#22: Amazon Wholesale

Date: August 14, 2020

Episode: 22

Title: Norman Farrar Introduces Todd Snively, a Serial Entrepreneur and Co-founder of Expert University.

Subtitle: Minimizing Risks and Growing Steady

Final Show Link: https://lunchwithnorm.com/episodes/22-amazon-wholesale-todd-snively/

In this episode of Lunch With Norm…, Norman Farrar introduces Todd Snively, a Serial Entrepreneur and Co-Founder of Expert University.

Todd helps develop professional Amazon sellers using the wholesale model. He has generated over one hundred million dollars in online revenue and now spends most of his time creating courses for others to learn his methods.

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:

• • 8:03 : How Todd started it out in Amazon
  • 13:05 : From selling customer-returned products to brand new name brand products and to wholesale
  • 17:50 : Todd’s private label and his seed company
  • 24:32 : How it works in the Amazon marketplace
  • 30:06 : Amazon’s rotational system
  • 32:54 : Taking the path of least resistance
  • 39:03 : Buy box rotation model: Go wide, not deep
  • 46:36 : Tips on how to get the first distributor: Trade Shows and wholesale buying club
  • 55:15 : Amazon’s transparency program
  • 56:59 : Todd’s final advice: Outsource

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Explore these Resources

In this episode, we mentioned the following resources:

• https://www.liquidation.com/index
• https://www.wholesaleinspector.com/
• https://www.facebook.com/wholesalebuyingclub/
• https://www.fiverr.com/
• https://freeup.net/
• https://www.upwork.com/
• https://www.linkedin.com/in/toddsnively/
• https://expertuniversity.com/
• todd@toddsnively.com
• https://www.facebook.com/todd.snively

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Norman 0:02
Hey everyone, it’s Norman Farrar, aka The Beard Guy and welcome to another Lunch With Norm.

Norman 0:21
And we are broadcasting live on Facebook, YouTube and LinkedIn. So yesterday we got our okay to live stream live on LinkedIn so I did a bit of a happy dance and, yes, you don’t want to visualize that, but I did do that. We’re happy to be on LinkedIn for the first time broadcasting live. Alright, Kelsey, so what are we supposed to do?

Kelsey 0:45
Right! Follow us on social media. We are on Facebook, Instagram, Twitter, YouTube, TikTok, Pinterest. We’re out everything and we also have a brand new website. lunchwithnorm.com. All the guest BIOS, latest episodes will be up and we’ll be releasing even the older episodes that we’ve done before this, so look out for that.

Norman 1:10
Alright, geez, that was very good.

Kelsey
Now I’m getting better.

Norman
Yeah. Oh, and it’s Lunch With Norm, the rise of the micro brands. Yes, that’s the new title as well or the new Yeah, what do we call that? The new show name. Anyways, like Kelsey was saying all the past episodes are going to be re-released. We’re going to be doing it in hyper mode. So you’re going to be seeing either five episodes coming out instead of three each week until we get caught up. Once that happens, you’ll also be seeing the show notes and the links of any books or whatever the guests reference in there as well. Okay, so I think that’s it for today’s updates except you can see the full episodes on YouTube and or when we would prefer this if you join us live on Monday, Wednesdays and Fridays at noon Eastern time. So that’s it for the updates.

Kelsey 2:05
Yep. So who is our guest today?

Norman 2:08
Our guest is a friend of mine. I’ve known him for years. Wow. Yeah, I’ve got to mention that this is the wildest introduction that you’ve ever heard of and it’s all true. But wait to hear this and if you can beat this, put it in the comment section. But anyways, Todd’s an amazing guy. He runs an amazing business. He actually was on I Know This Guy and that’s my podcast about really interesting people. I got to tell you, it’s going to be published in about two weeks. But if you want a full emotional, like from one end to the other, a full one ad on emotions you got to listen to it’s one of the best interviews I’ve had so far. So today, we’re going to be talking about Amazon wholesale and if you have any questions or comments, please feel free to put them in the comment box.

Kelsey 3:01
That’s right. We want to have a conversation with you guys. So if you have any questions, give us your thoughts about Amazon wholesale. Have you tried it? We just want to build a community with you guys. So, even just mentioned where you are in the world watching, that’d be great. We want to hear.

Norman 3:20
Alright! So sit back, relax, grab a cup of coffee, and then enjoy the show. So now I get the pleasure of introducing my friend Todd Snively. How are you, Todd?

Todd 3:33
Hey, Norm. As always, I couldn’t be any better. How are you doing?

Norman 3:36
I’m doing great. Now, I’m gonna jump right into this because, I mean, this is an interesting story. How we met, why don’t you tell people the craziness behind how we met.

