What To Do When Mass Retailers Like Amazon Become Your Competitors

Protect your brand, product or invention from the hazards of consumer product launching and go from idea to product to big brand. With guidance from retail product design and development experts Tracy and Tom Hazzard. Get the insider secrets to put the right things in the right order with the right resources so you can out design, outsource and out profit your way to retail success.

Hi guys, we're back on again. And this is Tracy and Tom. And our subject today is going to be when Amazon becomes your competition.

And it definitely happens. And actually this is something we've also experienced even before the days of Amazon, when your customer becomes your competitor.

Exactly, exactly. And that's kind of where we're going to start the conversation, I think. So there's an article, we posted it in the feed. You'll be able to see that I can link to it again and we'll try to do that. And it's an article that came out in the last couple of weeks. But anyway, it's really talking about the idea that Amazon is going to build its own private label empire. So they're waiting for the private labelers to find a niche that works and then they are going to go and direct source and buy those products themselves. And this happens all the time in regular retail. It happens all the time with Target and Walmart and Costco even. Not as much in Costco, but other places, Staples and all kinds of places. But it was in the. In Motley fool and that's where it was really posted. And so it's about how they're quietly doing it. And I've heard this from a couple people now, I haven't gotten anyone who confirmed that they were in fact their whole entire SKU taken over, but I have heard rumors from some private labelers secondhand that they were having their SKUs actually deteriorated by a price for. And then when Amazon drove them out, then they brought in their own direct brand. And then I had heard that a couple of them just got shut down. And that seems a lot more. I don't know if that one's true or not, but I have heard of it happening. We've invited Steve Creamy on the podcast from AMZ alliance and he's going to join us soon. And maybe he has some more perspective on that particular section of it. But why don't we talk a little bit about our history and what's happened with us in terms of direct stores?

Sure. Well, of course we've had a long history in mass market retail, bringing products to market. We developed unique products and as long as you develop very unique products that are protected by copyright or patent formally, then you can fend off what the trend that's been happening lately. So let me explain what that is. The trend that's been happening at mass market retail in the US has been for retailers to actually not want to work with vendors, what we would call value added resellers or importers of product in the US they would want to buy from them because they know they're paying quite a margin on those products they're buying. They would rather go and get a cheaper price going directly to the factory. Usually it's overseas somewhere. And in our case certainly it has been over in Asia. So they want to go direct. If you don't have a proprietary product, you don't have something unique, they cannot either own something unique. Then they can go around you, they can knock it off, find the same thing from the factory, buy it direct. But we've had some situations where even when we developed unique proprietary product that the vendor, in this case for us, it was Staples, we designed several products for our client that was selling to Staples directly.

Right. And they were very unique, very unique.

Products, original designs and had some patented components. But we actually had advised our client to file design patents on some key elements of the product. And they didn't have the money. In this case design patents, we're talking about a couple thousand dollars for each design to do it. So maybe we're Talking about spending $6,000, maybe 8 at most on what ended up being business for them over a few years of probably about $12 million of business over a couple years. They decided not to do it. Well, Staples became very unhappy with the margin to the domestic company and they felt like they weren't making enough money on these successful products. And so what they ended up doing, long story short, was, and at first they said they weren't going to do it, but they went and solicited other factories in China and in fact used one of the same factories that our.

Client had used, actually used one of the same factories that we had rejected for making bad quality.

Right, that's true. And they had, we had done a test with them. We'd done a 20 store test with that factory and then we moved it after that test. Even though the product was successful, we wanted better quality.

Yeah. Because the foam was terribly uncomfortable and there was a bunch of other things wrong with the way that they were producing it.

So these were office chairs. And the reality of there's a particular region of China where there's a serious Collection of thousands of factories. Since when we've been trying. And really it's a pretty tight network. Everybody knows all the factories know each other. Word gets around real quick when something happens. Well, so anyway, Staple Dead Nuts, knockoff of two of our designs that were successful. And it's not buying from our client.

Which meant we were out of royalty too. So we got screwed in the process. But what happens though, is that the client can't say anything. And that's what Amazon is going to count on. It's the same thing that Staples counted on. They count on the fact that that client or the private labeler has other skus that they're worried about losing if they start complaining. And that's what they do is they kind of leverage them and push them into saying nothing and doing nothing. And so actually, it's really why we advised our client with the patent strategy and that's why we've always used it. But we can't force a client to take it on. I wish we could, but we can't. And in the end, they learned the hard lesson that way.

Right. It's very tough. So really, we're out of luck that products are still being sold by Staples. And for a couple years now, we haven't made any money on it, which is not right. They are violating our copyright. But in reality, even if we tried to sue them, we would probably win that battle, but lose the war. It would cost us more money than we would recover. So we've just moved on and haven't done it. And that's the real unfortunate part. But it really illustrates the point. Why? Not only is having a unique product critical, especially when your customer becomes your competitor, which is what all these retailers are doing. And it is in reality is what Amazon does as well. They see products that are selling well in their store and they're like, can.

