#154 – Amazon Warehousing Tactics, Foreign Accounts and a Product Launch for the South Korean Government

Episode 154 of the Serious Sellers Podcast hosts a 3PL pro to talk about warehousing tactics, foreign accounts and launching products for South Korea.

Nervous about your next Amazon product launch?

Just imagine if you were launching that product for your government. Today on the Serious Sellers Podcast, Helium 10’s Director of Training and Chief Brand Evangelist, Bradley Sutton welcomes a friend, former business partner, and a guy who’s slowly made himself into a pillar of e-commerce wisdom.

Sean Chang is with Bradley today to talk about warehousing tactics, 3PLs, and an online marketplace that can 4X Amazon’s sales. He’s also going to tell us how he got the call to launch products on Amazon for the government of South Korea.

You can’t tell me that you’ve heard this story before.

In episode 154 of the Serious Sellers Podcast, Bradley and Sean discuss:

  • 01:20 – The Wayfair Marketplace
  • 03:00 – On Wayfair, Sales are Three to Five X Those of Amazon
  • 04:30 – On His Way to the FBI, Sean Pivots to E-Commerce
  • 07:00 – Selling Long Tail Keywords
  • 08:35 – 3D Rendering Helps Create High-Quality Graphics
  • 10:00 – Kidnappings and Other E-Commerce Happenings  
  • 11:15 – Challenges for the Partnership
  • 13:45 – “Starting on Amazon is Easy, Success Takes More Work”
  • 16:00 – What Does Kreassive Offer?
  • 17:00 – 30 Million in Truly Global Sales
  • 19:30 – Another Untapped Revenue Stream, the South Korean Government
  • 21:30 – Trademark and Brand Work for the Government’s Product Launch
  • 24:00 – Amazon Vendor Central Versus Wayfair
  • 27:00 – Would Wayfair be Interested in Project X’s Coffin Shelf? 
  • 28:10 – Why Would an Amazon Seller Need a Third-Party Warehouse?
  • 33:00 – How to Reach Out to Sean and Kreassive   

Enjoy this episode? Be sure to check out our previous episodes for even more content to propel you to Amazon FBA Seller success! And don’t forget to “Like” our Facebook page and subscribe to the podcast on iTunes, Google Play or wherever you listen to our podcast.

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Transcript

Bradley Sutton: We’ve got a serious seller today controlling multiple eight figures of annual sales on Amazon, who also runs a 3PL warehouse. He sells on platforms I’ve never even heard of. Plus somehow, he’s got the government of South Korea paying him to launch products on Amazon. How cool is that?

Bradley Sutton: Hello everybody. And welcome to another episode of the Serious Sellers Podcast by Helium 10. I am your host Bradley Sutton, and this is the show that’s a completely BS free unscripted and unrehearsed organic conversation about serious strategies for serious sellers of any level in the e-commerce world. We’ve got a serious seller with us today. Sean Chang, Sean, how’s it going?

Sean Chang: Hi, Bradley. I’m good. How are you

Bradley Sutton: Doing great. Doing great. Now I like to start off this kind of like with always the guests, like number one strategy. So something that I actually learned from you the last time I visited you at your warehouse was about Wayfair. So just really briefly, we’ll talk about more in detail later, but in maybe two minutes or so, can you talk about what is the Wayfair marketplace? Because I think a lot of people have never even heard of that before.

Sean Chang: Sure. Yeah. So about two years ago, one of our clients from China wanted to launch floor lamps and some furniture. So that’s how we started to set up the Wayfair account. So basically Wayfair account size and sales volume wise in furniture section it’s bigger than Amazon. Wayfair is bigger. Also, it has a good pricing in our world. So how they quickly grown up and also listed in our US stock markets is Wayfair doing similar thing– that well, Amazon been doing, which is made it as an open market, but they just focus on the home furniture or outdoor. To start the Wayfair business; you can actually need to have a brand and product. And there’s an online application form introducing your company and product. Then they– if Wayfair think it’s a good product and also has good pricing, then they will contact you to launch your product on Wayfair.

