Episode: 100

Title: Norman Farrar Introduces Orion Avidan, a Chief Inventory Profitability Expert, a Holder of BSc in Industrial Engineering and an MBA from Tel Aviv University.

Subtitle: “It’s A Range Of The Decisions You Have To Make. You Have To Figure Out What You Are Willing To Invest Time Wise, Money Wise.”

Final Show Link: https://lunchwithnorm.com/episodes/episode-100-the-ecom-spectrum-of-2021-w-orion-avidan/

In this episode of Lunch With Norm…, Norman Farrar introduces  Orion Avidan, a Chief Inventory Profitability Expert, a Holder of BSc in Industrial Engineering and an MBA from Tel Aviv University.

Orion is an eternal student. She is always learning. In this episode, she breaks down the arbitrage, drop shipping, wholesale, and white label-brand spectrum and which one best suits you.

If you are a new listener to Lunch With Norm… we would love to hear from you. Please visit our Facebook Page and join in on episode discussion or simply let us know what you think of the episode!

In this episode, we discuss:

• 0:20 : Happy 100th Episode!
• 5:38 : 30-Day Course of Improving Cash Flow
• 8:48 : What is Arbitrage
• 10:38 : The Difference Between Arbitrage and Wholesale
• 13:43 : What Is Drop Shipping
• 19:40 : Defining Your Range
• 21:52 : White Label Cash Flow
• 24:31 : Average Capital A Seller Should Have To Enter Amazon
• 31:03 : Don’t Put All Your Eggs In One Basket
• 35:47 : Don’t Mix Your Brand With Arbitrage
• 38:40 : Competing With Chinese Sellers
• 40:40 : Perceived Value
• 49:56 : Orion’s Advice For Sellers

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Norman  0:02  

Hey everyone, it’s Norman Farrar, a.k.a The Beard Guy here and welcome to another Lunch with Norm, The Rise of the Micro Brands.

Norman  0:20  

Alright, so today we are celebrating our 100th podcast. Kelsey got me a hat. I don’t know. Kelsey, where are you?

Norman  0:31  

He’s not even here. Oh!

Kelsey 0:36  

Happy 100th!

Norman  0:37  

Happy 100th Kels. Hey, did you not find something that says Happy 100th podcasts?

Kelsey 0:45  

It’s more difficult than you’d think.

Norman 0:48

Really? 

Kelsey  0:49

Yeah, with a two day notice, we could have prepared a little better. 

Norman  0:56  

So next time, you’re going to let me know when it’s the 250th. podcast, coming up like three weeks in advance or something.

Kelsey 1:04  

Yes. Alright. 

Norman  1:06  

He couldn’t even get a hat for the garden gnome. He’s already got one.

Kelsey 1:11  

Right. Gotta get one for Dallas too.

Norman  1:14  

Dallas the Oracle. Alright, so today, we’re gonna have sort of a fun day, this is going to be unique. Can anybody take me seriously with the hat? Should I take the hat off or keep it on?

Kelsey 1:29  

Keep it on, at least for the intro.

Norman  1:30  

Okay. Alright. So first of all, we’re going to do something different today. Everybody who’s watching, we’re gonna flip this over to a celebration over on Clubhouse. So we got that all set up and Kelsey, if he does his job properly, we’ll be posting the link into the comments section a bit later on probably a few times.

Kelsey 1:53  

I’ll post it right now actually.

Norman  1:55  

Very good. You’re on top of it. 

Kelsey 1:56  

Okay, yes and I think we also need to mention, we have a special episode tomorrow. Well, we haven’t talked about it at all. So Dad, do you want to take that away?

Norman 2:11  

Well, we’re going to be working. Well, we’re not working. We got an episode tomorrow. We’re going to be taught interviewing some top Amazon women and it’s all part of the Seller Session that’s happening with Danny McMillan and anyways, we’re going to be promoting that. We’ll be showing, even towards the end of this episode, we’ll be promoting the link for tomorrow’s and I think it’s going to be really great. I know all three ladies that are going to be coming on and they are incredible sellers. Alright, so for today’s episode, we have Orion Avidan and I hope Orion, I’m pronouncing your last name properly. But anyways, she provides this really cool course about improving cash flow and it’s eCommerce brands or just basically how to improve your cash flow by about 50% in 30 days. So today we’re talking, we’re not going to be touching on inventory so much, but we’re going to be looking at arbitrage, drop shipping, wholesale, what’s the right Amazon platform for you to work with? Or if you want to check out a couple, maybe you’re a private label seller and you’re just checking out some other areas. We’re going to be talking about that today. So I thought that was fitting for our 100th anniversary just to dive deeper into Amazon. It’s not all private label selling. Okay, so I think Kels?