I make more margin?

Make more money? And the same thing happens even with Apple and the App Store, when they see apps that work, you know, for an iPhone that are going really well, if there's nothing proprietary, there's no patent preventing them from doing it. They'll just go and build it into their operating system as a new feature of their operating system.

I mean, this has been going on forever. This is exactly. We ended up with our infringement lawsuit with Palm Computing and Ideo early on. It's that exact thing. There was a developer network, and when something was going successful and doing well in the marketplace, they just decided to knock it off. And in their case, they took the knockoff Too far counted on the fact that we were too small and wouldn't sue and didn't really have a patent issued, which because it issued after they launched. So this goes on all the case. And this is why we have what we call an intentional invention process. So there are some times where we intentionally develop ip, even though it may not be the strongest or the most enforceable patent out there, we do it because it's a deterrent, because it allows our client to say, you can't go direct source, that you have to stay with me. It just gives you a little bit of leverage and a little bit of an option. And the reality is, in the consumer retail world, your Pad is never going to issue before then. I mean, it's just the pending part is enough of a threat at that time that you filed it. It may be published, but it hasn't issued yet. That doesn't matter because they're still going to be afraid of it.

Right. We've experienced many retailers, including Costco and Staples and Walmart, knowing that when they're put on notice, there's a patent pending, or when they're put on notice is an existing patent. They actually take that seriously and they don't want to get in the middle of that fight, so they'll go and avoid it. And this happened in one of those two Staples office chairs that I was talking about. We had a base, you know, that sort of star base that's made of plastic that all your casters pop into. We had actually a patent on the design of one of those bases. And because it had been used on another chair. Right. Remember when we said our client didn't want to get a patent that was on other parts of the chair, but that base had one. So when Staples went and knocked off our item, they knocked off everything about that chair down to the T, except they switched the base. And why'd they switch the base?

Because it was patented.

So they do respect it. We've seen Costco even worry about it. When somebody even incorrectly informs them or threatens that, oh, we have a patent on that, they try to stay very far away from that. So it can be a good defense against some of these problems. But to me, the most egregious thing that is just a little anecdote that I think you all might like to hear is that when we would develop our products and with the same factory stickers ended up using, you mentioned that we had done a twin scroll test with them. When we create a product, we go over there to the factory manager, we Review it, make sure it's okay, and we sign off on it. And I mean, literally taking a silver Magic Marker in one of those paint markers and signing the chair itself, our signature on it with notes, what's acceptable, what's not. And so what we learned, because again, everybody knows everybody over there and we have a lot of contacts, is that in the meeting where Staples was reviewing the chair and all that, the factory owner actually pulled out the original sign off sample that you had signed Tracy. That's right, to approve that chair. And said, hey, here's all the details. This is the original, this is what you want to make. And Staple said, yeah, that's what I want. So they actually used our sign off sample to confirm what the new product needed to be and then said, okay, yeah, use that as the specification and the sample to, to match to when you're building this product for us going forward. So it was really egregious and I guess blatant that Staples was knocking us off. It was. I'm very, very unhappy with Staples for a long time. I mean, even though legally maybe they had a leg to stand on, there was nothing to prevent them unless we want to go wage copyright claim against them, which we could have. For aspects of this chair, it was ethically just the wrong thing to do. But this is the reality of big business and retail. And whether you're in big box retail or on Amazon these days, things happen. Those retailers or online merchants, they have the keys to their castle. And if you want to sell through them, it's got to happen their way, or if they don't want you to sell, they won't. So it's very unfortunate.

It is. It's the reality of what goes on. And now private labelers are just starting to feel the burn of that and the realities that that goes on. But it's really worse for private labelers because they are not only in a tighter competition with Amazon and other things as things get successful, but they haven't probably gotten enough traction either. So they've made all this significant investment and they've worked all the things through and they've got all that going on and then all of a sudden they get to the top and they think, okay, good, I'm going to coast for a few months and make some real revenue and rebuild this and invest it in a new SKU or something like that, and that's when it all goes wrong on you. So they haven't really had the time to build a strong enough business underneath that. And that's really the big concern for the other thing is that what they don't also realize is that there's some solicitation directly to Amazon from the vendors going on. So when the vendors start seeing the orders increasing on something, if you do not have a good relationship with them, they're straight seeking out through trading parties and going to Amazon direct as well. We get this all the time. Yeah.

And so you help show them, hey, this is working. And it's starting to get traction. If you do not have something proprietary or you do not have a good relationship with that factory, they're not going to feel like they owe you anything.

