Jason Sanchez is a true ecommerce veteran, having had his first taste of selling online in 1995.
Over twenty years, he has sold a range of products from novelty inflatables and swimming pool equipment, to fancy dress costumes. He now sells through eBay, Amazon and his own website CostumeBliss.com.
I caught up with Jason to talk about how his business his grown over the years, how he researches new products, and the challenges of selling through online marketplaces – both within the US and internationally.
Andy: What did you do before you got into selling online?
Jason: I went to law school and a guy I knew there had a brother, and these guys wanted to sell some stuff online. This was back in 1995.
He started building a website and the only legitimate search engine at that time was Yahoo. It was pretty quick and easy then to get your primary keyword phrases very high on the search engines in an organic format [without paid advertising]. I helped with the website and marketed it for him.
That’s what got me into this business. I finished law school and decided I didn’t want to be a lawyer, and I ended up starting an internet company retailing products online. That was in 1997, and it was my first real job post-education – a company I started on a shoestring budget. It was based in my own home. I filled up the garage with product, and had UPS and FedEx stop by every day in the afternoon.
Whenever I wanted to leave the house I would forward the business phone lines to my cell phone. I had the capability to take orders wherever I was, answer questions, and provide customer service. I did everything. After about a year that grew to the point where I needed a small warehouse space, and I needed to hire an employee. That’s pretty much how I got started.
I’d had part-time jobs but I’d never worked in the computer industry or in the internet industry before I started my company. I always was interested in the internet and how it worked, and I self-taught myself how to create websites, use graphics programs and databases and whatnot. I learned the basics, the big picture.
Did you sell on your own site or through eBay at first?
We were just selling through our own site. It was just a matter of get the website up, get it looking good, get it all optimized for natural generic traffic, and then get it listed high on the search engines. And on as many search engines as possible.
Once we had accomplished that, the natural thought was to find other sales channels – other populations or groups of people who are shopping in different ways. eBay was the next channel that we adopted after we had established ourselves on Yahoo.
What were you selling back then?
The website I initially designed in partnership with another company was selling inflatable furniture. That was bubblefurniture.com. It was interesting, kind of off the wall and crazy. But in the first year it did six figures in retail sales with very good margins. That really opened my eyes to the potential of the internet.
Next we did literally all kinds of inflatables. We sold inflatables that you might use in a swimming pool, and specialty inflatables for the advertising industry. If a company wanted to do an inflatable for a grocery store display we could handle that. We would design the inflatable and put the logo on it. We did Budweiser, we did an inflatable set for Nintendo, we did Bubble Yum bubblegum – there were quite a few.
We established a relationship with a factory over in China that was doing the custom inflatable work for us. We would do the design work on our side, source out the manufacturing, then provide the finished product to the client.
Back then was it just a case that if you built something, the customers would come?
Compared to now there was not as much competition. As the internet was building throughout the late 90s and early 2000s a lot of people weren’t aware of what the internet could be, and how powerful it was. But I figured it out in the mid 90s, and it was amazing how many people were on it in 1995.
I figured from that point it would just continue to grow and grow and grow, which of course it has. But I can remember in the late 90s, early 2000s, going to trade shows and looking for products to establish new websites. I would tell potential vendors that, yeah, I’m an internet company, and they didn’t even want to talk to me at that point. They didn’t think it was a legitimate sales medium at that time.
But of course all that’s changed now. By the mid-2000s the internet was well established. With the tech bubble in the early 2000s, people started to really understand the power and reach that you can acquire through the internet.
Which of your products did you start selling on eBay?
We took it all onto eBay, all the blow-up stuff, inflatable furniture, pool appliances and pool inflatables. We learned that for each sales channel there are nuances and specifics and different parameters that you have to work through in order to be successful. There’s always a learning curve.
eBay was a very good sales channel at that time, definitely one of the largest, but like the rest of the internet it was evolving and growing. The only thing that was really difficult about eBay at that time, was that from year to year they were making relatively large changes, which would then require us to make relatively large changes in how we were selling there. eBay has leveled out in the last few years though.
