AS 81: How Ed Kohler built a 7 Figure Amazon Wholesale Business
22 Mar 2017
Today I’ve got an invincible king on the show, coming live is Ed Kohler, who’s 43 years old has been selling on Amazon for 3 years and is now doing 7 digit sales for more than a year.
What you’ll learn:
- How Ed built his 7 figure amazon business
- Channels he uses including one big golden nugget
- How he expanded into office space
- Multi-Channel Fulfilment
- Wholesale strategies
- Wholesale problems Ed faces
- Predictions and analysis of Amazon landscape
- Amazon wholesale strategies
And much more!
DAVID ALADDIN: Great to have you on the show, Ed.
ED KOHLER: Thanks, David.
DAVID ALADDIN: So, can you take us to the beginning before Amazon, where did your journey begin?
ED KOHLER: Well, I guess as far as songs of our line it goes back quite a ways. That should have, I think I’ve set up for eBay at around 10 years ago, so I’ve sold stuff online for least that long. I think that’s a lot more tedious at that time because you’d have an auction closed and then you’d have to wait for a check to arrive in the mail, wait for the check to clear before you ship stuff out so that was pretty slow. But actually back then I also ran a small sporting goods software clothing company, where I’d sell stuff for a cross-country ski racers. I’m up in Minnesota. We have snow and so I built my first website around ’97 and actually I think I built it using the Aishima editing within Office ’97 which is tedious, but you know I learned something from that. But didn’t go into ecommerce in any larger way until recently. But it was still pretty fun at that time.
DAVID ALADDIN: Did you get like www.ski.com, or one of those crazy domain?
ED KOHLER: That would have been awesome, but yeah, I somehow missed the land grab-on on domains. That would have been cool. But actually, the product I sold was pretty fun. It was called the hand, and it was wind proof jockstrap for cross country ski racers because when you’re skiing wearing lycra ski suits and it’s 10 degrees or colder outside, there can be some issues for guys. So this product was four fleece jockstrap. Basically they had like a soft flex shell on top of it so it cut down on the wind. So anyways, it was called the hand because it was black with a white handprint on the front of it. So it made it kind of fun. But I’d get emails from moms of high school cross country skiers saying, can you make this without the handprint on. Yeah, yeah. Of course the kids want it with, because it was cool.
DAVID ALADDIN: So how much did that like retail for?
ED KOHLER: Like 17 bucks.
DAVID ALADDIN: Pretty good.
ED KOHLER: Yeah.
DAVID ALADDIN: It was a one product website?
ED KOHLER: Yeah.
DAVID ALADDIN: That how it started?
ED KOHLER: Yeah. I’m creating a bra. A sports bra called, The Hug.
DAVID ALADDIN: How did you get into that?
ED KOHLER: So, well, when I was into cross country skiers this is like the product to have. And I…
DAVID ALADDIN: Oh.
ED KOHLER: I don’t know. I have always been a little bit unto girls so I called up the guy that, who happen to create the product. He happens to live not too far from me. And I asked him if he wanted someone to be a rep for him because I travel around the country racing a lot. And he said, you know actually, I’d be pleased if you’d buy the company from me. I’ll just sell it to you if you’d like, because it started to come a little bit of a hassle for him so this is before things like [Inaudible] existed and so you’d have like the biggest holiday rushes like red roll on a holidays and so it’s like, it’s the last thing you want to be doing was going actually, physically into the post office as a huge stack of packages like, which was tedious. But, so I think for him, it just became a hassle. So then it became my hassle instead. But it was so fun. I learned a lot about just like an entrepreneur like, just everything that you might need to know how to do, like create labels, or ring in supplies, or you know dealing with supply-chains issues, manufacturing. Like, there’s a, you know, it was all a very small scale, but still you’ve got a taste of everything.
DAVID ALADDIN: So, did you acquire it from him or did you end up selling that business?
ED KOHLER: I end up selling it. I bought it from him
DAVID ALADDIN: How much did you get for it? Hope you don’t mind me asking.
ED KOHLER: Oh, I didn’t get much for it by the time I sold it.
DAVID ALADDIN: Yeah.
ED KOHLER: But I kinda gotten eventually in the same thing that he did like started a family and stuff. And got busier…
DAVID ALADDIN: I hate that.
ED KOHLER: Oh, it’s a hassle for me now. So, it was not quite big enough to deal with, but…
DAVID ALADDIN: Yeah. And so, ’98, you had a small size setup and then in 2007 you had the eBay setup. And you did that for 10 years. And how many, like trolling on eBay I’ve actually started to see, you know I’ve doubled up there. Let’s talk about strategies on eBay, because I feel like we just list products a lot on eBay and we don’t really focus on increasing sales. Is there things that like I’m missing out, like in terms of what I’m doing with my listings?
ED KOHLER: Well, I don’t know. I think there are a lot of things, like there’s just so much going in Amazon. Just syndicating your content can be a good way to pick some incremental sales. If you’re selling replenish-able products, then there’s more justification for doing that, you know.
DAVID ALADDIN: I see.
ED KOHLER: If someone’s business is just purely retail arbitrage, where you know, you’re buying just a handful of items that you’ve find on sale somewhere, you put one in Amazon. There’s not a lot of incentive to really syndicate those around to other places because they’re just going to come and go. Like you have more of a challenge of finding enough inventories often than figuring out how to move it. But if you have products that you can get in larger quantities or replenish-able, then maybe it’s worth syndicating them to other places like eBay or other stores, but, I don’t know. For us, like still one of the primary things we use eBay for was just to clear out our returns so when stuff comes back we’ll put it on eBay at 99 cents together with the party mail shipping and you know just let it ride so it’s gotten a week. So…
DAVID ALADDIN: Poor eBay.