Todd 3:51
I still laugh about it and actually still tell people this story too. Because it was so much fun the way we met. We were both down at this convention, Amazon actually, Mastermind, I think it was in Mexico. It was Acapulco, and we had a mutual friend down there. Matter of fact, she’s been on your show, I believe also, Elena is a dear dear friend, wonderful person and one of the great things about Elena, one of her superpowers is she will bring people together that need to be brought together, She just knows. She had been introducing me to people all day. I was wicked tired and my old guy anyway, So probably nine o’clock on a cloudy night or something. I just rolled back into my hotel room and just collapsed on the bed. My phone won’t stop buzzing, and it’s Elena and so finally I answered and came out to meet this guy. He’s amazing. You guys need to get together. You need and I’m like, No, Elena. No. I have like, zero interest in meeting anybody else today. I’m going to bed and she’s like, No, you got to come out, please come out. I’m going to compound on your door you need to meet this guy. I’m like, No, I’m just not gonna do it so I went to sleep and the next day was the last day and it was kind of funny everybody’s packing and they’re getting on the shuttles and I got on one of the shuttle buses to go to the airport. There were a few interesting people and there was some discussion on the shuttle on the way to the airport, and I believe it came out at that point right then and there that you were the guy I was supposed to have met last night. But we get off the bus and I start walking to the terminal. I see behind me you’re kind of following me and I get in line at the airport to check my bags, I look behind, you’re like in the same line I am. I’m like, what is going on with this guy, And we get on the plane and we’re on the same plane. It turns out, you’re going to Canada, I was going to Detroit, but you were changing Troy, we literally walked on the plane behind each other and I thought we were gonna be sitting next to each other for a second, but you’re like, I think a row in front of me or two rows in front of me and it was just like, how does that happen when we couldn’t even connect in Acapulco at the same convention, but we ended up like two rows apart on the flight home.

Norman 6:29
And the funny part about it is we never knew each other’s names until we were actually on the flight. Because we kind of looked back at each other and like, you were looking at me like I was your stalker or something and that’s when it was, yeah. Oh, you’re Todd.  anyways, you never know. It’s a small world. Networking is awesome.

Todd 6:56
We broke bread together and it’s great because if I had not had the chance to meet you, it truly would have been my missed experience, because you’re one of the nicest guys in the business and you here or what it is. But I just think there’s all kinds of people in just all kinds of businesses, right. It’s not just this online thing, but when you meet the good people those are the people you want to meet with and stay connected to and I truly have you on that short list.
So I’m glad we connected.

Norman 7:38
Okay, Todd, so the big question of today is Amazon wholesale. So most of the people that are talking today or that are listening today are probably going to be Amazon private label sellers. So can you tell us a little bit. Well, first of all, how did you get into Amazon and jump into private label or wholesale?

Todd 8:03
It’s kind of funny, when I first found out about Amazon was 2009 and at the time I was selling customer return goods had been doing that since 2002, mostly on eBay and my own web stores and I was buying these customer returned goods from a large distribution company liquidation company called liquidation.com and I was just buying good deals I wasn’t looking for anything specific spending anywhere from five to 10 cents on the dollar for regular consumer goods, kitchen stuff, you name it, lawn and garden boring stuff. I like to call them unsexy products. Well, one day, one of the sellers that I had bought a pallet from, the pallet showed up and every
single box on this pallet was an Amazon box. So I started to open these boxes and all of the customer returns that people were sending into Amazon were basically coming through liquidation.com. It’s one of the channels that they’ll use to get rid of customer returned goods and I realized all of a sudden that Well, wait a minute, people bought this stuff on Amazon. I wonder if I could sell this on Amazon. I had no clue in 2009. So I went to Amazon, poked around
a little bit, and looked at some of these products that I just purchased for 10 cents on the dollar. A lot of them are almost brand new and realized you could sell used stuff through the Amazon
FBA program and people could get prime delivery on this used stuff. So I discovered this whole underground marketplace, if you will, that I didn’t know existed. This was a complete accident. I never thought about selling on Amazon because I was so much on my path. My web stores and eBay, right. I couldn’t imagine another channel where I could do better well, then I can’t come across Amazon. We started selling the used goods through FBA, properly describing them and whatnot and meeting all of the rules and regulations of Amazon with respect to used goods and could not believe not only how fast they were selling, but how much money we’re actually getting for them. We found this subculture on Amazon of people that would never pay more than a penny more than the lowest price and even if the lowest price was for a used good, so it might say was $100 brand new, and they could get it for $94 because it was an opened box, they would they would spend the $94 every single time the subculture on Amazon and remember,
we’re paying 10 cents on the dollar and selling on the average 85 cents on the dollar for used goods. So it was pretty cool. We did that for years and it’s kind of a weird thing to say, but we grew too big. Okay, we were doing millions of dollars a year in these used goods, I had 26 employees. I had assembly lines within our warehouse of people analyzing the condition of the goods and we ran into a problem where not everybody could agree what used like new was or used good or used acceptable and this created customer service issues. Somebody would get something and say, Hey, you, you said this was just missing the owner’s manual, but it was missing the owner’s manual and this tiny little screw. So we weren’t always catching everything and so we got to the point where I was able to sell that portion of the business off and I decided that it was going so well on Amazon, that I was going to start just selling brand new products. So I was talking to my landlord and it’s kind of funny. I won’t go into this whole story right now. But I ended up leasing about 3000 square foot of space inside a huge warehouse like 150,000 square foot warehouse, I had a little 3000 square foot used to be a parts room, it was completely empty. They didn’t know what they’re going to do with it and I was able to make a really sweet deal with the owner who I had become friends with at the time. So he asked him, he said , you’re going to transition out of the used goods, you’re only going to sell new goods, where are you going to buy these new goods from? I said, Well, I’ll just have to find distributors and sell these up and make deals for name brand wholesale products and he kind of chuckled. He goes, Well, why don’t you sell my products? It was kind of funny because I’ve been in his warehouse now leasing from him for a couple of years, I didn’t even know what he really sold.

