AS 88: Inside the mind of Kevin King who’s pulled 3 Million so far selling on Amazon FBA
31 May 2017
Kevin has been an entrepreneur his entire life. It’s been 30 years since he last received a paycheck from someone else. He has created, developed and guided hundreds of products from inception to market. In 2015, he started five private label brands on Amazon. Together those brands have grossed more than $3,000,000.00. His goal is to reach $4,000,000.00 per year on Amazon alone by the end of 2017.
In this episode, you’ll learn:
How Kevin pulls 3 Million+ sales a year
- How Kevin picks his products
- Types of products Kevin has had success and failed with
- What most sellers do and what not to do
- How Kevin uses tools, strategies and knowledge to grow his business
- How he is expanding outside of Amazon
- Inner workings of his business, his execution and mindset
- Why he has 5 brands
- How he markets his products
- What he did before selling on Amazon and e-Commerce
- How he creates molds for products
- How much he started with
And much more! Stay tuned for transcript
Link for how to add two products to cart:
DAVID ALADDIN: Great to have you on the show, Kevin!
KEVIN KING: Glad to be here, man!
DAVID ALADDIN: Can you take us to the beginning before your first million, before Amazon? Where did it all begin?
KEVIN KING: Well, like you said at intro there, I’ve been an entrepreneur my entire life. I think the last time I got a paycheck from someone I was like 17years old, and that was about thirty years ago. So, (inaudible) back when e-mail first started, so I’ve been involved in this for a long time running several different sites, e-commerce sites, fulfillment stuff. So, the Amazon stuff. I’ve been actually selling on Amazon for 12years. I was actually using Amazon almost like e-Bay in the beginning where I would just…I would be one of those high jackers.
If I had something, some old DVD player, or something laying around the house that I was like just throwing it up on e-Bay, sometimes I would throw it up on Amazon, just jump on somebody’s listing and sold it as used. And then I’ve been also doing some wholesale to Amazon through the Amazon Advantage Program which is their program for DVDs, books and that kind of thing, and so audio tapes and stuff, it’s like a special program. So, I’ve been doing wholesale with them for almost 20years on a line of calendars that I do, it’s seasonal product.
So, it’s almost like vendor central, but they issue purchase orders and then we ship them in. But then I started the private label stuff on Amazon in 2015 and like everybody else, I think I saw one of those AMS adds come across my e-mail. I was like “this looks interesting”. So, I took a look at it, but…and then I said: “you know, I don’t need to take the course, I already kind of have this background, let me just jump right into it and do it”. And I started listening podcast and researching everything I could, and that’s where it went from there.
DAVID ALADDIN: In 1997 you’ve started, kind of -ish?
KEVIN KING: Yeah, ’95 I think it’s when I when I’ve sent my first e-mail. And I started my first selling online, first e-commerce sight, I think ’96/’97. It was in fact before there was a PayPal even, you know, people had to like…I think I used plug n pay or something back then. It’s still around today, but there were the first guys to actually take credit cards online. So, yeah, I go back. And I think Amazon was…I haven’t looked. I have daily withdraws on my Amazon account, so I am one of the…so, it’s an old school account, so I think maybe ’99 or 2000 probably is when I did my first Amazon stuff.
DAVID ALADDIN: Do you know why they removed daily withdraws?
KEVIN KING: I have no idea. Someone told me they took it away in like 2011/2012, and so any accounts after that. But it probably had to do with…I mean, you know, just protect themselves against returns, I mean, against people taking their money every day and then them get left held with a, you know, a bunch or returns or a fake seller, or something, I sure they got burned a few times. So, I don’t know what the exact reason is, but I am happy to have it.
DAVID ALADDIN: Well, I know there’s like services that come out trying to give us our payment before the two weeks, and you don’t have to deal with this kind of nonsense.
KEVIN KING: No, I think there are a couple different services that take 1%-2% and do that, but they still hold some back. And yeah, it is every day I can login, 6 days a week, so I’ve got the time. It helps more on Christmas when you know, if you are doing 10.000-20.000-30.000 and $50.000 a day on Christmas and you need that cash flow instead of having to wait two weeks. I got it figured out that if you do it before 4 o’clock central time, you give it about 30minutes for it to go through the system, so about 3:30 by central time, if I do that on Wednesday I’ll have the money Friday morning in my account. So, during busy times I’ll login like daily like clockwork, and just take daily withdraws. And it definitely helps as you are growing and as you are scaling.
DAVID ALADDIN: So, let’s go back a little bit. At 17 what were you doing? Like, what took you on this path?
KEVIN KING: Well, at 17 I think my first job was in a McDonald’s, working in a Mc Donald’s, and then I worked in a dally and then I delivered pizzas. So, those are the only three jobs I’ve ever received a W2. I’ve never worked in the corporate world, never done anything like that. And I’ve always been interested in direct marketing since I was a child I was selling stamps by mail as a, you know, 12year old. And I was always an entrepreneur, mulling people’s yards, painting numbers on street curves, everything I could do to make money. I made so much money as a kid, you know. I was making couple hundred dollars a week as a 12 or 13year old, and so my parents were like: look, this is too much money for 12 or 13year olds, so you have to save half of it, and they end up dumping that into a bank account and gave it back to me when I was in college as a, they said, as an allowance. So, that was my beer money.
DAVID ALADDIN: What did go to school for?
KEVIN KING: Marketing, Texas A&M University.
DAVID ALADDIN: And then you decided not to go toward the typical rout?
KEVIN KING: Yeah, I don’t think I can work for anybody else. I think I’d lasted a day or two if someone else is telling what to do or to, you know, look over my shoulder, or you are doing the hard work and someone else if getting the credit. It’s just not my thing. And so yeah, I came out of school and start selling t-shirts on campus during college, during football games, we’d get the license for the school and we’d do all kinds of stuff, and then I travelled around all the spring break spots with the back of my car with a buddy of mine selling, you know, “get drunk” shirts to spring break kids and stuff. And then I did that for a while, and then I started a couple other businesses and just went from there. So yeah, I’ve always been a “direct marketer”.
DAVID ALADDIN: You’ve literally direct like right to the customer!