Right.

And they're going to be all too happy to do whatever it takes to get more business. At the end of the day, they want to keep their doors open. This isn't even about copying that another course in China, you know, they have a bad reputation worldwide for copying people's things. They don't view copying things the same way we do. They view it and it's, wow, if you can make a really great copy of something, wow, you must be really good. And even better in some ways than the person who created the original. And that's something that's deeply ingrained in Chinese cultural history, that I'm not going to go into the lesson of why, but just accept that that's what it is. So they don't think here in the US we think, oh, you copied someone, you're not the original, you're bad. Yeah.

But in the case of the private labeling and what's going on there, it's just sourcing. I mean, if you make it in a special color or something like that, but that's really not proprietary. There's nothing proprietary about it where they're not protecting themselves. But I understand why, because you just don't know if it's going to have market traction. So before you get started, so if you don't know that it's going to have market traction and then you kind of go from there and you just start selling and now you get this SKU equity. That's what happens. So you build up your SKU equity. You've got it like all the keywords dialed in, it's starting to rank. You're free to change it, because if you change it, then it's a different skew and you have to start all over again. So that's kind of also a problem in the way that it works. You don't start out with that specialness with the item to begin with. And that Specialness costs, it costs the design, it costs the development. And sometimes you have to pay for tooling and other things. And so that's where it gets really costly.

Definitely can get costly. And the thing is, when you're putting something up on Amazon, especially because there are so many tools people can use to really find out how well something's selling, even if it's not their item, they don't have your seller account on Amazon. They don't see what your exact sales are. The reality is that they have the ability to really tell what items are tracking and selling on what are not. So not only is Amazon looking at that, but a lot of other competitors are looking at that. And if you're white labeling something, if you've sourced something from Alibaba that anybody else can source and put their name on it, once you show them, oh my gosh, there is really great value and sales potential in what this particular item or this type of item, they're going to go to school on you and say, all right, well, I have the money, I can go and import a bunch of those. And then I'll do some different keyword optimization and try to get my item ranking ahead of yours in search. And then I'm going to steal your sales, right? You're showing people a path to success. They're going to model off of you. So again, you can make a career, a business of doing that. But you've got to be getting in and out of things very quickly, right? Find things that work, light a fire under them, bring a bunch and blow them out, move on to the next thing you want. You expect to be able to sustain that same item year after year. You're not going to have sales growth, you're going to have sales shrink because you're just going to struggle and you're going to be competing with others very quickly. So that's why if you can in any way have proprietary products, unique bundles of products, you know, things that aren't going to be as easy for people to go and do as quickly. But of course, we're product designers and developers, right? And inventors. We're not really interested in doing something ourselves unless it's original.

That's right.

Different. And that's part of, we set the criteria, we'll research a potential market, figure out what to go make before we ever make anything, before we conceive of anything, right? Because that way we know a target market, and then we go and develop something unique. That isn't going to be. Me too. Me too. Is A very bad place to be on Amazon or in retail. It's just inherently risky and you're going to bang your head against the wall and you start losing your sales people bring it in. If you haven't stacked that next product right on top of the first one while you're in that upward curve trend, then you're in trouble. So I know we titled this when Amazon becomes your competitor, but it's true when Amazon becomes your competitor or any of your potential vendors or I guess distribution channels, resellers, whenever any of them become your competitor and they all want to become your competitor. I mean there's just two different things at Amazon. I wish we had the Amazon expert on here. I guess we're having some glitches in the communication, not quite happening. But you can be an Amazon vendor or an Amazon seller and they're two different things. Many of you may know that, but some may not. So an Amazon seller is someone that's products over Amazon. The Amazon vendor is saying they're selling them to Amazon and Amazon is reselling them themselves. It's a different situation. The first one is consignment. The second one is more of a traditional buy and resell relationship. And Amazon can buy it from. You'll sell it to them, they'll buy it from you. And then if there are others that are can also go to a factory and buy from them and sell, but they don't care who they buy it from. They can get the packaged product the way they want it. So there's no loyalty I guess is another real important thing to say. There's really no loyalty from Amazon or any retailer in terms of vendors. That may have been true 15 years ago where this is maybe before the big days of Amazon.

That's right.

There may have been a 15 years ago when you had a retailer like the Office Depot, a Staples or a. I don't know if Walmart ever did it, but there were more regional changes like in the Northeast as well there and Aims and some of these things, well, we've been taking over that kind of get to the world. But there may have been a time at which a retailer valued a vendor, their on time performance, their quality, all that sort of thing. And while they still care about quality and have to for safety reasons, the reality is the days of vendor loyalty are long, long gone.

