#160 – How to Build, and Then Sell, Your Amazon FBA Business
Why did you start selling on Amazon? Was it to have some extra side income? Was it to replace your 9-5 job? Was it a way that you could live the “laptop lifestyle?”
Today on the Serious Sellers Podcast, Helium 10’s Director of Training and Chief Brand Evangelist, Bradley Sutton welcomes Chris Bell. He’s going to talk about another outcome from starting a successful Amazon Business: Selling it for a big payday to a company like his. They are in the business of looking for Amazon brands that meet their criteria, and then offering a boatload of money to purchase their businesses.
What’s the least they have ever paid for an Amazon business? $400,000.
The most? Listen to this episode to find out, and to see what steps you need to take now in order to potentially sell your Amazon business in the future!
In episode 160 of the Serious Sellers Podcast, Bradley and Chris discuss:
- 01:10 – What Do You Need to Do to Sell Your Amazon Business
- 05:00 – Never Think You’re Stuck on Just One Path
- 06:45 – Creating New Products isn’t for Him.
- 12:00 – Connecting Great Amazon Product “Launchers” with Buyers
- 13:00 – The Most Important Things That Bring an Amazon Business Value
- 15:45 – Buy the Brand Only? Or Entire Account?
- 18:00 – Does Selling Off-Amazon Add Value?
- 21:00 – What’s My Company Worth?
- 22:45 – How Does a Seller Add Value to Their Amazon Business?
- 24:00 – Quality Products Instead of Quantity of Products
- 25:45 – What’s the Most You’ve Paid for an Amazon Business?
- 28:00 – Creating a New Business Model That’s Entrepreneur Positive
- 32:30 – Fidget Spinners? No Thank You!
- 34:00 – Chris’s 30 Second Tip
- 35:00 – How to Reach Out to Chris
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.
Want to absolutely start crushing it on Amazon? Here are few carefully curated resources to get you started:
- Freedom Ticket: Taught by Amazon thought leader Kevin King, get A-Z Amazon strategies and techniques for establishing and solidifying your business.
- Ultimate Resource Guide: Discover the best tools and services to help you dominate on Amazon.
- Helium 10: 20+ software tools to boost your entire sales pipeline from product research to customer communication and Amazon refund automation. Make running a successful Amazon business easier with better data and insights. See what our customers have to say.
- Helium 10 Chrome Extension: Verify your Amazon product idea and validate how lucrative it can be with over a dozen data metrics and profitability estimation.
- SellerTradmarks.com: Trademarks are vital for protecting your Amazon brand from hijackers, and sellertrademarks.com provides a streamlined process for helping you get one.
Bradley Sutton: Today’s guest pays millions of dollars to Amazon sellers to buy their brands, and he’s going to tell you exactly what you need to do if you eventually want that kind of payday. How cool is that? Pretty cool, I think.
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. And we’ve got somebody who definitely helps serious sellers out there, Chris. Chris, how’s it going?
Chris Bell: Good Bradley. How are you doing?
Bradley Sutton: Pretty good. Now today, we’re going to be talking all about getting your Amazon business ready for potential sale. But before we get into your history and the nitty gritty of this, let’s just start off the episode with the bang. Can you give us your best tip as far as what an Amazon seller needs to concentrate on if they eventually– if they’re building their business up, to eventually sell?
Chris Bell: Absolutely. We are looking for businesses that have built a winning product, and winning SKUs or ASINs, right? So we really want to find companies out there who are leading in organic search, who have great ratings and reviews, low return rates, really something that stands out from the crowd within whatever product niche they’ve chosen to compete in.
Bradley Sutton: Excellent. All right. We’re going to get more into detail on that stuff, but that’s a great way to start the episode. Let’s take it back, right before we started recording, you said that before you’ve lived in California, you’re actually in Boston right now, where were you actually born and raised for the most part?
Chris Bell: I was born in Tokyo. My father was a doctor in the Air Force and so I was born on an Air Force base outside of Tokyo.
Bradley Sutton: Then, after Tokyo, you were just like, kind of doing the military life, going from base to base?