Kelsey 3:47  

Yeah, so again, the episode we’d have a bonus episode this week on Tuesday, same time, as usual, it just will be on tomorrow as well and we also had our Gary Huang episode on Sunday that we released as well. So there’s lots of Lunch with Norm to go around for this week. So yeah.

Norman  4:09  

Did you get me a cake? 

Kelsey 4:11

Nope. 

Norman 4:15

Thanks. Not even a cupcake?

Kelsey 4:17  

Not even a cupcake. Where’s mine?

Norman  4:18  

You’re my kid. You’re supposed to be taking care of the old guy. Okay, so let’s get this started. Alright, so sit back, relax and grab a cup of coffee and enjoy the show. Hello. Orion, did I say your last name properly?

Orion 4:36  

You know Hebrew and English are written in different directions. We write Hebrew from right to left. We also talk from right to left so my name is Orion Avidan but Orion Avidan works perfectly.

Norman  4:51  

So I really wrecked it. I gotta improve my Hebrew

Orion 4:58  

I’ve seen worse.

Norman  5:00  

I guess I have to take the hat off too, to at least look half serious when I’m talking with you. No, I gotta take it off. There we go and Kelsey can come back on with the hat. But anyways, I think it’s so important about what we’re going to be talking about. Now, one thing we didn’t mention by the way, the course that you have about improving your cash flow is going to be the giveaway today. So why don’t we talk a little bit about that? I think it’s a great giveaway and I think each giveaway is worth over $800. So that’s pretty great. Yeah. So let’s talk about that course. What is the giveaway today?

Orion 5:38  

Well, I have a course, which is a 30 day challenge. Every day, you have a little snippet of information, whether it’s learning, whether it’s something technical to do, and I take the people through the whole process of understanding how inventory creates cash flow for the better or for the worse, and specifically for white label sellers, Cash Flow is a huge thing that impacts their results, and they don’t really know it and look, I’ve done my MBA, I came out of it, I knew nothing about cash flow. I knew how to say cash flow. That’s a real good starting point. But because inventory is such a cash intensive investment, realizing that cash flow isn’t just the answer to the question, am I going to be able to pay the bills next month? It’s the driving, it’s the steering wheel for your business. If you start looking at your decisions as your business in your future through the cash flow, you will have a new lease on the business, you will have a new level of control. You will have a new way to analyze and understand your decision making.

Norman  6:58  

Very good. So you’re offering two subscriptions to the course.

Orion 7:07  

Yeah, the course is built to be 30 days, and then all the material is always yours, of course,

Norman  7:16  

If you’re interested in the course, it is #cash flow. I think that’s what Kelsey came up with and we’ll be drawing that at the end. In today’s episode, we are going to be cutting off at around 45 minutes, because we’re going to be preparing for Clubhouse and getting everybody set up there. So hopefully everybody can go meet us over in Clubhouse. We’ve got a room setup. It’s under The Rise of the Micro Brands, and Kelsey is going to be posting that here and before we get even further started, we talked a lot today. Usually we try to get into it a bit quicker. But I just wanted to give a quick shout out to everybody that’s tuned in there’s tons of people. So Miro, Nichol, How are you? Simon, Yarrow, Facebook user, Facebook user, there’s a ton of people. Nathan, Radd, Baptist, Faye. Anyways, everybody, if I didn’t mention your name, just thank you, this podcast wouldn’t exist without our community and you guys have been supporting us so great. It’s been a pleasure over these last 100 episodes to be just building this community. It’s way beyond our expectations. Okay, so now, let’s talk a bit more about the different types of platforms or different types of selling on Amazon.

Orion 8:48  

Okay. So when we started thinking about this, we discussed a few options and the first thing I want to do is get all of us thinking about the definitions correctly, because one of the things that has troubled me when I started doing this is that I would say something, I would talk to somebody and say, Oh, so you’re doing drop shipping? They would say yes, and we would talk for half an hour and only then I realized that we talked about two different things. So I did a little research today and here’s the thing. First of all, arbitrage is a process of buying an item where it’s cheap and selling it where it’s more expensive. It’s basically retail to retail. It’s going into Walmart, buying a unit or five units off the shelf, and then selling it off again in Amazon and a lot of people who say they’re doing drop shipping are actually doing something that we can call drop shipping arbitrage. That means you go into one platform, let’s say eBay or AliExpress, you find an item you want to sell, and then you sell it at a higher price on a second platform, and you have no communication, telling the original seller that you’re reselling their product.

Norman  10:23  

Okay, so people do get retail arbitrage and wholesale mixed up. Yeah. So we could talk about that before we get into dropshipping. What’s the difference between arbitrage and wholesale?