Bradley Sutton: That’s pretty cool. So it’s basically like you’re saying that for furniture or some categories like that, it’s actually better than Amazon. There’s more sales than Amazon.

Sean Chang: Yes. So our clients selling furniture or product in Wayfair or Amazon– actually we are doing both. But sales from Wayfair is actually at least three to five times bigger.

Bradley Sutton: Wow. All right. Yeah I want to ask you more questions about that later, but another thing we do at the beginning of the episode is we’d like to get your entire history. So you are not born in the States, you were born in Korea. Growing up when you were a little, like almost your current son’s age, or maybe you’re older, like eight, nine, ten. What did you think you were going to be when you grew up? Or what did you want to be?

Sean Chang: When I was young, I wanted to be a detective. Actually, because of that, when I came to US after I graduated university here, right after that, what I tried was FBI process of field agent. Yeah, because that was my dream.

Bradley Sutton: Huh! Wow, so you actually came here for high school or for, just for university?

Sean Chang: Just for university. After I graduated high school in Korea, then my whole family immigrate to US. Yeah.

Bradley Sutton: What school did you go out to out here?

Sean Chang: UCLA.

Bradley Sutton: Ah, a Bruin. Okay, all right, cool. So then what was your major there? Was it about being an FBI agent or it was business or what did you major in?

Sean Chang: My major was cognitive science and psychology.

Bradley Sutton: Ah, so you were going down that detective route there.

Sean Chang: Yeah, yeah.

Bradley Sutton: Ah, now did you keep going with that? Like, is that what you actually got your degree in?

Sean Chang: Yeah. I finished a psychology major. Cognitive science, I have actually a few more or class left, but I didn’t finish that.

Bradley Sutton: Okay. So then graduating, did you start trying to get a job in that field or did you switch to kind of like e-commerce right away?

Sean Chang: Not– so my first job was like trading and logistics type of international logistics, type of job position. I joined it as a marketing team. I also like learning about how to import export, that type of stuff. Well we real living in California and a lot of products imported by Long Beach or LAX. So I’ve been thinking that this area is good too, something– some type of business that I can do something with oversea. So that was my one of major interest, which is global trading or relationship, you know, building a business. And during that time, online marketing or e-commerce been getting popular. So naturally I’ve been focused more about online marketing.

Bradley Sutton: Okay. So now when I met you, this was probably like 2014 or so, you were working at a popular accessory, dot com company. And now at that time, would you say that was it like 80 or 90% of what that company was doing was from their dot com as opposed to like Amazon or something? Or was it 50-50, or how was it like around the time that I met you?

Sean Chang: It was around 2012, 13. And no, at that time, that company, major– big portion of revenue coming from Google marketing. Yeah, so Google SEO and selling like thousands of different products long tail sales. But during the time, which is 2012, Google– actually Google at the time made a lot of money through the Google PPC, but Google changed, huge algorithm change for their search ranking, which is our shopping keywords– before, that type of.com site was ranked on first page on Google, it depends on how we do SEO and link-building. But after Google changed that algorithm more organically, which is that major algorithm change was, anything major shopping site or review site, regardless of how traffic or keyword position or SEO who was starting to put those sites on first page on top.

Bradley Sutton: Okay. So it was around that time that myself and a former business partner of mine, we met you and we talked about phone cases and I have it on this podcast, I’ve actually told that story before about how my partner brought in the ability to produce phone cases. And in the early days when we first started phone cases, first of all, what was your, this was kind of like you, and actually almost all phone case companies nowadays who have a lot of success, but what did you do differently as far as the images and things that at that time, nobody in the phone case was really industry was doing on Amazon?

Sean Chang: No, it’s not that easy to make a really good graphic for the product. So, well, one of the alternative options that I thought about is to 3D render.

Bradley Sutton: Yeah.

Sean Chang: Because you know, 3D rendering, was pretty common in magazines but not for e-commerce. So, at that time, since locally it was difficult to find a good graphic designer so instead to maximize how graphic– I mean put the maximum graphic quality, we try to find the good 3D rendering on designer. So that’s what we do.