KEVIN KING: Yeah!
DAVID ALADDIN: So, you’ve been hustling before like, you know, without the distribution.
KEVIN KING: Yeah, I am kind of antithesis or anti guy in this business. A lot of people, there are either attracted to this Amazon business and a lot of marketing out for all these people doing courses as “quit your day job” you know, “get your life back” “travel the World”. I’ve already done all that stuff. I organized one of my businesses so that in 2007 I could travel. So, I was actually, for seven years, I would spend like two weeks in the office and two weeks on the road, travelling all over the World. And so, I’ve already done that. And, you know, I had some money from the last business, I was doing pretty good and started to run out after about seven years of doing that, so I was like okay, I got to get serious again, and that’s where I jumped into the Amazon. I was like okay, this is perfect for my skill set of e-commerce, direct marketing, I know all the…I’ve been buying stuff in China and doing all that. So, none of that was new to me. Just had to learn how Amazon likes everything done from a third party point of view. And that’s how it started. So, I have five brands in five different categories on Amazon.
DAVID ALADDIN: So, just leading up to it, in 2007 what type of business allowed you to travel everywhere?
KEVIN KING: I had a television business; we were shooting TV shows all over the World, so… But we would go there and we would, you know, on some island in the Caribbean, and be working for a week and not really get to enjoy the place. I mean you are there, yeah, that definitely beats being in an office, but as I want to come back here and like spend a week and get to know this place really, so that’s kind of what led to it. And so I had my bucket list and I just made a list, and it was supposed to be one year of travel. And I wasn’t backpacking; I wasn’t staying in hostels, or… I was hiring a private guy wherever I went, you know, so that you almost have like a friend there, drive me around, show me everything, they’d take me to their house for dinner so I would get a real taste of the culture. And then I end up going in about 90 countries in all seven continents.
So, it was… One year turned into seven, because it became kind of addicting. I mean, you’d go out there, you know “oh, man, I got to check out this place!” or someone being “oh, have you been here” like “no, that sounds really cool!” And it’s the best education you can get. I tell people, you know, a lot of them, especially here in America, a lot of the Americans don’t even have a passport, I think 90% don’t even have a passport, or their idea of international travel is go down to Cancun, or go to Caribbean. And to me, that’s not an international travel. You got to get out where you don’t speak their language, you don’t know what the hell you are eating, nobody can communicate to you, and to really experience a culture and really get out there, and not be a tourist, but actually be a traveler. There’s a big difference between those!
DAVID ALADDIN: Do you think the products that you have today are a result of some of the travelling that you’ve done?
KEVIN KING: No, none of them are actually.
DAVID ALADDIN: Interesting!
KEVIN KING: None of my products are related to travel at all because I am not married to any of my products. I mean, some people…you know, you see even it on SharpTanks, you know, some of those shows where people come out and think their product’s the best in the World, and there’ve like spend 5years developing this, and everybody, all of my friends like it, everybody likes it, I know it’s good. I don’t get emotional like that. I mean, I used the tools out there like on Amazon and whatever people want is what I give them, and whatever’s selling whatever I think there’s an opportunity.
And so I’ve started five brands on Amazon all at the same time because I had a little bit of money to put into it. I wasn’t coming with 500bucks or something. And I wanted to see how each category…because on Amazon each category can react differently. I mean, there’s different rules, different things, different levels of competition. And so I wanted to see which ones would make sense for me to pursuit deeper, you know, to build out of Amazon big social Facebook and Instagram sites and all that kinds of stuff. And so, out of those five there are three of them that I am dialing down and focusing on. The other two, I still got some products there and they are making money, but I don’t think there’s big potential. And so, I’ll narrow those five down to three over the…by the end of this year.
DAVID ALADDIN: Me and you started actually around the same time it seems. Except you have five brands and I have one. Where did you get all this time to launch five brands at the same time, and then also have that confidence to just launch this much all at once?
KEVIN KING: I am a one-man-show. I have no VAs, no helpers. I am just now in the process of hiring someone to help on the social media side, because like I said, I’ve narrowed those five to three that I really want to focus on, so I am building up a whole Facebook and Instagram, and I hired someone to actually do that. But that’s the only help I have. I mean, I still…most of my products come from China to me, and yesterday I was out in my storage, you wrapping five pallets, putting stickers on boxes and wrapping pallets, and tomorrow the truck will come and pick them up and ship them to Amazon. I just work efficiently and smartly. And like I said, I’ve been doing this for a long time, so I am not trying to be…
You know, some people get into this like: I want to grow this to $100million Company. That’s not what I am trying to do. My goal is 10 million bucks. I mean, this year, I’ll hit about 4million on Amazon, but my goal in 10million by the end of 2019. And I’ll be happy. I don’t need… I’ve been there where I have an office with 16 people and all that headaches, and I am not looking for that again. I’ll probably hire one more person and that will be it. I’ll just keep leaned and mean, and that why it gets easier to adapt, and easier to change as Amazon changes. Because, you know, if you’ve got big office with 16 people, and overnight Amazon makes an algorithm change, or they kill your product for some reason, you know, it gets suspended… You know, I hear horror stories of people having to lay-off people, and you can’t be as nimble. And so, I’d rather have 10million sales. You know, I can with a 20% profit margin, you know, some of that reinvested, I can live on 500.000/a million a year, I’ll be happy.
DAVID ALADDIN: No big deal…
KEVIN KING: Yeah, and so I don’t need all of that headaches and all that other stuff, so, that’s not my personal goal. And like I’ve said, I already traveled all over, so I’m not doing this to, you know, go work the four-hour work week, like some people think, which is a policy in this business. Amazon is not a four-hour work week. I mean, it was for some of the people that got in maybe 2012/2013, right place/right time on a few products. But in today’s World, it’s a lot of hard work. I mean, if you want to you can work the four-hour work week with your side gig, and you keeping your normal job, and this is your vacation money, or college money, or whatever. But if you want to make a real business out of it and make real income, you know, 50 hundred thousand a year, it’s a lot more than four hours a week you got to work.
DAVID ALADDIN: Great! Okay, how much did you initially start off with to get to this amount within two years?