Orion 10:38  

Okay and I will say that we can say that there is wholesale and wholesale arbitrage. Wholesale is the process that wholesalers have always done, you go to a manufacturer, and you say, I want to buy your stuff. They say, Okay, you can take three pallets, that’s the minimum that the MOQ, and you take that MOQ, that quantity, and you break it down into a smaller one pack quantity, or a five pack quantity, whatever it is, and then you retail it out at a higher price because you have created a service. That’s wholesale, you buy in bulk, and you sell one by one. Wholesale arbitrage is when I can find a one time or multiple time deal to buy something at bulk but not from a manufacturer, or a wholesale seller. For example, if the store down the street for me is doing a going out of business sale, and they’re willing to sell all the shampoos off a brand to me at a certain price point. I buy that as a wholesale buy. But it’s a one time deal, I have an arbitrage here, I created a price difference, not because this is the regular process of business, simply because they have a problem that I can solve for them. By buying, get the low price, the low market price. So I have an opportunity. It’s an opportunity buy.

Norman  12:28  

Alright, so with wholesale arbitrage, retail arbitrage, you’re going out, you’re getting the one time offs and the reason why I want to talk about this today is because the terminology can mess people up. Some people are thinking it’s the same thing. Retail arbitrage is actually wholesale arbitrage and the differences. So if I’m going to, like you said, walk down the street and there is a special or liquidation on I can buy and you’re not always selling the same thing. You’re constantly buying and selling other products, and you see something, you see something, garden gnomes or the party hats. We can get them online, we can clear them up very quickly. On the wholesale side, what you’re doing is you’re going and you’re creating a contract and agreement between you and a distributor or you in the manufacturer. Excuse me, and you are selling it out. Now you’ve got an agreement, and you’re selling it out on Amazon with wholesale pricing. So you can mark it up, you’ve been given the okay and now you can sell it out. Correct?

Orion 13:43  

Yeah, that’s basically it and now let me go back to drop shipping. Because drop shipping is actually a wholesale agreement type. Actually the process where you have an agreement with a supplier and what you agree upon is that you will sell first and pay second and most of the times when we’re talking about drop shipping, you don’t take the inventory in at all so that sometimes if you do consignment which I’ve never heard in the Amazon space, you get the inventory in but you pay as you use it up. So you pay only after you sell it and when drop shipping happens, you have an agreement with a supplier, they will ship it out to your customers and you will pay them after you close the deal with the customer. It means you reduce your inventory and you delay your payment.

Norman  14:53  

So you can still have an agreement with a manufacturer or distributor. However, you don’t have to take the skids or the pallets or the MOQ into your warehouse. Yeah, they’re sending it out from their facility.

Orion 15:14  

Now, a lot of white label sellers can’t get this kind of deal and what a lot of people talk to me about and they say I’m doing drop shipping, they’re doing an arbitrage type of drop shipping. They don’t have an agreement on that inventory. They’re taking a huge risk, because they commit to a sale before they have any commitment on the inventory.

Norman  15:52  

Alright, in your opinion out of those three, what do you like?

Orion15:58  

Wholesale. Real wholesale, have a real supplier with a real business deal with them.

Norman  16:09  

Right. So we had Todd Snively on the other day, and he’s an expert in Amazon wholesale. He’s made 10s of millions of dollars off of it, he loves it, he lives by it, he used to have a private label. He used to have, I think he might even still have some private label brands. But he just said, it’s so much easier doing it this way, and not having to commit to a lot of inventory. He does his research and if he does his research properly, then he doesn’t have to worry too much. He’ll sell out of the product, and he’ll move on. But it’s just another option. So I’m not sure how many people listening today are actually on, are using wholesale or retail arbitrage, or any of the drop shipping models that you mentioned. But there are other models or other and we talked about last week, there’s other services out there by Amazon, that people don’t really talk about. You’ve got handmade, you’ve got print on demand, you’ve got the merch, there’s so many customizations, I should say. There’s so many different services that are out there that people can use, like I love, and I’m going to explore more, this whole print on demand side of things. There’s so many different outlets out there that if you do have the ability to get, just for example some designs, go and hire a VA, get some designs made, cut a deal with a print on demand company and then, just drive traffic over to your print on demand site or handmade. There’s lots of different outlets there. So Etsy, if you think of handmade, you think of Etsy, but Amazon’s got their version of this, too. So anyways, there’s just so many different things outside of third party sellers. I just see Victor just popped on. I’m sure you’ll have a bunch of questions, or comments. But anyways, does anybody have any questions about these different categories that we’re bringing up right now and if you do, just let us know. Actually, if you want to come on live, that would be awesome, too. Okay, now that we’ve talked about, are there any others that you’ve left out?

