Episode 1 - $0 to $100M on Amazon Seller Central in 2 Years

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Voiceover: Welcome to Login2Profits Amazon best seller podcast, episode 1. In this episode, we talk to Adam Hertzman, employee number one and former VP of Business Development at reCommerce, an Amazon seller that grew their sales from $0 to $100 million per year in just two years. Adam tells an incredible story on how the startup evolved  to reCommerce, an exclusive reseller of branded supplements selling hundreds of millions of dollars worth of products on Amazon.

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Thomas Syvertsen: Adam, welcome to the podcast.

Adam Hertzman: Thomas, always great to see you. Thank you very much for having me, especially on the first podcasts. I’m really glad you did this. It’s going to be full of a lot of information a lot of people can use.

Thomas: Thank you. Let’s start off with a softball. The topic here is protecting brands against unauthorized sellers. Can you please explain what is an unauthorized seller?

Adam: Yes, and specific to Amazon, obviously, an unauthorized seller is any seller that is not working directly with the brand and have permission to sell the product on Amazon. Mainly you hear the word arbitrage or product arbitrage, but there are so many different and unique ways that people get access to the product at the prices that they need to compete on Amazon. It’s so harmful for the brand, as you know.

Thomas: It’s not illegal?

Adam: It’s not illegal and, as you know, Amazon is governed by its own laws anyway. What is the rules and laws of Amazon are not the rules and laws of America.

Thomas: What are some of the ways that unauthorized sales hurt a brand?

Adam: Oh, well, where do you start? We were having these conversations back in 2007, 2018 with some of the largest brands out there. We were having the conversations really from a retailer having about five retail locations here in Florida. The initial conversation with us started with that we were able to buy the product on Amazon for less than we could buy it directly from them for or even through distribution.

When that harms your retailers, the retailers truly are a big part of the product demand process in creating demand for a product, especially new products and product launches, people still do need to see it at retail, I believe. When you have a good mix of business, you want to have a retail component and an Amazon or online component. It is important to protect these retailers.

Besides that, the reputation. The reputation on how these brands were being displayed on Amazon, the liabilities that some of these images or, again, how these brands are portrayed through these listings that are created by somebody in their basement while they’re spending multimillion dollars or tens of thousands or hundreds of thousands on trying to get the message that they want out to their customer through marketing, and through advertising, through PR. Then somebody’s taking control that and basically putting whatever they want, misS facts, and that creates liability, obviously, for any operation.

Right from beginning to end, there’s issues that unauthorized sellers create. The only people that are really benefiting are the consumer because they’re getting brands at prices that aren’t supposed to be selling for that amount. They’re unauthorized resellers, but they’re working at really low margins and it becomes a dollar and cents game as opposed to profit margin game.

Thomas: Cool. I think this is a good segue to take us back to when you guys opened reCommerce, which became one of the fastest-growing companies in America and ended up on Forbes. We’re not quite sure on the number, I think 347 or something like that. I think we can say with certainty that there were no other Amazon retailers, for lack of better words, that were on that list or higher on that list that year. Obviously, you guys stumble upon a really awesome strategy. Take us back to the beginning, how did you get involved with basically the fastest-growing Amazon account in history as far as I’m concerned?

Adam: You want the whole story?

Thomas: Yes, take us back to the vacation or whatever it was.

Adam: That’s exactly how it was. I exited a company. I’m from Toronto, Canada, as you know, I had some internet-

Thomas: GO LEAFS!

Adam: -marketing experience. Yes, absolutely. Appreciate you saying that. I came down here on vacation with my wife and my daughter. We stayed at a family member’s house. She was getting newly married to this incredible guy who own some of these grocery stores with him and his partner, as I mentioned before. They were a mix between a whole foods and a vitamin store hybrid at the time. One of their locations was going for 25 years. They were a brick-and-mortar business true and true and trying to figure out, with everything changing going on, what their next move was.

I was fortunate enough that they at the time respected my opinion and asked me to sit in on a meeting and discuss what was going on with the business. I sat down with the two owners. They knew that Amazon was definitely the future. At the time, they had been using it just like any reseller. It was the wild wild West back then. Anybody that was getting access to product was driving prices down and jumping on ASINs that sell high and trying to figure out different ways of accessing the product without really the brand finding out because nobody wanted their product, at that time, selling on Amazon. They were trying to control it, didn’t really know how.