KEVIN KING: I started off with about a $150.000. But some of that I actually…two of my products that I started off with out of those five brands, it’s three of them I did the typical private label, find something in China and differentiate it. I really differentiate my products heavily. A lot of people don’t really do that, but I spend time to change it up and to differentiate its packaging and everything. All my packaging is nice. In two years, I’ve had 20 sku’s, I’ve had one highjacker once. So, I don’t have that problem because I differentiate so well. But when I started two of those brands I actually created the product.
So, it took a little bit of more money, because I actually came out with the idea for the product, had it designed, found someone on UpWork to actually do the CAD stuff, had the factory make the moulds for it, and so I made my own product as in dog category. And then another product was in the Apple Accessories category. It’s a charger actually for the Apple watch. I completely…all the watch stands that are out there right when the Apple watch first came out, there were just…there were ugly, and so I created my own that was instead of selling for 10 or 15 bucks like everybody else, I sell it for 80 bucks, and because it had a built-in… it had a lot of extra features on it that the others didn’t. So that cost me about $35.000 in moulding costs.
DAVID ALADDIN: That is a lot, yeah!
KEVIN KING: Yeah, so that’s…I took that approach on that product, and that product now is going through…I’m doing a version two of it, fixing a couple of issues I had on my first and adding a couple of new features, and it will be out for Christmas. But that product, at one point, when it first launched, on Christmas of 2015, it was selling $25-30.000 a day on that one product. So, it was a big investment upfront, and it was a risk, but in the end, it paid off handsomely.
DAVID ALADDIN: So, you are like a hybrid, you are not even private label, you are like kind of an inventor as well.
KEVIN KING: I would call it…I don’t really call myself an inventor.
DAVID ALADDIN: You brought a product to market, so…
KEVIN KING: Yeah, I brought a couple.
DAVID ALADDIN: A new product, yeah…
KEVIN KING: And I do the same thing, I have dog treats, and I mean, I am big on differentiation on images. I spend a lot of money on my foreign photography, I mean; I am talking tens of thousands sometimes. And I’ll do a photo shoot for nine of my products and I’ll get… I might spend 15-20 grand on photography. I mean, I group them together to save, but my images set things apart. Like, I have a dog treat, for example, that everybody else put in some plain plastic bag with a little label on them, just a simple private label, and sells 20 or 25 of these treats in a plastic bag for I don’t know, 30 bucks.
DAVID ALADDIN: Eatable, right?
KEVIN KING: Yeah, they are eatable, yeah, consumables. And then I have a treat in that same line where I have three in a bag, instead of thirty in a bag, I have three. And I don’t put in a bag. I put it in a nice box, like a cigar box, almost, and with really nice packaging.
DAVID ALADDIN: It’s like framed!
KEVIN KING: Yeah, for my three…And my images on there are very special and very good. So, to really justify this, but I sell my three for $50. Everybody else sells their 30 for $30. And so a lot of people always think on Amazon it’s a race to the bottom, Amazon customers are always looking for the best deal and the lowest price, and that’s simply not true. Something like 47% if you look at the stats of Amazon seller, are very…are making over 75 or a hundred thousand dollars a year and they are upper middle class and above. And a lot of them are not pricing shopping. And they might price shop on Amazon, so if you are selling a garlic press, and yours is $8, and the other guy’s $9, and they look identical, they are going to buy the $8 one every time. So, that’s where the price shopping comes in and that’s where people get confused. But if you can differentiate the product and justify its price, people eat with their eyes first.
So, if you show them a really good image on Amazon and like tell them why in the marketing copy like why that price is justified, you can get it. And so that product that sells, you know, at 50 bucks and the guy that’s selling it at $30, he’s probably buying them at, I don’t know, $20 let’s say, $15 let’s say, and he’s doubling his money. So, he’s buying at 15 from the wholesaler and he’s selling it for 30.
Well, after Amazon fees and everything else, you know, he’s making what? 5 bucks or so on every sell he makes. And he may have a BSR of a thousand. So, that means he’s selling say 20-25 a day at that BSR. So, he’s making a $125 profit a day on paper off of that item. If you take mine that’s selling at $50, my cost on that is a little bit more that his, because I am doing some special stuff to it, but it’s not much more. So, if my cost on it it’s just let’s say $20, his is 15, mine is 20, I am selling it at 50, Amazon take roughly a third of that. So, I am getting about 35 from Amazon minus my cost, I am making $15 profit on every item. My BSR is about 5.000. So, I don’t care, because at that number, if he’s selling 25 a day and making $125 of profit, you can do the math really quick and see that I only need to sell about 8 a day to make the same number, the same amount of profit with less headache and less stock outs and everything less than him. And I sell about 10 a day.
So, in the end, I am making more money than he is. I am not worrying about high jackers; I am not worrying about all this stuff. So, you have differentiated. And I think that’s where’s the biggest opportunity in the future. People say Amazon is dead, this opportunity is gone. Absolutely not! It’s only going to get better! But where it’s gone it’s for the simple (inaudible)stuff, the simple punching in some numbers into (inaudible), or one of those unicorn smasher, or one of the others. Add some parameters and come back, and just cheaply put your label on a product. Those opportunities, if you could make one of those work, it’s like a lottery ticket! But there’s tons of opportunity for differentiation! Now, with the EBC the Enhance Brand Content, you can really ramp up what you can do if you are brand registered. And I do that with all my products. And people will pay. And people forget that in this business. They are looking for the quick, easy out.
They are not developing brands and they are not developing really good products that people will pay good money for. I mean, there’s a reason some people buy a Lexus and other people buy a Chevrolet and they both do the same thing, but… It’s the same for these products, and people forget that. And they just become too…I don’t worry about… I don’t use any keyword ranking tools, I don’t use spy on my competition, I don’t care what they are doing. I mean, when I am going into a market, I will look, I will use the different tools that are out there to actually see, you know, are this market… Like, previous example: I was in China sourcing some stuff in April. I came across a product and I was like: this is a kickass product! I got to get this on Amazon! I go back to the hotel, and I look and look, use the different tools, and I am like: holy shit! There’s like 20 people already selling this. You know, they have like 200 reviews +. It validates all the rules. People say, you know, the different gurus teach.