Chris Bell: Yup. Moved pretty much every two years growing up. I ended up finishing high school outside of Southern Pierre, South Dakota, and went to undergrad in Atlanta, and then moved to Milwaukee after that. And then Pittsburgh and now I live outside of Boston. So I have been all over the country and in the world growing up. So I can go through all those places if I want, but–
Bradley Sutton: As you’re bouncing around from place to place growing up, were you wanting to be in the military when you grew up or what did you envision your life turning out to be? You want to be a doctor?
Chris Bell: Yeah, I didn’t want to be in the military, but I did want to be a doctor. So I thought going into undergrad that I was going to go to medical school. And then, I just– another four years of medical school, then residency and internship and all that, the long stuff I just wanted to get out there and start working and start making a living. And so after four years of undergrad, I was ready to jump out into the world, and so gave up at that point.
Bradley Sutton: You gave up on the medical path. Then what was your first gainful employment, I guess you could say?
Chris Bell: First job out of– I was a computer engineer in undergrad and my first job was at GE healthcare in Milwaukee, where I was in what they call the IMLP program, which is the Information Management Leadership Program, supposed to put me on a path towards being a CIO one day, which is a Chief Information Officer. It was a two year program. After a year, I decided two things. One, I didn’t want to work at a company as big as GE. So there were about 140,000 employees just in the healthcare division. And that was one of seven GE divisions. Too big, too bureaucratic for me. And then second, I didn’t really love doing infrastructure technology. So I was doing kind of database integrations and server up time, type of stuff.
Bradley Sutton: Sounds exciting.
Chris Bell: Exactly. I actually left after a year. I quit in the middle of the program, and I joined–
Bradley Sutton: I’m noticing a trend here, not finishing what you start here. I’m looking for a good guest to have for inspiration. I’m just playing, but go ahead. Continue, continue.
Chris Bell: I wanted to– I felt very far away from real business when I was doing all this server up time type stuff. So I went and I got a job in sales, so I sold copiers and software for two years outside sales rep, hardest job I’ve ever had. So then after doing that for two years, I went to business school at Carnegie Mellon, a great school, learned a lot there. And then after Carnegie Mellon, I went to Bain and Co, which is a consulting company based in Boston. So that’s what brought me to Boston, and I was there for about six and a half years.
Bradley Sutton: I just want to bring something out real quick is, is the reason why we talk about this on all the episodes I like doing people’s backstories. It is kind of two-fold. One. I want to show how almost no two people on this show have ever had the same background yet. We somehow all end up kind of in this eCommerce space. I don’t want anybody out there thinking, Hey, I grew up wanting to be a garbage man and that’s what I do now. And there’s no way I can get out of this. What you think you’re going to do when you’re younger or what you even go to college for isn’t necessarily what you have to do. Yes, I was making light of it, but Hey, there is nothing wrong with you get into a certain career path or education path. If you don’t realize it’s for you guys, Hey, guess what? Pivot and go to something else. Don’t you think that you’re stuck into that. Now Chris seems to have done that a little bit more times than other guests on the show, but that is a great example of, Hey, he didn’t want to do the medical thing, didn’t want to do the IT thing, and probably didn’t want to be a copier salesman his whole life. And now he just kept trying different things until he found something he loved. Now, at what point did you kind of discover the whole Amazon thing?
Chris Bell: I started looking around and I stumbled across the Amazon ecosystem. I went to a conference in New York, and met a whole bunch of sellers and just really great people, really hardworking, honest, thoughtful folks that I could see myself working with. Just the huge scale of the Amazon marketplace. $200 billion in 2019 is so, so big. And it’s growing. Your Amazon’s growing marketplace is growing within Amazon. It just felt like a really exciting place to be. And then when we looked at what I feel like I’m good at, and a space where there was a place to speak to, to play in this space was– there’s so many people that are innovating and creating great products. And to be totally honest with you, Bradley, I’m not a super creative guy, right? So creating new products and that kind of thing, I just knew it wasn’t my strong suit, but what I do know how to do is take things to the next level, right? I can take something, and can take it global. I can put a whole bunch of your processes and technology in place to take it to the next level. And so what we came up with was what perch does today, which is find winning products and winning brands. Give those entrepreneurs a nice reward for all the hard work they’ve done in terms of a buyout, and then take that and put it on our technology platform, and take it to the next level, right. And build on the success that they’ve had and the products that they’ve built and take that forward.