Initially when we started selling on eBay, the way to do everything was to auction off the items. But eBay made a large change in reaction to Amazon, when they really started to take away a lot of market share from them. eBay has evolved to be more of a fixed-price platform for us.
We still auction stuff but we don’t do anything like the auction sales on eBay that we used to. Initially eBay was more like an auction/classified ads type of platform, where you have one item that you want to put up for sale. But for us we always approached eBay with several hundred units of each SKU to sell. If it was a good item we might run 10, 15, 20 auctions a day for that one product. They’d all sell and then we’d do the same thing the next day. Now we just have the inventory listed on eBay as a fixed price item. But to get from that point to today, there was a lot of programming in the background that had to take place every time eBay made a change, so our system could keep up and process the data flow properly.
So how did you come to sell costumes?
There were a couple of catalysts in the history of the business that were really big changes for us. The first was when the terrorist attacks took place on September 11th, 2001. There was a recession shortly after and although it wasn’t a huge recession for us economically, our inflatable advertising business dropped off to almost nothing. The breaking of the tech bubble in March 2000, and then the recession, put a dampening effect on ad budgets and the orders just weren’t coming in. That part of the business was no longer sustainable.
Once that happened we asked ourselves, “Okay, where can we fill in the lost revenue?” We were selling a lot of other inflatables, so we looked at that part of the business. We found that a lot of our inflatable sales were focused on late spring and the summer, because they were being used outdoors in the swimming pool environment or at the beach. We thought, “Well, we’re pulling a lot of traffic for swimming pool keywords. Why don’t we add some swimming pool equipment?”
So we started selling a lot of pool pumps and aftermarket pool equipment to go along with the swimming pool inflatables that we had. We built a relatively large business selling pool equipment, a market which is very focused on the late spring and summer seasons. We had to graduate to larger and larger warehouses, and were probably on our fifth location in terms of warehouse size. But we had a seasonal product and during the fall and winter months our warehouses were relatively empty, compared to what we were looking like in the spring and summer. So I thought, “Well, we need to find a product that is by nature seasonal, with a peak in the fall or winter which then drops off so we can fill up with the summer product lines.”
So I was doing some research, looking for keywords that got a lot of traffic during the fall and winter. And of course I found that Halloween costumes, and Santa Claus costumes, were very punctuated seasonal products. So we thought we’d pull in a few Halloween costumes and some Santa costumes and see how it does. The first year we sold about a quarter million dollars’ worth of Santa Claus costumes alone. It was tremendous.
It was around 2004/2005 that we started doing the costumes. We saw a lot of potential in it, and it was growing nicely. For several years we had a nice balance where as our costume inventory was depleted in mid-winter, our shipments from overseas with pool equipment were coming in. We were stocking the warehouses up, so that by mid to late spring we’d be ramping up for our summer season. Then as our summer season was going down and we were running out of pool equipment, our Halloween and Christmas costumes were starting to come in, in larger quantities. We had a nice cycle going.
So you could keep the warehouse running at full capacity all year?
Yeah, it just worked. We had an empty space and full-time employees. Good employees are somewhat tough to come by. When you find a really good one, you don’t want to let them go. I’d rather find a new product line and keep more good people employed full-time, than say, “Look, we’re just a seasonal company and we can’t keep you after the high point of the season.”
Each year, as we hire seasonally, we always find several really good employees that we want to keep. It typically works out that we’re able to keep those few because of the extra growth that we’ve been seeing from year to year. So that’s another factor. There’s an opportunity cost from losing a good employee versus trying to find the next one to replace them. You might have to go through two or three employees before you find one that really fits, someone who’s productive and gets along with the rest of the staff. So good employees are very, very important to us. Between the empty warehouse space and the idle employees, it really made sense.