Oh they really. I can't remember the last time you had enough business. I mean the more to get some of your business eaten away. Like they only let you get so big and then if you're too small, then there's absolute, absolutely no loyalty at all. There's not really even a happy medium in there. We see, this is why we see so many clients. And this is the one thing that I say again and again to those who want to get on the retail shelf. It is harder to stay on the shelf than it is to get on the shelf. And it's incredibly hard to get on the shelf to begin with. So that's saying something. And it's just really, really hard to keep your space because there's so many things that go into it. It's not just innovation and new products and new designs coming in and that has to be fresh all the time. Even if they still go back and buy by the same thing, you have to present to them quarter after quarter, half a year after half a year, depending season by season, depending on what category you're in. And there's also the factor of your delivery and your performance and all of those things go into giving you ratings how they get pitch you against other vendors in that scenario. And so there's really just so many ways that you can trip up. And that's really why we recommend so highly for those that are going to mass retail, not just Amazon, but going into that, that you really have someone who's guiding you through that process.

That's very important. That's right. I mean the worst, it's hard enough. It's hard enough a new vendor to learn about listings and to get on there. It's hard enough to become a vendor at any retailer. Maybe the only ones that are relatively easy to get into I think are the dot coms of the brick and mortar retailers.

Right.

So I think it's relatively easy to get on Costco.com, relatively easy to get on Target.com and that's a not a bad place to start if you desire someday to actually end up being on the shelf in those stores because that allows you to get a vendor number to get your foot in the door. And if you have some unique products that start to do well, then you can more easily then jump over. You're building sort of know I can trust relationship with the vendor and the buyers there. And you can jump over when you're ready and able to sell a product on the shelf in this store. But that's relatively easy. And in fact getting an actual product going and sold on product on Amazon in a listing is not all that hard either. But it's a lot of work to get it to rain and actually Succeed. The very hard part is just trying to go directly to be on the shelf at big box retailers from the get go. That's very, very difficult. You're going to have a long hard road to do that. So actually Amazon, as we're talking today about the problems of Amazon or any distributor retailer becoming competitive, reality is Amazon is a wonderful place to market, test a new product idea. And that's a different subject that we'll dive deeper into another day. But Amazon is a wonderful thing with a low barrier to entry to get a product up and listed. And the best thing you can do is to actually go and get market proof before you're going to go and invest heavy dollars in inventory or tooling things that are necessary in order to get a product on the shelf with mass market distribution in brick and mortar retail. So Amazon's a wonderful tool for that. But again, you'll be revealing stage in a test and if you don't have something unique or proprietary about it, again now you're revealing it before you've gotten a whole lot of sales, you're going to prove it out. But just all your competitors, if they can go and buy that that easily, they're going to say thank you very much, you just did all the research. Really what they're going to be is Burger king to your McDonald's, except that the disadvantages are as big as McDonald's and you've done the research and the homework, showed them essentially what street corner to put your store on and what price to sell your product at and what product to sell. And then somebody who can operate quicker than you and faster than you. It's the same thing. Faster than you and have more money than you in order to execute, can go to school on you and make more money on it to capitalize on that more than very unfortunate. So it is important that you have some unique proposition, right?

Absolutely. And it is really critically important that you also just be aware of your potential life cycle. Like when you know you're hitting up there at the top of your rankings, you know that you're at risk and you need to figure out a way to mitigate that. Bring in the next product, whatever it is that you really are going to be going for in that process. I am having a little technical issue in that I cannot see anyone else who's on here, but I can see that we have other viewers and Steve has notified me that he's on, but I can't see him. Yeah, I can't see him. So I can't I can't even see him to unmute him, so I don't know why that is. So, I mean, I have the control room and I don't know what's going on there. I feel I'm so frustrated with Google Hangout, it's not even funny. And I think we're just going to dump it and start with anew because it's not worked once since we started here.

Very unfortunate. Well, yeah, we have to work. Sorry, folks. Thanks for bearing with us. Well, let's continue having this good conversation and we'll apologize.

Yeah, I know.

Profusely. Over the text message a few times. And we'll have him on in the future after we've worked up the problem.

And just so frustrated by it. Anyway, sorry, let's move on. Yeah.

Waste everyone's time. So what other aspects regarding this subject do you think we need to cover, Tracy? Amazon becoming a competitor or really any retailer.

Any retailer becoming it. Yeah. It's not just that. I just think that I hear a lot of paranoia from the product community, from the inventors. From the inventors community. Not just the ones we have on here, but I hear them when I'm out in the field and everywhere else as well. I know you guys are frustrated, and this is stuff that happens. I don't want to be obsessed about it. I mean, it will happen, and when it happens, it's because it's a good thing. It's because you're doing well. It doesn't happen to those who aren't successful. And I think a lot of inventors cut themselves off with this fear of getting knocked off and actually don't get it out there fast enough. And that's the best defense, is getting out there faster. So if you really do have something special, getting it out faster is the best way because you get everybody struggling to figure out what's next, to figure out how to cost reduce it. And you can always be ahead of that curve. And that's really just the best method I can say. We talk about IP a lot and we talk about this sort of infringing thing that happens, but the reality is that we don't want you to get hung up on it for sure.