ED KOHLER: So it doesn’t just keep accruing. Well, people they get some good deals out of it. There are things that, people definitely have gotten some good deals, but to me the deals, I just need the space back so it’s good for that. But I do syndicate all of my inventory over there, and use Ship Station to tie that all together for fulfilling orders. So that Ship Station is probably one of my favorite pieces of software. It’s just such an efficient thing to use but like when I put something on eBay, if it’s something saying, like what the Ship Station rule I’ve set up are, when… when the eBay order comes in, the Ship Station firsts checks to see if the product is stock in Amazon, and if so it will fulfill the order, you know from an Amazon warehouse. And if not, it kicks it to me and then we go find the product and ship it out. So, you know, if it’s just something I’d seen in Amazon, its, you don’t even have to touch it.
DAVID ALADDIN: Yeah, yeah. You know like one of the cool things I like to buy at Ship Station is you can quickly copy like you know the four, if you’re trying to send a replacement to an Amazon costumer, you can just copy that entire thing and just paste it in the Ship Station. Whereas if you’re trying to fulfill an order in Amazon you’ve got to copy each one; one by one. So…
ED KOHLER: Yeah. Like the name and address and City, State and Zip.
DAVID ALADDIN: Yeah. That takes a lot of time.
ED KOHLER: Yeah. It just pops it up.
DAVID ALADDIN: Yeah.
ED KOHLER: Yeah. That is a nice feature.
DAVID ALADDIN: So, what kind of rules do you, I mean, I’ve seen the rules set, it’s inside of Ship Station. Is there like other optimization that you can do with the rules?
ED KOHLER: Yeah, like I’d, I have some sort of for things I want to ship myself it’ll have; it’ll pick the weight, like based on the weight. Like if it’s under a pound, it’ll automatically select that it’s going to go first class. And you know, there are things like that where you could just, you get a little bit further along than starting completely from scratch. And then of course, it will remember everything that you ship. So if you shipped the same thing more than once, you don’t have to keep putting that stuff in, that’s definitely keeping it. So it’s like you know, this is always going to be the exact same weight, It’s always going to be shipped on a 6 x 9 bubble pack, so we don’t need to start from scratch every time. So that really speeds it up like I remember, when I stop by my office yesterday morning, I had about 26 orders coming overnight that were going to go out and I had only two items that I need to configure the weight on, just because they were like multiples, so I just wasn’t sure. Like I had the weight right, but I just didn’t know for sure. So, I was like, oh, just going to touch up the weight on these two and then print out 26 packets, slips and labels, and so you know I’d, I was at the office for about two minutes I already had all the labels coming off the printer. So you know it’s pretty efficient.
DAVID ALADDIN: And, so, I’ve actually, because I’ve just gone into Wal-Mart, and I do get orders but certainly not, you know what is the optimization, do you have the drive to the post office? Do you have them come pick-up the orders from your house, or… how’s the setup on your side?
ED KOHLER: Yeah. Well, we have UPS come every day. They’re picking up Amazon inbound shipments every day. But don’t take anything that’s UPS related. And the post office also will just grab anything that’s ready. I really, they seem to come by around 2 – 3 o’clock. But I don’t know. I actually, my office is between my house and my kid’s daycare so I usually be able to just pass through there and pack up anything quick on my way to my kid’s daycare. So if it came in before like 4 o’clock, I can usually get it out the same day. So that definitely helps to have some pretty fast turn-around on orders. And you know what, since everything is packed up, I just throw everything in IKEA bags and drop it off in the post office to just dump it on the desk, you know because it’s all metered you don’t have to talk to anybody. I’ve tried to experiment a little bit lately with the Ship Stations in the day sheet and I don’t know a lot about this but it’s my understanding that you can basically print off the sheet and as a manifest of everything that’s in your shipment for that day so that UPS can, USPS can just scan that one barcode.
DAVID ALADDIN: Wow.
ED KOHLER: Without having to scan every item. So it doesn’t really save me any time but, if I’m walking in right at like 4:59 p.m., they like that, so.
DAVID ALADDIN: I usually, you know, for like the smaller type of owners they just turn in this, they have like this drop box over there, you know, the one that swivels very cool. So you say you have you said you have an office. Is there like a warehouse attached to it or how’s that so?
ED KOHLER: It’s actually, it’s my office/warehouse base but it’s about like about 400 sq. ft. of space, really. It was I think like a barber shop or something before I had the space. It’s like a little like red brick, 100-year-old retail building in the neighborhood and you know, it has some limitations like, it doesn’t have a lot of space which is probably good because you kind of grow to every space you have, and I’m, I want to sell stuff not store stuff. So…
DAVID ALADDIN: Yeah.
ED KOHLER: That’s all right. But if I got a different space today I’d probably get something that I could put a build a pallet in so, because I don’t have a door large enough that I could, you know, built up a pallet for to get picked up and I don’t know, overtime with a lot of stuff I saw in Amazon, there’s a lot of like health and beauty products and things like that. They’re just getting kind of heavy sometimes, where if I’m shipping in a hundred or thousands of units or something, you know. If I’m going to ship a thousand pounds stuff, it would be nice to put it on a pallet rather than…
DAVID ALADDIN: For sure.
ED KOHLER: Twenty moving boxes.
DAVID ALADDIN: Yeah. I started sending in pallets. You know, usually I just send them straight from China but just circumstances I started storing stuff to keep over the velocity and the pallet shipments are, is actually not as bad as I thought it would be. Have you put a pallet together, yet? It’s nice…
ED KOHLER: I haven’t built one myself, but I buy a lot of stuff from wholesalers that go in on pallets and you know, it does have a slightly different work flow but I didn’t find it confusing. You know, I’m just starting to figure out, you know, understanding like the bill of lading will come out on the day the shipments could be picked up. You got to send that to them so they can drop off the order and but I don’t know. They’re just itemizing it just like anything else so, it’s not too bad. If it’s up to the wholesalers it’s usually like a buying you know hundreds of sku’s it’s pretty simple. And you know, everything is in cases so, it’s like I have this many cases than this, so… I’ve received cases, I’ve received pallets but we just have to break them down before we bring everything in the door. At least, drop it on the sidewalk.
