EPISODE #7 - PART TWO - HOW TO FIND A 'HOT SELLER' TO PRIVATE LABEL

Hey, how's it going? It's Ollie here. Very, very warm. Welcome to the E Commerce Freedom Podcast. Welcome to the E Commerce Freedom Podcast with your host, Oliver Denmeyer. Learn the practical steps you need to take to build a business you can run on your own terms. Escape the 9 to 5 and work from anywhere in the world. So today we're going to be focusing on how to choose private label products. How do you take a look at the market place and see what's going on in all the listings on Amazon? What products are for sale, what kind of niches are available, what categories are we looking at? How do we use the data that Amazon gives us, all the things, all the little clues that we can have a look at. How do we spot hot opportunities for us to offer new products that would be valuable for the customers shopping on that platform? And also, I mean, if you can find opportunities on the Amazon marketplace, then these products are going to sell really well in other marketplaces as well, because Amazon is actually quite a good representation of how the whole e commerce industry is panning out. So if you can get this stuff to work on Amazon, you can validate products on Amazon, you can get them selling, then you can actually start to sell these products on other platforms. Maybe you can move over to Shopify, maybe you could start your own e commerce website, maybe you could sell some things on ebay, maybe you could branch out and start building a national brand off the back of the data you've got from Amazon. So once you've got this skill set down, and it is a skill set, you know, it does take a bit of time to learn how to do this stuff, but once you've learned how to do it and it becomes a little bit more natural and it's not so much as like, you know, putting your eyes down or looking at the checklist of all the things you need, when it becomes a little bit more of a case of just having a good eye for good products because you've got all the things they need to be in place for a product to be suitable, then this becomes a joy and you'll start to see opportunities everywhere. You know, whilst you're doing your shopping for products on Amazon that you want to buy for yourself or for your girlfriend or for your wife or your family or whatever, as you're looking around online, you'll be like, oh, that'd be a good opportunity for a private label. Or, you know, this one could fit in really well. Or, you know, what if I have a look at the similar products that other people buy on the bottom of the page here and try and find some other opportunities and, you know, you'll just keep coming up with new ideas once you actually understand and get a good grasp on how this stuff works. So I actually, as always, when I'm teaching people how to do this kind of things, I try and keep it as simple as physically possible, okay? I really try to eliminate all the fluff, not just in the way I teach it, but also in the way you implement it. Okay? So I don't want to be teaching things to you in a really complicated way and I also don't want to make your life really complicated. I want to make sure that the way that you research private label products and the way that you run your business removes all of the things that could potentially cause you trouble. I mean, why would you want to make it more difficult for yourself, right? I mean, why would you want to sell products that are going to give you issues? You know, what happens if all of a sudden Amazon take your listing down and you can't sell your product anymore and you spent thousands on stock and there are risks that really could actually happen when you're looking for products. So I like to keep things as simple as possible in that you're selling products that are as little likely to cause you a problem as possible. One of the main reasons I like to do this, besides the fact that obviously I want as little issues as possible, I want to keep things simple so I focus on generating income, is that because I actually run my business remotely, right? I'm living in Sweden right now and my products sell in the UK and in the us so if there was a situation where I had to be in the UK to oversee a problem, it'd be a pain. I'd have to get on a plane, fly to the uk. You know, I'm flying back and forth all the time anyway. But I just don't want to be obligated to have to be in one place at one time. That's why I started this business. So by keeping it as simple as physically possible and making sure that I'm not getting products that are going to give me problems, loads and loads and loads of returns, bad stock, get me into legal trouble and things like that. If I avoid all that mess, then I can keep running the business from a laptop and not have to have too much involvement with handling the products and dealing with issues. Okay? So with that in mind, let's go through a little bit of criteria that makes up the qualities of a decent contender for any private label product. Okay. So I think the first thing you really want to consider when you're importing stuff is actually the practicality of getting it from China to the uk you probably don't want to start off by importing furniture, right? Because, you know, if you think of those shipping containers that you're going to be importing things in, if you're importing like giant corner sofas, I don't even know if people do that, to be honest with you. But it would be a complete logistical nightmare getting those things in the shipping containers and sent over. It's going to cost you so much money and the chances of these things breaking and, you know, it's just so high and they'd just be a nightmare. So try and keep your products really suitable so they're easy to import. Okay? So this means