Their experience really made it clear on how they can start protecting some of these brands. The real credit goes to them, obviously, the idea the concept, but they realized early that this is a fast way that you can jump on some of the biggest brands with some of the fastest-selling products and some of the largest ASINs out there just reselling brand name products.

Obviously, it brings tremendous value to a brand when you can go to them and say, “I know exactly what’s going on with your Amazon account or your product on Amazon.” We were usually telling some of the C-suite executives how much they were doing on Amazon. At least they didn’t know. Maybe some people in their sales knew, but they didn’t know how the product was getting there. At that time, there was not even brand registry.

It was really an opportunity where we knowing what they knew and how to navigate the platform, we knew how to protect brands. We thought that if we can approach brands and get in front of them, explain our situation as a retailer and a partner of theirs, that they would be receptive to the offer. It’s a big ask, the way that we structured it, and we went to work, right from creating the account itself to creating the name. It was the three of us at the time, [crosstalk] [inaudible 00:09:25] myself-

Thomas: You were the first employee, right?

Adam: Correct.

Thomas: Who came onboard next after you? How did the team grow?

Adam: I’d say they moved some of their resources from what they were doing already to this new startup within the company. Once we tried to start figuring it out and it became something and we were starting to talk to companies and starting to get some opportunities for free, just trying to put ourselves out there, do whatever we can, they started allocating resources, their best resources, in fact, throughout the company into this division. I think it was clear that at the time, there was such a transition between retail and brick-and-mortar businesses and eCommerce that this was really the pivotal point they saw.

We were just able to create a great program from scratch and fake it till we make it, figure it out as we go, but the base and the concept was there. It was just all about getting people to jump ship and change what they’re used to doing and giving us an opportunity to work our program. From there, that’s the start of the story.

Thomas: How did you guys find brands to work with? Did you guys single out brands that you saw had the biggest need for this? How did you go about it?

Adam: That’s a great question. Really, we looked for the biggest brands on Amazon initially, realized that some of them had already figured it out or were figuring it out. These were top companies with big executives, but that’s not the norm in the industry, that’s very much a mom and pop, small businesses driving this industry. There was a lot of people that had absolutely no idea what was going on.

Thomas: That topic with the unknown revenue is really interesting to me because, like you said, it’s they don’t know about it, but it’s like, “Hey, did you realize your brand is doing $10, $15 million a year on Amazon?” They have no idea, and now all of a sudden, they can take control over that revenue and maybe try to grow it, whatever, more strategically versus not having a clue.

Adam: Like anything, it was timing, but it was a real eye-opener. It was just at the time where they were getting complaints from the retailers. As a retailer, we were hearing that from all the other retailers on a national scale, “This is what’s happening.” It was only a matter of time before they had to do something.

We had a very strong approach. There were some other companies that were doing this model, although we ended up being different in many ways, but the representation of these brands exclusively and being able to protect brands, really protect them and grow, which is the strategy of the company. When you can protect them, and the brand has full control over their product on the platform, that’s when you can really see growth, as you know, with what you’ve done, obviously.

We were telling brands what they were doing. We were breaking it down by utilizing any data that we could get our hands-on. These guys saw that as an important factor right away and they were utilizing it already with their unauthorized reseller account. Once we were able to identify, “Hey, these guys are selling this,” we broke it down and we started calling everybody.

Thomas: Basically, brands with multiple sellers in the buy box, possibly crappy listings, unknown revenue. Tell me about the first brand that came on board and how that went about?

Adam: We launched in the midst of or at the same time as the largest industry trade show. We set up one meeting for that trade show and it was with a brand they sold. They’re a vitamin supplement brand. They were around for a long time. They were realizing that Amazon was an opportunity, mainly because they were getting a lot of pushback from people that were receiving their product on Amazon because it wasn’t refrigerated, and it wasn’t the right products. They were just getting a lot of pushback and just in the early stages of looking into it.