Bradley Sutton: Cool. Now that’s what we’re going to probably be focusing on most of the rest of the episode, because I think that’s the most relevant to our listeners, is probably, I don’t know, I would say 80, 90% Amazon sellers who are listening to us. And so I think that a lot of times when people think about the Amazon opportunity, whether they learned it from Helium 10, or they took a course or something. I mean the great majority is just like, Hey, you’re, you’re trying to build up the laptop lifestyle and get some good revenue for yourself. And, something you don’t maybe have to work so much during the week, eventually build a team, but not enough people are talking about another financial benefit of building up an Amazon business is the potential later on to actually sell that business. And then you don’t have to do anything at all. It’s not four-hour work week, it’s a zero hour work week, if you make enough to retire off of or somewhat. So let’s just talk about this process first of all, how did you guys even discover this, I don’t know, need, or this opportunity, I guess you could say of how actually kind of buying existing Amazon businesses and building them up is better than just building a million brands yourself.
Chris Bell: I guess part of it was in talking with some of the entrepreneurs that I’ve met in this space and going to the conference I went to in New York, it wasn’t the ASGTG conference. It was a different one. So the whole conference was– everybody was talking about selling it and who would buy it and how the value of that. So it was clearly something that was on people’s minds. And then as, like I said, as I reflected on what I’m good at, I think there obviously is a lot of value for people that are good at launching products on Amazon, or elsewhere, and building those up, right. We’re paying these people a lot of money and they’re, like you said, many of them probably don’t have to work if not ever again, at least for a few years, they can take off and then decide that they get bored, to do something else. There’s a lot of value in that, but there’s obviously a lot of people who wanted to sell their business. And there’s a lot of upside for us in terms of taking those businesses to the next level and doing things that the average entrepreneur in this space, maybe doesn’t have the time or money or desire to do. Right? A lot of people don’t want to hire a team of 10, or 15, or 30 people because managing people is not working four hours a week, typically on your laptop from wherever you want in the world. It’s a different thing. I think there’s a lot of value in both sides, but in terms of the opportunity that we saw and what myself and my team is good at is I’ve done a lot of M&A, and in my time at Wayfair, and others. I have done a lot of things to add scale and structure.
Bradley Sutton: Real quick for everybody, what’s M&A? We’re not talking about Massachusetts here, but what are you referring to when you say that?
Chris Bell: Mergers and acquisitions. Good clarification.
Bradley Sutton: All right. Let’s just go to the basics. Now real quick, maybe the top five things that you look at when you first are evaluating how much you’re going to offer to an existing brand that’s on Amazon. So obviously revenue, the revenue, and I would imagine the profit margins as well, but let me just ask you, have it come from you, what are the top five things that most affect the valuation of an Amazon business?
Chris Bell: First of all, there’s a couple of pieces that are just table stakes, right? So it’s less about valuation, but we won’t really look at a company much in depth if they don’t have these things. And so some of that is size. And so if you don’t have at least $200,000, in the last 12 months, a profit, then it’s probably too small for us to spend time on. We have bought a couple of companies that are just below that, right. So if you’re 180, 190, and you’re growing really fast, we’d be open to it, but generally $200,000 of SDE, Sole Discretionary Earnings is as low as we go. And then brand registry, right? So we generally don’t buy- and other people may, but for us, we only buy private label brands that have brand registry so that they have an ASIN that we can protect, right. We don’t want to be fighting for the buy box. We want to be able to get Amazon, to take counterfeiters off and be able to have those ratings and reviews. It’s a really big part of what we’re buying is the ratings and reviews and the organic ranking that that private label seller has created. And so if you don’t have those things, then it’s typically not a match for us. And then beyond that, like I talked about earlier, the number one thing we’re looking for is a winning product. We want to see a product or products that are top of organic search with all the relevant keywords– of the most relevant keywords.
Bradley Sutton: I wonder what a program some would use to verify it. I don’t know. I think something that might be out there that might help with that.