Orion 18:23  

So basically what I have, of course, we have the white label, and white label isn’t a brand and having a logo isn’t a brand. White label is the process of finding products, making a contract with a manufacturer and putting your name or logo on it and I love that model. But to really brand it, you have to have more than just a logo on a product. You have to have a full story because a brand is a promise. It’s a communication with your target audience and if you take your logo and put it on a flask and a remote control and a baby toy, there is no connection between the product. So there is no connection with your target audience and there is no promise there. It’s just a logo.

Norman  19:23  

Right. Okay, so we’ve talked to a variety of different types of Amazon platforms. We were talking just before the call about why do you see this as a spectrum?

Orion 19:40  

Well, once you realize that these words talk about different things. It’s kind of weird to call it a spectrum, but this is a range of decisions you have to make as a seller. How much money do I have? How much time do I have? How much risk am I willing to take? Arbitrage, the basic arbitrage takes little money and little risk, or as much risk as you are willing to take, it takes a lot of time to hunt the bargains and it’s limited with its potential. Let’s say I find a really good bargain on a toy, I can only buy the toys that I have available to me at the shop that instance. If I decide to go on arbitrage on what we call drop shipping arbitrage and bring things out from the Far East, because that’s where they’re so cheap. I have a time issue. My service levels are very poor, in comparison to a local supplier and I have a high risk. Is the supplier in China whom I’ve never talked to? Messes up. I have all the risk. Oh, it’s a range of the decisions you have to make. You have to figure out, what are you willing to invest time wise, money wise. What are the risks you’re willing to take? Why are you doing this and where are you going? What is your target? Do you want to be rich tomorrow? None of these will work. Of course. But if you’re looking to go faster, or deeper, or you want it to be more stable, Are you in it for the flip or for the long run? All of these will define where on the range you want to find yourself.

Norman  21:42  

So we’ve talked a bit about the different ranges. But how does this actually affect your cash flow?

Orion 21:52  

Well, cash flow is an accumulation of expenses and income revenues and the different models create different accumulation. What creates a cash flow is how much you spend, and when do you spend. I’m most versed in the white label cash flow, where you buy from the far east, you have the MOQ, you have to order enough in order to get the supplier to agree to work for you, in order to fill up a container and those things will be spread over a period of time those expenses will be spread over a period of time and during this time, you’re not going to have any income from that inventory, which means your cash flow is going to go down very deeply on those units and only when you start getting money coming in, will you start going back up to more the black or the positive cash flow. My analysis has shown that for white label buying in China on standard operating procedures, cash to cash cycle, from the moment you start investing until you finish bringing in those revenues, you can go up to about 260 days and that is a massive amount of time. Mind you just for comparison, Amazon’s cash to cash cycle is negative, they get money before they paid, which is very much like the drop shipping model. But the other thing I found out when I did this research is that around 80 to 90% of that huge amount of time your cash flow is going to be negative. It slips to the positive very late in the game. Now, yeah, you have this huge margin and you’re very profitable. But it’s only day 245. Everything else you have to have to cough up this money somehow. So it talks about risks. It talks about time and it talks about how much money do you need to have in pocket in order to run this business?

Norman  24:31  

So for a typical Amazon seller, getting started, how much and the cash flow is everything. So you have to make sure that you have the proper capitalization to get going. What do you think the average Amazon seller should have an inventory or in capitalization to bring a product to market?

Orion 24:53  

The question is which Amazon?

Norman  24:56  

That’s true. I’m thinking of a private label seller.

Orion 25:00  

Which Amazon because in the US, you need about $10,000 for the first product and in India, this will take you 10 products. So one of the things that I would actually recommend is, don’t start with the US. Don’t even start with the products you want to start, get your beard wet, sorry, in a smaller, cheaper Amazon. I don’t necessarily think it should be India, it’s just that I have the details about India. But you can go to a European Amazon and work and get your skill level up at a cheaper entry point.

Norman  25:48  

I’ve been able to go to a bunch of events last year, and they had a lot of European sellers and one of the things that amazed me was, how successful they were in Europe and a lot of them didn’t even have a .com and nor did they want .com, because it was so much more competitive. So it was a smaller market. However, they were able to just sell their product that much more easily and I see a few people that are listening right now and I don’t know if they have any comments on that, but selling in Europe to a smaller market. Would you prefer selling in Europe? Or would you dive right into .com? I like the approach, like you just said, why not get your feet wet? Just try. I didn’t say anything about my beard, but just try the other markets and see if you can test that out. It’ll be cheaper for inventory. It’ll be cheaper for everything. But if anybody is selling in Europe or any other markets, tell us what your strategy is, how did you get into it? Are you selling over in.com? What were the differences? Okay, so let’s go back. I was talking about selling a private label seller. Typically, I’ll look and I tell our clients that to be safe, you should have at least three times your inventory costs. I don’t know what you think about that.