We were in the very early stages, we just printed our business cards, emails created, and we had our sales material for the first time. We rented a conference room at the show and we hosted this meeting. Met the show, obviously, we went around, tried to make deals and create some buzz about what we were doing, but it didn’t close there. We went back after the show, did a lot of follow up, did a lot of meetings, did a lot of pitches. That company came back around and one day I just checked my email, he asked a bunch of questions. We spent about a couple hours on the phone walking through the process.

I remember getting the first contract back signed. I was in the warehouse and I see Jesse pop his head out, one of the owners, and we just start celebrating in the middle of all these guys like we’d won the World Series. It was super exciting. It was a million-dollar account. [crosstalk]

Thomas: It was XX, right?

Adam: Yes. I think even more important than the size of the account was that we were able to prove right from conception to now [crosstalk] the pitch and then the concept and the need obviously was there. Right from there, we very quickly looked at each other right after a couple of minutes and said, “Oh, shit, we got to really execute now.” That was the first one. At the height, we had a gong and it was going off four times a day. We were learning at the same time. That’s a big part of the story, it’s not just getting this- [crosstalk]

Thomas: The owners had access to store, or at least connections with some of these brands due to the health food store, right?

Adam: The market that they were already in on the brick-and-mortar level, and obviously, doing what they could on Amazon with the products, it’s the perfect type of product for Amazon. Supplements and vitamins, they’re usually high profit, at least at the retail level, and their somewhat low Amazon costs. They had already been able to identify that this is a good market to do. The fact that 80% of all supplements at the time were already being sold on Amazon throughout the US made it even more apparent that this was something that was needed in the business.

The focus really had to switch from brick-and-mortar to what is the fastest way and the best way to do Amazon. These guys really figured it out. They had the idea and saw the vision before a lot of people. We were just lucky enough to be able to follow through on what we were thinking.

Thomas: Cool. XX comes on board. Who are the next couple of brands? Who comes in next? Now you have proof of concept, so now maybe you even tweak your approach a little bit. What’s coming next?

Adam: Definitely. I’ll tell you some of the things that we learned were– Some food brands started to come in next. Health food is widely sold through distribution very rarely, sold direct. It was just-

Thomas: -[crosstalk] sardine cans. [laughs]

Adam: Those sardines can sell millions of dollars a year.

Thomas: Oh God.

Adam: Yes. There was a lot of food companies. We had laid the net out to everybody in the industry at the time and we were getting a lot of interest. We were getting four two-hour pitches a day to CEOs. They were sitting there listening with their executive teams and their decision-makers and the ownership of some of these companies. We’re talking about any company that does a couple million dollars to companies that were doing a billion dollars.

They were all really interested in what we had to say because we really had the knowledge of the retailer, which is a very important component of theirs, and the unauthorized reseller. Then we showed them a clear path and exactly how they can take control of their issue. We had everything really laid out properly.

Thomas: What are some other brands that signed on? Let’s hear it. We can always bleep now if [crosstalk] we have to. [chuckles] It’ll be like bleep and bleep.

Adam: One of the big moments was, there was a million-dollar brand. We had a couple of those size. Then when we had about six months into it, I’d say, we had our first multi-million dollar brand. That was about a $3.5, $4 million brand, large, well-known.

Thomas: You’ve got XX on board. Then I assume you tweaked maybe the concept a little bit and now maybe you stepped it up with bigger brands and then you got some or? Who were the next to come on board after XX and then it snowballed?

Adam: YY was a good brand. They were out in West Coast and had a really loyal following. Then we had those drops. What are they?

Thomas: Oh, those were legit.

Adam: Yes, that is a big brand.

Thomas: How much was it? $12 million a year just on basically one SKU?

Adam: Yes, they had one SKU.

Thomas: It was just one SKU?

Adam: Exactly. That SKU was replicated to a two-pack all the way up to a 24-pack.

Thomas: Yes, there was a 12-pack and stuff, I remember.

Adam: It was a great brand. That owner and I developed a great relationship. I think that was a case where they were a dedicated brand, they bought all in. That’s really what we were trying to identify. What is our perfect brand to help both ends? Obviously, it’s got to work for us and it’s got to work for the brand. Some of these smaller brands wereN’t all in. If you don’t have a partnership all in with the brand, it’s very difficult to execute for them and it puts you in a situation where it’s tough to be profitable.