small stuff, things that relatively you can hold in your hand. They're quite light. You don't want to be importing any, you know, dumbbells or any weightlifting equipment or anything that's going to hike up the costs of importing these things over. Try and keep them small and as light as you possibly can. Now, also, when we think about keeping things simple, you want to avoid common problems which could occur with your products. Okay? So anything that's an electronic, meaning that anything that has wires or circuits or an on off switch or that you plug in or it takes batteries has a much higher chance of malfunctioning when the customer gets it. Right? So the customer buys your product, they receive it, and for some reason it's not compatible with the other piece of electronics they use, or the circuits have blown and it doesn't work, or it just malfunctioned for some reason. That's. There's a lot higher chance of that stuff happening and you getting returns with electronic products than they would be with, say, pillowcases, Right? I mean, you're going to get returns in your business. It's something everybody has to deal with. You just factor it in to your profit margins, Right? You just make sure you're making enough money to deal with the 4, 5% returns that you're inevitably going to have to deal with. Right? But you don't want that return amount to be getting up to 10%, 15, 20%. And that's kind of what you can expect with any kind of electronics. So I definitely avoid them. Also, I'd actually avoid health and beauty stuff. Personally. I wouldn't necessarily deal with anything that has complicated ingredients that people are going to be putting on their faces or in their bodies, on their skin, because you could get into some kind of trouble there in terms of, you know, something went wrong or someone had reaction to it could cause you an issue. And also, I mean, one of the. One of the ingredients in your product might end up being deemed as hazmat, which means it's like a hazardous material. And Amazon don't want to have any hazmat materials inside their warehouse. So in order to sell products with hazmat materials, you're going to have to actually ship the products to customers yourself. And you don't want to be doing that right. You want Amazon to be doing everything. So just to avoid any potential problems with those kind of things, those kind of areas. In the beginning, I'd recommend not starting out with health and beauty products. Later down the line, when you've got a little bit more capital and you know, you've got maybe a bit more money just to make sure you're doing everything correctly. I'd recommend health and beauty because it is an incredible category and you can make a lot of profit selling those kind of products. And also, you know, you can get real customer retention with health and beauty products. If you have, say, 100 people who absolutely love this moisturizing cream that you sell on your account, when they run out of their tub of moisturizing cream, they're going to want another one. So you're going to have a hundred customers who buy this moisturizing cream off you every three months. That makes it a lot easier for you to actually snowball the amount of sales you're getting. If you think about it, the customer base will compound every month with new people wanting to buy this and reorder every few months and the whole thing will just spiral. So you're getting a lot of sales of a lot smaller marketing budget. So health and beauty can be very, very powerful. But I would recommend not starting out with it. You know, start with something simple. Be much easier to import something that's made out of plastic. Right? It just makes more sense. Just a little plastic thing that you use in your kitchen. Maybe a little gadget or something. Some kind of product that's small, relatively intuitive to use. Light isn't Health and Beauty, isn't electronic. Also, I recommend not importing anything edible or anything drinkable. I'd say things like tea or supplements or food. Anything in the sort of groceries section probably needs to be avoided as well. It's the same kind of thing as health and beauty. You could run into issues, especially with supplements. I Mean, there's a lot of strict regulations in the UK and in the US with EU regulations and FDA regulations that you need to watch out for when you're selling any supplements or food. So I'd recommend avoiding that as well. Stick to stuff that's really, really simple. Home and kitchen is a really great category for private label products. Loads of potential opportunities in there. I think there's over 23 million active products in the UK and home and beauty alone. Okay. So anybody who says any category is a bad idea because there aren't opportunities is usually lying because the categories are just so huge on Amazon. Pets is a great category. Lots of simple products in the pets area. You know, things like mats for your dogs, dog beds, dog toys, fish tank accessories, things for cats, obscure, weird, tropical pets. I mean, the list just goes on and on. But the amount of stuff you can offer for pets is really cool. And a lot of the things that are required for pets are small, simple items that you can import without real, any real trouble. For example, the other day I was actually looking at a fabric dog case. It's like a, it's like a crate to carry a dog in. You know, those little things you carry around a dog in their portable, but it's actually foldable as well, it's made of fabric and they're selling quite well in the UK at the moment. And I was looking at. That looks like quite a good opportunity for a private label product there. Much easier than, you know, a bodybuilding supplement, which could be endless trouble if somebody takes it, has an allergic