Todd 13:05
Well, what kind of products do you sell? So he walked me around his warehouse and it turned out he was in the turf business and that’s just a funny way of saying he carried a lot of lawn care products but he specialized in golf courses. So we were walking through his warehouse and I was seeing things like roundup and garden hoses and golf course paraphernalia, miscellaneous accessories and fungicides and obviously grass seed and all that. I said, Oh, okay. So I made a deal with him to purchase wholesale and he was the very first distributor that I ever ended up working with and I found out it was just, it was easier in some ways to sell the name brand products brand new, but I still have a love and I still sell used goods customer returned goods on just on a smaller basis because the market for those are incredible. I mean inventory levels, you will never run out of used goods to purchase there’s just so many of them you just have to know how to do it correctly and have a nice system in place and not get so greedy brought a monster right. But that was my first intro into the wholesale business right, now at the same time I created my first, I like to say I accidentally created my first private label product back in 2009. I’d seen all this grass seed sitting in his warehouse and I mean 50 pound bags of every kind of grass seed you could think of but he also sold bent grass seed and a bent grass seed is what golf courses used to make the greens and the tea boxes and even sometimes The fairway. It’s a special grass seed and that was sold in 25 pound pails right and so I had this idea I don’t know why, I just said I think people maybe want to make their own putting greens in their backyard kind of a niche area but on Amazon could not find anybody selling any bentgrass seed or any potting green seed or anything like that. So I sat down at my computer and I said I’m gonna make a product on Amazon. I’d never done it before, right I didn’t even know it was called a private label at that time. So you had that little add a product screen that all the private label people are chuckling at me right now I know that they’re like oh, an idiot but this is how I read
the ad a product started at the top you don’t come up with a skew and or my price and I got down to brand. That brand was supposed to go there. I guess this is kind of like my brand, right. So I came up just on the spot, came up with a name to put in for the brand and put it in there and just kept going so I could finish filling out the add a product form. Well that bent grass seed and I did no advertising, I did no launch, I did no PPC at that bent grass seed sold so well. I couldn’t believe it. I just couldn’t believe it. I had asked my friend initially, I said Is there any way I can buy just like five pounds out of that 25 pound bucket? He chuckled and said no, you can’t buy the whole 25 pounds. Well at first 25 pounds sold the first day, the first day sales started to come in, it took a few days after the listing was made but I guess people were searching for putting greens, home putting greens, back grass seed or whatever and I just said in the right keywords and the thing just took off organically because there was pretty much zero competition. So basically, I had accidentally invented a private label brand, but it put a thought in my mind. It’s like , Wow, If grass seeds like this bentgrass seed are selling so good, I wonder what other kinds of seeds might sell and I thought, maybe vegetable seeds, maybe flower seeds. So I went to my friend who owned this distribution company would help me out so far and I said, Hey buddy, I said, You know any wholesaler that I can buy vegetable seeds from? He goes, sure, call this guy. Alright, fine. So I called this guy and I had already done some research, And I found out who all the online competition was and who the big boys were and I called this supplier and I said, I’d like to buy wholesale from you. He said, Why? What are you trying to accomplish? I said, I want to beat this guy, and that guy, and he goes, well, they’re my
largest customers.