DAVID ALADDIN: So your majority sales, is mostly wholesales not retail arbitrage anymore, right?
ED KOHLER: Combination of those two.
DAVID ALADDIN: Okay. And.
ED KOHLER: Probably 50/50.
DAVID ALADDIN: Let’s talk about that, like are you buying from the internet or are you buying from wholesalers that you call up? How does that work?
ED KOHLER: The, with wholesalers, gone to a few shows things like AST or the Toy Fair. And you know, you search out, make some contacts, find some products and see if they make sense, there’s a variety of different piece of software that can kind of help you like bulk process, a spreadsheet of listings to find out you know, what might be worth selling. So, you know, if I get a spreadsheet of UPC codes and cost data from a wholesaler, you can run that against Amazon and find out the profitability which of those products and then the next step is to figure out, well, do they actually moving or not. You know, if this product will sell 10 units a month or a thousand units a month. So you can figure out whether it’s worth bothering to deal with. Overtime you’ll figure out what works. And you know when, when I was receiving pallets, with a lot of health and beauty health things, you can’t really make the numbers work unless you multi pack it.
Like it’s hard to sell one unit of like a toothpaste or a lotion or something. It’s just so much of the cost is eaten up by fulfillment costs but once you make it a 2 packs or 3 packs or something, it starts to make more sense. So I’d receive a pallet of stuff and poly bag it up and just turn around and ship it in.
DAVID ALADDIN: Very cool. What worries you about Amazon? I have so much worry about how big it’s gone, you know. If you got all these inventory that you’re wholesaling, what if, you know that fear. I guess I could, every Amazon sellers has been, that fear of suspension but does that come up in your mind, or…
ED KOHLER: Yeah. I dealt with the suspension about a year and a half ago. I think it was July of 2015, now. And it was definitely a very tedious to work it. At that time I was actually in the process of on boarding with Amazon Canada, and I was on UK, and one Amazon US decide to suspend me. The Amazon I think, Canada rep that I was working with says like, what is going on? Like, I don’t know. I’ve never been through this before, just like. So, they were really helpful. The reps actually helped me write my plan of action and you know.
DAVID ALADDIN: Nice.
ED KOHLER: There, because, when Amazon shut me down in the US, they also shut down my other accounts. So the Amazon UK, they’re in the process of helping build listings for me, for all my inventory that wasn’t already on Amazon UK like they had a team that was willing to do that, because like, oh, this guy is losing volume help get up, up and running and then I get blocked to like, what the heck? We want this guy. We’re trying to get this guy in our platform and you shut it down. So it’s just tedious but you know coming out of it, I think pretty much anyone who has been through suspension probably ends up running a better business after that. You do learn something from the process. I think it’s a, you know it’s a pretty heavy hand. And I think that particular time period I think the spring of 2015 I think, I think a lot of people got suspended like within a few month period right then, because I understand that I think they might have come up with some new algorithm that was for certain types of customer dissatisfaction cases and it just kind of, they didn’t really do a good job of looking at like, what’s the rate? Like this person is selling 10,000 units a month and there’s been three complaints. All right, well, we’d rather there not be three complaints, but that’s a pretty low, you know, order-defect rate. I think they didn’t do a very good job looking at that side of it. But I don’t know. And I don’t lose sleep at night about suspensions now because I feel like I’m running a pretty clean business and not you know, doing sketchy stuff that would piss off Amazon. So, but it still can happen.
DAVID ALADDIN: Yeah. I guess, it’s just like an ongoing fear that I have, I mean the bigger the business gets the bigger it falls if that suspension hits but…
ED KOHLER: That’s for sure.
DAVID ALADDIN: So, in terms of like your holdings, do you have, like… like I’m like 80% into the Amazon business and I’ve just been diversifying lately but what about you? Someone who’s been selling for three years, do you have a lot of holdings inside of Amazon? Or do you kind of tend to diversify your assets into other locations.
ED KOHLER: There’s like whereby actual physical inventories sitting or….
DAVID ALADDIN: No, no, no. Like, I mean, like, so if Amazon was to shut you down tomorrow per se. Would you be entirely screwed?
ED KOHLER: It would definitely be a problem. Yeah, it’s a very, very large percentage of my business at this point.
DAVID ALADDIN: Yeah, because I was thinking, like it wouldn’t it be a big deal if I only put like 30% of my wallet into Amazon versus like all most of it. I mean, because right, I’m, I’m fairly young, and you know, I kind of went all-in and if it did happen tomorrow, I’d be kind of screwed if it, if that was to happen you know. And so I’ve been trying to like de-risk my business away from Amazon as much as possible.
ED KOHLER: Sure. Well, I don’t know. I try to think about what, if Amazon didn’t want a business like mine on their platform, what kind of business would they like? You know, if there’s got to be a heck of a lot of businesses that’ll get suspended before me, that’s the way I look at it. So you know I’m, there, I know there’s, people really kind of push the boundary’s on, you know, just sketchy sourcing of items and or, I don’t know. There’s some things that like, one thing I, two years ago the idea that I want to do now is like source them like a TJ Maxx. Where you know you’re going to get margins sourcing from a place like that especially if you, because you can buy gift cards for like 15 or 20% off. So you know, if you are, you’re, like the numbers already work and then you can get this gift cards that are like such a huge additional discount that the numbers can be pretty good. But to get a product from there to someone, you know, through Amazon and landed on the customers house and have that product be an absolutely perfectly mint condition? I think it can be a challenge like because everyone in those TJ Maxx product has a sticker on it and those are not easy to get off without causing some damage to the box or leave a little sticky residue and stuff like that and you know if something, if someone’s buying something that’s new, it better be 100% new. So, it’s just a harder argument to make that.