Bradley Sutton: Nobody was doing those 3D images before back in those days. And now, everybody’s doing it, every single company it’s kind of doing it, like following exactly what you had done, like even the style that you did. And I think that was a big reason for the success and we see that, you know, I remember in the early days we were bringing containers of these phone cases, selling thousands of units a day. It was insane how we were doing it in those days. I’ve told this story, you and I, and that original partner, we formed our own Amazon based company. Moved out here to my house and, and we were doing well. And I actually, I had a whole episode guys. Guys go back and do a search, go to helium10.com/podcast and, and look up a “Storytime with Bradley” about how his other business partner got kidnapped and held for ransom. That wasn’t Sean. Sean didn’t get kidnapped. That was our other kind of shady partner. There’s part of that I didn’t talk about. So people know about the story and we don’t have to mention his name on here, but they know about how we got kidnapped by Chinese gangsters and I had to pay ransom. And that was a crazy story. But then after that, we got all of that taken care of and then things were better. Everything was going good. But then, you and I started kind of noticing some signs that maybe this guy was trying to maybe do something behind the scenes to us. And so, do you remember that conversation? We had that one night in the car and you’re like telling me what was going to happen. Can you talk a little bit about that?

Sean Chang: We knew that he’s been doing something crazy all the time. Yeah. So I was bringing attention on it. So, and what happened that day was I– it’s like long time ago, so I forgot why, but I knew that he’s going to move a big portion of our inventory to somewhere and through a different Amazon seller, he’s is going to sell the same product, I mean our inventory.

Bradley Sutton: Yeah. So like in other words, take inventory from our warehouse that we all had and like take it and give it to somebody else. Like you predicted that. And I remember I was like, “Nah, that’s not going to happen”. Like, I can’t imagine that, but sure enough, the next day he did it. And then like, it was kind of crazy. We were able to stop him from doing some, and then I remember you had me go to Best Buy and I had to order all this like camera equipment so that we could make sure he doesn’t try and break back into our warehouse. But that whole part of the story, it just, I think that’s important our listeners to understand that even you might have close friends, like he was my friend for 15 years, like always have things in writing. Always make sure that if you’re doing a partnership everything’s out in the open end and understand that sometimes things might happen where, you know, one member kind of goes crazy. And then you’ve got to be prepared for that and have contingency plans. I mean, he afterwards tried to steal our trademark for those cell phone cases. It was a big mess, but let’s fast forward. You know, after that we were able to kick them out. I myself went back to kind of a corporate world a little bit for a small time. And you kept going with the Amazon business.

Bradley Sutton: And one thing that you’ve been doing for a while since that time, which I thought was a kind of unique opportunity. I think it’s important for some of our listeners to hear this is, obviously cell phone cases became one of the most saturated markets. So you knew you were not going to make the majority of our sales from cell phone cases, but you being from South Korea and having connections over there, you have this kind of interesting idea that, “Hey, there’s these foreign companies who maybe are from Korea and they’re interested in selling in the US but maybe they’re not at the level where they can just go the traditional route and open up a branch office in New York or in California, and start with a big marketing budget”. Like they can’t afford that thing. So Amazon really has an opportunity for some of these foreign companies to kind of like say, “Hey, you know, you don’t have to open up an office”. So talk a little bit about how even today, but this is how you started to, like, what, what kind of offering you were giving to Korean companies to help them get launched in the States?

Sean Chang: Yeah. So, you know, like many, I mean, most of people think even my friends or my family too, like starting Amazon business is easy and some portion is fact cause it’s an entry level is easy, but making things successful is different story. Because it’s business, Amazon is one of the most saturated market with a huge competition. So which means to do proper business in Amazon. Yeah, like product development, operations as the same marketing, customer service and international logistics, all those things are linked and needs to be operated properly. And, you know, to set up that type of infrastructure from overseas company is very difficult. I decided to stop doing phone case. One of the reason is the phone case market is saturated. The second reason is, we are located in USA, and we don’t have factory R and D in house, which means at the end, if marketing capability or operation capability is similar, then it’s all about the product. So the local service that oversee or manufacturer or brand cannot do it, a local market research or like SCM supply chain management or, or local marketing or content generation, even, you know, translation graphics or that are creating or generating contents in US look and feel type of thing. Kreassive can focus on those, but there are many marketing companies who couldn’t do a lot of the content generation, but there’s not too many marketing companies who have warehouse doing customer service or fulfillment logistics, no labor service.