But I am looking at like: look, you got all these ads up, and they are selling a million dollars a month of these top guys. You know, they had the reviews, but they are missing a couple things here on this product. There are a couple things you can do in the bundling, couple things you can offer. I can come in and get 10% of that market. So, I am pretty confident with my marketing. I can go in and I can capture a 100grand a month of those million dollars sales, if not more. So, that’s how I look at that stuff, as differentiating and not just going by some basic formula. And so I use these tools to see is the market…because those tools are all guesses, none of them are accurate, doesn’t matter who you use. IT just gives me an idea relatively of the market.
DAVID ALADDIN: Okay, so how many SKU’s do you have per brand would you say?
KEVIN KING: Couples, I only have a couple of SKU’s effective in a brand, and my biggest pulling right now is like 12. Total active right now is around 20 SKU’s.
DAVID ALADDIN: Okay, I have about 20 as well. I am just trying to see how you’ve got a lot…like so much done and, you know, two years, it’s not a lot of time. And I’m, you know, in my business everyday working as well. So, I am just gagging if I am working fast enough, or…
KEVIN KING: Well, I work like, you know… I was working 16… I work 16 hour days there, 7days a week. You know, money never sleeps. So, a lot of hustle, a lot of hard work and then, just picking the right products and market them. And I’ve dropped products. You know, in the last two years, I’ve 20 so much, whatever, 20 SKU’s right now, but out of those I am about to drop eight of them and I’ve dropped six before and not because they are not profitable. I just have a rule that I give a product six months. And after six months, after I’ve done all the tweaking, all the launches, all the, you know, got it going, done the whole initially to get it going, if after six months of this it’s not throwing $2000 profit per month, and a profit is after all advertising cost, after all shipping, everything, and if it’s not $2000 profit per month, then I drop it.
DAVID ALADDIN: That’s cold!
KEVIN KING: Because I am like I can’t…you know, money is limited. I am not multigasilioner that can just keep dumping into it. So, I am like: look, if I can…if that product costs me… I might have a carrying cost, you know, depending on how fast they are selling, how much they are making. I can take deployed that same investments in another product and get a better return. So, that’s how I look at it. I look at it almost like stocks at all of my products. Like I said earlier, I am not emotionally tied to them like the people in SharkTank and so many other people are. Like, if it don’t work, yeah, I spent a lot of time developing really nice boxes, taking pictures, I drop it. I move on to the next one. I just…I don’t get tied to them or like hold out hope, or try to rescue them. I mean, it’s pretty obvious after like two or three months usually, that if that product is going to have any potential or not.
DAVID ALADDIN: I actually…I’ve had like 500units that were pretty like oversized units, but they weren’t selling. And it just came time to just kill them. I had them all destroyed. It was kind of painful, but didn’t make sense.
KEVIN KING: I’ve never lost money, because I’ve had a couple and I just lower them down the base like a break even, and just turn off PPC and just let the one or two people a day discover them, find them, and use them. I think one of them took me…one of my first products, it took me 10months, but from the time I said: okay, screw this product, it’s out of here, it took about 10months to finally get rid of them all. But I just let them sit, let them… I mean, it got some bad reviews; I didn’t do my homework correctly since like 3star products. But it eventually sold out. And I got my money and moved on. So, I haven’t actually ever, like you said, take 500 and just destroy them, I’ve never done that.
DAVID ALADDIN: How long did that mould take to develop? I developed a mould myself, it took about a year to actually finally get it onto the market, so…
KEVIN KING: Yeah, I mean, my process is… The dog category, it took about… I started that product, designed it in the summer of 2015, I launched it in January, so what’s that? 6 or 7 months from…7 months from conception to…
DAVID ALADDIN: It is pretty good…
KEVIN KING: …on the market for that one, but, you know, all my… And then the other one took a little bit longer, the electronic parts and stuff, and that one was pretty complicated. But what I did on those, I mean, I did…you know, I designed it, had someone on UpWork do the CAD work, then I took it to guy here that has 3D printers, I mean, he has like 20 of them in the building in his backyard, really he’s like a 3D printing junky. So, he would print me 3D prints of them, I would test them, you know, I would test it with a dog, the ones that are electronics I’d take to the Apple store and like: hey, can you pull out all the watches, you know, in you draw here and let me make sure every bands fits.
DAVID ALADDIN: That’s funny!
KEVIN KING: And then I’d make adjustments, go make another 3D print, you know, get it right, and then send it to the factory. They will have to make a prototype which will cost me sometimes like $1500 for just a one like functioning, have the power and everything prototype. I’d check that, make sure everything’s okay, like any adjustments. Then they make about 20 more prototypes. And those are the ones that I say: okay, these are all cool. I would send those out to the reviewers, so get the reviews going. And then wait for the product to get manufactured and brought over.
DAVID ALADDIN: I am surprised you were able to that within seven months. Like, you know…I kind of almost gambled, because I… And it took a year, cause, you know, I always only able to get one or two samples, you know, back and forth. I am like: this is taking forever, but I think this is pretty good, so let’s go with it. But it seems like you had a lot of samples done within the seven months.
KEVIN KING: Once I green lighted the product, it’s probably three to four months. About a month to make the mould, and then three months to manufacture just like any…a lot of other products, 2 to 3 months. But yeah, it’s… I did have some of them flown over like on Christmas, 2015, Apple stand was doing really, really well like I told you earlier, and so I had no choice, but they weight about almost 3kilo each, so I’d just…I actually put some pallets on the airplane and airfreight them over, and I spent $16.000, you know, over a couple of pallets, but it was Christmas and it cost me like $10 a unit, you know, to bring them over. But I am selling them for $80, and so I had a good margin and my cost was almost 22bucks. And so, I just had to eat 10bucks margin. And it was worth it to maintain a minimum. As you know, on Amazon, you don’t want to run out of stock. So yeah, I’ve done that too.
DAVID ALADDIN: Yeah, I have too. But for me, I have overbought due to fear of running out of stocks. And now, I mean, like I am not really…I don’t really care if I run out of stock as much as before, cause I… It’s been painful to oversupply.