You could have a dissatisfied customer pretty easily with something like that, that it’s hard to say like, yeah, we picked this up out of a shelf at TJ Maxx and dust it often. Yeah, it’s new, you know. So it’s another case to make then. On the other side of it, there’s a board game that I sell. And a customer complained that the box they received well like the plastic was, like the shrink wrap was torn on it and there was like a dent in the product and stuff and like, this is, how can you this is new? I agree that is not a new product. But, and so Amazon, they, you know, they received the complaint and passed it along but when I was able to reply to Amazon saying, if you look you can see that all of the product that you’ve received from me came in case packs, absolutely brand new. So that product that person received the reason its not new see here, is because of how it was handled in Amazon’s warehouse, how it was shipped or you shipped the product co-mingled from somebody else but, I can say that my hands are clean on this one, so.
DAVID ALADDIN: Oh, very interesting.
ED KOHLER: I think it can help really. If you have a clean supply chain, I think that really is going to help.
DAVID ALADDIN: I’ve actually never thought of that perspective of case pack versus individual pack. The case… In terms of like shipment pallets, like it’s a lot easier to individually pack—I’m trying to remember the reason why it’s because case pack is to be exactly you know, 12 units in a box, or whatever, but individually you could have like a weird number but, okay. How’s your logistics look? Does the inventory come to you or does it go straight to Amazon? How do you set that up?
ED KOHLER: Say about, maybe like 30-40%, maybe a little higher of our units go straight to Amazon. So, you know best case scenario? Never see them.
DAVID ALADDIN: Yeah.
ED KOHLER: So with that, with the wholesaler, I mean , you know, we build up a shipment and sometimes we’ll just base on size or you know, different… you know Amazon wants to go up different places for different reasons but you know the wholesalers tend not to get that worked with the ways to not get too excited if I’m going to build something into like 4 different shipments like, okay, I need this secure warehouse. This is the standard stuff here and then here’s the oversize stuff here. And then this stuff needs Amazon labeling. The whole sellers not going to label it for me so then you might have a whole oversized and non oversized labeled stuff so eventually I’ve just figured out like just pair it down to the ones that were actually working well and keep it a little bit simpler and you know, occasionally rounds it up and make it a full pallet because they, if they say like a pallet of items would be like 600 units of a particular product and I really only need 400, you know, it’ll make them all happier if we just make their life easier like taking this whole pallet and ship it. That’s nice and simple.
DAVID ALADDIN: I like how you mentioned you know, just kill the bad products and just focus on the good ones. Stuff like something I’m doing right now with, you know, cleaning some of my bad inventory.
ED KOHLER: Yeah.
DAVID ALADDIN: You have to make all the difference for between 20117 and 2016.
ED KOHLER: You know that’s something that I think it pretty much every conference I’ve gone to has had experienced source someone goes on stage and says, stop falling in love with your losers.
DAVID ALADDIN: Exactly.
ED KOHLER: Just get rid of them.
DAVID ALADDIN: But I love them!
ED KOHLER: Keep your money back. Like, it’s, you know exactly. The prices going to come around, everyone else around is going to stock it and then I’ll get that price I really wanted. All right, Maybe But it’s…
DAVID ALADDIN: It’s the emotion. You can’t touch emotion.
ED KOHLER: That’s probably one of the things… No. You just have to move on with it. But having like a good system been placed just let, this is one ride I haven’t figured out quite yet is the just put some roles in place right extra more days to automatically re-price down stuff and so nothing sits for a super long time before you notice that it’s been there collecting dust at Amazon, running up your storage fees, which those are, Amazon I think, you know, they say they don’t want to be in the storage business but I think that they still haven’t done a really god job of making it like making it clear just how much storage costs people. Like if that was…
DAVID ALADDIN: So true.
ED KOHLER: On the dashboard, like dude, this product is going to cost you like, you will never make your money back on this if you get hit with another storage fee. So either throw it away or get whatever you can for it this month. Like, I think people will be motivated by that instead of—because when that storage fees come through it’s just kind of like deducted out of that. Accrual is happening so it’s almost like an invisible cost.
DAVID ALADDIN: Let’s talk about that. I just see a number. Like mine’s like, during Christmas it’s terrible. I don’t even want to say the number that show. But right now it’s right around 900 bucks a month and it, there’s no breakdown, you know, per unit, right? Am I missing something?
ED KOHLER: You can get into a storage fee report that will show you product by product.
DAVID ALADDIN: Really?
ED KOHLER: What it’s going to cost you. Yeah.
DAVID ALADDIN: I’ve been trying to find that report. I couldn’t.
ED KOHLER: I’ll see and link it to you if I can find that report. It will break it down. And sometimes it’s, sometimes you’ll see stuff on there that doesn’t really make sense. Where like the product dimensions appear to be off? That can be really scary where, just like this product can cost you $500 this month, and like, that’s impossible. That product is super small like because you know the storage fees are based on you know volume, so there’s no way it should be that big. But some emergency stuff like that can come up to like where you’re being just penalized because the weight is off or you know, because the dimensions were off. I’ve seen suffer the weight being off is also affected just what it cost for what is Amazon charging for fulfillment cost where, it’s like the product is 2 ounces but some seller went in and changed it into 2 pounds accidentally and now the fulfillment cost got insane. So weird stuff can happen sometimes but I don’t know. I mean, yeah. Keeping an eye on those there is a report that does it all. I’ll send you a link on it when I find it but it’s a great way to like…
DAVID ALADDIN: Dig down, yeah.
ED KOHLER: Just put it in your calendar here’s the, where the pain is, all right, like it or not, this seasonal product and it’s really not going to start moving until July can I deal with that or what, let’s get it over there, do something with it, or then, like stranded stuff. A lot of that stuff echoed port right away but I’ll usually, instead put it on eBay and just instead of pulling back to myself hole, just, you know, fulfill it to a customer that buys it on eBay. Now then it works pretty well.
DAVID ALADDIN: Let’s go to multi-distribution. This is probably one of my favorite topics because I just want to diversify my assets into multiple locations rather than just making all my money from Amazon or whatnot. Have you been diversifying into other channels of your inventory?