On a side note, I’m a complete Star Wars nerd. The first movie I ever saw was Star Wars, the very first one that came out in 1977 when I was six years old. That had a huge impact on my life, looking back. So I’m a science fiction geek, and I’ve always loved the superhero stuff. I didn’t think to do the Halloween costumes for that reason, but it really fits into it. It’s market research for me whenever a new superhero movie comes out that’s going to have licensing and costumes, and a really fun and interesting part of the job.
Which sales channels did you start selling costumes through?
We were already familiar with eBay, so everything went up on there. We established our website and at that time Amazon was really starting to grow a lot. So we adopted Amazon as well, as a trial sales channel. There’s some smaller ones like Sears and Rakuten, which was Buy.com, but really the big players were our independent site, eBay and Amazon.
And how was the pool equipment side of the business doing?
When the housing bubble in the United States crashed and then popped in 2008, that pretty much killed our pool equipment product line. A lot of the pool equipment we sold was for new construction, and people buying pool pumps for the first time because they’re putting in a pool. With the housing market crash and the recession that we had, there was a big drop off in construction and a big drop off in new pools. There was a lot less money to spend on that kind of stuff.
When you have that combination, basically what happens is the pie gets smaller. Those of us that are competing, are all now competing over fewer sales. That, and a couple of other market conditions, showed us that we probably ought to just drop the pool line and focus on the costumes, because we realized that the costumes could sustain us year-round. And we could turn it into a much larger business and not be so seasonally dependent. It really surprised us how much interest there is in costumes year-round. So around 2009/2010 we phased out our swimming pool products.
Since then we’ve been exclusively costumes. Another thing we learned is that children’s costumes, which is the vast majority of what we sell, are somewhat recession-proof. We’ve seen ups and downs in adult costumes. An adult will wear a costume if they have a Halloween party or some other sort of costume party. But adults typically don’t buy costumes just for trick-or-treating on Halloween. If you have a downturn in the economy fewer people and businesses will throw Halloween parties, and so fewer adults are going to need a Halloween costume.
We saw tremendous sales of adult costumes before the last market crash in 2008. After that, the adult costumes dropped off dramatically but the children’s costumes didn’t drop off at all. In fact we kept growing. Adult costumes have slowly but surely come back, but not to the level it was before. I noticed just in my local area, when you get into October you see the restaurants and nightclubs throwing large Halloween parties. There was just less of that going on several years ago. But the nice thing about children’s costumes is they seem to be relatively recession-proof.
In the neighborhood we live in, Halloween’s a big deal. All the children are dressed up, and at almost all the houses there are people out on their front porch handing out candy. As parents, if we were in a financial situation where things were very tight for us, we would prioritize things around our children. We don’t want them to miss out on an experience, because you can’t get those years back when you’re a child. So they would still get a Halloween costume. Probably not a $100 costume, but still something that they’ll be happy with so they can go out trick-or-treating. I’m sure most parents have that attitude.
Yes, absolutely. How do you find that eBay, Amazon and your own store compare in volume of sales and the amount of effort and admin overhead that you have to put in?
Amazon and our independent websites are pretty equal to each other in terms of the sales we’re doing. eBay is not as strong as Amazon, but we find that our profit margins on eBay and our independent websites are considerably better than on Amazon.
The way Amazon has created their platform, with immediate competition on each listing, makes it very, very competitive so the margins get squeezed quite a bit. On eBay and our independent websites we have a lot more control over how we present the product. Our listing is our listing, and nobody else is on there. We control completely how it looks and what it says, as opposed to Amazon. With Amazon, what typically happens is if you show up with a product, in all likelihood that product has already been listed. So you add yourself to that listing.
On the flip side, if the product’s not on Amazon you can create the listing. But somebody behind you who also sells that product can come in and add themselves to the listing you created. Then they can contribute information that might change the description, and you have no control over that whatsoever. A lot of times it creates frustration.
