What Risks Can We Predict While Starting An Amazon Business?

Hey, how's it going?

It's Ollie here.

Welcome to the Ecommerce Freedom Podcast. Before we dive in with today's episode, I've got two cool resources for you. The first one is my new E Commerce Q and A group on Facebook. So in this group, the point is, you ask questions in the Facebook group and I answer them with daily videos, okay? So you can get your questions answered really, really, really quick. It's a great resource. If you go to ecommercefreedom.com and look at the top of the page, you'll see a button for the Q and A group. Click on that, it will take you.

To the Facebook group.

Second resource I got for you is an Amazon accelerator call.

So what I'd love to do with.

You is talk about your goals, talk about where you are now and talk about the stuff that could prevent you from hitting your goals right together. On a strategy session, we will come up with a plan for you to replace your income with an Amazon business.

If you'd like to book a call.

Where we can do this, go to ecommercefreedom.com, look at the top of the page and click Amazon Accelerator Call. You'll be taken to a very short application page. You can fill that in on the next page. You should be able to book your call. Alright, hope you really enjoy the episode.

Hey, how's it going? It's Ollie here. So today we've got some fantastic questions based on the topic of risk. How do you avoid the potential risks that you can encounter as you grow your Amazon business? This is definitely something to be thinking about as you move forward. But before we dive into these questions, I just want to say that no matter what you do as you grow your business, there will always be risks. And you can't have a contingency plan for every possible risk. There's always going to be something that comes along and derails you from at some point. I've seen this in my business and I've seen this with so many clients who I've helped build businesses as well. From getting your Amazon account set up, that can be a problem that Amazon drag out for a long time. In some cases all the way to importing your first shipment or even getting your products to sell. At some point something's going to go wrong. That's just the nature of being a business. So it's not just about mitigating risks, trying to make sure there's no risks. It's about becoming adaptive and being able to think on your feet and deal with risks as they happen. Because if you take a challenging situation and if you're creative with it, then no risk can derail you. There's always some way of dealing with it. But having said that, obviously we don't want to jump into the deep end and take massive risks for the sake of it. We want to be making sure we've thought of this stuff first. So the questions today really do tackle some of those issues. So Mark Bennett says, when you have products that you wish to import from, say, China, how do you go about arranging the freight from a wholesale or manufacturer into the UK and what are the pitfalls you need to avoid? So this is a great question because obviously getting the stuff from China into the country you want to select, whether it's the UK or the US or wherever you're based, contains a lot of risks.

Right?

There's a lot that can go wrong because you have to get the stuff from the manufacturer to the port in China, through customs in China, on either a plane or a boat, safely, okay? And it gets shipped over to the country you want to sell it in. It gets from the plane or the boat taken off in some kind of container, transported to customs, has to go through customs and get approved and not get stuck there for weeks.

Right?

You have to fill out the right forms and pay the right taxes and the right duty so you don't get fined. Then has to go from customs to the place where you're prepping it, whether that's at your house or your storage facility or maybe a prep center.

Okay?

Then it has to go from the prep center or wherever you're storing it into the Amazon warehouse. And it has to go into the Amazon warehouse safely prepped properly. So Amazon recognize your products, don't lose them, and know exactly what you have in those containers. Right? So a lot of steps there, and there's potential for this stuff to go wrong. That's a very simple answer. To make this all much easier, don't do it yourself. Don't try and arrange shipment of your products by yourself, and certainly don't let your supplier do it for you. Especially when we're talking about, you know, 500 to a thousand units. If you're ordering, say 50 units for a test batch, yeah, express shipping is the easiest way. DHL will do everything. But when you have huge shipments that require, you know, a container load full of stuff going on a ship, don't arrange the shipping yourself. Hire a freight forwarder to do it for you. Now, they will pretty much remove 99% of the risk. They'll deal with all of the steps I just mentioned, including prep, sometimes including all the customs forms and everything else. They can even ship stuff into the FBA warehouse for you. Quite a lot of companies can do that. So the best thing to do is get deal flow. You've heard me mention this before. If you watch previous videos, deal flow is key. So don't just contact one freight forwarder, contact 20. Type Freight Forwarder UK if you're in the UK or type Freight Forwarder US if you're in the US or if you're in Brazil. Freight forwarder Brazil, whatever country you're in. Freight forwarder in the country you're in or the country you want to sell in.