Sean Chang: The Kreassive direction was to work with the manufacturer, same as– similar theme as Amazon. We, Amazon wanted to work with the manufacturer or brand owner, right? But what we do is factory make a product and we do rest.

Bradley Sutton: You mentioned that a lot of different marketplaces, you know, you’re selling all over on different Amazon accounts and Amazon foreign and Wayfair and walmart.com. But overall, what would you say are your overall sales that you’re generating for either your products or together with your customers that you fully manage? So like, are we talking 1 million a year, 10 million a year, 30 million a year. What’s overall? So now about 30 million. Okay. So $30 million a year of sales. And what are the top? I mean, obviously Amazon USA would be the top marketplace, but yeah. What what’s after that? What is the next biggest chunk of that 30 million?

Sean Chang: Amazon UK and Amazon Germany, Canada, Amazon Canada, and then Wayfair. Yeah, our portfolio. And eBay and Walmart.

Bradley Sutton: Now, just going back a few minutes to what you’re talking about your business model. I think that’s important. I hope everybody really understood what you’re talking about, because first of all, that’s just a great business model. I mean, like if you’re a foreign company, who’s out there and, you know, you can’t afford to start your own Amazon business yet. Yeah, you could reach out to companies like Kreassive to help out. What if you’re an Amazon seller, maybe you’re just even our smaller, private label seller Guys, you know, like, but you’re from Poland or you’re from Uzbekistan originally or whatever country there is in the world and you have contacts back home. Well, maybe you could follow a similar model that Sean did. Now, if you’re from Korea, you know, don’t go take into Sean’s market share. But in other countries, like use your contacts and say, Hey, if there’s a popular local brand over there in one of these other countries in Europe or Asia or something, and they’re interested in expanding their sales to the US well, as a consultant or something, you might be able to help get them onto Amazon and, and allow them to do things that maybe they couldn’t do on their own because of the language barrier, because of budget constraints, at least that you guys get anybody can do.

Bradley Sutton: I mean, it doesn’t require a warehouse or anything like that, just to help people get on. Now, Sean kind of has taken it to the next level because like he was saying, he actually has the A-Z service. You know, he’s got a marketing team, he’s got a– I went to his brand new world. What is that? 30,000 square foot warehouse and a bunch of, you know, a whole entire team who’s doing FBA labeling and storing products. So if you have those capabilities, well, you can pretty much just offer an A-Z service. But I think a lot of people out there who are Amazon sellers, yes, make your money on Amazon. Yeah. Maybe make your money consulting for other sellers here in the States. But yeah, this is another market. Another income stream that maybe you haven’t thought about is helping companies from countries that maybe you have ties to, to get started on Amazon. So that’s a pretty cool business model now real quick, talk about how you, not only are you, are you just helping just any Korean company or companies from other countries? I know you have a few from India and others as well, but now, because of what you did, like the Korean government actually kind of found out what you were doing and, and they were interested, right?

Sean Chang: Yeah. Actually it’s been already live in this year or so what we did was in Korea or China, or I think Japan similar. They need to export to US to make revenue and run the country right? So, because of the government supporting or exploring company by government, there was a chance, I think two years ago, that I have chance to have meeting with a government official and they wanted some type of way to help those small, medium type of business to sell the product in US market. But it’s not easy because a small company, they don’t know about the US market and the trend, there’s a lot of regulation. So what I suggest– what I proposed to them is, Kreassive knows about US market, and government has money or marketing budget to support the local company and local company has a factory and R and D. So if we rank these things properly, that we can develop product with a market demand, local market demand. Also government can support about some marketing funds to run the PPC or any type of other marketing activity. In South Korea, there is eight different provinces. They decided to launch their local company’s product in the province’s own brand store.

