, so we can start to allow them to go over there when we want to and then push on that platform so then we can leverage that platform even more. My point is this, use the platform right now. It's a great opportunity and, yes, they just crossed a trillion dollars or whatever. It just proves that they’re massive and whenever you think to yourself like, “Man, I don’t think they could do anything else,” then they start telling you they’re going to ship live Christmas trees. I’m like, “What else could they ship?” Then I'm just like, “Really?” Like ice cream like…
[00:13:33] Chris: Well, they do that now.
[00:13:34] Scott: I know. That’s what I’m saying.
[00:13:35] Chris: They’re Prime Fresh.
[00:13:36] Scott: I’m like, “Really? Like, how the heck are they going to get me a half gallon ice cream without the thing being melted?” But they're figuring out everything.
[00:13:45] Chris: They’re going to go to Whole Foods which they now own and they’re going to take it out the freezer and they’re going to fly it to you with a drone.
[00:13:53] Scott: You know what I mean. It’s like crazy.
[00:13:54] Chris: That I think is a really interesting thing because as they continue to grow, it’s actually going to open up more and more opportunities inside of a platform as long we’re paying attention. And grocery I think is a great example that we have somebody inside of TAS Breakthrough U that is really interested in selling a food product.
[00:14:11] Scott: Yes.
[00:14:12] Chris: And traditionally, that's been very difficult to do on Amazon because you would have to ship and fulfill the orders yourself and there's not really a ton of demand for it. The thing that's nice about having a partner that is a trillion-dollar company, a trillion-dollar-plus company is they have a massive marketing machine. So, one of the reasons that Amazon bought Whole Foods was to expand out, obviously, the groceries out of it because they know the next big area for e-commerce is grocery and if you look at Kroger, you look at Safeway, you look at Ahold, those are all big grocery conglomerates, they're all spending tons of time and effort, Walmart is doing the same thing right now, to try to figure out how to make grocery shopping online a thing. Well, we still don't really buy cars online. There’s a lot of things that we haven't even tapped into from a physical products standpoint that are going to slowly start opening up as Amazon and some these other players like Walmart continue to get bigger and bigger. It's just going to happen.
And so, if you're paying attention, there's actually going to be even more opportunity I think coming up. Very much like Amazon circa 2013 where you can just throw up anything and launch. As those things start to grow and start to expand out, you’re going to see those same opportunities open up in brand-new categories, brand-new verticals within the Amazon platform and within some of the other competing platforms on the web.
[00:15:42] Scott: Yeah. No, I look at it as opportunity. I always do. I mean, eBay, you go back as far as like when eBay was doing all of – they were doing e-books. You could sell e-books on there. You can't do it anymore. There's a great opportunity while it lasted and then they switched over to where you got to have a physical item, so you put them on CD now. So, there's always going to be new things that are going to be introduced and if your brand lends itself to that, well, that’s just opportunity so I welcome it. I also welcome that they’re making big changes and a lot of those big changes are there to really help and protect the real brands. They’re making it harder for you to be able to just throw a product up so that's good for us that are willing to do the work and if we’re willing to do the trademark. If you're willing to go through the trademark process which is sometimes a long process, depending, then they’re like, “Okay. We’re going to give you credit for that and we’re going to help protect you.” So, those are some things.
The new program that they're allowing you to – that the transparency program with the labels like they're trying to make it where we can actually get on there or legit brands can get on there and sell the product and have it protected. So, they’re doing things there too. So, those opportunities are going to open up for us if we’re a real brand, but if you're not a real brand and you’re just trying to throw a product up, it’s kind of like you’re doing like the old school way or you're doing the old eBay way. It’s kind of like you’re buying something and flipping it, buying something and flipping it. And that’s fine that that’s the model you want. You might want to go on eBay for that or Craigslist or something, but I’m saying they’re making the marketplace better in my opinion for brands that are willing to put in the work.
[00:17:25] Chris: Well, if you think about it, their ultimate consumer if you will is not sellers. It's customers, people who are on the site to buy things, not people who were on site to sell things. And everything that Amazon is doing is to help consumers realistically. Obviously, doing that helps their bottom line and help them become a trillion-dollar company but if they take care of their customers, it means that we’re going to have to approach things differently potentially within the platform and I’m okay with that. Amazon wants to be the lowest price. I’m okay with selling it for a little bit less on Amazon than I would on my own website if it makes them happy because they have a ton of traffic. It saves me from having to pay ad cost or whatever else. So, if I sell it for a dollar less on Amazon and I happen to pay them a couple dollars in fees, it actually tends to work out to be about the same as acquiring the customer myself, so why would I not take the sale with very little effort to make the same amount of money? I'm okay with that.