Thomas: Especially back then when there was no brand registry, there was almost impossible to make changes on the listing, whatever have you. Even if you have the authority to do so, it still was a pain in the rear, right? It took weeks.

Adam: Well, I remember we had the CEOs and owners of companies contacting Amazon on our behalf and we own the brand. That was all part of learning. How do we defend that? This was, again, before brand registry, of course. Then there was the problem with brand registry. People were registering on behalf of the brand and somehow getting access to their document.

Thomas: Yes, it didn’t really exist in the same way back then. You’d just register, but there was no protection program, there was no features, there was no extra advertising, extra content, extra rights.

Thomas: Okay, awesome. How do you guys afford all of these brands, to bring them on board? I assume you guys brought brands at a pretty quick-paced. How do you guys stay out on top of POs?

Adam: Well, we had to raise money. We were growing faster than the business that we could take, and at one point, we had to fire brands. That was a tough thing because WE HAD TO FIRE BRANDS.

Thomas: Not only brands. [laughs]

Adam: That sucked because when you make these types of partnerships, their true partnerships, were both invested into it, as I said, and there’s just only so much that you can do for a heavily distributed brand where the margins are low already and it just doesn’t have the movement. We had to really concentrate on, number one, executing for the large brands that we had and getting rid of the smaller brands. After we identified the bigger brands that we were able to go after, we were able to focus in on that and then show them that we were able to execute.

Thomas: When you mean execute– Sorry to cut you off but, talk a little bit about the protection because it’s obviously a legal element here. There’s a lot of contractual stuff that’s going on behind the scenes. Can you dive into that a little bit?

Adam: Yes, absolutely. That’s actually a protection in our investment. That’s what I was going to get into. To finish the answer to your last question, we figured that there’s about two months worth of product in the channel, where we’d be able to identify exactly how much. As quickly as we are able to identify who these resellers are is as fast as we can then get our product that we then own as their exclusive seller and their price on Amazon where they need it to be and get more control for them and all the benefits, obviously that it brings.

We would have to figure out the best way within those two months to work out the financial implications of cutting some of the biggest clients off depending on how big their brand was on Amazon. Those were some really hard decisions that the brand needed to make. At the time, we absolutely needed to be ready with the correct funding. That was always something that the two owners were working on continuously.

Then your second question of brand protection. That’s key because we were one of first to really identify some of the– Again, all the credit goes to the owner, who is a lawyer, and we had to get some of the largest lawyers involved, but we were able to identify some of the loopholes within the Amazon rules and regulations. We were able to identify and know them better than almost anybody so that we could really-

Thomas: By using them.

Adam: By using– [chuckles] Well, we learned them the hard way in some situations. We studied them, and that’s something that we knew there was a way that we could protect brands. Then we put it to work and then we saw it happen. That’s so important to protect our investment and the investment of time and money that we put into the brands as well.

The brands, when they gave them the word that they’re going to go and protect them and clear– Protection is really in two ways, it’s the unauthorized resellers and it’s to make sure that continuously, they can be supported at the correct price with the correct representation and limited liability and that opportunity to push marketing and grow for their future. It wasn’t just now and protecting our money, it was PROTECTING THE BRAND for the future.

Thomas: You can run around and ask for exclusives just for nothing.

Adam: Exactly. We were able to identify these resellers, that’s what really made us special, and we knew what to do with them at that point and how to really get them off a listing.

Thomas: It was just around the same time where Amazon grew a lot, 2017. That was the same time where Amazon was getting too big to ignore for some of these brands as a channel and they had to take it seriously, right?

Adam: Definitely. You look at a brand right now where back then they were predicting 80%, 90% was retail, a good mix for a brand right now might be 50/50 or 60/40. There’s definitely a healthy mix of Amazon. Specifically for any brand that can afford their fees and the margin allows them to, but that’s part of any business now. Sometimes, most of the time, it’s the start of every product or the start of every business right now.

Thomas: I’ve seen sellers that sell in multiple channels and I’ve seen Amazon being bigger than the rest of this stuff together.

Adam: [chuckles] No doubt.