If there’s a real issue you can push that forward and have an actual person take a look at it. But there’s so much stuff going on, there’s no way that you can have a human go in and look at everything. From time to time another seller who comes onto the listing mistakenly thinks that the item being sold is something else. Then they essentially provide misinformation for a listing, which means if the listing is not accurately described the consumer that buys it doesn’t get what they thought they were going to get.
It’s not a huge problem, but at least one or two percent of the sales that we have on Amazon are subject to that issue. We go in and put our item on a listing, and then that listing changes later and we’re not aware of that change. Then we find out because one of our customers buys something from us and they tell us that what they ordered is not what they actually received. Then we go back and figure out what happened.
It’s a problem I hear about a lot. Do Amazon need to do more about it?
Amazon has gotten a little smarter about that, so you have to present a valid UPC code. Then you can tell by part of the code who the manufacturer is. It has got better where it’s not hard to tell exactly what the item is, because attached to the listing there’s a UPC code, the manufacturer name, images and description. You can usually be pretty close on that.
But the Amazon system will actually go in and merge listings, if it thinks that two are the same. A lot of times Amazon will merge items they think are duplicate listings, but they’re not. They’re actually two items that look similar but are made by different manufacturers. If that happens, we have a 50% chance of Amazon getting it right and merging it as the item that we thought it was, versus them merging it as the item from the other manufacturer. It’s one of those things where again Amazon doesn’t have the resources – and no one really would – for the huge catalog of items they have now.
There’s just no way to do it from a business perspective to go in and review all the listings by hand, so Amazon has programs that use their own factors to merge items. Then sometimes we go in and say, “Look, there’s way too many listings for this product and some confusion caused by these other listings that are supposed to be the same thing.” So we’ll put in a request for Amazon to merge the listings, and most times they do it. It’s an imperfect system, but it’s not realistic that any system’s going to be perfect, it’s just not the way it works.
Has your eBay sales volume changed over the years?
eBay’s declined for us basically. I think the majority of eBay’s decline is due to Amazon. We saw the growth in Amazon that took place, and eBay slipped back for us as Amazon grew. It really is a function of traffic, and eBay doesn’t get as much traffic as Amazon.
However, eBay has a loyal following of shoppers, and if you are not on eBay you are missing an important population of consumers. What we see is that most people tend to be habitual in how they shop. Once somebody has got used to shopping on eBay, they tend to keep shopping on eBay. It takes a lot of effort to get them to break that habit.
It’s the same thing with Amazon shoppers, and especially with their Prime program, because once you invest in becoming an Amazon Prime member, and you’re comfortable with Amazon’s platform, you’re not likely to change. I’m sure a few of us, like me, will check several sales channels to find the best price, but most people won’t do that. They look for the best price on Amazon, or they look for the best price on eBay. Or they’re just used to using a search engine to find what they want, then buying from independent websites. Nonetheless, if you’re not set up to take advantage of those sales channels you are missing quite a few consumers who don’t shop outside a single channel.
What software do you use to manage your business?
I think one of our strengths is that we have a strong IT focus. We have programmers on staff, and we spend quite a bit on a yearly basis in terms of IT resources and development. We created all the software that our business uses to run in-house. If we had looked back in the mid 2000s, and tried to find an off-the-shelf solution, we wouldn’t really find anything that did what we wanted to do. We knew that as other sales platforms developed, we wanted to be able to integrate the data flow the way we wanted it integrated, and to use it the way we saw fit.
We also wanted a platform that would specifically address our product lines. One product line to another can be very, very different. The way that you store an item, and the way you pick it and pack it, when you talk about our Halloween costumes versus our prior pool product line, there were night-and-day differences. You can imagine the difference between the way a typical costume is packaged, versus the way a pool pump is packaged. The requirements of storing, they way you pick and pack, the different equipment that gets used, you might even have your packing stations set up differently if you’ve got enough volume of these different kinds of products for your packing lines.