ED KOHLER: Yeah. As I think, it’s my kind of sourcing strategies change where I’ve gotten more into replenish able items than its non, then I started to say, well, all right, I can get this product on a consistent basis from a wholesaler so I’m going to try and increase my incremental sales in any way I can. In case of, like, you know, other health and beauty products, there’s many ways of doing it just within Amazon itself, make sure that the product is replenish on in every existing ASINs. So if the product is like a multi-pack, you know, product, there must be a ton of listings for that product that you could be on. And sometimes you could benefit if you keep the inventory local then and so, like you might have a product that’s listed on Amazon as a one pack or two pack, up to a 12 pack or 24 pack case. So why not sell then every single one of those. So if you keep the inventory you know local it’s actually just easy. If an order comes in…
DAVID ALADDIN: You packed base on…
ED KOHLER: Yeah, Just roll that many in a poly bag whatever.
DAVID ALADDIN: Interesting.
ED KOHLER: Bu then you know, you can, then of course expand it into selling in other market places as well so currently I think I’m on, well, I’m on Canada and Mexico through the Unified account, and UK. I just started on boarding Japan, but that’s off to a pretty slow start. But you know I’ve been working with her in virtual assistance. I can just, all right, here’s the list of all my ASINs and here’s the SKUs I’d like to use and go through and build this up for me on different platforms. I’d give her a call log to work from. Yeah, you know there’s some timework involved in that, but it is, you know, just getting that listing going is you know a one-time work. Once it exists, you know then you can just toggle the inventory up and down, so. But someone has to go on and build that listing the first time and there’s some software out there to work with that, but I haven’t had any good luck with it like, Geeks Seller for creating listings on Wal-Mart. It’s, at least it has a web interface that somewhat similar to like what people are used to for building listings in Shower central. But it still, it gets cranky because there’s a ton of times where you create a listing and then you go in your Wal-Mart account, you look at it, it’s like, oh, yeah, that’s good. Oh, except it’s the wrong multi-pack or something. Like, I want to create a four pack and now it’s a one pack in Wal-Mart. And so, I don’t know. It’s messy.
DAVID ALADDIN: Yeah. I’ve actually experimented with Geeks seller. I do like the interface a lot. So she, from coming from other software that have tried to create the interface between Jet and Wal-Mart, so.
ED KOHLER: It’s certainly better enough, yeah. It’s really not their problem as much as the batching is done in Wal-Mart side, with the Geeks Seller data that caused the problems. I mean Sellers has given whatever data that you put in so.
DAVID ALADDIN: They’re smart though. They take I think 1% of your sales and not your revenue, so.
ED KOHLER: You know what, yeah. You know what though? That is still, I think better than a lot of companies out there because with a lot of the. . . at least the multi-channel programs out there, they’ll do 1% sales but it will be based on your overall sales so this where like it just becomes [Inaudible].
ED KOHLER: Oh, jeez.
ED KOHLER: Because like all right, saying like I’m doing like a million dollars a year in Amazon and I decide I want to start selling on Wal-Mart and you know, EBay or something like that. Well, I’m only going to have 1 or 2% of my sales at first out of those platforms. But I’m paying 1% on all of that, so…
DAVID ALADDIN: Who charges that? Let’s call him out.
ED KOHLER: Yeah? I guess it’s pretty common for this coming from in those spaces. Like you’d have like a, there’s so many I’ve tried. I’d tried Skubana; it worked pretty well. But, that, the incremental sales did not justify the costs for me, you know. At some point maybe they would have but I’ve tried that for maybe like three to six months sounds like, this is somewhat important, like I saw the potential on it but not enough to justify the costs. It was so just so said I get out of that. I know I tried once, what’s it called? It’s from the West Coast. We’ll celebrate, I don’t know what their price, but they kind of playing that space. Oh, Stitch Labs. Stitches now.
DAVID ALADDIN: I think they’re pretty expensive, right?
ED KOHLER: Yeah, because they use that same kind of a model, I think. I think channel binds with us to, I haven’t tried that one but, I don’t think I will. So, at least with Geeks Seller the nice thing is, you’re paying that 1% but you’re only paying on that one channel. So I don’t really have problem with paying that compared to like I’m not getting a benefit, from. Like if from, if I am just going to sell it on Amazon, I will just sell on Amazon but paying a monthly commission based on my Amazon sales in order to sell on Wal-Mart just, that hurts.
DAVID ALADDIN: What do you think about Wal-Mart.? How are the sales over there for you?
ED KOHLER: They’re not bad. I’ve had a few products that have done pretty well. But it’s been slow. For me, I think largely because of this multi packing, of a health and beauty products because they just won’t allow a lot of those products because a lot of them do go on with like a goofy UPC or the, like the UPC called Kellogg. It sounds like they only want the UPC code in there once, and so that it would be for the one pack. And it’s like, well if you guys only want the one pack, this is just a dead on arrival product to sell online. So, that’s kind of a problem. So, I need to try and talk to them about that and it’s like you know, have some products that are multi-packed, products that they sell, you know, $10,000 a month or something in volume, but I can’t put it on Wal-Mart because they won’t allow it with the, you know as a multi-pack. So, you know it’s hurting them but it doesn’t help me but, I know it was out if they’ll just allow it. So first kind of painful so, I don’t know, I think overtime may be they’ll start to loosen up on that a bit. But that one is tedious.
DAVID ALADDIN: And have you gotten on to Jet?
ED KOHLER: I haven’t got on Jet I guess I think I missed that window where they’re letting people in. I’m sure I’ll come around but this is all, letting in a lot people in right now.
DAVID ALADDIN: They’re not a proven product really, or at least they’re not improving it like relatively fast, it’s just like Wal-Mart was fast. I submitted at the same time and it’s still on their approval or under pending approval. So we’ll say.