Thomas: It’s just how it is. All right, cool. I’ll do a little plug. You must have had a good marketing manager since you guys grew so fast.

Adam: [chuckles] Well, to be completely upfront and honest with everybody, it was definitely one of the things that hooked a lot of these brands. They all had a mess, but they were all still making money unless the chargebacks were so big and, in some cases they were. They didn’t know how much money they were making and they saw the need to clean it up.

When we really put the marketing perspective in front of them, and that’s something that any brand understands, is marketing, but they didn’t understand it on the platform. We did a great job of explaining it to them and then showing them what it could do. Not just that, but this type of marketing is probably more valuable than any type because it’s directly related to a purchase in those situations.

Thomas: And how you rank after.

Adam: Yes. What you were teaching us, when you were teaching the brands, when we were able to add that component, it was massive. Then the fact that you were able to deliver was obviously good for business because we were getting big brands and then we were able to grow them.

Thomas: Me and Adam worked together, if you haven’t figured it out already. I worked there and did their PPC. I just want to say it was insane because I came from the private label world. I was pretty good at managing the ACOS and all of this, but it’s like we were able to get 1.5% ACOS on some of these brands, which is just ridiculous. It’s like $75 for every dollar we spent in sales. You don’t see that with crappy products, I can tell you that. It was a unique experience, for sure.

Nowadays I would say it’s even more so important because now the brand registry platform has added a bunch of advertising features and content features and all of these things that back then you can really do. Now you can separate yourself even more so from the other brands in your category by utilizing brand registry. That’s another reason to go exclusive, because if you’re just selling to a bunch of people, none of them are going to get brand registry, none of them is going to have incentive to work on the listings, to basically do marketing of your product.

Amazon is a competitor platform that just ranks your product based on how much you sell. If you don’t do enough marketing, you sell less than you could and you miss that on sales. It’s just how the platform works. It’s very sales-driven. They don’t care about quality necessarily or reviews or this or that, what’s converting, like what is people buying? Obviously, if the product have a lot of returns, Amazon is not going to ignore that, but for the most part, is it selling?

Adam: Another thing is that the Amazon consumer, as the market’s grown and the platform’s grown and they’ve become what they are, they’ve gotten smarter. They understand that certain things should be certain ways, they know a big brand should be presented as such, their products should be represented in a certain way. They expect certain information around the product. They’re getting smarter as well.

They want brands that know what they’re doing, that can give a consistent message, can take all the money that they’ve spent, putting their message all over the country already and have that consistently on a platform where anybody with their product or access to their product can jump on a listing and sell it.

Again, what you said about what was happening with current sellers, and they really had no reason to put a penny into the product because they were, at the end of the day, making low margin and then jumping on products that were selling already. Why invest money into it, where if you can’t get the product, some other seller’s just going to jump on it and you’ve built that ASIN for somebody else?

Thomas: Right. Yes. You guys are basically chasing away these unauthorized sellers out of the Buy Box and taking over the sales gradually. Once that happens, what are some of the positive results that the brands experience after working with someone exclusive that, like I said, help them enforce, help them maybe get better listings? What were you guys able to do now that they were not doing before?

Adam: The whole way that we were able to get people off the listings is a whole conversation and it’s a whole business in itself, but when we were able to do that and we had the product that we bought at a fair price to the brand, not with large chargebacks or undercut or whatever, so they make their fair margin, that’s number one, the price point 9 times out of 10 on Amazon was obviously a lot lower. People were driving down the price when they were able to get the products. That was the game of arbitrage. It still is.

They have apps that automatically match low prices and continue to sell it till you hit your floor. Bringing that price point up, which obviously allows them to make more margin, it allows the consumer to see it at a price point that’s relevant on the shelves and online or on their own website, so you’re supporting-

Thomas: It becomes profitable again, basically?

Adam: It becomes profitable again, you’re supporting your retailers. Again, they can now make money and sell your product at the retail level, which is great for brands-

Thomas: I didn’t think about that.