Todd 17:50
So I said, Okay, I guess I kind of blew this call and he goes, No, no, no, he said It’s okay. He said, they both pissed me off last week. So I’ll tell you what, because I’ll work with you and it was kind of interesting because in the normal seed business, these people, they’re the people that buy the seed, they buy all of their seed in a whole year, they’ll say give me 20,000 pounds of this, give me 50,000 pounds of that and that’s what this guy would do. He’d make the contracts with all the farmers, get these seed contracts, And then he knew how much he had to sell and he would sell it. Whereas I was saying to him, can I buy like a pound of this and a pound of that and this and that and again, completely outside of his normal business model, but we worked it out. So to test I bought one pound of beef steak tomato seeds, the huge big red beef steak tomatoes, about one pound of seed cost me $19 and my middle daughter and I sat at the kitchen table, and we literally measured out20 seeds in a novel I mean, which weighs almost nothing. It was like 250 milligrams, maybe I don’t know, I might be getting those numbers
wrong. Anyway, we made a thousand packets of tomato seed out of the one pound of beef steak tomato seed, and sold it on Amazon under this new brand I had created and made net net profit of $1 per sale. So we made $1,000 net profit on a $19 investment and I said, Oh, Amazon, I love you! This is amazing, But that was all the private labeling I had done was under that one brand and now we have over 350 different seed varieties. We do 90% of our business through our webstore and it’s still on Amazon. But what happened and I am not sure I can fully explain this, other than to say that the people that buy seeds are such amazing people that they have a high level of loyalty, they followed the brand. So I accidentally made this brand into a multi million dollar a year brand off of Amazon that’s still growing and I’ve, I feel bad because I’ve basically I don’t want to say I’d ignored the brand, but I’ve done nothing to grow it and my dirty little secret is I’ve never grown anything in my life and I own a huge Seed Company now, but to go back, so that’s my private label, pedigree if you will. I have launched a few other private label brands, but I’m telling you I don’t know it was tough and expensive and when I discovered the world of wholesaling already selling name brands, my life got a lot easier, a lot easier and so at that point, I just started to figure out how to contact specific brands and large distributors, and just find out what it is that they were willing to sell to me and started analyzing I created some software and started analyzing these files, which is something I had always done with the customer returned goods. I’m a big numbers geek, a bit of a nerd. So I really like technology, stepping in and doing these really wicked hard tasks that are super boring and anything I can’t do with technology now, we use virtual assistants because it’s, I mean, if their eyes bleed, it’s their eyes, I just get the end result. So that’s an awesome thing too. But wholesaling is one of those business models. I don’t think people really look at that hard because there’s so much of a push out to do private label. They’ve everybody sex is up private label, right and now remember this is the guy who has been doing private label accidentally or not since 2009 and I have a decent amount of experience. Just real quick, one of the other private label experiments I did was, this sound wacky too, because their products I’ve never used was mascara, eyeliner, and one of those eyebrow curlers, eyelash curlers.

Todd 22:37
So we made a brand, right. Who do we go after? We’re after Maybelline and Revlon and CoverGirl and after about an $80,000 PPC spent to get on page one, I realized how difficult
private label can really be and put all of my efforts into wholesale and built up a wholesale business that was doing 10s and 10s of millions of dollars in top end revenue with average margins of 20% a year. So that’s kind of my passion and a lot of people, It’s kind of interesting, a lot of people poo poo on it. They think of every negative thing that there is about selling wholesale name brands. There is about drop shipping, or every negative thing there is about arbitrage or every negative negative thing there is about private label. Every single model has its warts, and it has its attractions.

Norman 23:39
I just see that with press releases everybody’s got the negative against oh, they don’t work. They don’t do this. Oh, just a quick second. Todd just wanted to give a few shout outs to Liz
Cassidy. How’s it going, Steven? Oh, my gosh, I was just on your podcast. How’s it going Mr. Pope? Cash, glad to see you. Isabella, how are you? And we’ve got Scott and we’ve got Rob.
So just a quick shout out to everybody and thank you for joining us live. So, hey, Todd, so you started to talk about we’re going off in the direction of Okay, you’re selling brands wholesale. I want to just step back one, just one step backwards, because some people might not know what Amazon wholesale is. Can you just explain that before we go forward?

Todd 24:32
Absolutely, and I actually get excited talking about this because I think some people might actually finally have a light bulb go off. Everyone thinks that Amazon has 12 million products, you see that number all the time Amazon has 12 million different products. What they’re really saying is Amazon has 12 million products that Amazon actually sells on. There are close to 500 million name brand products on Amazon that anybody can buy that Amazon does not sell on. So these name brand products can be small brands or everyday brands that everybody has heard and Amazon as a marketplace allows anybody, for the most part to sell anything for the most part, that they legally can purchase. Okay, that’s how the marketplace came into existence when third party sellers were allowed to sell on Amazon. It was basically Hey, if you bought something legally, we’re a marketplace. You can list it for sale and what’s interesting is they came up with the model of I call it the UPC database. Amazon’s really nothing but a search engine and it is based on UPC codes. So if you take any kind of name brand product and we’re talking about the Perrier just a little earlier, before we went live, it has a barcode, and if you enter that UPC barcode into an Amazon search box, the Perrier should come up any product. That’s what should happen. That’s how Amazon works off of barcodes. They have their own FN SKU and ASIN system. But the base level is barcodes. So every product has a barcode. Any product with a barcode should be able to be sold on Amazon. If it doesn’t have a barcode, you usually got to buy one and that’s when you’re usually talking to a private label. Okay, so the other unique thing and this is what I’m most excited about is Amazon has multiple sellers. So if you ever really, really look at a name brand listing on Amazon, it should have multiple sellers, it should say, sold by in the Buy Box, right the person when you hit the add to cart that is selling that product, but if you look down, there’s other sellers, and it’ll tell you right there, there’s 15 other offers. There’s 87 other offers, there’s three other offers, So what is this other offer thing all about? Amazon since about 2013 has been working on what they call a rotational system amongst competitive sellers. Alright, so that’s a real kind of a bunch of stuff that Amazon wants as many competitive sellers on every single product that they can get. Why? Why does Amazon want multiple sellers on all these different products.To provide a better experience for the customer. I’m going to go down just a real quick rabbit hole. You know how when they came out with two day prime shipping, like almost everybody in the known universe signed up for this because it was free two day shipping. Nowadays, everybody’s like, can’t believe it’s gonna take two days. So now Amazon went for one day shipping, And then after that, now they’re doing one hour delivery in certain areas and this is all kind of pre COVID. Alright, but here’s how they can do this. If they get the right number of competitive sellers on every single product, they can properly have both products, the warehouse around the country to allow the one hour delivery to the majority of the country. alright, so how does that really work? First, understand a competitive seller is somebody that has the product generally at an FBA warehouse,