So for us, the IT aspect of the business is very important because it affects how we store stuff. Our system basically generates data for us, and then tells our warehouse people where to store certain things. If you’ve got a higher volume item going out you want it closer to packing lines, so that that item doesn’t take as long to retrieve, versus an item that doesn’t go out as frequently.
Or perhaps an item for which we have extra inventory, that inventory needs to go on upper-level storage versus the lower-level hand pick areas which need to be sold up. You don’t want a lot of redundant stuff there, and have to use equipment to get up higher, because it takes longer to make those picks. So we did all our own software that takes care of that, and also keeps track of which items are selling stronger. Then the software handles our sales and marketing, on eBay, Amazon and any kind of sites. All those sales channels are integrated within our system so that we can have a big picture that allows us to make decisions.
We can see for example if we’re going to run out a month early at the current sales rate, and it’s an item that we do not carry too much outside of the Halloween season. We would have that item tagged in our system as a Halloween item. It’s probably a dormant product for at least six to nine months after Halloween, and it picks up and starts selling again for the three months up to Halloween. For that item we want to sell out by Halloween, but if we’re going to run out early then it makes sense, if you’re getting a better margin on it through eBay, to raise your prices a little bit on Amazon. You try to run out at the optimum time plus get the best margin that you can for it at the same time.
Did you see any effect on your business from the new eBay search engine?
Yeah, actually we did. The first thing is we had to go in and understand, “What has eBay done?” They’re not going to tell you exactly what they’ve changed in respect of the search algorithm. Everything is driven on the internet through keyword searching, so eBay is extremely keyword driven and the way you acquire the most traffic is by getting your own listings with your main keywords pushed up towards the top of the search results.
That’s the idea – get yourself to the top of the search results. So eBay tells you, “Hey, we’ve increased the number of characters you get to use in your title.” And they’ll suggest to you things like, “Don’t repeat the same word in the title because you’re just wasting characters you could use for something else.” But what eBay doesn’t tell you is how they weight what’s in your listing versus what’s in the title. A lot of that is just guesswork, but some of it you can determine by reverse engineering. You can experiment and try things and see how things work.
But honestly, in combination with their search algorithm changing, they also give weight to listings that acquire more sales as a proportion of views. So if people are clicking on your eBay listing but they’re not buying, that actually will reduce your search exposure. You move down in the search results as opposed to maintaining or moving up.
Another aspect of it that we discovered was the pricing part where, if you’ve got a new listing, eBay initially gives it a boost. But that boost ends, and your relative position in the search results falls. The one sure way to get your relative position back up is to lower your price. That’s a big part of the algorithm for eBay. Once you lower your price, you’re going to move up, you’re going to pick up more sales, and then you can incrementally raise your price back up to be closer to your competition.
So if you have a competitor that’s selling a costume for $40, and you show up with a newer listing for $40, for a few days you might be ahead of them because you’re a new listing. But once that ends you can drop way down the search results, because if you don’t have the sales proportion that competitor has, they’re still going to beat you. So you’ve got to lower your price for a period of time, which allows you to establish a good sales ratio of views versus sales. Your listing will rise and eventually overtake that competitor, then you can bring your price back up. Of course in the meantime the competitor might see your activity and lower their price to a sale. But that’s competition and that’s what benefits everybody as a whole.
You mentioned that your products aren’t quite as seasonal as we might think, but is Halloween still responsible for a large proportion of your sales?
Yeah. Within the month of October we do more than 50% of our sales for the year. What really surprised me was there are categories of costumes that sell well year-round. In fact we have some costumes that don’t really sell for Halloween, but outside of Halloween they sell great. For example the entire Comic Con genre of costumes let’s call it. You have an age group of teenagers and young adults that are into Cosplay and dressing up as super heroes, and characters from Star Wars and Star Trek. There are entire conventions just for Star Trek. And if you go to a Star Trek convention 95% of the people will be dressed up as some kind of Star Trek character, whether it’s from the original series or from the newer movies or the series that was out in the 90s.