Adam: -that continuously come out with new products for product launches. It’s a great way to do it in person, brick-and-mortar still. Obviously, the representation, as I mentioned, about a brand, the continuous message is important to any brand because it limits your liability, it protects the brand. When we’re talking about protection, we’re also talking about how they’re being pushed out to a market when somebody can create a listing with their product on it, and it’s legal. I can go on, take a picture of a product and post it online. I could list it as another product and sell it for a terrible price and all that comes back to a reviewer on the product. Who does that hurt at the end of the day? It’s the brand.

Being able to go in there, and when you have control of your brand, you can clean up a lot of your reviews. You have a lot of access to– Just more control. Essentially, when you have control, you have control over not just the messaging, but you have control over the financial implications of the chain right from manufacturing to the end distributor in all your channels. There’s just so much upside for a brand at that time, especially when they were just being pillaged online.

There was just tremendous upside, and if we were able to do a few of those things, brands were seeing huge returns. The ones that really committed to this structure of being exclusive and made the commitment to cutting off the resellers saw huge results and much quicker than the ones that we had to continuously push and pull with to cut people off. I understand that, when you go to them and you say, “Hey, this customer for 40 years that was supporting your grandfather’s business, and when he had it, they were your biggest seller on Amazon and they looked you in the face and lied to you,” that’s tough in many ways.

The second that they understood that and business is business and they wanted what’s best for their brand and their investors, they committed to it, and sometimes in less than two months, we were able to bump that price up, get their more profitable, see all the benefits of it, go through the process of the rebranding, eliminating the unauthorized resellers. Then for us, we were able to capture all that business, obviously.

Thomas: Right. I can say, from the marketing perspective also, once you have a bunch of unauthorized sellers sharing the Buy Box, it’s incredibly hard to manage the PPC ads. That’s what I do for a living. Once you get the Buy Box back, you get more constant revenues, it’s easier to set your bids. Also, like I said, if your brand has multiple sellers, none of them are really incentivized to advertise because they get the sale in the Buy Box based on their pricing and they all have to take turns or whatever depending on how they run out or whatever, how they price, but it’s all a price war pretty much about the Buy Box. Margins get squeezed very, very thin and then there’s very little room to advertise.

You see what I’m saying? Once you stabilize that, get rid of these guys, it’s a lot easier to advertise, and especially if you can do the double whammy and also fix the listing. I could tell you, even some of these branded products that we worked with, they still had crappy listings, they still converted like crazy, like 7500% on branded keywords and still like 30% to 50% on search term keywords or customer acquisition search terms. Yes, the marketing aspect, no one is going to bother marketing your product if they’re just a bunch of randos, they’re just going to maximize their profits and leech off the brand, in a way.

Adam: You make such a great point there. When you’re talking about unauthorized resellers, you’re talking about a game of pennies and volume. There is no margin in there to advertise. When you have, obviously, margin in there to advertise, that’s when you can actually see huge growth because the platform works. The advertising, as you know, it’s based on conversion and that’s very powerful. That works, [crosstalk] and when you know that well-

Thomas: Now that I advertised for a while and looked at a lot of keyword data, and by the way, you don’t get keyword data if you don’t advertise, but what we see is maybe half of the conversions come from brand keywords, for a big brand. It depends on every brand. Every brand is different, but in either case, a large percentage, maybe 50%, maybe 70%, 80% are customer acquisition search terms, where, let’s say, someone’s searches for vitamin C. You’re a vitamin C brand, Solgar, you get this sale, but you still gain the customer versus if you didn’t advertise for that keyword, whatever, maybe some competitor does it, they get the order. Now they start to outrank you. Amazon is a battle of getting these orders and getting all these sales for a good ROI and try growing your sales profitably.

Adam: Another thing that we haven’t even touched on is that Amazon gives you an opportunity to have contact with the consumer post-sale. When you have different resellers reaching out about a product of your brand and representing other brands competitors or illegitimate brands or companies, that’s just another way that companies, and they spend a lot of money and time on that anyway, but by making a sale, and obviously having continuous ability to contact these customers, and then with all the other benefits, with subscribe and save and some of the coupon functions, it really allows you to do a lot more for that customer when the brand has control, and is able to speak directly after purchase instead of some reseller that has no loyalty or, like you said, incentive to help the brand.