Todd 28:39
and is priced within say 1% of the lowest FBA sellers. So if you have a name brand product that’s already selling a thousand units a month, and there’s 10 people that are all selling it for 1999. And those 10 people are all FBA, theoretically and generally in practice, each one of them will get 100 of those 1000 sales. It’s a rotation system and it’s generally pro rata. It’s generally tempered if there’s 10 sellers, it’s generally 10%. Generally, there’s a lot of exceptions to this rule, but we’re just talking at a high level right now. So it doesn’t matter if you have been a seller for one day, or 10 years or 12 years like me, okay, as long as you are deemed competitive, which means FBA and within generally 1% of the Buy Box price, you can get a share of this sales of an already existing product and I just said there’s like 500 million products that like.

Norman 29:48
Okay, I didn’t know this. I have no clue.

Norman 29:53
So I just picked up a little nugget. So you’re telling me I can go in, find a product, list it and It’s gonna go through this rotation. I had no idea that Amazon would do that. I always thought it would be price driven.

Todd 30:06
No, Amazon used to have what was called an extra, I think they might have just changed the name of it. It was called the featured merchant program and this was back in the day, okay. The featured merchant program was kind of a king of the hill type of a thing. So if I found a product, a wholesale product, and I was able to buy it, and send it to Amazon, and I was like, I had the most feedback, the highest percentage of good feedbacks, I had good metrics and things like that. Amazon would award me the Buy Box. I was like the featured merchant and only way I would come off, I would have 100% of the sales and the only way I would come off is if a stronger featured merchant came along a stronger seller and thinked me off, they would add their offer to that product, and it could be the same price, it could be FBA, but they might have 10,000 more feedback than I did in some of the other metrics that Amazon won’t talk about and next thing I know I’m getting zero sales. I’m the number 2 guy and this new chunky monkeys on top of this chest thing at me, well Amazon figured out that that was not good for the customer. Not good at all, because the prices would tend to be higher that way. It was a bully system, it’s what it was. Alright, so Amazon did a lot of research in this and they made their long range plans. They are not a stupid company. They are an innovative company. Say what you will about Amazon but at the core of it is innovation and so what they figured out is, you know what, if we just let a bunch of people on that product, we can put the product all over the country, you tell them where to send it right and they’ll invest in the inventory .They’re buying the inventory, they’re sending it to our distribution centers and this way prices will stabilize and if one guy runs out of inventory, if he was the only guy in that listing, and he runs out that, that listings gone. Now, if you have 10 people constantly sending down inventory, it makes for a better experience for the customer and the reward to the seller is a percentage of the sales, a rotation, if you will, of that Buy Box and that’s the high level of opportunity. Now, just like any other opportunity, there’s like a thousand other things that you need to know.

Todd 32:54
Many other things, because I know there’s a lot of people that have done this or are doing it that are sitting there going yeah, but yeah, and like I said you can do that on any business model. But the thing is we have all the yeah buts figured out and when we explain these yeah buts you know people do the same thing when they hear about the opportunity they go Whoa, I didn’t know it worked like that. That’s pretty cool and then all the yeah buts get dealed with that way
people give the model a go and and they fall in love with it like I do. Because if you think about it, you never have to test a new brand. You don’t have to buy a boatload from China. You don’t have to deal with customs fees and I like private labels But it’s a different animal and people that are looking to get started into Amazon. My personal opinion is, they should take the path of least resistance, the least risk that has the chance for a real decent reward, we averaged 28%
margin and I know private label sellers are going yeah, I got 300% margin. That’s wonderful but we could do all the Yeah, but yeah, but how much did you have to invest? Yeah, but how long did you have to have your money tied up? That’s the other thing, by the way that I really like about wholesale. There’s a number that some people ignore that’s in their Seller Central account and its inventory turns, if you go into your Manage Inventory and your seller central and
down into inventory planning. In the upper right hand corner, there’s two numbers, average days, on hand of inventory, and inventory turns and inventory turn, is the number of times you
would literally sell through your entire inventory in the course of a year up an average private label seller, it’s two or three, which means they might invest $50,000 in inventory, and get that
back two or three times a year on average. My inventory turn number is 28.6. Which means if I’m spending $400,000 a month on wholesale inventory, and I can get that money back and spend it 28.6 times that year, same money, I don’t have to go back into my pocket. I don’t have to wait six months to get my investment. It’s coming back to me 28 times and like I said, I’m a number geek, The return on investment becomes darn near infinite. When you’re looking at that same money earning you 28% margin 20 times a year. It’s crazy. So the amount of money that can actually be made and I mean real money or return on investment is almost infinite in my mind with wholesale because you’re only buying enough inventory to cover that turn. You’re not buying six months worth and people ask me that all the time. If you have a really really good seller, would you buy six months worth, I’m like, nope, not on your life. Because I want to turn my money, I don’t want it to sit for six months. So the other thing that you can do, I talk real fast,
I’m sorry, if you need to stop me, stop me. But the other thing that I love to do is when it comes time to reorder that, say that one item, a Blue Widget, a name brand Blue Widget that’s selling really good. I like to reanalyze and see if I can’t move the money that I would have spent on that Blue Widget into a Red Widget, that’s going to even perform better, higher margins, faster sales velocities. So now the same money is working for you harder and that’s what I think money should do for you. If they’re like little soldiers you send in the battle for you and the better tools, the better you can train them, the better you can take care of it, the better return. It’s that little money soldiers are going to get for you and you can’t do that with a private label. You really can’t pivot like that. With wholesale, I can add new products every single day. The only thing that  limits me is my budget, how risk averse semi things like that and I’ve built up a really nice business and now I’m getting to the point where I figure I have maybe another year or two, before I sail off into the sunset