Orion 27:22  

I don’t have a ballpark number. It really depends on how you plan your cash flow. Well, if you do cash flow planning, if you have a cash flow cycle, and you decide how you’re going to do your inventory and your cash flow, then you know what you’ll need and the way you order and stagger your inventory defines the amount of money you’re going to need and in a classical buy a big batch from the Far East, ship it to Amazon, start selling it and then you’re going to need five the next one. Just about the time this one starts selling yet, x three is the minimum.

Norman  28:14  

Okay, I knew Victor would pipe up. Alright, and I see Usman first. What does that say? Kels, I can’t read it.

Kelsey 28:23  

So they have some questions about the VAT. So Usman’s saying, how do you deal with the VAT? The VAT is 20% and then the profit margins are so tiny.

Orion 28:35  

Well, a VAT like any other expense has to be priced into your product. 

Norman  28:45  

Okay, Victor’s got a question. I think it’s along the same lines.

Kelsey 28:49  

Yeah. If you’re a US based seller getting started, why in the world would you want to get bogged down with VAT compliance?

Orion 28:56  

Well, there’s always a compliance to something. I can ask the same question about the US and their sales tax, which vary and inventory taxes, which vary from state to state and sometimes from county to county. I’m sorry, but the question here should be, why do you want to be a business owner? If you don’t want to be bogged down, don’t be a business owner. There are always compliances that you will need to do and those things change all the time.

Norman  29:31  

One thing I like to add here and just to talk about complexities. So there are a lot of Amazon sellers and Victor, I think you’re selling off of Amazon, but I’m curious about this. Once you get off of Amazon, so Amazon is taking care of a lot of the tax collection right now. However, if you’re selling on Shopify, if you’re selling through other platforms, you’re still responsible for that sales tax. So are people finding that and I’m just kind of curious, because I had to go through this just recently and a couple of my clients, that Hey, it’s great that Amazon’s taking care of it a lot of the time, however, now I’m selling in all the different states may be selling some stuff up in Canada, and I’ve got all sorts of tax issues. Now we’re going off base here, we’re going down a different rabbit hole. But if we want to talk about complexities, now that’s complicated and if Amazon is the majority of your business, and you’re selling, let’s say, 10, 20, 30% on Shopify, man, you get stuck with all this compliance and actually, Lil Roberts will be coming on and she’ll be talking about this on Monday, just coincidentally, or this week, coincidentally enough, but it is something to think of, because so many Amazon sellers now are going off of Amazon to get extra sales.

Orion 31:03  

Well, I know. I understand the point of complexity. I want to give you a different point of view on the situation. It’s easier to be on Amazon, they take care of a lot of the complexities for you, they don’t take care of everything and they don’t tell you where they have left you to take care of it yourself, for example. I know, I’m not a tax person and I know that the US tax situation is confusing to me. But what I have been told is that Amazon will take care of getting the sales tax for you, but you have to record it, it’s on you to record it state by state. So even if Amazon does a lot for you, it’s still your responsibility and the other thing I want to point out is that, and this is how I like to put it, don’t put all your eggs in the Amazon basket. It’s an amazing platform and it has its ups, it has its downs. But any platform, if you have everything in one platform, you are very exposed to risk and if Amazon ever falters, whether it’s on your specific account or globally, you go with it.

Norman  32:34  

Yeah, true. I hear both sides. I heard one side. We had somebody the other day that was saying, stick to Amazon, 100% Amazon, stick to what just to become an expert. I’ve had other people come on and say you don’t want to be a one legged stool. I agree with that. I think you should be on multiple platforms and try to build it up or just have some different products maybe on your eCom platform. What’s interesting, I’m just trying to read, I can barely read, but I’m trying to read some of the comments that are coming through for the European and we didn’t say go and try out the European side. However, you do have an allowance, that if you wanted to test it out, and I think that’s what we wanted to tell people is that, Hey, if you just wanted to put your toe in the water, you can try it out and you don’t have to worry about a ton of VAT issues. I forget what the exemption is but you have to start reporting up to a certain point. I forget what the dollar amount is, I’m sure somebody knows here. But anyways, whether it be in the UK or in the EU or over in Asia, Australia, it was just to get started to test the waters and I know again, a lot of Australians that I’ve talked to that have done it and they’ve gone to different countries and then they’ve come back into .com but we’re actually going one step further with this and we’re saying okay, not just private label selling but all these other types. Well, try it out or look into it or  find a course on it. I don’t think we have any courses on it. I know Todd Snively has a course on the wholesale side, but just expand your horizons and see what else is out there possibly. That’s it.