ED KOHLER: I’ve had a few friends dragging down a Wal-Mart lately and in that case, when they’re going through the questionnaire that Wal-Mart puts out, I get the impression that what Wal-Mart really wants to know is like, are you capable of putting something in the box in a timely manner? So you know to ask him how much storage space you have, and all this different questions, but I think the real amount of it is like, if you can just say to him, if an order comes in by 2 o’clock I can get it in the mail at the same day. Or something like that. Like what do you guys really asking here? Like are we here to fulfill stuff or not. Like, I think they want to know you’re not going to be fulfilling stuff from Amazon, cause you can’t arrived in an Amazon box, the people.
So you either need to fulfill it yourself, or have some kind of third party fulfillment center setup in order to do it and they want to just understand you’re confident. But, I think for private label seller friends of mine, I think some of them are looking at that and like is it were like jumping into this soups so like, I don’t know what it is. Unlike it’s can be pretty tough to get online, like if you just have like a small handful of products like you just don’t have much of a catalog, might be tough to get Wal-Mart to approved them. They might be better off just partnering with someone which already is approved and say, you know can I ship a case to you and have you fulfill this orders like just might be easier. After that I’ll think about it because it’s, you know checking out an entirely new platform and just the hassles that can come with it or understand the customer’s service and all that stuff, like if it’s only going to be a small handful of sales like is it worth the effort? It might be easier otherwise do it?
DAVID ALADDIN: I felt like the Wal-Mart channel has a lot of potential, just I’ve only been on it for maybe for a week or two and it’s shown a lot of promise similar to eBay, in terms of just sales that are growing. I’ve zero reviews on any of the products. I’m in private labeling; I know you’re on wholesale so reviews I’m trying to build up over there to. I, like from I’ve seen in the algorithm it’s apparently if you got like one review you showed really well compared to all the other products that don’t, so.
ED KOHLER: Yeah. The bar is pretty well to have a, this show’s interaction. This is an actual product.
DAVID ALADDIN: There are no reviews on Wal-Mart. It’s interesting. And if there is, that product is ranking really well so.
ED KOHLER: Yeah and Wal-Mart, the inventory it plays well on Google. Like it’s easy to find there and it will show up taking Google shopping as well. See, one kind of long tail platform that I’ve had pretty easy to work with is bonanza. B O N A N Z A.
DAVID ALADDIN: I haven’t heard of it.
ED KOHLER: No. like, they’re like syndicate your eBay. Like they have the thing that would can such authenticate your eBay account, and opposed off over and I think they’re just pretty good at SEO, so like they just seemed to do a good job in getting visibility for inventory online. So if you, you know just have stuff over there, it doesn’t take a lot of work to get a built up on.
DAVID ALADDIN: Sweet. I’ve never…
ED KOHLER: Bonanza.
DAVID ALADDIN: Yeah.
ED KOHLER: And then bonanza ties in with Ship Station, so when an order comes over, it’s just like any other order, like sure I’ll take it. So
DAVID ALADDIN: How are the sales over there?
ED KOHLER: They’re not bad. They’re even better than Wal-Mart. So it’s goofy that way.
DAVID ALADDIN: I am moving to that channel, too.
ED KOHLER: Yeah, it’s just… They just seem to be good at SEO. So, they get your inventory there and the catalog just starts popping on a like Google search and stuff like that. I don’t know. Have you done a Shopify store for yourself or in any…
DAVID ALADDIN: Yeah.
ED KOHLER: Or any kind of personal store?
DAVID ALADDIN: Yeah. I get this in traffic conversions pretty low. What about, what other software do you use? Have you been Facebook advertising or?
ED KOHLER: I haven’t done any Facebook ads. I do quite a bit on, on Amazon especially for like multipacks that’s such a gold mine, cause you can, you know just take this listing ad, you know, and assuming the prices are competitive like, you just letting in people who are looking for that product know that it’s available on a certain multipack that make sense to buy it in. So the, just the cost of sale can be just amazing on that kind of stuff, cause, I mean pulling people who really see in the air, people that they already decided they want that product, they’re just trying to figure in which quantity to buy it in, so that can be great. I tried the thing, that was like really long tail right, run ads against UPC numbers on Google, to drive people in to Amazon, where was like the people search that long of a tail like down to the UPC code. But that was not enough, not enough.
DAVID ALADDIN: I like that.
ED KOHLER: But, you know, short of that though, for like you know retail products, people do search by a making my own number, so like I used to do a lot of affiliate marketing. And a one really good tactic was the by the make and model number. So like on Amazon, it’s been about like six or eight years ago now, but I would buy like dual XG37JX were like, where like a specific kind of a drill or you know, other types of power tools.
Where it was early enough that people did even necessarily understand that Amazon had power tools, but you know someone would be out in Google, you know Googling a term like that where, the person who’s doing that, they’ve already decided what they want to buy. They’re just trying to figure out where they’re going to buy it from, you know so they just kind of doing like price shopping at that point. So, if you had an ad pop up, and say like hey by the way this is available on Amazon with free shipping, people like , oh well that make sense. Already have my card on file there and I know they’re kept confident put the stuff in a box so; I’ll buy it from them. And that worked well.
DAVID ALADDIN: Amazon just has it so good. Everyone’s advertising, sending traffic, plus emails to them, and just, it’s insane. I know, I’ve never. You know like I’ve never seen a business that pulls that much power ever and it just keeps getting bigger.
ED KOHLER: I think, it’s, the brand benefit comes from a logistics I think where you really can count on them to put something in a box and get it to you in a timely manner and in good shape and you know, if you’re going to start from scratch at some other company, like stuff that I’d buy in online retail, you know, for arbitrage, it’s amazing how pearly it’s pack at times like, Jesus, who thought this is going to be good. You know where, like I’ll buy some health and beauty product and you know like, like it’ll be like a lotion or something, like one of them open up and then, all 36 in the box will get ruined. Just like guys, have you think about this at all? Like so, but, I don’t know. Especially when you get to the holiday’s and stuff. The closer it gets to Christmas, like, this item has to show up in time. But then Amazon is just going to win more, more, and more. Because the last thing someone’s going to do with the last minute is to build relationship with the retailer they’ve never heard of him take a risk on a Christmas present. So, like I you got to get that logistics right.