You definitely don't want to get hung up on it.

So what else, Tom? What else have you been hearing out there? We've been out and doing a bunch of live events lately. So let's touch on this. On why the power of Amazon. Because there's this guy who you met at a local event who wanted to. To I forgot what he wanted to do, but he wanted to like was going to go tool and make hundreds, tens of thousands of something.

Oh my goodness, this type of thing is so scary. You're right. I attend. We have in Southern California a lot of pretty big inventors forums, inventors groups, and they meet twice a month usually. And at a recent meeting, someone came to that with an idea for a kitchen. We'll call it a kitchen gadget of some kind. And quite honestly, when I looked at this, I'm like, okay, that's been done before. I really didn't think there was anything unique to it in terms of patentable function or unique function that hadn't been done before. I think that there could have been some unique design done to it. So if you wanted to build a brand on nicer design, kitchen accessories or, you know, have a particular style of things, you're going to sell into the kitchen accessory category. I think you can build a brand brand around that and enter on design. But in terms of function, he really didn't have anything unique. And his without discussing brand or design or any kind of strategy for business, he presented this to the inventors group and said, so I'm wondering if I should make 10 or 20,000 of these and put them out there and try to sell them. And I just couldn't believe that that was coming out of these now because this is not a seasoned inventor, somebody that's got a lot of products on the market. This is somebody who just has this idea aside of their day job and doing it. And I just said to him, please don't go manufacturing 10, 20,000 of these. I mean, that has scared me and feel for his family that would suffer when he's got these things towing his garage and he can't move them and he's wasted all that money. But what I said is what you could do. And if you're really passionate about this product, here's what I would recommend. Go make a hundred dollar a small run something that you can either make yourself or with relatively small resources, Joe, and make that and put it on Amazon and see at what price point is accepted. Will it sell at the price point you think it will? At the price point that you need to put it at? Will people appreciate the design, does it work? And then you can get a read on. Is this worth putting more money in to? Honestly, I really do the worth putting any money into. But if you're passionate about it and you want to do it and you think, all right, well, even though it's going to be functionally unique. I'm going to have my unique designs, patterns, whatever it is that I can copyright. And that's legit. You can do that, right? There are plenty of brands out there that haven't, don't have patents, don't make anything, but they have a certain quality of look, a style. Patterns are copyrightable and that is a natural property too. And it's actually easy to enforce that. So if you're really patent, that's something you can go ahead and do it. But personally I wouldn't have spent money on this one. But it's a good example of how I think you can use Amazon to test at the same time. At the same time, I think you really need to think about your unique proposition. What are you offering and why is someone going to want to get your product over lots of others? I don't think enough people are thinking about that. But even if you're not, even if you learn some of those things the hard way and you're going through it reinventing some wheels, still using Amazon as a wonderful retailer to use as a testing ground, approving grant because they'll let you put any product up there as long as you're not violating their policies in terms of use and copyrighted trademark, you can pretty much put anything up there. Some categories require approval for certain things, but it depends and it's really even the big box retailers, if you have a product that succeeded on Amazon, that gives you credibility when you go into them and are trying to convince them to buy it and put it on the shelf, that's a lot of times what they'll say, well, how's it doing on Amazon? And even if you're not going to make the exact same thing for Amazon, you're going to make a little different flavor of it that's unique for the retail big box retailer. If you're going to make a little different flavor of it, then so much the better because then that's unique and they may not have to price match when they, you know, because this happened of course, you know, I think with pair of Beats headphones buying them at Best Buy, a salesperson historian told us, yeah, you can get Amazon up on your phone and show them that it's there for $100 off, they'll price match it at the register for you. And while that sales guy was doing us a great service, he certainly wasn't helping Best Buy out. And I'm sure that the buyers and the executive management at Best Buy were not happy that they have to do that. So anything you can do to provide little flavors and unique assortments. So. All right, I'm gonna hang out now. You're starting to see a little intro here. Steve Creamy, who is with AMZ Alliance, a good friend of ours and complimentary business to what we do. He is an expert in all things Amazon. So do we hear?

Can we hear me? Yeah.

Yeah. Great.

It's so funny, I'm actually on my phone because the link that you sent that I just was sent from, I guess your assistant was through your text and I'm like, I tried to copy and paste it and it wasn't working. So I'm on my phone right now, but we'll figure this out. I think it appears that Google is going through a lot of genesis with hangouts, so hopefully these things will be worked out.