KEVIN KING: Yeah, I typically order thousand. I am not of these guys that: let’s test 50 units and see what happens.
DAVID ALADDIN: Yeah…
KEVIN KING: I mean, I am not going to dip my toe in the water, I am going to jump in. And so I’ll order a thousand. And I know, like I said earlier, I can sell a thousand. And I’ve done the same thing as you. I brought over a thousand that are doing really well and like: okay, let me order 1500 to get ahead of this. And then all of the sudden the sells start slowing down. And those 1500 arrive and I’m like: ah, god damn it, man…now I am going to be stuck with these for six weeks, or six months, or eight months, or whatever. So, I’ve had that happen too. You make those mistakes. So, as you go, you learn, you kind of learn what works, what doesn’t, you develop your own risk tolerance inside what’s best for you.
DAVID ALADDIN: Let’s talk about stability in terms of suspensions. You’ve been in this game for a long time, even before the private label. Have you had your fair share of suspensions or people you know that got suspended?
KEVIN KING: I don’t know anybody personally that’s been suspended. I mean, several different masterminds…and also, you know, like… I don’t know anybody personally. You know, you hear stories on Facebook, and you hear them on the podcast… But I’ve had a couple products suspended temporarily, you know, for a safety issue, because a customer said something.
Or someone doesn’t know how to use the product. I’ve had a makeup product, it was a 3D fiber lash mascara, so it comes in two different valves. And a woman opened it up and one of those vales is dry because it’s like fibers, there are like tea leaves almost, and she’s like: oh, this is dry, it’s dried out, this product must be old, it’s all dried out! So, she sent it back. And someone wrote a review service, she paid, you know, 99cents for it. I mean, she sent it back and I was going to send a replacement. And she’s like on the next one: oh, it’s dry too!
So, she filed a complaint because there two of them back to back, and Amazon suspended the product. And had to go do a warehouse check. And then it took me about two weeks to get it up. So, I’ve had a couple incidents like that where you are dealing with stupid ass customers that cause that. But my accounts ever suspended? No, I’ve never had had that. I do have insurance. There’s insurance through Lloyds London that they insure Amazon accounts, so I do have that insurance so that if I ever did get suspended, they’ll pay up to a million bucks, as long as you weren’t doing some black add or some crazy thing. But they’ll pay you out on that. So, I do have that and I pay about 3grand a year for that coverage.
DAVID ALADDIN: And you answered my question before I asked it! Interesting! Okay!
KEVIN KING: I mean, and I also pay…I also have product liability and general liability. I mean, Amazon actually requires general liability. Most Amazon sellers don’t have it. But the general liability usually have I think 2million dollars policy, but that just covers basically that if you know the UPS guy sticks a package, you know, on the door step and the customer trip, or if something happens in the warehouse. And that’s about 5-600 bucks a year. And that’s what most people have and they think they are covered. But you are not. I also have product liabilities; they are a completely separate insurance. And product liability covers you if, you know, someone eats your product and they die, or if someone’s using your product and they hurt their back, or, you know, it catches on fire and their house burns down, or whatever. So, product liability is depending on your product and your category, and your sales, so there are a lot of variables in that that will determine the price, but I am paying about 5grand a year for that. And covers me so that, like I said, if someone gets hurt, or something gets damaged using the product, I am covered.
DAVID ALADDIN: 5k a year for both liabilities?
KEVIN KING: No, 5k a year for the product liability and that will vary… I mean, if you are selling more, it will be a lot higher. If you are less, if you are selling supplements, you know, human supplements, that price is going to go out. So, that’s not… The $500-600 price for general liability, that’s pretty much for everybody that can get a price around that. But the product liability is all depending on your sales and the categories you are selling in. But for me, it’s about 5grand a year. And then I have on top of that the Amazon suspension insurance which is 3. So, you can see that I am paying about 8500 bucks a year to cover my ass.
DAVID ALADDIN: When I talk about Amazon, it is like all these people are taking money out of your pocket from all different services, and liabilities, offer services, Amazon’s 15% fee, warehouse and through FDA. It’s just the list is never-ending. And then, by the end of the year, you look at how much you’ve paid. Starts, you know, looking smaller and then you…
KEVIN KING: There are a lot of people doing… I agree with you! There’s people doing 10million dollars a year on Amazon and they have trouble paying their rent! I mean, people get confused. You see it on the forms and people are like: oh, I got 40% profit margin, 60% profit margin. I call bullshit on every single one of them! They don’t know they are not true numbers. So, I mean… And you got to factor-in everything. They may have a 60% margin on what they are paying to what they are selling it for, but when you factor-in, like you just said, all these other costs, you don’t have that margins. I believe that if you can hit a 20% bottom-line margin, you are doing well on Amazon.
So, after your PPC, after your warehousing, after your returns. A lot of people don’t count, factor-in returns. I use HelloProfit. You know, there are other softwares sellers; there are tons of them out there that do it, but…to manage that, to watch that stuff. And then you know, Zero and some of the Quickworks, you know, that will kind of give an idea too. But it’s not as on point as like HelloProfit for what we do. So, I am typically at about a 20% margin, you know. Some products, you know, I might dip down, that’s another criteria. As I was talking about earlier, I’d drop a product if, you know, if I can only achieve 5% margin on it, I’ll: screw it! It’s not a good ROA. So, move on to something else.
DAVID ALADDIN: So, what are your thoughts about…have you been expanding outside of Amazon?
KEVIN KING: Yeah, I sell on Amazon Canada. Amazon Canada is about 7% right now for me. But I only have really six SKUs over here of my 20, and 2 of them aren’t selling, they sell like one a month, even though they sell 20 a day here, it’s like 1 a month over there.
So, I got a couple of SKUs that took off over there. And so, it’s about 7% of my sales. I am going to expand to Europe later this year, but that…it’s cash flow, you know. It’s basically like starting a whole another business over there and I’ll take my best sellers. My philosophy is: test everything here on Amazon, get the bug worked out, like I said earlier, find who the winners and losers are, and then expand out, so you are not going over Europe with you know, with a garbage product, and you’ll have to deal with returns and getting them back, or getting a suspension over there. And I also sell in Jet, I sell on WalMart.com, sell on eBay, and I am on shoppify site, and then I did some wholesales through some of the deal sites like TouchOfModern which is kind of like a…if you are old enough, you remember SharperImage, they are aimed at min, they have about 10million min, and they do deals. They run it for like four days.