The people that are interested in costuming as a hobby drive a lot of our sales throughout the year. Then there might be a fund-raiser that takes place with a 1920s theme. So you get sales of 1920s costumes year-round. Another popular theme is a 70s party or an 80s party or a disco party. Those kind of costumes are relatively strong sellers year-round for us because of all these unpredictable little events that take place throughout the year.
We have other events that are slightly more predictable, like when Prince William and Kate Middleton got married we completely blew out of all of our Union Jack dresses. We had a couple of different costumes that were essentially a Union Jack mini dress, and noticed the sales picking up about three months prior to the wedding. We might normally sell three or four dozen of those throughout the whole year, but were selling a lot more, and our system pointed it out because it shows anomalies.
When I first saw it I would think “What’s going on? Why suddenly the interest in these dresses?” I wasn’t sure and I just basically threw the question out there in front of my staff. One of the girls said, “Well, William and Kate’s getting married in a couple of months.” So I said, “Alright, let’s go ahead and get another couple of hundred of these things in stock and we’ll take a risk.” Sure enough, the closer we got to that wedding it was on peoples’ minds, and we sold the majority of those Union Jack dresses in the US.
How do you research products before you have a sales history for them?
Terapeak is a big part of that and also we use Google’s AdWords tools. We also pull down data on searches that are on Amazon as well as some other search engines.
Terapeak is very valuable in terms of showing you trends. The way that they present the data you can filter it and find opportunities that other sellers are doing well with. It’s relatively a no-brainer to pull those items in. We’ve actually put up a lot of new products and found a lot of different SKUs because of Terapeak, and the sales histories we can see for some of our competition.
One thing we do is look at what competitors are doing. If you have a competitor that’s doing something the right way and they’re doing it well, you gain some ideas on how they do it and then you apply that to your own system. You’re not necessarily copying them per se. But if we take that idea and do a variation of it, we can actually make it even better than what they’re doing. It happens all the time. A lot of times if you have a competitor who is doing really well, and just outpacing you, the best thing that you can do is learn from that competitor. It’s funny in business, for the most part people are cordial to each other and they’re willing to share ideas. But we’re not willing to give away some of the big secrets, some things that are so intrinsic and proprietary to your company, you can hurt yourself if you give away too much of the learning curve that you had to go through to create what you have.
However, there are a lot of things that are out there that are just kind of obvious. Like focusing your eBay title, and being specific about what it really is. I find that that little bit of advice right there can get people a long way. Now, they’ve got to go and create the titles themselves and figure out exactly what specific thing is going to work in that title. You have a limited number of keywords you can put in, and if you put two keywords in there that are not really being searched for that somewhat hurts your chances, and could bring your relative listing exposure down a little bit.
That’s one of those things that you glean by trial and error and by experience, and by just getting out there and doing it. If you keep your title relatively simple, to the point and specific with relatively high traffic keywords, then I think that’s better than adding extra keywords. That’s just one small factor on where you show up in the search results on eBay. It’s a forest and you have all these individual trees that you’ve got to go around and water and take care of. The better each tree grows, the healthier your forest is. And that forest is what gets you the better placement and more traffic, which should then result in more sales.
Terapeak uses historical eBay data, do your findings from that research apply to selling elsewhere like Amazon?
Yeah, if we see an item that has sold well on eBay that we don’t have, we go back and say, “Okay, this item, if it’s popular on eBay it’s going to be popular on Amazon.” There are a combination of factors that make an item popular in terms of selling it on the internet. The first thing is just the item itself, what is it? Is it well designed? For us as a costume, is it a cute costume? Is it a good-looking costume? Is it a costume that really fits what people are looking for, if they’re looking for that genre of costume? The product itself is important.
Once that’s out of the way, another barrier to selling is the price. A costume that’s a lot more expensive is not going to sell so well. There is a sweet spot for pricing on costumes, where the median price for us is probably somewhere between $30 and $35. Once you go above that the sales drop off. And once you go below that you might run into a situation where the perception of values drops to where people are wary that they might not be getting a very good quality costume.