Orion 34:32  

Well, I really like the model of starting with drop shipping to test a category. Why go to all the efforts so drop shipping, I mean drop shipping arbitrage. Validate your target audience. Validate your assumptions with a low investment first.

Norman  35:01  

Right and Usman, Thank you. 85,000. Okay. 85,000 pounds. Alright now, Kelsey, do we have any other questions that are coming in? I saw there were a bunch of comments.

Kelsey 35:15  

Yeah. Radd is asking, Can a brand seller do arbitrage on the same accounts?

Orion 35:21  

I think and I’m not a bonafide Amazon expert as to what Amazon’s Terms of Service are. I think Amazon would like you to never do arbitrage. But I don’t think that’s a problem.

Norman  35:43  

Yeah, I don’t think that’s it. I know, it’s not a problem at all.

Orion 35:47  

I wouldn’t put those products on the same page as your brands. I wouldn’t put them together. Because a brand is a promise and having something here today gone tomorrow, that’s not a good promise.

Norman  36:04  

I agree 100%. You don’t want to mix your brand with arbitrage. Yep. Simon says something about going Global Amazon, Etsy, eBay. You know what, I’ll tell you something about Etsy. So Dave Kettner, my old partner in Amazon and Beyond. He started looking into Etsy about a year ago. He took a product and he is just not a product, but a print on demand. His print on demand system and he started selling on Etsy. I think in November, he just killed it. He just killed it and there was no inventory. It was all print on demand and he just had to drive traffic from Facebook to get people to notice what he was doing. So Etsy and I don’t know if Jodi’s listening, but if she is I mean, she’s killing it. We’re not talking six figures, but we’re talking like $50-60,000 a month in extra income at 20% to 30% profit. Not bad and no risk. You can’t go wrong with that. So, anyways, and also eBay, that’s another one. I know a few people on here have heard me talk about eBay. But I love eBay. eBay is not the eBay of 8, 10 years ago, which everybody had an account and everybody thought sucked on most people. They’ve changed their mind like they’re actually going out of their way to bring brands into eBay. So there’s a lot going on and what’s going to happen with Walmart, that marketplace, Google Shopping, and Google my Business of Craig Darling was on just a little while ago and with Google My Business now your products automatically show up, regardless if it’s in Google Shopping or not. I mean, there’s so many different outlets out there, even if 10%, 20% or 30% came in from these different outlets. It’s helping you out. 

Orion 38:12  

It’s more than that. It’s giving you stability, it’s reducing your risk.

Norman  38:19  

Alright. So Kelsey,  more questions.

Kelsey 38:23  

Yes. Usman, how to deal with Chinese because they have such uncomparable cheap prices and when I add VAT, it’s like I’m making only 5% or something. What advice do you give? 

Norman  38:38  

Oh this is a good one.

Orion 38:40  

Yeah. This is a really good question. I don’t have a slide on it. So I used to work at Intel and we had good questions. So we had a slide on and we had amazing questions. Those are what we take offline. So this is an amazing question and I think we have a mix of things here. What do you mean when you say they have uncomparable cheap prices you can buy from them, probably around those cheap prices. It’s a question of value and the value you offer. If you’re going to compete with a Chinese seller on their basic products, you’ve got to compete on price, then you’re not going to win. It’s like me trying to run out on Usain Bolt. Don’t go where you don’t have a really special selling proposition, where you don’t have a real value to add and they have their weaknesses, whether it’s the service level, whether it’s the language barrier, whether it’s the time. Retail is a lot about speed. Which is why I like having inventory on hand. It allows you to speed up your reaction time. Now, the answer would it be specific to the product and the pricing model and again, I think I said it before, you have to price the VAT in, don’t set the price and then realize you have to pay it back on it and then if after VAT the pricing is wrong, you need a new product.