So, you have to price competitively, but I’ve done well there. Most of my deals over there run over four days and then I’ll do five…a nice five figures. I do stuff on Zulily for some of my stuff aimed at women, and it’s owned by QVC, and they also do side deals, so I also do some there. And then I get approached by…like my dog stuff, I just got approached by chewy.com, which is…actually there are bigger than Amazon on selling dog products. They sell more than Amazon. But they are very smart over there. They, rather than me having to approach them, because I’ve reached out to them a couple times through a couple of people I know, and I am just basically ignored, but they mind their search data. They get reports. The buyers get reports of what people are searching for in their search box. And so my brand is getting searched for quite a bit as a result of Amazon and some Facebook ads and stuff. So, they reached out to me and said: hey, we are seeing your brand being searched for a lot, we would like to carry your products. But the problem with them is they want NET90 terms. So, I am basically…
DAVID ALADDIN: Hate that, yeah…
KEVIN KING: Yeah, so it’s a cash thing. So, I have to figure out what I want to do. And then, besides the price I give them, unlike Amazon, so I can go to Chewy and say: okay, your price is $10 for this product, well that’s not the price they pay. They take 22% off of that for other fees. So, 4% advertising fee, 3% return co-up fee, all kinds of bullshit fees that they add in. So, you have to factor that into your price too, and so instead of $10 wholesale, you know, I might be getting $8 off of it, or $7.80. And then you want to get paid, you know, early or whatever, and you take a few more points. So, you can lose pretty quick. And then if I have to factor that to cash flow, because if they come back and they give me a quarter million dollar order, you know, unlike Amazon, you can like buy smaller amounts and just feed the beast as you need to.
And you know how long is going to take, but they give me a quarter million dollar order, I am going to have to go out and factor that, so I am going to have to pay someone 3% to factor it, maybe 4% to actually run the production run, to pay the factory, and then wait 90days to get paid. So, at the end of the day, I might not be making much money. So, I am not sure… Have to be very careful on that stuff. And retail is the same. A lot of people are like: I want to get in the big box retail get in the best buy. They can be great places. And 90% of all things are still bought off in physical stores, so that’s not dead, but it’s a whole different game, and it takes a whole different mindset and whole different pocketbook to do that stuff.
DAVID ALADDIN: I think Chewy just got acquired by…was it PetFood, Pet-something…?
KEVIN KING: Yeah,
DAVID ALADDIN: PetSmart?
KEVIN KING: PetSmart.
DAVID ALADDIN: So, you might be able to get into retail as well with that.
KEVIN KING: Yeah, I could. I am playing that game too, but you also lose control. I mean, I do that with… Like you said earlier, if you have a product on Amazon and it’s a dog, you know you are going to sell it through and you are kind of controlling this third party seller. You can modify the price, you can mess with your images, you can influence and run some ads. When you are a box retailer, sometimes that stuff don’t even put out on the floor. I might order a thousand units, send them to different stores and in ten of the stores, they just stay in the back, they never even bother to put it out. And you get returns, you got paid for the returns. It’s a whole another animal that a lot of people don’t think about. It can make sense for some products and for some people, but it’s a whole different mentality than what we think about as Amazon sellers.
DAVID ALADDIN: One thing that stood out earlier. You mentioned that you are a one man team and you have a warehouse. Can you tell us more about what’s your warehouse situation look like?
KEVIN KING: Well, my garage is a whole shipping centre. So, I have, you know, I have one of those big peanuts, the little star phone thing that comes down and I got the whole thing set up as a shipping centre. But I don’t store… I only store a little bit there for… I can still park my car there too, but I store a little bit. Like I said, I am very tidily organized. And so I have customer service stuff, you know, a part is missing or something I can ship from there. And then I have three, and they are like public storage warehouses, you know. They are like three side by side. So, I can hold 16 pallets in each I think and so I have two pallet jacks and you can go to Harvard’s and get it for 250bucks.
So, I keep my… I used to ship everything in to Amazon. I would bring it here, re-label it and ship it in to Amazon, but you know, that gets expensive with Amazon fees. So now I bring it in, I peace mail it. So about every two weeks I’ll go spend about two hours… You know, people are like: oh, I don’t want to hustle with all this. But it gets me off my chair; it gets me a little exercise. So, yesterday I had five big…. I have some oversized stuff. So, I have five pallets that I’ve packed up. You know, all you got to do is move the box around, put a label on it and put the wrap around, put the label. And then send that LTL to Amazon. So, instead of paying $800 in UPS fees, even that Amazon’s heavily discounted rates, I can send it for $75 LTL. So, right there I just make $700. And I know the product is good, I know everything is fine. And I got some exercise. And tomorrow the truck will come, pick it up, go back in and it take me 10minutes. So, for 3hors of my time, total time, I know everything’s done right and I save money, and get out of the chair and not sitting on my ass all day.
DAVID ALADDIN: Interesting …
KEVIN KING: I mean, if you are doing a hundred million a year, I can’t do that. And I have a couple of things, some of my dog stuff or consumables, like a good factory in the US and so they ship direct. So I am not messing with that but anything coming from China, I want to see it, I do inspections in China before it comes and do all that but anything coming from China, it has to come through me, I don’t do any direct through Amazon.
DAVID ALADDIN: That is … you know, that is another cost that is hard to factor into the profits, the inspections that go on in China.
KEVIN KING: I pay 200 bucks.
DAVID ALADDIN: That is pretty good.
KEVIN KING: I have got a really good company, it used to be higher, they give me discounts now because I have done so many but I do an inspection on every single order even if it is the 20th order from that company. You have ordered 19 times from this company, everything has been fine so far, I don’t need just waste of money – bullshit. I do inspections, I have had problems because these factories in China people forget … every time there is a big holiday, a lot of their low paid labor doesn’t return, they go back to their home families, they go back in the middle of the country and they stay there, they don’t come back.