Todd 37:22
in turning the business over to my daughter, who’s been running it for me for eight years now and matter of fact, my business, my wholesale business has been outsourced 100% for almost
six years, maybe 5 years. So I really don’t do anything in the business anymore other than getting up in the morning and reading my financials for about 10 minutes, my P&L and my balance sheet, just to make sure that the ship is still going the way I want. But, I’m not actively building the business because I’m really, really happy with everything that’s in place and like every entrepreneur should have, like every amazon seller should have. I have multiple streams of income. I have five different streams of income. Amazon wholesale, hundred percent on autopilot, it’s doing great. My risk levels, right where I want it for my age and my goals and everything else I’m going at, it runs itself, it’s one of the few businesses you can actually 100% outsource and because it’s so replicable I mean, we have a full set of SOP’s. Now that we give to the new people, and that’s the extent of training everybody’s supervised by somebody.

Norman 38:40
I got a question about you. We talked about those winners that you have. So you’ve got your red widget and your blue widget. They’re selling 100,000 bucks or whatever. Then you have the purple widget, so the ones that don’t sell, so isn’t there a risk that you’re buying all this inventory in small quantities and a lot of it doesn’t take off?

Todd 39:03
No, here’s how you minimize that risk. All of this is software driven. Alright, so here’s the scenario. Let’s say you want to sell pet supplies and there’s a huge pet supply distributor called Bradley Caldwell. You go to Bradley Caldwell, and you open an account with them and the very first thing you ask them for is a list of everything they sell and distributors, that’s what they do. They make deals with hundreds of brands, bring all these brands into their distribution in large quantities, and then they turn around and resell as a wholesaler to the retailers whether it’s a brick and mortar store, an online store and Amazon’s salary base, it doesn’t matter in most instances, okay? There’s some brands that don’t want to be sold on Amazon but that’s above our what if or whatever. Anyway, once you have this list, I have a piece of software and there’s other softwares like it, as a matter of fact, mine’s called wholesale inspector. Anyone can go get wholesale Inspector, run a list, an inventory file through a wholesale inspector and what the wholesale inspector does is it analyzes the list, there could be 18,000 products on that list and the wholesale inspector goes to Amazon figures out what the stuff is selling for. It looks at the BSR. It looks at velocities. It looks at everything you need to know about those 18,000 products and then it gives you a result, file results report that you can sort by highest profit, highest margin, number of units estimated sales per month, you can crunch all of that data and decide what you’re going to invest in. Now, let’s say you remember, all of these products are already selling, you’re not buying something that is unproven, that has no sales record. Many of these products have been selling for years. It’s a supply issue, so logistics to play. Matter of fact, if I had to put it into a 10 second explanation of what a wholesale inspector does, it finds products that need additional competitive sellers on Amazon and you can take a share of those already selling profits, because remember, Amazon’s goal is to maximize the number of competitive sellers. So you might run into a product where there’s only one other competitive seller, but we’ll eventually have 10 and then it’s tapped out, you want to be one of those 10 you want to be one of the maximum number of competitors on products as you can, and with respect to risk, so your analysis says, Hey, this product sells 100 units a month. That’s your estimate, based on all  of the data that you have. You figure that thing’s gonna sell 100 units a month, and based on the data, there are two competitive sellers so if you’re the third, you’re going to get one third of the share that profit. So you become a competitive seller on that, what, where’s the downside, more competitive sellers will come around and take additional share. But remember, this is going to happen eventually on every single product for sale on Amazon. So what determines how much money you’re gonna make is where and when you come into a life cycle of that product, you come in right at the beginning, you might ride that product for two, three years, before it gets maxed out. You come in in the middle or towards the end, you might only write it for a month or two. Because as a product gets closer to the end of its life cycle on Amazon with respect to the wholesale by box rotation model, the sales will grow exponentially, because what happens is when you first find out about it, there’s not a lot of organic search results. It’s only doing 50, 60, a hundred units a month, people start to buy it, it starts to become more popular. It rises up in the search results. As it rises up in the search results, you’re going to get more sales. As you get more sales, it’s going to get on the radar of more wholesale competitive sellers and then eventually it maxes out and you end up with your minimum share of those sales. So it’s still profitable. But you’ve gone down in how profitable it is, An incremental level as time goes on. Every now and then you get what we call the clown that shows up and they do what we call a Buy Box crash. So this clown doesn’t know how to play in the wholesale model and he’ll get on one of your listings that you’ve been sharing the Buy Box with six other people with and finally for the last six months, and the clown comes in and thinks he has to have all of the Buy Box so he tries to figure out how can I get all of the sales from this product and the only tool he has is to lower prices. Now, the funny thing is we know how to deal with clowns cuz you’re always gonna find the clown. Okay? We know how to deal with clowns. It’s part of the model, because people will say that all the time. Oh, that’s just a race to zero. Well, maybe on a small percentage of your overall stable. Our model is to go wide, not deep. I would rather have 100 products, all selling 10 units a month, than a thousand products just selling