Chris Bell: Absolutely. I’ll just be honest with you. We use Helium 10 when we’re listing these companies, right. So if we want to look at, if somebody says, Hey, take a look at my company. If you sellers want to know where we’re getting our information, if you look on Helium 10, whatever it says is what we’re looking at as well. So it is the gold standard as far as we’re concerned for keyword ranking. And then well ranked with keywords. We want to see low return rates, right? Customers generally being happy. We want to see ratings and reviews that are differentiated from competitors. So if you look at a lot of product categories, there’s usually two tiers of products. There’s anywhere from two to five, maybe a few more that have a lot of reviews. And sometimes depending on the niche, sometimes that’s 300 reviews. Sometimes that’s 5,000 reviews, but there’s a few that have the most reviews. And then usually there’s a drop off, and everybody else has 10% of that. So if it’s a 500 review category, maybe everybody else has 50 or less reviews. And so we want you to be one of those few that has that top leading review position. And then we look at some other things. We want to make sure your ad spend is within a normal band. If your TACoS is above 20%. That can be a little concerning because that doesn’t feel sustainable. We want to make sure your margin profile looks good. We do look at market share over time to make sure that lower price competitors aren’t gaining share rapidly, things like that. And then generally also what we like is, we like winning products and we like those winning SKUs, and we realized everybody has a business. And so your business might not be a hundred percent ASINs that fit all those criteria. But generally, if less than 60% of your revenue is from those winning products, right? So if you’re somebody who has hundreds of products and every single product is contributing a few thousand dollars that’s also not really a match for us, or we might, we’d be open to talking to you about just buying your winning ASINs, but in general, because of the cost of the inventory to keep up with all those products. And it’s just harder and more expensive to keep products that are on page two and three of organic search, we generally assign less value to those. But we will still buy the whole business if you have most of your revenue and profit, if you’re winning SKUs and you want to divest the whole thing, then we absolutely will take the whole thing.
Bradley Sutton: Alright. That’s a great starting point here. I have tons more questions here. Usually I don’t write things down, but I almost feel myself I need to write some notes down here because this is just such an interesting topic to me that we haven’t talked about in the show in a long time. So I want to make sure that everybody’s getting– I’m hoping I’m going to cover everybody else’s questions out there, but let’s just really quick talk, you’re talking about real buying brands and brand registry. So when you’re actually buying these brands, are you buying just the brand or you bind their whole account or sometimes each, or how does that work?
Chris Bell: We typically buy, we always buy the brand, so we buy the trademark, any IP associated with the brand, and any IP close to the brand. So for example, we’ve purchased assets of a company where they had a main brand and then they had a sub brand that they weren’t really using anymore, but it was in the same product category. And because we asked folks to sign it on compete, we bought that IP as well. And then outside of that, we typically– I’d say 70% of the time we’ve taken over their seller account, but either if they ask us to, or if we want to, we can just transfer the ASINs, transfer the brand registry. So we’re flexible on that as we’ve gotten–
Bradley Sutton: It’s possible. That was kind of what I was getting at, cause I wasn’t sure I haven’t heard about that. So, if you’re not buying the account and that account has the brand registry, it is a function of Amazon where there’s a process where you can transfer the ownership of the brand from one Amazon account to another?
Chris Bell: Yep. We would transfer the trademark with the US trademark office first, and then we’d file that new paperwork with Amazon, and ask them to transfer the brand registry over. And in the interim you can assign our accounts’ admin rights. If we– cause that that process can take a little while, so what we can do to be able to close faster is we’ll just have you go into your account and your brand registry, and make our account an authorized seller. And if you have transparency program, we can also do that. We’ve done that as well. We can have the immediate term solve to make it work and then get it fully transferred over.
Bradley Sutton: This is great to know. The it’s not like– people out there might be thinking like, Hey, I want to build, I’m not sure which one’s going to take off. I want to build up multiple brands. It’s not like they have to worry about having to have a different account for every single brand, just because you have to buy the whole account, they can have it all on one account and then you can just sell them an individual brand that you’re interested in.
Chris Bell: That’s correct. Yep. For us anyway.
Bradley Sutton: Okay. Excellent. All right. Another question I have is, I’m sure it helps somewhat, but how much do you guys look into the diversification of platforms that they’re selling on? Obviously I would assume you’re primarily looking at Amazon USA, but is it nice if they’re in Amazon Europe or Amazon Australia, or other marketplaces? Is it nice if they’re selling on walmart.com, or Wayfair, or E-bay? How does the other marketplaces kind of factor into your valuation?