Norman  40:40  

Right. So if I were to work backwards, whether it is over in the UK, or over in North America, if I can’t get three or four times my cost of goods out of it. At the end of the day, if I’m getting five points back, I’m not looking at it. I’ve got to have something that allows me to make a profit, or I just cut it, it’s just not a good deal. Now going back, Usman, about your product. Orion, you were right on, it’s all about perceived value. I don’t care two hoots about Chinese manufacturers and maybe there’s some people that will panic about it. I don’t have, I don’t care, I’ll sell the exact same product, I’ll have a higher perceived value. If it’s a shampoo or conditioner, I’ll package it completely differently, my images are going to be great, my marketing is going to be superior and I mean, if they want to compete on that level, that’s great. But they’re really just churn and burn. They want volume. For the most part, I can’t speak for everybody, but not all billion people. But for most of the sellers, they’re just trying to look for a quick turnaround, make a little bit of profit, and they’re happy. Let the bottom dwellers deal with the bottom dwellers. Let the product cannibalization happen, I am going two or three or four steps higher than them in pricing and I’m going to, I might not get 1000 units a day, Hey, if I get 50 units, or 100 units a day, and I’m making more profit than them, I’ll do that all day long. So that’s probably the best way that I can talk about all the Chinese that are flocking in, you just have to have a better package, a better written listing, better quality images, all of that. Take all of that into consideration and you’re not seeing a lot of Chinese going on to eBay or not onto eBay, onto Shopify, and doing anything that way. They’re not going after the influencers. They’re not going after all the different types of different product launch strategies. They might be sticking to PPC, are they building a social community? Everything that Amazon’s giving us, right now to build social communities, it’s incredible. People are allowed to follow you now. You can drive traffic to your brand page on Amazon, and get followers. That’s pretty cool. So anyway, just to go on a rant about perceived value, but I love it. I love that competition and if people are going to be on the page that are $3 and minus $30. Okay, that just means that I’m going to have a whole bunch of discount bargain shoppers that are going to come and they want that product. Or do I want a really good quality buyer who’s looking for quality and willing to pay a better price, even though the quality is fairly the same and just the quarter difference in packaging. But I took too long.

Orion 44:00  

I’ll tell you something I heard a long time ago. There was a company who did a sound system and they had three packages, the regular, the silver and the gold and then somebody who’s in the know told me that all the boxes had exactly the same sound system, but they came with different warranties. The regular warranty said you’re gonna get this level of quality of sound and you cannot complain if a sound isn’t better than basic level. The silver level went 30 decibels higher and lower or whatever it is that sound quality is measured by. They promised a higher quality and if you didn’t get the next level of quality, you could return it and get a new one because they were committed to a different level and the gold had an even higher level of quality promise and that is three different products. Even though all the wires, all the boxes are the same. Simply by telling your customer that you have a commitment to give them a different service level, a different value, you created the different products and how do you show the value just from the listing when the customer is simply looking at the price? No, the customer is not simply looking at the price. I am a customer, I know. I have questions and whether it’s shopping for clothes or for other items. A lot of times everybody’s pictures aren’t clear enough. What size is it? Is it my size? Even if it’s a toolbox. Is it the size that I need? How do I measure it? How do I set it? Is it going to work for me? There’s a ton of information that you can give me and as you create this communication through the listings by talking about what’s important for me as a customer, you’re creating value and yes, this could be copied. But so what?

Norman  46:14  

Yeah, I agree 100% and the other thing about showing value, and this comes back to your persona or knowing your customer. So if Amazon is showing your product, and Yep, there’s three different types or 10 different types of people there. Okay, let the people who are discount shopping, go and get the cheapest product. They’re going to be also the ones that are going to be taking advantage of all the discounts. I don’t know about you, but we’ve got this product that sells extremely well. It’s a high dollar, it’s over $100 and we put a digital coupon out there. You realize that so many people don’t take advantage of the digital coupon. It’s crazy. So you can get $10 off. Alright, you would think everybody would and this is just my thought is that people don’t care and I know just before I came on here, I was looking for a product and what did I do, I went down, and I checked out, I checked out just very quickly on page one, I wanted to see who the best seller was I saw Okay, there was a deal over here. I saw reviews, I looked at the listing and then it came down to the image. I looked at the image and then the prices. I didn’t want the cheap one like the one and this just before we came on, there was a product there for 32 bucks, I didn’t want it, it was the cheapest, which gave me the impression that it’s the cheapest. I went up to the 45, I ended up buying the $60 one, that was the upper area for this product. Those are the clients I want, or the customers I want. So if people are looking at it, and they want it and find all the other ones, those other 80% can go, those competitors can make $1. I’ll make 10 to $15 and I’ll take the 10% and you’ll find out that not only that, those are also the people that will build your brand. That’s the start of brand loyalty and all those other ones, try to make them a brand loyal customer. They’re gonna go after price. So just a thought on that and I know I’m just looking at the time now. So today, we are ending the podcast a little early because we’re going to be hopping over to Clubhouse for our 100th anniversary room. So it’s gonna be called The Rise of the Micro Brands, Kelsey is going to be putting the link in here and just before we do that, again, put #cash flow, if you’re interested in the giveaway that Orion is giving us. It’s incredible. It’s 750 ish dollars in value, and she’s giving away two of the courses. So I think that’s fantastic. So we’ll just wait a couple of minutes. Before we do the Wheel of Kelsey and head over to Clubhouse. So anything else that you’d like to talk about while Kelsey is putting in all the information? Orion?