Right.

Then get quotes from at least five. Figure out who's going to be the cheapest, the most reliable, the best communication. Go with them and get them to organize the shipping for you. That is how you avoid 99% of mistakes with the process. Because they are experts at this stuff. They know all of the abbreviations. They can communicate with your supplier and sort out shipping from their warehouse all the way to Chinese support to your country, to the warehouse, etc, etc etc etc.

Right?

They can make sure everything goes smoothly and they can even sort out insurance for you, etc, etc etc to cover yourself, let them handle it. You focus on marketing and sales. Let the freight forwarder deal with all the importing stuff because it's complicated and it's actually quite tedious really. It's not the fun part of the business. The fun part of the business is getting things to sell and finding hot products. Great question, Mark. Eduardo asks, how do you build a business that's sustainable so it doesn't come crashing down suddenly and have a clear exit? So maybe you can sell it. Great question, Eduardo. So again, how do you build a business without the risk of it crashing down? How do we avoid that risk? And what's the end game? What's the exit strategy? How do you potentially sell the business in the future? Fantastic question. So here's my philosophy for doing that. So number one, build a brand. Okay, so a lot of people go into Amazon thinking, right, I want to sell a product. I've seen this, I've seen quite a few clients come to me with a business that's already running. They're making, you know, significant income, but they've got one product and their business revolves around this one product. Well, that business could come crashing down because the competition could sweep in. Amazon could randomly change rules on something. Chinese suppliers could compete with you, your one supplier who's supplying this product could all of a sudden not supply the product anymore. Any number of things could happen to derail a business that relies on one product, right? So don't build a business that relies on one product, have five products, 10 products within a brand. So if one or two products get tanked, it's fine, you've still got the other eight. Also, the chances of you creating a smash hit product with one product isn't always high, right? You might launch one product that does say 500, 600 pounds a month. You launch another product, it does 1,200 pounds a month. We're talking profit here, by the way. You launch another product, it does say £700 profit a month. Then say you launch your fifth product and it smashes it and it does 5k profit per month and does more than all of your other products put together. What I'm saying here is you don't know which product is going to be the real winner. The real one that carries your business forward and actually makes it extremely successful. Sometimes it's not your first product, sometimes it'll be product number 2, 3, 4, 5, 6, 7, etc. So you don't want to just launch one product and then pray, you want to launch several down the road, all within a brand. That will enable you to build a sustainable business that doesn't have all your eggs in one basket. And this also answers the second part of your question. It will make your brand sellable because you won't just have one product, you have several. You have a brand, right? All this will make sense together. And so if an investor comes in, they'll be more happy to buy it. So that's the first part. The second thing if you want to sell your business is I would recommend, once you've got to six figures on Amazon, you could do that in your first year. If you're really committed and you really move forward with confidence and you know what you're doing, then I would aim to take the brand off Amazon as well.

Okay?

Because to an investor, a series of products that are selling very well on Amazon is good, it's promising, but also presents a bit of risk because what if Amazon don't want to work with you anymore?

Right?

What if the products don't sell off Amazon? It's quite limited in a way. So long term aim to sell this stuff elsewhere as well. So look, Amazon is the best place to start. They do all the work for you, right? They got the traffic, they got the brand, they've got the fulfillment that, you know, it's like partnering with a really successful ecommerce giant.

Right?

That's what it is. So start there, but then take the brand off Amazon after. So sell products on your own website.

Okay.

You can even try and get it in retail stores. That looks good if you can get your products in high street stores. I mean that is legitimate, right? An investor will be very happy if you can do that. Try and sell it on other platforms, eBay, etc. Shopify and just make it so your business is more solid. If you've only got one stream of income from one platform, again, it's like having one product, you know, the whole thing could come crashing down. But if you sell an Amazon your own website, high street chains, you're doing wholesale deals, you've got all these streams of income and your business is more solid. You know, if Amazon shut you down, then it's fine, you can sell on all the other places. Still, investors going to be much happier to buy a brand like that. So that's a few things you can do to build long term business and build something that you could really sell to a potential investor in the future. I know people who sold Amazon businesses for seven figures and they've pretty much followed this formula. So great question, Eduardo, and I hope that, hope that helps.