So, I think as they continue to grow, we’re going to have more opportunities but we’re also going to have more changes and if we can embrace the suck, the things that are terrible, if we can embrace them then we’re going to be able to get through it. And I always look forward to changes and this is something you and I have talked about in the past because I've been in the AdWords’ world since 2009 running ads online and the SEO world since then too. Every time Google made a change, the sky was falling. But what actually ended up happening with the people who were doing things in a legitimate way was to the bigger market share, a bigger market share, a bigger market share. And the same thing tends to happen on Amazon when Amazon makes a change. If you're doing things, not just the like letter of the law correct way on Amazon, but with good intentions. You tend to do better when Amazon does things when they made their review change. The sky was falling, and you and I had a little heart attack for about five minutes and we said, “What were we doing? Why were we even using these services that just gave away our stuff for a dollar? They’re just a giant email list. Why don't we do the real business thing?”
[00:19:30] Scott: That we already knew.
[00:19:31] Chris: Right. That we’ve done in the past in every other business that we've ever worked in and build our own email list and start to use that and actually make more money in the process.
[00:19:41] Scott: Yeah. Build an asset and all that stuff.
[00:19:43] Chris: Right. And so, a lot of those changes have forced people to become more “real businesses” and I think that's the mindset that we need to approach this with as Amazon continues to grow past a trillion. If we are going to be a real business, a real brand, then Amazon is going to be a long-term partner for us. If not, then we need to find something else.
[00:20:03] Scott: Right. Yeah. Cool. All right. I just wanted to jump on here and just kind of hash that out. I know it's big news, so I figured I would jump on with you and get your take on it and I know people are asking themselves like, “What does this mean? Is this good? Is this bad?” Hopefully, that cleared up at least our thoughts for you and maybe gave you a few things to think about. And also, really just I want to emphasize that like we’re talking about building a brand. So, regardless if you’re using Amazon or not like we’re saying like build a real brand in a market that is there, that wants products, and that needs products and you can add value to the marketplace like that's in a nutshell. And it's something we talk a lot about in depth in PACE and I would definitely recommend if you haven't done that, check out that resource. We did a whole series on that. There’s five episodes. There’s also I think I did four whiteboard videos on that as well. So, all of that is linked up at TheAmazingSeller.com/PACE and you can grab all that stuff.
And I would follow through with that. I would look at your business currently where you are even if you're just starting looking it there, it'll give you a good idea of where to start but also, if you already have a business, it’s going to show you the areas that you should be focusing on and then you focus on that area and you can always come back to any one of those pillars and continually make it better and improve it and then you’ll just be building out that business and that brand. And I just think that Amazon is going to reward the brands and if we can help build our own assets outside of that, we’ll be able to also secure a little bit more of our business and our share in our own channel.
[00:21:41] Scott: So, anyway, that's what I wanted to do here. So, guys, the show notes to this episode can be found at TheAmazingSeller.com/573. And again, the other thing I didn’t mention, Chris, here on this one which I had mentioned in the last, I’m going to do it here again, Brand Accelerator Live. I wanted to just a little shout out to our first ever conference. It’s a conference. Technically, it's not an event. It is an event, but it's not a small event. It’s going to be about 300 people and we’re going to be talking all about building your brand and not just on Amazon. We will be talking about that, of course, but we’re going to be talking a lot about what goes into PACE and really like how to build a real brand that’ll be here today but also tomorrow. So, definitely check that out, BrandAcceleratorLive.com or TheAmazingSeller.com/Live. We’ll give you all the details over there. So, Chris, you’re ready? You ready to wrap this up?
[00:22:33] Chris: Let’s do it.
[00:22:33] Scott: All right. Guys, remember, as always, I’m here for you, I believe in you, and I am rooting for you, but you have to, you have to, come on, say it with me, say it loud, say it proud, Chris is going to say it with me today in the hotel room. Are you ready, Chris?
[00:22:47] Chris: On the count of three?
[00:22:48] Scott: On the count of three. One, two, three. Take action!
[00:22:50] Chris: Take action!
[00:22:52] Scott: Have an awesome amazing day! And I’ll see you right back here on the next episode. So much easier when we’re in the same room. It really is.
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