Norman 46:01
I do too. Yeah.

Todd 46:04
You go for the cash.

Norman 46:06
Well, it depends.

Norman 46:08
But right now no travel, right.? I got another question for you. So let’s say that you’re into private label, or you’ve never been involved with Amazon ever. How do I reach out to my first distributor? Where do I find them? Let’s say that you are 100% new to this. How can I find a distributor to work with?

Todd 46:36
There’s a lot of ways to do that. Just like anything, I think it comes down to what your personality will tolerate. I know people that the only way that they’ll sign up with a new supplier is through Trade Shows and I’ll tell you, Trade Shows sound like an unsexy thing but they tend to hold Trade Shows in really nice places. Lots of Bay, New York City, Chicago. So you’re gonna go to a nice place when they’re having a Trade Show. For the most part, everything’s  deductible to your business. So if you want to go to Vegas for a week, attend a Trade Show. Now go play some golf tour, you did a nice restaurant, or whatever and the other thing about the Trade Shows is when you go there and you make a connection, they generally have Trade Show specials, so you can get an extra 10,15, 20% points right off the top with your first order when you go to a Trade Show. So I like Trade Shows, okay? Because I like to travel, I miss not going to them now and there’s so many huge ones, where you can just like walk in and if you don’t walk out, which is the ton of money because something’s wrong, because remember, you make your money when you buy and when you sell, If you can make that great deal up front, that’s when you’re making your money that 20% off special at a Trade Show using 2% cashback on a card. I mean, that’s all. That’s how you make your money when you buy. Now, for people that don’t like to do that, you could actually even just go to a Trade Show website, like a directory. Like for example, I mentioned pets earlier, let’s stick with that. There’s the international Pet Expo in Orlando every year, they didn’t have it this year. It’s usually in March, they put their exhibitor list, right on the website, you don’t even have to go to the show. You literally can pay a virtual assistant to pull that file, pull the list off of the website for the Trade Show, and just contact them all that way and there’s like four or five questions that our VA will ask. Every one of our leads goes into a database. So it’s always in there, If somebody talked to a potential supplier five years ago, it’s still in my database, and all that information is there and that so that database is like gold to me. But one day because we’ve been training people on how to do this for almost six years now, one day, I decided I wanted to become a distributor of my own, because we had people that we were consulting all the world who are having trouble signing up with distributors, either because of the time difference, language barriers, accents, heavy accents, all of them are just not even having the right documentation. So I actually started a distributorship company, and we call it the wholesale buying club and so we have over a million name brand products at wholesale prices in this wholesale buying club. So generally, what people that we work will do is take a portion of those, it’s because it’s broken down into different categories and whatnot,  they’ll take a portion of those, run them through the wholesale Inspector, and they purchase through us. So then it comes to our warehouse, we inspect, we prep, and we send down to their FBA account and this is how people all over the world are doing wholesale, without ever having to see a product, talk to a distributor, set up in their account, get a tax ID or anything because it’s all done through our entity. But let me give you another way to do it. Also, because a lot of people just want to do this on their own right. They don’t need training. A lot of people that are already selling on Amazon, if you’re already doing private label, I’m telling you, man, add the bottle and you don’t need me. alright, you can do this yourself. you can

Todd 50:46
literally go online and just search things like pet supply wholesalers, you might have to do a lot of research and a little digging. This is why I like the Trade Show route. But then you just call the people and remember, they’re in the business to sell stuff. Now some of them have their own requirements, some will only sell to brick and mortar stores. Okay. Back in the day, I used to go into brick and mortar stores. Do you have a toy? I went into this one toy store. It was one of these boutique toy stores in a quaint little town I lived in and I went to the owner’s work in the register and I said, Do you have an online presence? No. Do you sell on eBay? or Amazon? No. We’re okay. Would you sell to me if I bought from you in bulk, would you sell to me at a discount, knowing that I would turn around and just sell the stuff online. I made a lot of deals that way. So here’s somebody that’s hooked into a toy distributor, right that maybe never would deal with me because they only sell to brick and mortars and all of a sudden I’m buying $10,000, $15,000 from from this toy store owner through her account, and she just marking it up 5% to me because she has to do nothing and I told her well, this is like having your own online business without having to do anything. So, there’s so many ways to find these distributors, or even specific brands, no goodness, just go on Amazon and see one thing that a wholesale inspector will also do is identify these brands that aren’t selling very much and you might look at it and say, Well, why this is a decent product, why wouldn’t it be selling a lot, and then you go and you find out, they just don’t know what they’re doing on Amazon, Don’t have a clue about image optimization, headline optimization, bullet optimization, They don’t have any keywords in the back end search or anything and you literally can just contact that brand, Even using the Amazon messaging system, and say, dude you can’t be doing very well with a BSR of 2.2 million. why don’t you make me your authorized seller, contractually obligated, I’ll buy from you at a certain price, blah, blah, blah and then you go in and you optimize that listing, you do some PPC, I even I’ve even had brands give me hundreds of free units for the purposes of marketing, just to get additional velocity on on their brands. So I think private label sellers actually have kind of a huge advantage over somebody that’s never sold wholesale before. Because they know Amazon already. They know how to optimize a listing. They know how to recognize a listing that needs optimization. It’s all of a sudden now, but it’s not your product, This was the big pushback I used to get. Why would you help that guy out? That’s not your product. So because I have an exclusive marketing agreement, and it has no risk. And we become partners in it. I mean, literally.

