This article is by Gary Huang, host of the 7 Figure Seller Summit for Amazon sellers.
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Recently, I interviewed over 20 seven-figure ecommerce sellers and experts. I wanted to learn the specific mindsets and growth strategies they used to scale their business to over a million dollars in annual revenue.
At the same time, I challenged them to talk about and explain the mistakes they made along the way. This was the vision behind the 7 Figure Seller Summit.
After speaking to these million-dollar ecommerce sellers and experts, I noticed some common themes between them. So, I’d like to share with you my top 10 takeaways that I’m implementing to grow my own ecommerce business.
Before we begin, remember that everyone’s business is different. You are selling a different product, in a different niche, to a different audience, at a different price point. Don’t expect to simply copy what someone else is doing and expect it to work the same way in your business.
Adapt and tweak the strategies you read about here to your own unique needs.
1. Drive and hustle to make things happen at all costs
Greg Mercer, the founder of Jungle Scout, shared this with me that based on the thousands of Amazon sellers he’s worked with:
The majority of people fail because they get too discouraged by the lows.
For example, with Greg’s first Amazon private label product, after a trial order and validating the idea, he ordered 2,000 units from China. They arrived and he was surprised to see that the packages had wet paint from the printing, because they hadn’t been given enough time to dry completely. They were literally stuck together and there was no way they could be sold!
This was a huge headache to fix, and Greg had a moment where he questioned himself, “Maybe I wasn’t cut out for this Amazon thing?”
So even Greg Mercer, one of the most successful seven-figure Amazon sellers in the space, had his lows and moments of doubt.
But rather than give up, Greg decided to PUSH THROUGH IT. He repackaged everything himself, fixed the problem, sent them in to Amazon and sold them. And the rest is history.
Similarly, Chad Rubin, the co-founder of Skubana, told me that to successfully scale your business:
You must be willing to do things others are not willing to do.
If you look at Chinese sellers, who account for a huge proportion of Amazon sellers now, many of them are willing to WORK LIKE ZOMBIES, according to Jimmy Dai, a seven-figure Chinese Amazon seller.
So are you willing to put in the DRIVE and HUSTLE and the HARD WORK to succeed?
2. Ability to learn and teach yourself and start NOW
Andy Humphrey, a seven-figure ecommerce entrepreneur, shared with me his marketing system using Facebook Live. This builds an endless audience of fans, boosting his sales and product launches. I asked him how he learned to do it.
He replied THEY DON’T TEACH YOU THIS IN SCHOOL. He wasn’t afraid to experiment, and learned it all on his own. Andy Humphrey said that he’s willing to take risks as long as it doesn’t kill someone!
You don’t necessarily need to go to that extreme BUT you should have the desire to learn on your own.
Mike Jackness shared with me how he created a “marketing trifecta” where he learned how to use Facebook Messenger, Facebook Pixels, and email marketing all together.
More importantly he told me that it doesn’t have to be perfect… just START NOW.
You might be wondering, “How do I learn this on my own?” Greg Mercer says he learns how to use software tools like Zapier from YouTube. It’s as simple as that. Learn from anywhere that you can.
But the important thing is to start now. The best time to start may have been a year ago, but you can’t do much about that. The second best time to start is NOW. The longer you wait, the further you fall behind.
3. Build a MOAT around your business
Many seven-figure sellers said outright that they are building a moat around their business. This makes it hard for competitors to copy them and take away sales. There are many ways you can build a moat, including:
Making your product hard to copy
One way to do this is with rapid product development and techniques like 3D printing to reduce the time required to create new products. Chris Davey uses this to cut development time down from weeks to days.
Jordan Lindberg uses personalization with his funeral products, which generate several million dollars of revenue per year. He offers custom engraving which is very hard for competitors to duplicate AND he can markup his products by 30% as well!
Using patents, copyrights, and trademarks
Legal methods help protect your intellectual property from unethical competitors. Even if you’re not a seven-figure seller, small solopreneurs can leverage these methods at a low cost.
In many instances they can do it themselves, according to John Di Giacomo from Revision Legal, a law firm which specializes on working with small businesses and ecommerce entrepreneurs.
Creating official licensed products
This is an advanced tactic to build a moat around your business. Paul Miller told me about the benefits of licensing big names like George Foreman, Disney’s Frozen, or even your favorite sports team.