We've had nothing but problems lately, so.

Well, I agree 100%. Let's not take the rest of the time. We have the Google gripe session some of the points. So, Steve, can you share with our listeners some of the your words of wisdom regarding Amazon and what today's topic is about Amazon on becoming your competitor, which is a cautionary thing. And in future, Hangout, when we have this technical dialed in more, we definitely want you to go into the kind of service and benefits your company can offer to people. But for now, with limited time, can you help share some words of wisdom regarding working with Amazon and Denver?

Absolutely. And by the way, I've been listening to the conversation for about the last half hour, so I got a real gist of what you're talking about and your frustrations, which I totally understand. Coming from the background of inventing a product and taking it to market myself, I recognize the challenges and the struggles that go along with that. And I think that the number one challenge for any inventor today is speed to market. That's probably the biggest challenge from the standpoint that I think it's actually a challenge for all companies, regardless of what size they are. Because it used to be that you had a product cycle that may have been, let's say, eight, 18 months. Now, by the time 18 months comes along, you already have a lot of competitors on the marketplace. I'll give you an example. Brenda and I started actually selling Compost Pals about six months ago through Amazon. And to your point, we saw them for the first time in Costco the other day. So apparently people are understanding that that's a hot item right now. And I think that there's just no time to get to build a market or a brand before you have competition out there. I think that that was really the point that you're making. So what we do is we look at getting that path to market down to obviously as small a timeframe as possible and then not investing tons of money in a specific product, but basically looking at how can we make sure that we're keeping enough inventory to continue to obviously grow that marketplace, but not take too much risk. And so I think that that's where Amazon really comes into play. I can't speak outside of Amazon as far as getting into retail into brick and mortar. That's your wheelhouse. I think that that's a good start into making sure that if you want to launch a product, you can launch it through Amazon, at least in small quantities and test the market first.

That's really interesting. Steve, what do you think the biggest holdup for you in the development cycle has been? Why does that take so long?

Well, I'm coming from a background of electronics, so I think that from your standpoint, you may obviously feel that development cycle is a lot quicker. Certainly when it comes to consumer goods, it probably is. What's the development cycle that you're used to now seeing with a new product?

Development cycle of a hard product made in Asia, the whole chain thing, I mean, gosh, development of the product can take anywhere from 90 days to a year. Just depends on how complicated the product is. And then once you decide you're going to pull the trigger on a product, if there's tooling involved, that's at least a 60 day time period. And then manufacturing it and shipping it, you're 120 to 180 days between pulling the trigger on a new product and having it land in the US if it's imported.

So obviously for consumer goods products, it's a much quicker product cycle. I guess you're looking at on the outside, maybe six months from the time you're conceptual design, patent process and everything. Is that what you're thinking?

It can, it depends. I mean, for instance, we had some customers just recently that we were quoting a job for. They've got a product I guess developed to a point, but it needs a little tlc, fine tuning make it more efficient. And it was going to be about a 90 day process to get that out. I mean it can be that low.

Yeah.

And I think it's even easier if it's not your first product in a certain category. Like we have another customer who's doing water bottles of some kind. Right. And when you Put out your first one, take longer putting out a new version, you're experienced in it, you've got trust and a system in place. With your logistics of your factory and all that, you're not doing it for the first time. You can shorten that quite a bit. But I think in the world of retail and hard good products, I mean, developing a product in 90 to 120 days is not unreasonable. And it is a long period of time, no question. You gotta be projecting what's going to sell way ahead. And that's not easy to do in.

A world of seasonal like projections and forecasting and all of those things. Like, I mean, we work way ahead in terms of brainstorming and concept anyway. But the actual making of things before a buyer places it, I mean from the time a buyer places an order on something, so you have a design that you like, it's kind of no different than you guys find a pail that you really like or you dial that in. From that moment on though, for the most part, if there's not hard tooling involved, we can do that in 90 days.

Actually, just to add to that about the seasonal nature of things, let's say for a holiday product, something that's specifically for Mother's Day or Halloween or whatever, you've got a seasonal event. And I don't know how it. And I'm interested to ask you, Steve, I know how it is at brick and mortar retail, those buyers are looking at those products a year ahead, making the decisions of what they're going to buy. From 12 to 9 months ahead. How would it be for getting a seasonal product into Amazon? How far ahead do you need to be doing that?

