BI 347: How To Achieve Max Growth On Amazon And Set Up A Profitable Exit

On the Bright Ideas eCommerce podcast, Trent Dyrsmid interviews today's most successful eCommerce, Agency, and SaaS founders and gets them to share all their most effective strategies and tactics for growth so you can quickly figure what you need to implement in your business today to get ahead of your competition. If you are looking for proven methods to scale up your eCommerce business, increase efficiency, improve your systems, and delegate more, this is the podcast for you. eCommerce, automation, outsourcing, standard operating procedures, workflow management, search engine optimization, social media, podcasting, Facebook, Twitter, YouTube.

Episode Highlights

[3:35] — Ryan's background and business growth on Amazon

Ryan is the CEO of Recom Brands, a company focused on buying and growing businesses on Amazon.
In their second year on Amazon, they made $15 million through wholesale trading of footwear and apparel.
Although Ryan's background is in physical commodities trading, he saw Amazon as an opportunity, and this led him to the eCommerce path.

[8:03] — Recom Brands' business growth and shift of focus to acquisition

Amazon's Terms of Service used to make it difficult to own more than one Amazon account.
As Amazon loosened their policy, Recom Brands was able to buy and acquire businesses.
The company raised $2 million in debt financing from an investor to boost its growth.
eCommerce has so much opportunity that they changed their model a few times before finding their sustainable niche.

[13:07] — Why buying and acquiring is better for business growth

Building a business from scratch is extremely difficult.
The risk-to-reward ratio for buying existing and functioning businesses is better than launching one yourself.
It is easier to take over and keep the business afloat from a risk-adjusted point of view.
On the other hand, Amazon has made it easy for third-party sellers to start a business.
Online businesses are faster but riskier. It is not as straightforward and can be tricky.

[19:47] — Identifying the right company to buy

The primary criteria they look for in brands are great reviews from a solid product.
They tend to prefer mature products that have been in the market for at least two years instead of new products that have been available for a few months.
Favor sustainable products with stable sales instead of trends and fads that only had a surge in demand.
Their company is open to any product category.
For more information, tune in and listen to the podcast.

[23:03] — Valuing a company's purchase price

The math behind the purchase price is from a multiple of the seller's discretionary earnings.
A business with a lot of skews will be valued less because it is more difficult to manage.
Another factor is the competitive landscape of the business and whether there's room to improve.

[25:00] — Managing the risk of having a single channel

They manage separate accounts just in case.
If your product is authentic and you follow the rules, your account will get back up even if you get suspended for some reason.
Amazon will not be getting rid of the third-party marketplace anytime soon as it constitutes most of the platform’s volume.

[26:43] — Recent progress for Recom Brands

They currently have ten acquisitions.
The company is starting to gain momentum, with as much as acquiring three brands a month.
In the following weeks, they expect more financing and funds raised to expand further.
With the abundance of competition, they just focus on themselves and being more efficient every day.
They are taking a long-term approach by building their reputation and network.