Sean Chang: So, which means, it means we did the trademark and brand names to set up the government brand store or brand registry. Now we prepare everything for the last six months. So through that, even small company or unique product. We made a structure that they can launch on Amazon. And if it sells for if then similarly without, or major, or like legal or importing issue, they can supply their product on USA market. And we are also working on Europe, Amazon too through our London office

Bradley Sutton: Guys, that’s another knowledge bomb right there. So, think about what he just said, guys. I mean, that’s crazy. If you think about governments actually subsidizing companies in their localities to sell on Amazon. So like that even takes away more obstacles where government’s pockets are, are, are steep and they want to have export and they want to promote their local businesses, but they’re even willing to pay for like, you know, PPC and marketing funds that will even make it easier for you to make money and sell on Amazon. So we’re not talking, you know, this is not, “Oh, Sean is dealing with the prime minister of South Korea” or anything like that, where, you know, this is a local government, you know, is that the kind of like the province level, but guys, if you have ties to other countries and it’s something to look into, there might be a local city government, or a local district or province government who has certain programs that they have in order to promote local businesses and boom, that that could be a treasure trove of potential right there. If you can get the government to actually help some of these businesses hire you basically to help them sell on Amazon. So that, that’s pretty cool. Now earlier in the very first part of this, we talked a little bit about Wayfair. Now, Wayfair as a marketplace is probably new to many people, but correct me if I’m wrong, it’s kind of like vendor central, right? Like it’s not third party sellers are selling directly on Wayfair. Is that, is that how it works? Kind of,

Sean Chang: Yeah. It’s like vendor central, which means Wayfair will buy your inventory. Yeah. All right. But there’s a major difference between Amazon vendor central and Wayfair. Cause when Wayfair purchase your product, the purchase actual PO a purchase order occurs when products sold.

Sean Chang: So it’s like really, it’s not like Wayfair will buy you one container in advance. They will make a listing on Wayfair. And if your products sell, then mostly they will pay you with certain buying price and, you know, selling price, which means our selling price like vender central, you don’t have control. So Wayfair will decide and sell with their margin. Also all the marketing they will invest. Well also, there’s another huge difference between Amazon vendor central and Wayfair is even though in the bus or on the product, you put your logo on it. Wayfair will sell your product on the under their brand name. So Wayfair marketplace is more likely, I would say it’s for more about your cash flow. So you sell Amazon, you list your product under your brand name. Shopify also you’ll sell your product or your brand name and you compete your database or Wayfair. They will sell no matter what, but it’s under their brand name. So it’s huge difference. So my suggestion about the furniture category, what you guys can do is just Wayfair side, use it as an inventory to channel while you’re doing that through your Shopify store or Amazon or other, like other furniture channel. Keep building your brand name. I think that’s the point that you can make profit and brand recognition, both in certain points.

Bradley Sutton: You brought up an interesting point. I was thinking, as you were talking like, man, if Wayfair is controlling the price, what if they make it at a lower price than your Amazon listing, then you’re going to lose the buy box on Amazon. You’re like, if you have a product on walmart.com and it’s $5 and you put the price $6 on Amazon, Amazon is going to suppress the buy box. But you’re saying that probably Amazon doesn’t that not even relate the two products because on Wayfair, it’s not even under that original brand then. Right?

Sean Chang: Yeah. You’re correct. Yeah.

Bradley Sutton: Okay, cool. That’s good to know. Now that sounds interesting. Now, now you obviously worked on, you helped us out a little bit with Project X and our very first shipment of coffin shelves. We actually went to your warehouse and that was an episode. That was the first time we saw the coffin shelves now. So you kind of know what that product is. It’s not necessarily furniture, but it’s kind of a house decor. Do you think Wayfair might be interested in the coffin shelf?

Sean Chang: Yeah. It’s good quality product. And on the Wayfair, not just furniture or office or home decoration products selling well in that platform. So definitely it will fit to Wayfair and there will be interest.