You.

Got a question from Gabby who asks what risks can we predict while starting up an Amazon business? So we've talked about a few of them already. So we talked about, you know, the risk of not being able to sell your product. So launch several products. We talked about from Mark's question importing. And so you should hire a freight forwarder to handle that. One of the biggest risks is having trouble with your Amazon account.

Right.

So this is something that all Amazon sellers are worried about.

Right.

So what if Amazon shut me down or what if I get a problem? So the best thing you can do as an Amazon seller is actually read their terms and conditions. Read them. Don't get your advice about Amazon terms and conditions from experts and gurus. Don't get advice from me about Amazon terms and conditions. Take it upon yourself. Take the responsibility to know all of their terms and conditions and get them from the horse's mouth. You don't want to be.

You know.

Giving the responsibility to someone else in your own business. Because at the end of the day, you know, if I've given you my version of the terms and conditions, you follow what I say to a T and then Amazon shut you down. It's not going to Affect me same. If you follow any other experts version of the terms, it's not going to affect them, it's going to affect you. So memorize this stuff, read this stuff before you launch a product and you're thinking, would Amazon be all right with this? Would they not go into the terms and conditions, research and have a look and find the line about the product, about that category and research this stuff. Whenever they have headlines and updates, read them just constantly. Be refreshing yourself of how they want you to operate. Then you will have a much higher chance of being in their good books. The two biggest reasons people get shut down is through sending bad stock into the warehouse and intellectual property violations. Okay, so bad stock is like stuff that's broken, stuff that doesn't work. Intellectual property is, you know, if I create like some rubbish trainer and I put a tick on it and I say it's Nike, but it's obviously not, I've violated Nike's intellectual property, it's going to be a big problem. Amazon really don't like that because they want to have a legitimate website, legitimate brand. So if there's loads of fake stuff on there, customers won't buy from Amazon anymore. So anyone who sells fake stuff, Amazon will just shut you down straight away without even asking.

Right?

So those two things are the biggest barriers. But other than that, take it upon yourself, be responsible for understanding Amazon's terms. That's one of the best things you can do as an Amazon seller if you want to sell on the platform for a long time.

Great question.

So Rio asks, Roryo asks, is there any way to avoid some risks? I mean, what the advice you would give to minimize some risks when starting on the business. So best thing I can say to you, Roryo, is watch this video because I think I've outlined all of the major risks in the business during this video. The first one was importing, so get a freight forwarder. Second one was Eduardo's question, so launch lots of products, not just one. And then we had the question from Gabby about risks as well. And I talked about the Amazon account. One final thing I would say about risks is having a lot of inventory and not much cash. In fact, I did another video where I talked a little bit about this couple days ago. But just to give you a refresher, one of the biggest problems anyone with a product space business can face is when you have too much inventory, not enough cash. So you've got loads and loads of stock and it's just not moving. And so you can't turn your Assets, that is your inventory into cash. That is a bad place to be. So the key here is to not jump the gun. Don't import too much stock before before you know it's going to sell. Start slowly.

All right?

Start slow. Test small 50 units first. That sounds great. Now do 100. Cool. It's selling good now. Maybe 2, 300. Fantastic. 10 sales a day. All right, good. So now you can maybe buy three or four months worth of stock.

Okay.

Check whether it's seasonal.

Okay.

First before placing the order and make sure it's not going to tank in three months time. Then you can go bigger and you can order more units because the cost per unit will come down. Go small and don't order 5,000 units as your first order because you want to save money on each unit. Go small and scale up slow when you feel confident. That's the best way to avoid having too much inventory and not enough cash. Alright, so we talked about a lot of potential risks to the Amazon business in this video. Like I said before though, you could never prepare for everything. There's always going to be some curveball that gets thrown at you as you're growing your business. This is why building a business is one of the best opportunities for personal growth. Because you have to learn to adapt and you have to become a better version of yourself. Order for your business to grow. This is why it's such an incredible experience. As your business does grow and you do overcome these challenges. That's what makes it so fun. So don't get paralyzed by all the stuff that could go wrong. Just commit to moving forward in the right way and always adapting to any challenges and I'm sure you have the potential to build something really great.

Alright.

Hope this video helped you. Hope it gave you some insights and I'll catch you very soon.