That's a great question. And so the answer to that question is it all depends, I guess on risk and reward. For instance, if you know that you have a product that's going to sell around the holidays, you definitely need to place that order with the manufacturer probably about four months prior. Remember, we usually have about a 60 day cycle just to get it here, right, Unless you're going to have it airship, which is very expensive. But the other thing is, do you know really if that product is going to be hot? And that's the big challenge that you have and very difficult obviously to feel that way. I want to make a point though, getting back to what you said before, which was really critical about what happens when you have product of brick and mortar you put on the shelf and, and you're investing in tooling, you're investing in all these things. You Just don't know what the volume of product is going to be until you get it on the shelves. And then if it's a really good item, as you said before, unfortunately, there's a lot of people out there who don't really pay attention like they used to an honor system or patents or anything, because you have to have the money to protect those patents. And if you don't have that money and it could be a lot of money. So I think what happens, whether we like it or not, the world that we live in is such that a lot of the manufacturers in China, we get calls from them from time to time and say, oh, by the way, this item is really selling well. Well, that's probably the items that you guys designed and worked with somebody for a long period of time and they went overseas and they started manufacturing. Now we do some due diligence with that, but it's a big world. So it could be that maybe they did this with somebody across the country, or maybe it's somebody who's actually in another country and they're then coming to us because they, maybe they want to manufacture as much of that product as they possibly can. And as you said, they don't pay attention to patents like we do. And even if there are patents, they find a way around them a little bit. So I'm not saying that I think it's right or wrong, but the fact is, is that this is the world we live in now. As an Amazon seller, we really work hard to state integrity and do our best to find out if in fact, that product has patents on it, if that product is protected. Most of the time that's not the case because people have learned that going through that process is very tenuous. And let's face it, even if they have a United States patent, chances are they don't have a patent in China. So obviously, I'm rambling about that. The fact is, you hit the nail on the head. So at the end of the day, I really think going back to the speed to market, it's really about speed to market. And one of the best ways that we have found to launch a product is through going into Amazon and really getting it kicking as quickly as possible. And hopefully we have 18 months to two years before competition comes in. And unless we're willing to buy a tremendous amount of it, we usually at that point get out of it because it gets too competitive.

What about doing something like, she used kencourtright's phrase, stacking S curves. So if you found that it was going really well. I know that there's a sort of skew value, like there's a value to having gotten it ranked and everything. But if you were to do that, as you sort of see it scaling up and to stack the next one on top of it, is that possible to do and that next one be a little more proprietary? No.

That's a great point. And we've talked about that in the past. I think that, Tracy, that my feeling is that's the next step for us. So we have a silicone ice cube tray. We call them big chillers. They've actually done really well because we package them in a unique way. And I think that's probably another subject. But bundling and packaging is so, so critical to the success, I think, in any environment, especially on Amazon. So to your point, though, we've really done well with that. And I think that we're starting to see glimpses of some. There's always been competition. But interesting point. We've got two square ice cube trays, two jumbo squares that we put. We can't sell them for nothing. We pretty much give them away. We have a round and a square together, and we're selling the heck out of it. And it's just that combination now we thought about doing is because we've already established that big chiller brand. Coming in with something more novel, more unique, to your point, and investing a little bit in actually designing something that's the next big thing in silicone ice cube trays or freezing products or whatever, whatever it looks like we can use that branding will help us. But I want to make this abundantly clear because it's really difficult with Amazon. When you create a listing, that listing is for that product. It is unlike we see with ebay and some other sites where you're actually building your store doesn't work like that on Amazon. You're only building that listing. So you have to be really creative. You do get some kudos for your seller account, whatnot. But you really have to almost kind of basically close out that listing and start a new listing if you change the product much. So there's some really interesting ways that we can look at doing that. It is difficult to build on a new SKU or build on an old SKU and create a new listing like that.

So would that mean. Steve, there's really. On Amazon, you don't build a lot of brand equity. It sounds like that you won a new product equity. Well, future product doesn't benefit a lot from the brand success of an earlier product. Like you're saying each listing is unique, each listing ranks on its own. So it sounds like there's not a lot of benefit there. But are you really starting completely from scratch with a new product?

Yeah, in many times, many cases you do. But as I said before, there are some tricks that you can use and one of them is bundling, like basically take an older product and bundle it with a newer product. Let me just be clear that your seller account does have clout. And so the more that you sell on your seller account and the more that you create that, you've got the reviews, you've got the feedback. That's important. Now, I do believe that the social media aspect can help with the branding of the product. It's always important to recognize that if you drive traffic to Amazon, that helps. It can help in a big way. So even though Amazon doesn't necessarily recognize that as far as your brand or anything, of course it's important that you recognize that most people who go to Amazon for a lot of different products, unfortunately, they're not really shopping for a brand name. But you can work with social media to drive traffic to that, and then Amazon looks at that very favorably when you're driving traffic to them. The last point I want to make, and it's very important that we're starting to recognize this more and more. It has to do with how much we believe. Anyway, we don't have absolute proof to this, but we've launched a couple of products lately for people and we really felt that they would have done well. And they're not doing as well as we would like them to. And we're starting to recognize for basically trial and error that you have to have enough product in Amazon for them to really push it. It's almost exponential with them. It's really interesting. The more product you sell, the more they help you sell, and it really increases the numbers.