reaction or something. And it wasn't stated on the label that there were allergens in the ingredients. And then you have to go to court and, you know, it goes on and on and on. So I hope that gives you a good idea of what to avoid and what categories actually will make your life a little bit simpler. Home and kitchen pets, baby toys can be good as well. Anything really where the products is simple, intuitive, small, light, made out of simple materials and isn't going to cause you too many issues. So once you kind of get an idea of what this is going to look like, right, stuff isn't going to break, isn't going to be too heavy or problematic. We need to start to go a little bit deeper and do an analysis of what kind of products customers are spending their money on, because it's all very well, the product you're thinking of importing actually being a great fit on paper in terms of how it looks, what it's made of, what category it falls in and what size it is and how light it is. But if the thing is never going to sell, then obviously you don't need me to tell you you wouldn't ever want to import a load of them, all right? You only want to be importing stuff that's going to sell and preferably the faster it sells, the better up to a certain point. And I'll explain a little bit why that's the case a little bit later on. So I want to talk to you a little bit now about why competition is a good thing. Let's say you were setting up a coffee shop, okay? And you're looking for an area around where you live, near where you live, to set up shop and start selling coffee to customers. Now the intuitive thing, maybe in the beginning, if you haven't really ever done this before, you might think to yourself, well, not going to set up shop near where all the other coffee shops are because I'm just not going to be able to compete, right? They've got all of the marketplace, all the customers go to there, get their coffee where the other coffee shops are and that, that those kind of areas, there's too much saturation. So I'm going to set up my coffee shop where there's no coffee shops at the moment. Now this could actually be a really good idea, right? You might find that you set up your coffee shop and there's loads of people who want coffee around that area, but they just didn't have anywhere to get it, alright? So that might actually plan out to be a really, really good idea. However, you don't necessarily know that those people in that area are going to want coffee because there's no solid evidence that coffee drinkers exist in that area because there's no current coffee shops doing really well. However, if you were to have a look at town centres or where, yes, there are coffee shops, but they always seem to be full up. You always walk into these coffee shops and there's no seating, maybe they don't offer the certain type of coffee you want to offer. And there's gaps in the marketplace in those towns that would give you a much higher chance of having a great stream of customers without a big risk of opening your shop and nobody walking through the doors, okay? So the point I'm really trying to make here is that competition is a good thing. If other coffee shops are selling lots of coffee and customers are, you know, filling the shop, especially at the weekends when they really want coffee. And in the mornings on the way and back from work and there's lines going all the way from the counter out the door. Then there's clearly coffee drinkers in that area. There's a marketplace. So that's a good sign. That area could do with more coffee. So this stuff relates to Amazon in that you want to be looking for products where there's clearly customers spending money in the marketplace. Right. So you want, say, a selection of products which is similar to the one you want to sell, that are selling very, very well. And I want to talk to you about a few pieces of evidence we can actually extract from Amazon to, to help us understand how well products are actually selling. Okay, so you've got a few indicators that a product is doing really, really well on Amazon. And the first one is actually probably the easiest one to spot. And it's really, really a great indicator of how good a product is. And this is the reviews. Every product that's been sold between. Sorry, for every single product where there's a review, for every one review, between 20 to 100 sales have actually been made before that review has been left. So that means if a product has got a thousand reviews, you can imagine just how many sales have actually been made in order to get those reviews. Right. Now, my maths isn't exactly my strong point, but you can see from a thousand reviews, 5% of customers leaving review, it could be up to 20,000 sales, right? I think that's right. Don't quote me on it, but you get the idea. The more reviews, the more sales have been made for that particular product. So if you have a look around and you see a product that has loads of different people selling different types of the product, and there's been loads and loads of reviews made, you know that customers are buying this kind of product. Okay, now another indicator is best sellers rank or sales rank or Amazon bestseller rank. Now, on every single listing that you'll see on the Amazon Marketplace, if you scroll down just above where the reviews are, where it says additional information, you'll see a little bit of data called the Amazon Best Sellers rank. And I've discussed this in a previous episode and basically what it means is the lower the Amazon sales rank, the faster the product is selling, the more sales volume this product actually has. So let's just say the best seller rank is number one and this product is the best selling product in its category. You know that this product is selling