An interesting thing about selling costumes on the internet, is it’s an item that you wear. It’s amazing to me that so many people are willing to buy clothing online that they haven’t even tried on when they get it. And that’s another barrier to making sales. So if you make your return policies more flexible and easier for the consumer to exchange, or to send it back if it doesn’t fit them properly, then that reduces another barrier to making the sale.
Is selling internationally a large part of your business?
Selling internationally is a significant portion. We’ve got somewhere in the neighborhood of between 10% and 15% of our sales going overseas right now. eBay has actually been really ahead of the curve on that one because with the Global Shipping Program they take the difficult part out of the process. If you’re part of GSP eBay will charge the customer on your behalf and let the customer know, “Hey, this is the extra charges.” We don’t see that money, eBay just takes it and uses it to handle the shipping.
It’s been an excellent program. In fact something I hope Amazon will look at adopting because that could be a big deal for them. We’re actually developing software now to do a similar system for our independent websites, that would send our products to a freight consolidator in the US who then consolidates our packages with other companies’ packages, that then go over as bulk shipments. The international thing is a huge growth area. But the barrier is determining shipping fees, import duties and taxes that take place.
Even shipping to Canada, there’s some inconsistency where we can try and nail down everything upfront and charge the customer for it. But if the Canadian postal service thinks that it’s something other than what we said it was, then the duties and tariffs are different, and the package is delivered with a bill. That’s just a negative experience for our consumer, and sometimes they will say, “I’m not paying the bill, I’m just refusing the package now.” Then it comes back to us months later, and underneath there’s a charge-back and we don’t have the item, and it’s just a huge pain in the butt really.
So the barriers to international sales are just simplifying the process. Paying the tariffs is not a problem as long as we can get that taken care of upfront, as opposed to having something change before the package gets delivered to the consumer. And the consumer gets hit with an extra bill from their own government.
What do you think is going to change next in the world of ecommerce?
One of the big changes that’s still happening now is the way in Amazon have dissected the overall marketplace on the internet. There was a reaction to Amazon from a lot of manufacturers, where some manufacturers said, “No, we’re not going to allow our products on Amazon,” because Amazon was dropping the prices too low.
Then there were other manufacturers whose reaction was to put in MAP pricing, minimum advertised pricing. That’s a double-edged sword and it usually doesn’t work, because of the technical aspects of trying to police MAP policy. It’s just so difficult. Then there’s the fact that if Amazon’s buying directly from you, they’re probably your largest customer. I think some of that’s started to shake out now with some MAP programs going by the wayside, and others sticking by their MAP programs and developing their resources to police it. Then others are not on Amazon at all.
I think this Amazon effect is going to cause some further changes down the road. You’re starting to see companies like Walmart react to what Amazon’s doing. They have been slow to the game, but then their focus is not the internet as much as their brick-and-mortar stores.
You’ve also got Jet.com coming onto the scene, which will be interesting because the guy that founded it was a big competitor to Amazon. Amazon bought his company and he worked inside of Amazon for a while. Then he left and started Jet.com. From what I’ve read about his vision and how he wants to do things, it’s an interesting concept. I think it could have some merit. But a lot is going to depend on if they can persuade people to sign up for a Jet membership when you’ve got Amazon in the marketplace. It is good that Amazon has some competition on the horizon, because they need it. But that’s the general way of things. Amazon has come out and done things a certain way and it’s been a very successful model for them – from the standpoint of gross sales.
Google has been dabbling in a marketplace that would compete with Amazon for a while, but they haven’t really focused on it. So far the companies that are out there that could compete with Amazon, they’ve talked about it and alluded to the fact that they’re going to, but then they just haven’t really done anything substantial.
Jason, thank you so much for telling us your story and sharing so many great tips for other businesses.
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