So there is a big turnover at the worker level in a lot of these factories and so things can change over the course of a year. So I just had a factory I have ordered … I think it is like the tenth order from them and it failed inspection and so I made them fix it and I make them repay for the inspection so it is not just fix it and they send me a picture say “look, Mr. Kevin, everything is good”, no, we are doing a third-party inspection again and you are paying for it. And they do and sometimes I have gotten into big fights with a couple of them but one thing I refuse to pay their deposit the rest of the money. I say “if you don’t fix this …” because in China, it is different. Their standards are not the same as ours; in China they don’t care if it is in a nice box for example but if there is a small scratch on the bottom of a piece of cookware, they are like “look, it works, it still cooks your stuff, what is the problem with it, there is nothing wrong with it”. But here, if someone gets a small scratch on the bottom of their cookware, they are going to say “you sold us new”, they are going to complain or whatever, I can’t have that.
So it is a different level of thinking and so sometimes I have gotten into big fights with those guys saying “I don’t care if it works, you know, there is a small scratch here, it is out of parameter, you are allowed to have ten small scratches on an order of a 1000 but you have thirteen, that is too many, you know, you have got to go open every box, fix everything” and they have fought me on it. And they have gotten to the point when one said “screw it”, keep them, I had paid 30% deposit I think, I said “they are yours, do whatever you want with them, I am not paying you” and they finally buckled and said “okay, we will open them all up, we will fix it, we will pay for it”.
So it is a challenge sometimes but I don’t trust them at all. And I even do that here in my US factories; I don’t do a big inspection before they leave because I trust a couple of these guys and I haven’t had a big problem but I do once they send it into Amazon, I will order a couple of units to me, to my house just to spot check, just to make sure that they didn’t put the labels in different places this time or whatever. So I will do that as well and in that way, it is totally random, they can’t just … I can’t just tell them “hey, send me a couple of samples” because they are going to make sure they are the prettiest and the nicest ones.
DAVID ALADDIN: So, do you have like … going back to the warehouse, do you have like a big trailer? I am guessing you have to move the pallets from the warehouses. How are you picking up those?
KEVIN KING: Well, I have an agent … like my cut broker is here in Austin, so literally all I do is if my factory in China has got something ready, I just call my agent and say “here is the name of the factory and their address, go get it.” And I don’t know about it again until they are calling me “hey, it is 8 o’clock”, you know, “it is 8 o’clock, we want to deliver today to you at 11, are you going to be around”. And so they bring over a small truck like 25 foot truck or something, it has, you know, 10-15-20 pallets in it and it has a lift gate, we just lift them down, roll them right in to the storage …
DAVID ALADDIN: I mean from exiting your storage … like, moving those pallets afterwards.
KEVIN KING: So, once they are in the storage, no, I have a pallet jack. I have two pallet jacks, you know, those are the metal things you put on the pallets and you move them, I have two of those. And so I just move them … like, yesterday I pulled 5 pallets out right in the middle … in the sun … whatever and I put little stickers because you have to put one, I don’t know if you done than … LTL shipments.
DAVID ALADDIN: Yeah.
KEVIN KING: Put a sticker on each box and then you got to wrap the whole box in cellophane, then I put outer stickers on all four sides like you have to do and then just push it right back in with the pallet jack into the storage and it takes two days for LTL from the time you schedule shipment, Amazon assigns you to a trucking company and it is two days later that they actually come pick it up. So tomorrow …
DAVID ALADDIN: You have the LTL come and pick it up at your storage location?
KEVIN KING: Yeah.
DAVID ALADDIN: Oh, okay. That is what I was wondering … I was wondering if you brought it to house.
KEVIN KING: No, in the past I have brought stuff to my house and sometimes I will do that because I can store 9 pallets in my garage. I was doing that in the beginning but now it is easier just to have them go there because I need it back right in, you know, bring a big, 47-foot trailer and …
DAVID ALADDIN: Yeah but the problem I have had is like they are just not consistent and showing up on time, you know, they always tend to show up whenever they want, they are like a few hours from the scheduled pick up time. So I guess you would have to meet up and wait at the storage unit.
KEVIN KING: Well, my storage unit is three minutes from my house so a lot of times I have the same driver but if I don’t, they go there and they are like “we can’t get in the gate here” or whatever so they call me and I am like “I will be over in a couple of minutes”. I know here they do the pickups in the afternoon because it doesn’t matter who the freight company is, it is always after 12 because they are doing their drop offs in the morning and so it works good. I have no problems.
DAVID ALADDIN: We have got about 12 minutes left. Let’s talk about marketing. How are you getting traffic to your listings?
KEVIN KING: Well, I have a whole marketing strategy that I use to launch and like how do you get traffic now in lieu the terms of service change from October last year. But there is a whole process I go through to launch and it depends on the product but I believe there is a lot of traffic on Amazon, a lot of people are focused on sending traffic from outside of Amazon. I don’t really think you need to do it, you just need to … I mean it does help, there is no doubt and maybe when you are first launching, you can do a few of those, I do a few of those. But when you are … there is a lot of traffic on Amazon and you can maximize that so a lot of people overlook that; they just get the listing up and do some PPC. There are all kinds of stuff you can do with AMS and targeting competitors on a launch, there are all kinds of stuff you can do with frequently bought together, there are all kinds of stuff you can do with cross-promotion in your images to get additional traffic.
There are ways to do the PPC, you know, if I am doing a launch service, you know, like the our launch or one of those guys, I still use those, some people say they are against terms of service but they are not … they are not asking for their views. So I actually … I don’t (inaudible) they go and they do their homework and they are like “these keyword tools, these are the top keywords I want to target” and so they go towards not using the service or using their own Facebook or whatever it may be trying to rank for those words and they are missing the boat because just as traffic words supposedly, doesn’t mean that is the word you are going to be on. For example, I have a dog ball and in my dog ball, I don’t convert of the word “dog ball”, I cannot stay on page one for the word “dog ball” but I can stay on page one for a lot of other variations and ways the people type that in. so I use my PPC when I first launch a product, run that for a couple of weeks, I usually take automated PPC and also I use the manual.