This will not only prevent copycats from selling your product (unless they want to face a lawsuit), but has the added bonus of immediately gaining a built-in audience of raving fans to sell products to.
Building your own audience
Vance Lee and his business partner have raised over $980,000 from crowdfunding using Kickstarter and Indiegogo. He says that many Amazon sellers have a competitive edge, in knowing how to do deep customer research and product development with suppliers overseas.
If you apply those skills to crowdfunding your next product launch, you can instantly build an army of backers whose email addresses you OWN and can market to. If done well, you will get upfront CASH for your next order. This solves a lot of the cashflow pains that many ecommerce entrepreneurs have.
4. Spend 80% of effort on product selection and development
Two of the seven-figure sellers I interviewed have also sold their businesses for around the seven-figure range. They both spend around 80% of their efforts on product selection and development.
Sophie Howard sold her prior Amazon business for a seven-figure lump sum exit and continues to build her next business. She travels all over the world to build a small portfolio of profitable products.
For one of Sophie’s recent product lines, she sourced products from India, Australia, New Zealand and the USA. This is something most ecommerce sellers ignore as they only focus on China.
Dave Bryant sold his previous ecommerce company in 2016 for just under $1 million and moved to Xiamen, China to create another brand in the off-road market. Like Sophie, he spends 80% of his time on product development and 20% on everything else. His strategy is to launch and try out as many SKUs as possible.
5. SMART SMALL first, then double down on the home runs later
Entrepreneurs may be perceived as risk-takers, but I’ve noticed a common thread among smart ecommerce sellers – they CAP THEIR DOWNSIDE or limit their risk.
One way to do this is to place small orders when launching new products.
Dave Bryant says that if he had $20k to spend on inventory, he wouldn’t go all-in and place one large order. He would place smaller orders to reduce the risk. Instead of ordering one product, he would order eight products for $2,500 each. This way he meets his goal of getting as many diverse products to market as he can.
Sophie Howard negotiates the MOQ (minimum order quantity) down from her suppliers, which limits her risk of capital in the initial product launch phase.
Eight-figure Amazon seller Bernie Thompson told me that as he scales his business, he diversifies the products he selects like a venture capitalist. That way he gets more chances of hitting “home runs” – launching products that are best sellers.
Once you launch your products, you will discover that some of them are “singles”, some are “outs” and some are home runs. You will want to cut the under-performing ones and place more orders on the home runs.
The key is that you need plenty of turns at batting to get the chance to hit home runs. Placing small orders for different products gives you that.
6. Sourcing and learning from trade shows
According to a survey by Web Retailer, million-dollar ecommerce sellers are TWICE as likely to attend trade shows than smaller sellers.
I found this was even more evident after talking to the seven-figure sellers I interviewed. Many of them attend trade shows to source products, meet with suppliers in person, and quickly gain market intelligence about their products and industry.
KJ Robinson told me that he found the products which led to his seven-figure business from a trade show. He was able to walk the floor and quickly find the right type of product for his business. With some customizations, this ultimately became one of “Oprah’s Favorite Things” and transformed his business into an overnight sensation.
Jimmy Dai, a Chinese seller, prefers to source products from industry specific trade shows because he can meet the suppliers in person and quickly develop a level of trust that’s difficult to do online.
Which trade shows should you attend?
Besides Canton Fair which takes place in Guangzhou, China every October and April, there’s also the Global Sources Exhibitions in Hong Kong. These include the world’s largest fair for electronics and also trade shows featuring home, lifestyle, fashion, and travel products. Here are my top tips on attending Chinese trade shows.
You don’t necessarily have to fly to China to attend trade shows. You can visit them in your home country, or other countries where your competitors aren’t looking. Sophie Howard is a big fan of attending trade shows in India.
Attending trade shows is a best practice for wholesale ecommerce businesses as well. Eddie Levine from Wholesale Breakthrough told me that it pays to meet with vendors face-to-face at trade shows to build relationships and increase your chances of doing business together.
It applies to product licensing as well. Paul Miller goes to specialized licensing shows to build contacts with licensors. This gives him a leg up on the competition.
Besides building connections, you can gain marketplace intelligence quickly. When Jordan Lindberg sourced his first product, he went to a trade show in Las Vegas that he wasn’t supposed to be in. He didn’t even have a business at that time.