And that doesn't matter if it's across.

SKUs, I wouldn't say that so much. It really has to be in the same sku. And what's important is recognizing. And in your world, this is peanuts. But a lot of people, if you try launching up only having two or 300 units, let's say in Amazon, I don't think that that's enough anymore. It used to be, but Amazon's evolving too. And so I think that now you have to have 500 to 1,000 units to where you really start seeing some movement, because now they've got the ability to move the product around in their distribution centers. And keep in mind that their shipping costs is a huge part of their business. Right. Huge part of their overhead. So we're starting to see we used to send product all to one place. Now we're having to pay a little bit more in shipping and kind of split the cost cost with them. So here's the way I look at it, and that is that once you prove a product, it's very difficult to put a whole lot of money into a product. But like we talked about, let's say with the compost pals, because that market is still relatively young and still, I think, very attractive, I think where you really get the momentum in it is you launch, let's say, a more generic product and then you start working immediately on designing the next generation. Even though you have to kind of start from scratch, almost from scratch, I'd say start at the. Basically, you're starting at 20 miles an hour instead of at zero. You're still starting at a smaller point, but you could usually build that much faster in that marketplace because now you've got two products, let's say, that are sold by the same seller. And you get that up to the front page and people see the differentiation between that.

So, Steve, I want to make sure before the end of this hangout that I want to explain to our listeners a little bit about your company and what we do with you. And without taking a terribly deep dive, because there's so much to. We want to go very deep into what we do in a future hangout when we have all this tech completely from the get go. But the reality is we design and develop products, we work with inventors, and we develop some of our own products. And so to you, our audience, what we do when we encounter someone that has a product and they think that they're ready to start selling it on Amazon, we refer them to Steve. And this company is AMZ Alliance. And I can't even tell you how long it took me to realize that was an abbreviation for Amazon. I almost shouldn't admit that. But anyway, because Steve and his business partner Brenda are experts in how Amazon works, it's their job to figure that out. So while they sell some of their own products, they also offer their services to create listings and manage listings for other people and help them rank on Amazon. So that's the key.

But the thing I like most about you guys, Steve and Brenda, is that you guys are picky. Like, you don't take people who you don't think you can get them ranking and I appreciate that because it's not easy. It's really hard. It's got to have the right formula of all the things in place to make it work. And that's why we don't do it. I mean, I can't tell you how many inventors and product people I come across and I'm like, why are you doing this yourself? You're failing at it and you've been doing this for a year now and you're not even close to ranking. Why haven't you given this up already and turned it over to somebody? It's in and of itself an art and you guys do it well, right?

And I want to be clear, unless we need to go to. Thank you very much for the accolades and I thank you for recognizing that because we do not have is the ability to rank a product that is just not going to rank. And where you guys come in, if somebody comes to you, you can help them get that product to the marketplace with the most bang for the buck basically to really differentiate themselves from everybody else. And that's why I love working with together because I can tell you right off the bat, well, if they do certain things or they look at it, this is the price point they need to be in. So if they do choose to go to Amazon, at least they have a fighting chance. And it doesn't work for everybody. But we do our best when we can do it. So I appreciate that.

Well, let's close out real quick and thank you so much for joining us. We really appreciate it because your insight's really valuable and you're the guy on the inside there doing that all day in and day out. And we're just kind of casual observers. We have products that are on there but we don't do anything to make them rank. That's our clients jobs, unfortunately. So we don't have the inside track.

No, I think that as current members of the network and future members of the network who look at this and other hangouts we do recorded after the fact. We certainly are all connected and we have access to Steven, you will too. So if you think you're ready to get on Amazon, we'll make sure to connect you and need some expert advice and counsel on this and maybe even whether you want to try to create your own listing or not, I guess.

Yeah, you still may need some help. So anyway, I'm not sure what we're going to have for our next topic. We'll see what rises to the list for our very next topic. And maybe I'll post up a couple of voting lists. We had had quite a few various things. I think we needed to have more deep dive pricing discussion. But I'm also thinking because I just had such a significant conversation with some venture capitals and about how seed capital is just really requiring a higher level of sales proof market fit proof than ever before. So I think that's probably a significant conversation we should have as well. So maybe I'll throw that up plus another one that we had in the queue and see what's of interest there.

I think the venture capital funding your project is of extreme interest to inventor.

Yeah, that may be the one. So anyway, I'll post that up on the Facebook group. So go ahead and vote there and let us know what you think. And we appreciate your patience with our tech issues and we're doing our best to work them out and and I don't know, maybe it's no more Google, it's something else. Okay, thanks everybody. We'll talk to you soon.

Thank you.

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