Chris Bell: Today we only purchase the Amazon brands. So if you have, and again, everybody has their business and they run their business differently. So if you have less than 10% of your revenue on other platforms, then that’s fine and we’ll figure it out. And we’ve taken over some Shopify sites, and things like that, that come along with the brand. But in general, today we are hyper-focused on Amazon. It’s the biggest marketplace. It is growing the fastest. We want to be all of our eggs in this Amazon basket. And so if you have a business that’s 50% on Walmart or something like that, I just– I don’t think we would be the perfect match for that kind of a business. In terms of within Amazon, we love all of Amazon, right? So, we, US, all of North America, UK, uh, Pan-EU, most people’s Australian or Japanese businesses, or I know they just launched in Brazil are quite small. So if you have some business there, that’s fine, but it’s usually such a small part of your revenue that we don’t spend a lot of time talking about it, but in general, we like all the Amazon platforms.
Bradley Sutton: Let’s say you are doing the thing of buying somebody’s account instead of just the brand. Now, obviously there has been horror stories about people say like, Hey, will you go through that process of switching bank accounts or registered owners and the accounts get shut down and things like, have you ever run into those kinds of issues or is it a pretty much you guys got that down to a science where that doesn’t happen?
Chris Bell: We do. We’ve done a bunch of these now. And so we do have a process that we follow, which includes giving Amazon a heads up, and going through the process in the same order every time that we know works. For sure– especially the first couple of ones that we did, we got– I think one or two of our accounts shut down for one or two days, but we got it resolved very quickly and we talked to the Amazon reps and we figured it out. So at this point, it’s a pretty seamless process. Sometimes there’s a hold on funds for a day or two or a week, but your ASINs are still alive. We’re still selling. In general, they’re– Amazon’s always a little bit mercurial, so it can, you never quite know, but we have it down at this point to a pretty repeatable science that we haven’t had any issues recently.
Bradley Sutton: Of course, there’s a million factors that would affect how much somebody would get, but is there any, like say somebody has a million dollars of profit yearly? What could they– what is the range of what they could be looking at based on other factors?
Chris Bell: It varies a lot, right? And I think you know this and that’s why you’re adding all these caveats. If you– maybe as a way. One, there’s a bunch of reports out there that people can get, right. So if you go to quiet light or empire flippers, or website closers, that’s some of the bigger brokers out there that we work with, they all have reports. And I think if you pulled up those reports, you would see anything that ranges from 1.4 times earnings at the low end, all the way up to three and a half to four times earnings, if you’re a big company that has many, many years of results. And so I know that’s a really large range, but–
Bradley Sutton: No, that’ s helpful. Some people have no idea what that range is. So that definitely answers that. Okay. Speaking of that, what are the biggest things that people can do now for their business that somewhat easily, obviously brand registry is a must, but to get a better return. How do they make themselves more attractive to you? Something that doesn’t require changing their entire business model that they’ve been doing? What are some of the easiest things?
Chris Bell: The easiest things would be, and I know this isn’t actually easy, but the short list is, really invest in winning products, right. Create a really high quality product, and invest in great imagery, great customer service, get great reviews, have high sales velocity. So you get high organic ranking, watch your keywords, watch your ad spend, watch your return rate. This goes all the eCommerce and consumer work I’ve ever done in my career. Always comes down to treating your customers well. Right? Get a good product, treat your customers well. It doesn’t always work out. It’s not, like I said, it’s not simple, but it’s easy to say, is have a profitable product. And in general, like I already talked about, we were building our own portfolio of products made up of winning products from other– from all these companies that we’re buying. Right? So we don’t assign any values. Some people say, “Oh, I have my revenues spread across a hundred SKUs.” And so that should be exciting to you cause it’s diversified. And we actually, we’re building our own diversification by buying all of these winning products. And then we’ll have a portfolio of top of organic search products across a whole bunch of niches. And so don’t focus on diversification. Don’t focus on launching a million products, and trying to get a few dollars, a profit out of every single one. Both for us, for exit, but also for yourself, that’s a lot of working capital. You’re going to have a lot of your personal money tied up in inventory. You’re going to spend a lot of time managing too many suppliers. I think you’ll get a lot more bang for your buck, both in terms of your own personal work life balance of managing less. And then in terms of your exit opportunities, for us anyway, we really like, we would much rather have a company with a few winning products than with a hundred products that are all second page of organic search.