But he walked around, met a lot of vendors, asked a lot of questions and learned about his product’s supply chain, which led to INDIA not China. This ultimately paved the way to his seven-figure business. Had he not gone to the trade show, he may have toiled away on Alibaba and wasted a lot of time down the wrong rabbit hole.
7. Facebook Messenger is the next big thing
Many seven-figure sellers and entrepreneurs in the ecommerce space are using Facebook Messenger for marketing now.
Facebook Messenger generates insanely high response rates of over 90% according to Mike Jackness and the results from his own campaigns. It’s a great way to build an engaged list, as the open rates are much higher than email marketing. Mike said that there is a very low cost of acquisition right now, but costs may rise as more people jump on board.
Facebook Messenger can also play a big part in other marketing tactics such as Facebook Live, which Andy Humphrey is bullish on.
By using Messenger to build a list you can:
- Quickly build relationships with your audience
- Target them to boost your next product launch
- Inform them of your promotions to generate sales
But the key is to start now!
8. Know your profit margins especially if you want to sell your business later
Obviously an ecommerce business owner should keep track of their P&L (profit and loss account). But this is even more critical if you’re looking to sell your business down the line.
A buyer for a leading private equity firm said the typical valuation of an ecommerce business with annual revenues in the 6-7 figures range, is 2.5 to 3.5 times annual profit, plus the seller’s discretionary earnings from the business.
Dave Bryant realized that this meant every $1 cut from his expenses could mean $3 added to his businesses valuation. By eliminating his office and asking his team to work remotely, he saved $30k a year on expenses AND added $90k to the selling price of his business. A penny saved was THREE pennies earned!
For those of you without an office space, you could cut excessive marketing costs such as under-performing PPC ads. You can eliminate software that you’re not using, and reduce utility costs such as your mobile phone bill.
As a general rule of thumb, you should check your P&L every month and look for ways to decrease costs and increase profits.
9. Negotiate, negotiate, negotiate… and not just on price
When you think about negotiating, the first thing that comes to mind is probably price. But there are many other variables that most people overlook. By doing that, they are probably leaving money on the table.
All of the following can be negotiated to increase margins, improve cashflow and reduce costs:
- Payment terms
- Packaging and labeling
- Minimum order quantities (MOQs)
- Exclusivity deals
- Utility bills
- Software costs
- Shipping costs
And much more, depending on your specific business.
One HUGE takeaway when it comes to negotiating successfully is to JUST ASK. KJ Robinson revealed to me that this is how he got his product featured on Oprah’s Favorite Things. This skyrocketed his sales by 20,000 units overnight and almost instantly created his seven-figure business.
KJ also says not to be afraid to walk away. That may be easier said than done, but it is one of the keys to negotiating successfully.
10. The biggest thing you can do is to HIRE
Chris Rawlings has launched over 1,000 products on Amazon and told me, “The most high leverage thing is to HIRE.” Get another human being on board. When you hit a ceiling this will help you break through that.
When hiring, smart sellers know when to look for generalists and when to look for specialists. Generalists could be virtual assistants (VAs) as Nathan Hirsch taught in his session on hiring and managing VAs.
Several of the seven-figure sellers I spoke with, including Kelly Fedio and Greg Mercer, have a remote team. As a best practice, you should aim to be in the same time zone or at least have some work schedule overlap, so you can answer questions quickly and work more efficiently
BONUS TAKEAWAY: Surround yourself with a community of entrepreneurs
One recurring theme that surfaced among many seven-figure sellers is that they get support from a community of entrepreneurs to help them stay ahead.
Some sellers like Kelly Fedio get value from the networking aspect of meeting and speaking with other entrepreneurs.
Others such as Chris Davey learn from attending events such as the Global Sources Summit in Hong Kong and FBA4U meetup groups in Guangzhou.
If you’re a digital nomad like Vance Lee, you can even find support from like-minded entrepreneurs when you’re traveling in Bali or Thailand.
Your support community can be online or offline. If you can’t travel than the next best thing may be to attend online events like my 7 Figure Seller Summit where you can surround yourself with successful sellers to learn from. For a limited time, you can sign up for a free pass to view all the interviews.
Affiliate links in this article: 7 Figure Seller Summit.