So I will take all those search terms I have found, put them in manuals and run it all with no reviews, nothing. I just run everything for a couple of weeks and see what I am converting on. And then I look for something as … I have a formula for it … it is getting at least a point … at least two sales, at least a thousand impressions; I combine all the data … back up. I download that report and combine all the manual and automatic PPC data into a single Excel spreadsheet so I have everything meshed together. I look for anything that sold at least two PPC for a click through rate at least .7; I look for thousand impressions and I look for signs that I am not worried about a cost, I am not worried about any of that stuff. I am just looking to see what converts and so once I figure that out – what actually converts, then I will actually use that in my launch. So I will look at that data and say “okay, these are the ones I think I can stay on page one for” because you can use a big launch service, do big giveaways to your own list or whatever and you don’t stay on page one. That is because you are not converting on that keyword and so you are just wasting time and money.
So, I will do this and figure out what actually converts for me and target those and when I do that, I typically stay on page one. But then you could do some stuff with frequently bought together, you can do some Facebook stuff; I do quite a lot of things. I mean, it is something that we teach … I am part of the Illuminati Mastermind which is a deal for sellers who are already selling out there who are like stuck, they have done some of the courses, they have done it on their own like “okay, I have reached this level, how can I get to the next level and what can I do” and so we have a program called the Illuminati Mastermind and it is a live training program that we teach and we show exactly how we do all that stuff in there. That is how I get traffic to my … that is one of the strategies but you can do a lot with AMS; if you are not using the AMS, there are a lot of powerful stuff that you can do in AMS and targeting other people’s products when you are launching.
DAVID ALADDIN: Yeah; I hate it when people target my products.
KEVIN KING: Yeah, well you control it yourself by bidding on your own to keep them out of there but it can get expensive too.
DAVID ALADDIN: It is really expensive. I am like “why would someone pay …” like I have it set at a dollar, then two dollars and three. It is like “why are people paying this much to advertise on my listing” – it doesn’t make sense.
KEVIN KING: Well, a good strategy though is if you are launching, the frequently bought together is heavily overlooked. 45% of all sales on Amazon don’t come from search, they come from things that are on the page so if you can get in that customers who also bought this that can boost your sales a lot. I do it even when I launch a product, I will use one of my best products and I will tag it, I will send something out … that is where I use the Facebook because it is off sight because I will go to my customers and say “hey look, if you buy … we have a new dog treat, if you buy my new dog treat” … let me back that … there is a dog treat they are already buying, I know they love this particular dog treat, there are repeat customers. I say “hey look, I will give you 25% off this treat that your dog loves, if you will just go buy my new one” and put them in the cart, I will give them a link that puts them in the cart at the same time. In that way with usually five or ten sales, you are getting a frequently bought together on my own products. Then that leads other sales because other people are finding I have a product that is already established, lots of people are coming in “oh, they have also got this other one, let me click it”. There are a lot of tactics you can do.
DAVID ALADDIN: What is creating that link that adds two products at the same time?
KEVIN KING: A special link that you have to do it … it is a long URL, I don’t have it off the top of my head but that is something that links them together.
DAVID ALADDIN: I am just wondering like is there something that generates it?
KEVIN KING: I don’t know the tool, I am sure one of these guys, you know, there are thousands of different software out there, I am sure someone has a tool that does it. I just know what the link is and I just change out my sense in there and you can do one product, two products, three products, five products or however you want and it just puts them all in the cart together. So with a single click you have everything in the card together so the customer doesn’t have to go back and forth, back and forth, back and forth.
DAVID ALADDIN: Okay. I have been wondering like how people have been doing that. I don’t know if you could send us that link after, I will put it in the show notes.
KEVIN KING: Sure.
DAVID ALADDIN: That sounds cool because some of my products are frequently bought with other very popular items and stuff that contribute a large amount of sales. I am sure you are having some success with it.
KEVIN KING: The Frequently Bought Together, if you can get in the Frequently Bought Together, it can add 5 to 25% to your sales according to Amazon statistics, especially being in that top row of three, it can be very effective. And there are tools out there you can use to do that … we just had the Illuminati Live Mastermind in Cancun, we were like 75 people there and one of the speakers was showing a tool that you can actually use that finds things you should put your product Frequently Bought Together With and it is not always what you think. You may be selling a dog collar and you think “I should get on a dog leash and be Frequently Bought Together with a dog leash” those two go together but your dog collar might not be best with that, you might actually get more sales if you get your Frequently Bought Together dog collar with a garlic press and you are like “that doesn’t make sense”. But the way customers buy and that data is all on Amazon, you have to know how to mine it. And there are tools and ways to do that and you can test that with AMS and see so you can actually use these tools and like they suggest other weird things that you don’t think.
And you take it in the AMS and run as an AMS to test it and see if you think that will work and then once it works, then you can go out and use this and go out to your own customer list and make sure you get that Frequently Bought Together. It could take as little as five sales or if it is heavily competitive, you know, if you are trying to get in the Frequently Bought Together of something that is a BSR 500 for example, it might take a lot more sales. And there is software that does that too, there are software program, charges like a thousand dollars a month for, Rapid Rush guys that does some of this but you don’t need to use all that stuff.
DAVID ALADDIN: Awesome! It has been awesome having you on the show, Kevin! Is there a way for people to contact you?
KEVIN KING: The best way probably if you want to contact me would just be … like an email address or …?
DAVID ALADDIN: I don’t know. Sometimes people like to be contacted at the end of the show.
KEVIN KING: Yeah, you can reach out to me at firstname.lastname@example.org if you want to reach me that is the best way to do it.
DAVID ALADDIN: Awesome! Alright; we appreciate all the golden nuggets that you shared today, it has been a very good episode.
KEVIN KING: Cool! I hope I have been able to help some of you guys and gals out there listening, gave you a few things to think about and a few things to look at. David is doing a good job here delivering some good value on this podcast so, I am glad to be able to be a part of it.
DAVID ALADDIN: Kevin King, David Aladdin – out!
KEVIN KING: Peace!
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