Norman 53:55
So, I got a question on that and we are winding down in a few minutes. So let’s say you go over to a person that has a horrible listing, you want to be the exclusive. Alright, so you signed the
exclusive on Amazon, you’re the only other person there. So there’s two people on the listing either him or you. Is that correct?

Todd 54:19
Correct. Usually it’s just you.

Norman 54:22
Yeah. So they’ll back off completely and then it’ll just be XYZ just distribution. Okay, so I guess one of the things I don’t know, this is more of a comment. I guess you have to protect yourself. If that private label person is selling to a wholesale distribution network, and then they’re taking it and bringing it onto Amazon. I’ve seen that happen, where all of a sudden you’ve got an exclusive right to a product on Amazon, but the person or the company is selling to two or three distributors, bricks and mortar, which are then going on to Amazon even though there may be a in a seller’s agreement, retail sales agreement that they’re not allowed to sell on Amazon. So I have seen that happen. How do you defend that? How do you stop those people from selling against you?

Todd 55:15
Yeah, contracts are only as good as the people signing them so, generally, you have that understanding contractually that you are the sole source of distribution, they shouldn’t be selling to anybody else and if they currently are, they stop. So you know that there’s a period of time where you may have some competition, but it should draw you somewhere else to buy that product, you are the sole source on Amazon to sell that product. Now, if they come around and say, well, we still want to sell to the brick and mortar stores, So what’s the stop one of them then from coming like on the Amazon there’s a few ways to deal with it, but generally working closely with the brand, you can figure out who’s doing that and if the brain is super serious, and they enjoy what you’re doing for them, they will go to that person and tell them to knock it off. Right, we will stop selling to your brick and mortar. If you keep giving product to your brother and your brother lists on Amazon, there’s a lot of ways to do this, the transparency program is is probably one of the better ways because only the Amazon the products that are gonna be sold on Amazon will have the transparency, our code, the ones that go to the brick and mortar won’t. Okay.

Norman 56:31
Okay, that’s a great idea. So, now we’re at the end. What’s one thing that you can let us know about? I’m just trying to see where you’ve left you’ve given us so many, like really great nuggets today and just general information. I’ve been learning a lot, Todd, but is there anything else that you can leave us with?

Todd 56:59
Make the decision to outsource sooner than later, you will be able to scale so much faster. If you just let go of things right now, if you think you’re the only one that can do the bookkeeping, you think you’re the only one that can optimize the listing, you’ve already lost, you need to  change that thinking and start outsourcing. Okay, go to free up, go to Upwork certain things Fiverr and make it your job to figure out how much you can actually immediately begin outsourcing and do it.

Norman 57:37
Fantastic. So the big question, Todd, other than Thank you is how do people get ahold of you?

Todd 57:46
We have a website, our overall brand is called Expert University and so they can go to expertuniversity.com and should be able to get a hold of us and see what they need to see at that site.

Norman 57:59
Alright, fantastic. So that is it. What a great show. We’re right on the hour. So thank you very much for joining us today and I am very excited about our LinkedIn guests. I hope you enjoyed
the show today and join us every week on Facebook, YouTube and LinkedIn. For the whole posting, it should be up shortly. There’ll be shorter clips up on YouTube and the other social networks. But Kelsey, tell us what we’re supposed to do.

Kelsey 58:30
Alright, follow us on social media. We just got a brand new website lunchwithnorm.com. So if you are interested and watching or listening to the podcast, you can find us there and if you
enjoyed the content, please like and share as every time you like the post or share post, others see it and then we can grow the community.

Norman 58:56
That’s what we’re trying to do. We’re trying to grow a community not just an Amazon but like online, grow business, bringing incredible brands and micro brands, social media. It’s not just about Amazon, it’s really how to build your business and other options like Todd today with wholesale, not enough people are talking about it. So, next week, starting Monday, we’re gonna have another great guest, Emma Schumer Tamer, and she’s going to be talking about listing optimization. So please remember it’s Monday, Wednesdays and Fridays at noon, Eastern Central’s time or the Eastern Standard Time. So, thank you and thank you, Todd.