really, really, really fast. And usually a bestseller rating of 1 indicates between 100 to 3 or 400 or maybe even more sales every single day. Okay, so if you see lots of products just like the one you're thinking about selling, the private label products you're thinking of importing, they all have great sales ranks. To be honest, a best seller rank of 1 is unrealistic and we're going to talk a little bit about having too much competition in a minute. But a best sellers ranking of 1, a best seller would be way too competitive to try and compete with. But if a product has a very good best seller ranking, then you know customers are spending money on it. So therefore you know that if you were to offer a similar product or a product with better qualities, something slightly different, then customers would spend money on yours as well. Okay, so we've got reviews and we've got best sellers rank as two things we can actually use to see whether similar products are actually making sales. There's another thing which you can actually use to determine whether products are making sales and whether sellers are actually making sales on the Amazon Marketplace. And if you type in the name of a product, be relatively specific with what it is. So if it's a frying pan that has a rubber handle, type in frying pan rubber handle into the search results and sort by category. You will see on that page that quite a lot of sellers are using Amazon pay per click system to actually encourage more customers to buy their product. You'll see along the top of the listing results page, along the side and actually at the bottom that the sellers are actually paying for pay per click advertising to get customers to buy their product. So if customers if. Sorry, if sellers are paying for this advertising, especially if they've been paying it for quite a long time, if you keep seeing it every time you check and the same sellers advertising their products using paid advertising, then they're obviously making a return on it. Nobody would waste money on advertising if their stuff doesn't sell, right? Who pays for advertising? What adverts do you see all the time? Companies who are making lots of money because they have the budget to do it and it works well into their business model. So you can actually use sponsored ads and products that are being sold with advertising on Amazon's platform as an indication of products that sell. So these are three indicators of products that sell well. And if you find a product that, once you've taken all these three things into account, looks like a good fit and actually is making some sales and customers do buy this thing, then you can actually start to think about offering your own version of the product and offering something that customers actually want and maybe something that's actually missing in the marketplace. Okay? So that's why competition is a good thing. And that's how you can begin to use the competition and the competitive sellers on the marketplace who are selling the similar products to actually figure out whether your product idea is going to be something that customers want. Now, once you've had a little look at this and you've seen that, you know similar products sell pretty well, there's advertising being done. A lot of the products have decent reviews. Bestseller ranks look pretty good. You want to make sure there's room for you to compete, okay? Because some certain products out there really won't be any. There won't be any opportunity for individual sellers to actually go ahead and offer their product to the marketplace. A really, really good indication whether a product is worth bringing to the marketplace is if whether a national brand is dominating the market. Okay? If you go on to the Amazon marketplace, you type in the name of the product you want to sell, say it's a frying pan with a rubber handle, you'll probably see there's a load of national brands there selling frying pans with rubber handles. And you're never going to be able to compete with them. They've got much bigger budget for stock, which means they'll get cost per units down much lower than you could ever get them because they can really, really drive aggressive deals with their manufacturers and get product costs really, really cheap. They have much bigger marketing budget. They've got much better trust with the customer base. So customers will be magnetized to buy from these brands rather than buy from you as an individual seller. And you're just gonna have no chance if you stick up your throwing pan with rubber handles. Unless there's something amazing about it and you do a really good job and you got a big budget, you're not really going to have much of a chance to compete. So definitely avoid anything where you see there's a national brand dominating. Also, you probably don't want to compete. If you see another product that has over three or four hundred reviews. That's about the threshold. If you see a load of products on the Amazon Marketplace, and you know, you can see that the competition is looking good, but most of the listings on there have more than three or four hundred reviews, then it looks like that market is pretty much done. I mean, the customers are going to be magnetized to the guys who've got lots of reviews. They're not going to buy your products when you've only got a few reviews. Handful of reviews in the beginning. Because, I mean, just think for a minute about why you buy products in the marketplace, right? Think last time you bought something online. Imagine just how powerful reviews can be. You're never going to buy something that has never had a review if there's a product right next to it that's had 400. Okay? So there's just no chance of you really competing if there's other sellers who are really dominating