Bradley Sutton: Cool. So, so using your contacts since you obviously have an account with them or relationship, how about we try in the next few weeks to maybe give them a proposal to see if they’ll put the coffin shelf on a Wayfair?

Sean Chang: Sure, yeah.

Bradley Sutton: Awesome. All right. So like, let’s remember to do that. And then I’ll give everybody an update later on how that went. Now you also talk about how you’re not just helping the foreign companies on Amazon, but you’re also doing kind of like 3PL services. And, and why would somebody need a 3PL service? I think nowadays people understand that reason, especially since after a coronavirus happened and we saw what happened there, but, but just for maybe some other people who are new to like Amazon, they might think, “Wait, why would you ever not want to just send your inventory to Amazon?” Can you talk really briefly about why in some situations it’s good to have a third party warehouse?

Sean Chang: Yes. So, one, I think first reason is if you’re selling just Amazon, U S then it’s okay. But if you are thinking about Amazon, Walmart, eBay, or all the other channels, somewhere you need to store your inventory. It’s difficult to use or rent your own warehouse and the labor and regulation, it’s complicated. To manage all those other channels, you need 3PL warehouses and fulfillment services. Another reason is also that Amazon has been increasing their FBA or storage fee, especially October to December, you know, those highest season storage fees are going up like three times or four times, whatever. So it’s like that will your business, if you don’t manage properly on time. I mean, yeah, if you don’t manage right inventory level, then your stocks huge storage fees from Amazon. So minimize that well situation also local warehouse will be needed.

Sean Chang: Another reason is that if you are located in oversea then, or the return or replacement type of thing. So something happened and your inventory needed to be shipped back to somewhere. Well, if you’re living in London or selling on Amazon US, then you need local people– like local warehouses or like support to manage those situations. So in that case you need that. Also, another reason is, you know, at FBM, so you can do FBA but like after this COVID-19, you know, Amazon or the FBA’s process been delayed or limited. I think for a while, it’s getting better, but you know, it can be happen anytime. So FBM is it’s really good to not make you take your listing down from Amazon, it will affect to the rankings or sales So, Oh two. Yeah. Keep the, your FBM listing and extra backup; a local 3PL service is needed.

Sean Chang: With international logistics, let’s say from China to US Amazon you’re sending inventory. Well, because of custom issue or like logistic issue. If something gets screwed, then probably you need to pay back or ship it back to China or, like trash it, there will be a lot of excessive charge can be added, but if you have local 3PL service, then on that type of situation. I like logistic experts. It can be minimized or prevented.

Bradley Sutton: Cool. Cool. All right. I want everybody to be able to not have their head completely explode here, but guys this is great. You know, Sean’s a great guy. Yeah. You can almost trace my Amazon journey back to Sean. If my partner had never found Sean’s company originally, I never would have gotten into Amazon. So indirectly or directly, part of the reason why I’m standing here today is because I originally got connected to Sean and started working on Amazon Accounts together. So it’s really cool to see– I remember the very first day I met you. You were a small office worker, like in the inside of a very crowded place in the corner of a room. And me, I was just coming from a corporate job and I didn’t know what the heck I was doing for Amazon. And now, six, seven years later, it’s kind of crazy to see where you and I have come, but I know I have more questions, but if other people have more questions either about like, you know, how to utilize your services to import from other countries or to use you as a 3PL what’s the best way that people can find you guys on the internet.

Sean Chang: Yeah. You can go to Kreassive.com, K R E A S S I V E.com. And there’s a contact link. So if you are mail or your inquiry, then including me, our whole sales and marketing team who received all your inquiry and from that part of our team will follow up on what we can do it together.

Bradley Sutton: Okay, cool. And then maybe next year, we’ll have you back on the podcast and, and let’s see if your sales have increased from 30 to 50 million, but if you want to be on the podcast earlier, I know when I went up there last week, you had said you might be interested to buy my Tesla. I’m trying to sell. So if you buy my Tesla, maybe I can get you back on the podcast a little bit sooner. Does that sound fair? That sounds fair. And I’m interested in all right. Cool. Thanks a lot for joining us, Sean.

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