Bradley Sutton: Okay. All right. Cool. What about if somebody has a big email list that they’ve built up, they have a big social media presence. Obviously you’re taking those over as well, but how much does that play in the evaluation? Is it really attractive if all of a sudden they have a list or a Instagram page for their brand that has 50,000 highly engaged followers, does that mean much to you or it’s not that important?
Chris Bell: It does. That’s valuable, but it’s only valuable on top of what we already talked about. And so, if you are– if you have a great Instagram following, but not winning products, we’re not as interested in that, but if you have a set of great products and you have a loyal social following, and we’re kind of open to all platforms, Facebook, Instagram, Twitter, however, you’re getting people to follow you. Absolutely. And we have purchased brands like that, and we’ve even brought over VA’s from some of the brands who are running those programs so that we don’t lose any of that special sauce that was going into that before, because for sure, if you found a way to drive off Amazon traffic onto Amazon, then that is valuable, right. That helps you not only get more sales, but get better organic ranking because Amazon values those kind of clicks onto their platform, and then conversions pretty highly in their search algorithm.
Bradley Sutton: Okay. Cool. Rough figures. If you can say this, what’s the most you guys have ever paid for an Amazon business and the least?
Chris Bell: The least was I think around four or $500,000, and the most is several million dollars.
Bradley Sutton: Nice. So I think that I should get some people excited about who wouldn’t want that kind of payday.
Chris Bell: Yeah. Even on the low end, but on the high end, you can– I don’t know what everybody’s lifestyle is like out there, but several million dollars, it goes a long way. Spend a few years on a cruise or something.
Bradley Sutton: Yeah. Now this is just for you guys. I’m just curious, what’s your end game here? Is this kind of like a flip my house on the home improvement channel where you want to buy a house and then flip it later on for more money? Are you just trying to build this revenue stream, or what are you guys trying to do?
Chris Bell: I am glad you asked. That’s a great question. I’m going to tell you what I really think here, and you might call me a dreamer, but I think that the future of products out there lives with the entrepreneur. I think that companies like Proctor and Gamble who develop a lot of Unilever and those who develop a lot of the products that we all buy today are not going to be able to keep up with the hustle of these entrepreneur communities that are out there. And over time, because it’s gotten so much easier to source products from China through Alibaba and so much easier to sell products through places like the Amazon marketplace that I think more and more people are going to continue to create products, innovate on those products, create better products, and you can get from the big CPG companies out there, and sell those and find success. And so what we want to do is we want to build a platform that over time– what I am building is a lasting company, right? We want to have the best products from across the world. We are starting today on Amazon, but eventually we’re going to be meaningfully multichannel, and we want to have all the best products and have this collection of products that are made by entrepreneurs and therefore better suited for the problems that they’re solving and are successful in the marketplace. And then we can take those and we can use our scale and our technology and take them global, put them on, if you’re not already– for example, if you have just an Amazon US product, over time, our aspiration would be to take that, take it global, put it on Walmart, put it on wish.com, or any other marketplace that’s out there. Secure the right brick and mortar relationships, sell these things to brick and mortar. And really the goal is to take the best products and give them the benefits of scale. And I think that this can be a really interesting new introduction to consumer goods. I think more and more we can get great winning products at a much lower cost than otherwise through your normal kind of Unilever, Proctor and Gamble type of companies. So, i think this– I’m really excited about the transition that’s going on, and the fact that all these entrepreneurs are now able to launch these products and be successful. And then we can help them take it to the next level.
Bradley Sutton: Nice. Now, how many will you have potentially bought by the end of this year, for 2020? So you come December 31st, you guys will have bought maybe how many?
Chris Bell: We think we’ll have about 20 by the end of 2020, and close to 75 by the end of the 2021.
Bradley Sutton: Wow, that’s awesome. So, basically you’re just taking it over and you’ve got your whole team of people who just take over where the brand owner left off, where they’re doing all the keyword research and managing the PPC campaigns, and building it out. Are you guys actually expanding the brand too, like the product line? Let’s say it’s like the Project X coffin shelf. So, you buy that, you buy the Manny’s mysterious oddities brand that we created on Project X. And then you’re like, Hey, let’s make a coffin bookcase and let’s make this, are you guys doing that? Or are you just kind of like, just expanding the existing products?