DAVID ALADDIN: Total world domination.
ED KOHLER: They’re good at that.
DAVID ALADDIN: I’m hoping for Wal-Mart to pull in to, pull some weight just, so all my eggs are in a basket. One of my competitors actually has a hundred retailers carrying their products. And I was very surprised that they’re really pull such weight in such a short time, so. That’s definitely an option to go into, you know. Get into retail stores.
ED KOHLER: Have you done any for fulfillment dues, don’t you do any fulfillment yourself, or use third party fulfillment or just an Amazon displayer?
DAVID ALADDIN: Sort of walked into it. There’s a 3PL that does fulfillment and they’re charging like $20 pallet per month and there’s always other fees for receiving and distributing. So reluctant because it takes a lot of margin out of the end product and then so I’ve been fulfilling from my house for Wal-Mart. I’ve heard of people doing fulfillment through Amazon to Wal-Mart customers, such. I don’t want to risk that channel right now. It’s a good channel.
ED KOHLER: Yes, I think before you address it to Wal-Mart were I don’t ship from. It’s going to be written in the tracking number like…
DAVID ALADDIN:Oh, I understand.
ED KOHLER: I don’t think a customer would care that something shows in an Amazon box. They got what they wanted, who cares. If anything, it probably be more difficult to do the other way like if someone’s bought to you on Amazon and you shipped it to them in a Wal-Mart, Wal-Mart as a brand is somewhat polarizing. Like, there, you know. There are people love Wal-Mart but there’s someone that really hate Wal-Mart. I don’t think anyone really hates Amazon same way like…
DAVID ALADDIN: Certainly, a Wal-Mart box?
ED KOHLER: Yeah. Yeah. I’ve think about that sometimes like if I’m just like putting on an eBay order in the mail and I’m just shipping it with some random boxes that are still in my office. If I have a choice between Amazon box or a Wal-Mart box, I’ll go with the Amazon box. No one, not eBay customer would ever complain about the box but I think, I don’t know. I think as far as just the brands go, Wal-Mart, it has higher negatives. It has very, very high positives, but the people who don’t like Wal-Mart really don’t like it.
DAVID ALADDIN: You bring up a very good points. It’s all like perceive brand value. Something that, if you’re doing privately, something we’ve got to grow and not be the Wal-Mart brand and be the Amazon brand, because there’s a huge distinction. The Amazons boxes higher perceived value, why would you want a Wal-Mart? Please don’t listen to this Wal-Mart. It’s like, they’ll kill me.
ED KOHLER: Well, it something that I’m sure they are working on. Like, it’s very [inaudible] I think but, I don’t know.
DAVID ALADDIN: Yeah
ED KOHLER: I looked at third party fulfillment simply because I’m in the Mid-West and It’s nice that I’m in a centrally located location but the same problem, there’s nobody around here. So when I’m shipping orders the number that are going on the Eastern West Coast or Texas’s you know 80% of orders it’s where everybody lives. So, I’ve looked at spinning up a third party fulfillment like in New Jersey or in Southern California and also tends to be closer to some of the places I resource from but I’ve started to experiment in two, with Merchant Fulfill Prime and I don’t know if you had the chance to try that but I can turn on Prime for products that I’m selling or ship it myself which is cool except you really have to be get it to people in two days, you know whatever the time line is, which in the Mid-West kind of be tricky.
You know if there’s a major city so that could be a problem like in Tulsa, Mexico or something like that, then they start to get more challenging but if I, they do let you originally gate the prime offer, so I could say I’m only going to offer Prime for stuff in the upper Mid-West, so like as far as Ohio and Missouri or something like that. Or the Dakota’s but if I had the products sitting on you know the east Coast, I could say, all right, I’ll do Prime for East and Upper Asia. And then I see if Ministry calls to people you can ship stuff you know first class or other types of really reasonable rates and you know get it into people in two days because you know it’s not just going very far. You know, I mean, I think probably why Amazon’s able to do what they’re doing so they have a warehouse within you know X number of hours of anyone’s house at this point so they don’t have to spend a lot on shipping to fulfill all those orders.
DAVID ALADDIN: I’m telling you, they got the full monopoly on this gig and it’s just emerging into an e-Commerce that’s just about to explode. It is exploding right now but it’s the beginning of it.
ED KOHLER: Yeah and you know, I had got a friend. She, like Target is up here and headquarters is in Minneapolis, and that friend of mine who works at Target, she was telling me that her and her husband, using their shared Amazon account, like they place orders throughout the day and then the orders will arrive in one box, you know, even though the orders where placed at separate times. She’s like, Target is years away from being able to do that. It’s like, yeah, it makes sense, once it’s gone out the door yet may as well bundle them up. You know, queue orders. Ship Station can do that for 45 bucks a month. But, you know.
DAVID ALADDIN: We’re talking about the existing functionality that they have right now. I mean it’s, it’s what are they working on right now, you know.
ED KOHLER: You know…
DAVID ALADDIN: Their vow of fulfillment.
ED KOHLER: You know, they actually, they just opened a new fulfillment center here in Minneapolis in Shakopee, a suburb here. And they built a, they’re opening an office in downtown Minneapolis, Amazon is, but its specifically for logistics. I thought it would have been more related to sourcing products and merchandizing or things like that just because they could probably share their pick of people in Target, and Best Buys, in General Mills and some of the big kind of players in that kind of space up here. But it’s a Logistics Office, I went to the roll-out of this opening in this office and they’re showing like what they’re doing in warehouses now where one that was, I’ve never seen before was, they’re using augmented reality to get pickers up to speed faster.
DAVID ALADDIN: Wow.
ED KOHLER: When they’re picking orders. So, first they have the robots, you’ve probably seen that one. Like the robot, it will bring the shelf to the picker so the picker doesn’t have to run around all day. Where people used to complain that they had to run like 12 miles a day while they’re picking orders, well now they could just get to stand in a cage all day, they don’t have to move because the shelf comes to them but what they’re finding is, it just still takes people a while to really get in the flow so they give them these Augmented reality glasses and it’ll you know, the item like comes off the conveyor. They’d know what that item is. They know how much that item weighs and what size of box it goes in so it’s like this item goes to box A1, okay.