the marketplace with this. Another clue that the market's too saturated. And this is a little bit like you trying to set up a coffee shop when there's a town that has 15 Starbucks located right in the center. Right? I mean, there's a point where you think, okay, I think all the coffee drinkers have got all the coffee they need. It'd be the exact same thing in this instance. And if you look and you see that most of the best seller ranks for the type of product that you want to sell are very, very low, and I'm talking say below 500 or below thousand, then you know that these guys are doing really, really, really well. And to be honest with you, it's probably too competitive for marketplace for you to actually sell in. And a number of things happen when the marketplace is this competitive. Okay? What will happen is you'll get big, big, big sellers coming in with heaps of capital, loads of money to spend on products, and they will just completely stomp all over individual sellers who can't really afford too much marketing, can't afford to drive the price of stock down by buying in huge bulk shipments, and you won't really have much room to compete. Also, Amazon might come along and actually create a product that competes with you as well if you go into these really competitive marketplaces. And that really is going to make it hard for you to compete because obviously Amazon have got huge leverage, huge buying power, and with them competing against you, you're probably not going to have too much of a chance. So definitely avoid selling products where there's more than 400 reviews. A couple sellers have more than 400 reviews because they're pretty much sorted in terms of dominating the marketplace. Also, if the best seller ranks are really, really, really low, and also if there's a national brand dominating, because customers will just buy from these sellers. In these circumstances, when you've got more capital and say you've got, say £10,000 to spend on one private label import, you can start entering into these more competitive marketplaces and you can actually start offering products that, that will match up to a lot more competitive environments and will actually get reviews quicker. If you've got a bigger marketing budget and you might be able to get stock for cheaper, and you might be able to drive the price down and sell your stock for cheaper and still make a profit in these instances. But in the beginning, I'd really recommend going for products that aren't too saturated. But there's just enough competition. You can see sales are being made and there's enough reviews to suggest that sellers are getting sales. You know, they're spending a bit of money on pay per click. And the best seller ratings are say between 1,000 to around about 10,000. Okay. If most of the best seller ratings on the first page of results when you type in the product you want to sell are between 1,000 and 10,000, you've got an indicator of a product which will sell. Right. Customers are spending money, but it's not too crazily competitive. So once you figure this all out, right, you've got a private label product which meets most of those criteria. It's not too big, it's not too heavy, it's not going to break in shipping, it's easy to import over without any problems. It's not electronic, it's not health and beauty. It's not something that you're going to eat like groceries or supplements or anything like that. And the competition level looks pretty good. You want to go a step further. Okay. You want to analyze the marketplace and see where the gaps are. There's going to be things and aspects of other products which are available on the Amazon Marketplace that are selling, but customers are annoyed about some of the things that happens with them. Right. And where do you think is the best place to find what customers are pissed off about? Obviously, it's going to be the review section. Right. If there's anywhere on the planet where people love taking out all the anger and frustration they've had from all their other problems throughout the day, it's in reviews section on the Amazon Marketplace and also YouTube comments. Right. They're two of the main places where people just go absolutely crazy. So if something's wrong with it, something's wrong with a product, customers are going to tell the seller about it in the review section so you can have a look at the other products that are similar to the product you want to sell. Go into the reviews and see what they're bitching about quite a lot. If they're really annoyed about certain thing constantly. And you know, a lot of people say that same thing. Let's just say we're Talking about the foldable dog crate I mentioned earlier, it's made of fabric and everybody's saying it's really flimsy and it feels like it's going to tear all the time. Loads of people are complaining about this in the reviews. Then it's a perfect opportunity for you to fill a gap in the marketplace and actually come out with a foldable dog crate, a fabric dog holder that's sturdy, it's more sturdy, it's been built better. And then you can actually promote that in your listing. You can say, this is a really sturdy dog crate, won't break, won't tear. And then you'll get all the customers who are looking at reviews, comparing all of these potential products that they want to buy. They'll see yours that says it's really sturdy after everyone else has been complaining about their products not really working and tearing or whatever, and they'll buy yours. Okay? So you have to have a look at your marketplace, look at the similar products to yours and find gaps. Fill those gaps with really, really quality, good quality products that have your own private label on them and you'll be set up for success. Right? You'll understand exactly