Thomas: I can tell you from an experience, once you’re able to just do the correct PPC, can double the sales of one product versus not having it. You see what I’m saying? Literally double the sales and oftentimes even improved ROI depending on how the campaigns are running from before. An optimized brand that has crappy listings, no ads running, doing 5 million a year on Amazon, they could probably do 10 million a year if they just got their shit together on the platform.

Adam: No question. What I think, a healthy mix is about 70/30. If you look at your business right now and you fit to be a good product for Amazon, 30% of your business, I see, would be a healthy mix of what your overall revenue is on Amazon and 70% in all your other channels. That also depends if you’re in distribution yourself or what type of product, if you have a reseller network, but in general, I think that’s a really healthy mix and I think that’s a mix that’s going to keep increasing as eCommerce continues to increase and we’ve all seen what’s happened over the last couple years.

Thomas: I work with a nine-figure brand right now and trying to help them, you know which brand it is, and we’re trying to help them get their Amazon together. I was just looking at their reporting on their ads and they had a 80% new to brands. Amazon reported a new to brand reporting, that’s the percentage of the sales, and it’s literally up in the 80s. Even for a very big brand, they’re the biggest brand in their category, they’re the most well-known brand, and even for them, they’re gaining 70%, 80% new customers just from their ads.

I think, and like I said, when we were doing these meetings, yes, it was the protection is very important and obviously that’s the stepping stone for the advertising, but then you can grow it, then you can do both, now it’s going to grow.

Adam: Anybody that has a brand, you want control over your brand, over your message, over your colors, everything, how people perceive you. Once you have control on Amazon, the opportunities are unlimited, obviously depending on your space and the product, but if you’re starting from a point where you’re recognizing there might be an issue or you don’t have control over what’s being put out there, what’s being sold, the price points, the messaging, whatever it might be– I’ll tell you, there’s a huge opportunity once you can get control and you can utilize everything that Amazon does at that point to maximize what you’re doing on the platform.

Every business obviously is taking it serious, but it’s the ones that can structure it perfectly or properly from the beginning or can identify the product the problem and make the changes and commit to them that are then the most profitable and the biggest brands now that are on Amazon. You can easily figure out who’s doing it and you can see they’re successful.

Thomas: Right. This happened to us. We’ve been trying to get podcasting gear and we bought some stuff from unauthorized sellers because we’d had no other choice because it was sold out retail, and I can tell you, it’s been driving us nuts because like we get poor service. We get a poor purchase experience. I know it’s not the brand’s fault because we’re involved enough to understand the channel, but the regular consumer, they don’t know. They’re going to hold a grudge against the brand and Amazon and be like, “Oh God, they charge $650 extra. Oh I can’t believe it.” Then you order it and then it get lost, whatever. They try to pull some scam or they ship it like two weeks later because they don’t give a shit.

They want to ship it the cheapest way possible at the post office, you have no choice.

When you order from Amazon and it’s sold by Amazon, you have the shipping options, you can pick your speed, pick different couriers or whatever, but with some of these third-party sellers, they’re just going to do it how they’re going to do it and you just have to suffer the consequences. All you can do as a customer is just leave the seller a bad review, but a lot of customers, they don’t know that, they think they’re buying from Amazon, so they just get mad.

Adam: Specific to that situation, what really sucks is it’s such a great product.

Thomas: That madness is killing brand equity. [crosstalk] You see what I’m saying? It’s like the brand has a certain value, let’s say, Coca-Cola, whatever, but buy it on a certain basis. Then I see something shady about them in the news. Now I have a lesser perception of them and now I start buying it less because they bother me or whatever. You see what I’m saying?

Adam: The consequences are obvious, but-

Thomas: That was an example.

Adam: No, it’s a great example, but there are certain industries, certain companies. Certain industries are set up, certain companies are set up where they’re in a harder position, just based on their business model, on who they sell to and how they sell and how they get their product at the end to the consumer, whether it be through a third party, whether they are a direct company, whether they sell to co, whether they don’t, all these things play into it.

It’s important to know it’s not like people are teaching owners and teaching executives how the best way to structure their business on Amazon is because I only think that there’s a few people in the world that have figured it out and I definitely know that the team that we were with definitely has.

Voiceover: This podcast was produced by Randall Ward and fact-checked by Annie Lin.

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