Now, and then the glasses will like point down to them, like here’s where the A1 box is. So, it guides their hand basically by like turning the light on in their glasses. And then I think the machine could automatically dispense the appropriate amount of tape for an A1 box so you don’t have to think about that and you know kicks off the label for him.
DAVID ALADDIN: It’s crazy.
ED KOHLER: Yeah. So, they haven’t fully automated it but the learning curve is low to get someone to speed on that for the little mountain would need a human touch an order.
DAVID ALADDIN: The last step is eliminating the human part. I’ve watched videos of actual machine pickers, to, so where the machine picks the item from distinguishing between different objects and then different sizes then being able to put it in the box that would probably affect our FBA, Fulfillment very massively, they cut their entire labor force which would suck all the FBA employees but…
ED KOHLER: Truly. I wanted to…
DAVID ALADDIN: Oh, it’s moving definitely.
ED KOHLER: Oh, yeah. I learned—one thing I wonder if they would do is like sometimes retailers will just have [inaudible] pack on something, you know. We need this baggage in a certain type of retail from the display. I’m going to put this on the store in Best Buy. Like, it needs to be in a clamshell because it’s going to get too damaged if you do something else, whatever but what if Amazon went to suppliers and said, we want you to prepackaged stuff in boxes, Amazon boxes because we learned over time that when people buy this product they only buy one unit like, so we’re just going to have it ready-to-go, so then we can just store the ship ready boxes and then just slap the label on it like we don’t need the packet because you know, it’ll just arrive in our warehouses pre-packed. It might be one way they could…
DAVID ALADDIN: That is actually pretty interestingly new.
ED KOHLER: Even take a step out of things just you know, off, stop that work on the supplier.
DAVID ALADDIN: I remember I was talking to a guest on the show, and she said everything is going to be 3D printed from our houses. So when someone orders a product, you printed it out for the customer, versus keeping all this inventory because it’s insane how much inventory you have to make, you know that revenue stream going. But if you just printed it out as needed. It’s an interesting concept
ED KOHLER: I’m sure it works for some parts. My friend was in the drones. He really prints a lot of his parts when he crashes his drones. I guess a lot of the pieces are just… the models are on line so he just runs another piece real quick.
DAVID ALADDIN: I know we’re getting off topic but, so where do you see your business going on in 2017?
ED KOHLER: Just, let’s say, probably the thing that I was working best on is probably keep working on is just putting more effort into my winners and finding more of them. So, probably the biggest thing that’s really helped me is you know I used to look at, well when I was doing retail arbitrage only it was just finding new stuff, like everyday you’re going to start it from scratch. But then over time, I start to get a little bit more mature about just, hey, a lot of these products are replenish able, why don’t I start there then before I look for anything new, just replenish what has proven to work. And, so that was step in the right direction. But that time I was still looking mostly just based on the number of units I was moving, but now I’m looking at more on like what’s the actual revenue of each of these products so just because something can be replenished it doesn’t mean it should. So like…
DAVID ALADDIN: Exactly.
ED KOHLER: If you look at the selling quotient port in Amazon, you know. There are a lot of things in there than it looks like. Actually I’m just glad that it’s gone. I don’t want to replenish that one. So, but, I think that’s definitely helped so. I think year over year, right now; my gross revenue is down a little bit but my net significantly higher. Like, I might be doing like 50% higher margins than I was a year ago so I’m taking more money home with, you know, more money with less work. I guess. If I get up in the morning and I don’t work on replenishments first, then I’d probably screwed something up because until I get that stuff in stock I don’t really need to go look for new stuff.
DAVID ALADDIN: What’s your morning routine look like?
ED KOHLER: Drop off my kids at day care and then I work for my coffee shop for a few hours. Swing by my office, put a few orders in the mail then in the afternoon I’ll do some sourcing and run, you know. I often watch a webinar or something like that. When I’m at my office I usually have a podcast going so I would listen to something like you. Just do some Amazon related thing while I’m packing orders, or just seeing what’s going on around there. But, it’s yeah, it’s pretty chill.
DAVID ALADDIN: It’s pretty chill.
ED KOHLER: Yeah. My kid’s day care is about 2 miles from my house and then my office is right in between the two so I have to travel around too far to do some of that stuff. Sometimes I’d do some retail arbitrage where I’ll end up over selling on some products that’s just available from like a major retailer. So I’ll queue up some in-store pickups and then just swing by it a store and pick those up and put them on the mail. But because I already have all the data and Ship Station, you know, I can preprint the labels and stuff like that swing by, grab that in-store pickup and put them to mail. I kind of like that because I’ve been paid before and even bought the item so that’s kind of convenient.
DAVID ALADDIN: I’ve been considering getting an office but I love working from home. How will, how did you separate that?
ED KOHLER: Well I don’t, I never sit there and used it as an office. I would never go there to work on my computer. Like I work from a computer from coffee shop or a bar or from the house or anywhere but my office. It just got too big you know I had it in my house first. When I first started in Amazon when I got serious with this stuff was Fit Bits well not with the Fit Bits itself but all the other accessories and it didn’t really took up any room. So I would just kind of do that. You know with a little side room in the house. But, then I moved it to the garage when things start to get bigger and then eventually I had to get out of that space too because I basically lost the car space in the garage and it’s like all right I want to get it back before winter because the garage isn’t heated either. So it’s going to be a problem.
DAVID ALADDIN: Is your wife’s car, too, or no?
ED KOHLER: No, she kept her spot but I’m right next to where hers was. A lot of car burn. So.
DAVID ALADDIN: You know what, I’m sure every seller goes to this phase. I’ve kind of going through. I shipped mostly direct to FBA, so the garages had been saved. But, Ed, it’s been great having you on the show today.
ED KOHLER: And thanks to you…
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