how to fill your pockets of customers money. Right? You'll know what customers are looking for because they'll say in the review section. So I hope this kind of gives you a little bit more detail into how to start looking for products. You need to keep it simple, not look for products that are going to give you issues. Make sure they're easy to import. Avoid the things that are going to cause you a lot of hassle. Don't try and compete with national brands. Make sure there's competition for the product you want to sell, because that indicates that there's money in the marketplace, customers are spending money. But don't go too crazy and try and compete with the big guys. And make sure you're adding value to the marketplace and filling gaps. Once you've taken this all into consideration and you found a product that looks like it's going to be quite a good fit, what you want to do is start to try and source products in China that will actually work well for this opportunity. Right? So let's say you're looking for fabric dog crates, you go to Chinese suppliers and you actually want to start to find a supplier who might be able to supply this for you. Now, I personally use Alibaba to look for suppliers because I think this is one of the best websites you can use because they just display so many Chinese suppliers on there. Agents of suppliers, middlemen, and also the factories themselves that produce the goods. And you can just get directly in contact with these guys. And you know, most of them are just normal business people like you or me, who just are making a living. They're really nice, speak great English most of the time, and you can just send them a message and just ask them about a lot of their stock. So you can go to alibaba.com, search for whatever it is that you want to import, and then find a supplier who actually makes the product that you want to make. Start to have a chat with them. And what I really recommend you do is before you say go and order a thousand units of a product and realize that it's low quality and it's basically just rubbish, I really recommend you order a sample. Okay? So before you dive in and spend thousands of pounds on product, make sure you just order a sample. And they're very, very well versed with this product. In fact, they expect you to do this. They expect you to ask them for a sample and usually they'll actually give it to you for free. You'll pay for the shipping and then maybe they'll charge you for the sample. But then when you order them order a larger quantity of products, they'll take the money you spent on the sample off the price of the order. And that's usually the way it works. So then you can actually get the products sent to you, just give them your address, pay them usually via PayPal for express shipping. And you'll be surprised how quickly these samples come. I mean, I've had products come from China in three days quicker than stuff you order from Amazon. So it's definitely worth doing. Doesn't take much time. And then you can feel the product in your hands, you know, you can try it out, try and use it, see if it breaks in five seconds. Obviously you don't want that. Make sure it's build good quality, keep using it for a few days to make sure it doesn't break after a bit of use, give it to your friends to try out and just see whether it's actually exactly what you're looking for. And I recommend once you've done your analysis and you found a couple of products that might work, contact a few suppliers and order a different variations of products to try and find the best one to go to. Okay, so this is definitely really, really important. Once you've done your analysis, make sure you order a sample. And I actually consider the analysis or ordering the sample to be part of the analysis. Process. Right. So I hope this episode has helped you. I hope you've got a little bit more of a clear idea of what kind of thing works for a private label product. And what we're going to do in the next episode is we're going to talk about what you do to actually get your products to sell on the Amazon marketplace. Okay. It's one thing just knowing what to import, knowing that it's going to sell and sticking up on your account, but how do you actually get your product in front of customers eyes? And how do you get your product ranked really high in the Amazon search results? And how do you actually get sales happening through your account? So in part three of this mini series, in the next episode we're going to be talking all about that and before we get there, I really, really recommend you grab my ebook. And it's entitled four reasons private labels will change your life. It's got so much info about how to start a private label business. It's got some really embarrassing stories which I shared in there, which are quite funny, which I think you'll enjoy. And it talks a little bit about how to actually turn this private label business into a lifestyle business that actually gives you freedom to have the time, spare time to do things you love doing and also work from anywhere in the world. Because that's what we're all about. We want freedom to be able to travel and work from anywhere, even if it's just working from home. So definitely grab the ebook. If you just go to ecommercefreedom.com 7 you can download the ebook for free and I think you'll really enjoy it. So thank you so much for listening to part two of this mini series. The next episode. Like I just said, we're going to be talking about how to get your products to sell once you've found an opportunity, something that fits and it's going to be really good. How do you list it on your account and start to see sales moving? Okay, so thanks a lot for listening and whatever you do, keep believing. I'll see you in the next episode.