Chris Bell: So we do not do any new product launches. We– like I was just saying, we think that the launch process is what these entrepreneurs are great at and what Helium 10 helps them with. And so in general, we don’t want to compete with our– I view the sellers as our customers in a bunch of ways, right? So they have built this great business and I want to convince them that we are the right home for that business for the long term. And we don’t want to compete with our customers by launching new products. And so, we take the brand, we commit to kind of making the most out of that existing brand. But as you know Bradley, the hardest part of this whole thing is creating a product that gets product market fit, right. That ends up that customer’s love, that gets to the top of organic search, that has great ratings and reviews, that has a low return rate. That is hard. It’s really hard, even people that are really good at it have– some people might claim that they have a 90% success rate. I think that you abide by our standards of– your winning SKU probably needs to have at least a hundred thousand, if not $200,000 a year in revenue. By that standard, most people maybe have a 10, 15, 20% hit rate. So it’s really hard, even if you’re good at it. So, what we want to do is say, that’s what you guys are good at, right? And you guys should do that. And what we’re good at is taking that and taking it to the next level. And so we take the brand, we try to maximize the value of what we have. And so, we invest in the products. We invest in terms of making sure the high quality, if we get feedback from customers on this thing or that thing. So we’ll always be open to variations, but typically the ASIN, right? All those reviews that organic ranking is the most important part. And so we’re not, we don’t try to recreate new ASINs. Typically, we take what we have and we try to go as far as we can with it.
Bradley Sutton: That’s actually curious to me, not that I’m second guessing you guys, because you’re obviously a successful business, and I’m just me here in my podcast studio right here. But you know, to me, in my experience, a lot of products on Amazon have a shelf life. So if you’re not expanding the brand, you don’t maintain the sales. It just goes down gradually. So the way that other brand owners kind of expand or alleviate that is by expanding out new products. So I would assume then that actually kind of maybe narrows down the focus, like you definitely want product lines and existing products that are kind of evergreen, I guess you could say, as opposed to ones where you’re like, yeah, this is probably going to go out of style in a couple of years or something.
Chris Bell: Correct. We generally stay away from things that require high levels of new product introduction to stay relevant. And so that is anything fashion oriented, high-tech type of stuff. We stay away from anything that feels like fidget spinners is the example I always use with my team. Right? We don’t want to buy fidget spinners, cause those are going to go up and then go way down. We’re looking for steady evergreen products, which I think is probably 80% of the catalog. And then what we’re– what our goal would be to do is, people are always going to be buying mixing bowls, right? Or spatulas, or aprons, or whatever those things are. And so as long as we, and I’m not saying we don’t do any product innovation, we will kind of keep the product updated with the best that is available right now. We respond to customer feedback. So we want to make sure these products stay relevant within their categories, but always within that ASIN, right. With all power of what we’re buying is those 3,005 star reviews, and that organic ranking. You’re right. We keep it narrow. We’re focused just on making those things as successful as we can.
Bradley Sutton: Cool. All right. Now, what is your 30-second tip? We call that TST of our show. You’ve been telling us a lot of different strategies about how to improve the value of your business, but is there something that you can think of really quick that you can say in 30 seconds or less, it’s a highly valuable, highly actionable that would help anybody along this path, who’s trying to build up their business for future sale.
Chris Bell: I’d say the most important thing, if you are looking to sell your business is to really create a best in class product that we believe will be an enduring product for years to come and what that means is something that has great reviews, great organic ranking across the right keywords, has a good price position, a good profitability, a good cost position, good customer feedback. It really comes down to building a great product and a great brand. And if you’ve done that, which I expect many of your listeners are doing and aspire to do, then we’d be really interested in talking with you.
Bradley Sutton: Love it. All right. So along those lines, if somebody feels that they might be ready to take that next step and start the process, how can they find you guys on the inter-webs they get that started?
Chris Bell: Our website is perchhq.com. And if you want, you’re always welcome to email me directly. It’s just firstname.lastname@example.org.
Bradley Sutton: Awesome. All right, Chris. Well, we’ll try and maybe reach back with you sometime next summer, 2021. Let’s see if you guys hit that goal of the businesses. It’s going to be great to see what you’ve learned in the last year.
Chris Bell: Great. Looking forward to it. Thanks Bradley.