Orion 49:36  

Sorry, I was trying to get into the Clubhouse.

Norman  49:40  

No, I just started to see a couple of other questions coming down here too. So yeah, what other type of advice can you give to people that are looking at these different platforms?

Orion 49:56  

I think you have to remember at all times that these are tools and never let the tool manage your business. The car doesn’t drive you, the tool doesn’t manage your business. So have a strategy and use the tool and if the tool doesn’t fit, there are other tools and I sometimes go into maybe LinkedIn or Facebook and see these posts where people are weeping and complaining about how hard Amazon is and how unfair it was. It’s a tool, if the tool doesn’t work, replace it. I think that’s really, really important to keep that in your mindset. The other thing is, whatever I said, and I said, whenever I speak, is whatever I say, is the theory and the numbers are the truth. So if I talk a lot about how to manage inventory and how to balance it and how to slow it. But then if you take your numbers, and they don’t add up, and that doesn’t make any sense for your business, don’t do it.

Norman  51:07  

Very good. Okay, so I think it’s time for Wheel of Kelsey

Kelsey 51:15  

Alright and just to clarify, some of you guys have entered, some of you have won multiple times, especially like even in the last month. So you could do that. We’re just going to hold off for the next couple of weeks, just so new winners can come in and so we don’t have multiple winners. So I hope you guys understand. So if you see your name not in the Wheel of Kelsey, that’s the reason. 

Norman  51:42  

Just email him and complain.

Kelsey 51:46  

I’ll share my screen. Also, I don’t know if you saw this, but as I’m doing this, Victor out of this point, there are two main values of superior packaging. The first is to delight your customer and or make the product giftable. The second is to include it in your main image to differentiate your listing in search results. 

Norman  52:07  

Very good.

Kelsey 52:09  

Alright, I’ll share my screen. So we’ve got four people today. Okay, so two giveaways. 321 

Norman  52:28  

Usman, there we go.

Kelsey  52:33  

Our second, Manny.

Norman  52:44  

Okay.

Kelsey 52:46  

So, if you’ve won, you can email me atk@lunchwithnorm.com. I’ll put in the comments as well and yeah, that should be it and then I’ll send the information over to Orion, and get that all started.

Norman  53:03  

So Orion, thank you for being on the podcast today. I really appreciate it and just talking about all these different platforms and how people can utilize them. Yeah, and please feel free to join us on Clubhouse in 10 minutes, 7 minutes. Oh my gosh.

Orion 53:21  

Thank you so much for having me. I had a really great time.

Norman  53:25  

Yes, great questions. Okay, everybody. So that’s the end of our 100th anniversary podcasts. We are going to be having Lil Roberts from Xendoo, coming on and answering a ton of questions about Amazon accounting and tax and she is the right person to do this. I’ve known her for years and she’s incredible. Kelsey?

Kelsey 53:54

Yes?

Norman 53:55

We have the Clubhouse link on.

Kelsey 53:56  

Yes, we have the Clubhouse link. I think I posted it everywhere. I’ll post it on your Facebook personal page too. The Stream Yard doesn’t let me do that and yeah, just some closing remarks. I think, Simon, it’s always good to know. Please don’t underestimate how freaking complicated Amazon is. It is a tool but you need to know how to use the tool. 

Norman 54:20

That’s right. 

Kelsey 54:21

Yep, so we got Faye. We got Usman. Congratulations, Usman. Congratulations, Manny, so both of you k@lunchwithnorm.com. Yeah, please email me.  

Norman  54:36  

Oh, come on Victor. Get an Apple phone. I’ll buy you the Apple phone.

Kelsey 54:41  

Remember, we have a special episode tomorrow. This is not a Clubhouse episode tomorrow. This is a regular Facebook, YouTube, LinkedIn episode. It’s just the same time, it’s just a bonus episode that we’re doing. We’re just starting to squeeze this episode in. Yeah, so we can have Live episode.

Norman  55:01  

Yeah. So tomorrow, Branded by Women and that’s part of Seller Sessions. We’re going to be talking to three amazing Amazon sellers and then Wednesday is going to be Lil. So join us every Monday, Wednesday and Friday at noon Eastern Standard Time. Guys, thanks for making this an incredible 100th episode and community and we look forward to 100 more. 

Kelsey 55:25

Thank you, everyone.