Whether you're just starting out or looking to take your brand to the next level on Amazon, it's vital for you to understand your potential pain points and how to alleviate them. In this episode, Chris and Leah speak with Daniel Fernandez from AMZ Clever, an amazon seller turned agency owner who has helped numerous private label brands achieve success on Amazon.
[00:00:07] Chris: Hey everybody, this is Chris McCabe. We're back with Seller Performance Solutions, our wonderful podcast about brands and Amazon sellers.
I'm here with Leah McHugh and today speaking with Daniel Fernandez of AMZ Clever, and you're based in Miami, right?
[00:00:26] Daniel: Very close. I'm in West Palm Beach.
[00:00:27] Chris: And we're, we're speaking with him today about his past experiences as a seller and also now currently helping Sellers as an agency.
So maybe we can start there. What were your first experiences with selling, and then at what point did you decide that you wanted to transition to an agency owner and help sellers that way? Did it grow organically from just your initial interest in e-commerce?
[00:00:50] Daniel: Yeah, absolutely. So I would say I've been in the industry for about eight years. That time I was living in San Francisco, working in tech, and somebody, just a random friend sent me one of the first FBA podcasts from a guy called Pat Flynn.
[00:01:07] Leah: Oh, wow. Yeah, that's going way back.
[00:01:09] Daniel: Yeah. OG, right? And that got me hooked, you know, so I, shortly after, launched the product and it did so well and it ran out of stock. But at that point I thought this was it, right? So I decided to leave my job and it was one of those situations where I had the golden handcuffs on and took me 10 minutes to write my resignation email, took me an hour to hit the same button, but eventually did. And started this journey. And it was very tough at the beginning because when I was able to restock that product, the ranking wasn't there anymore.
But it still was selling. And , you might think I, I, I learned the lesson. Ran outta stock again. And reorder. And then the third time, the ranking was definitely not there anymore. Right? And I had already put a lot of time and, and effort and all of that and I had taken by that point, like courses after course, after course like crazy. I had learned a lot. And I hired a coach and joined a business mastermind down in San Diego. And they told me, look, you've got all this knowledge and you've done well, but obviously learning the lessons here, but you need cash flow now. So why don't you switch to an agency?
Right. And that was almost eight years ago. I did that and never, never look back. Continue working one client as to the other and hiring people. And this brought me to China where I think we met the first time.
[00:02:31] Chris: In Hong Kong ?
[00:02:33] Leah: Oh wow. We are going way back.
[00:02:35] Daniel: Yeah. Hong Kong and then recently moved back to the States, so here I am and what we do hasn't changed. We maybe added Walmart, obviously Amazon, and it's it's full management. We help brands grow.
[00:02:58] Chris: So you got two or three dozen clients somewhere in that vicinity, I think you were telling me. They're mostly private label brands or do you help resellers as well?
[00:03:07] Daniel: Yeah, I would say our ideal client, right? The brand that we help become the most successful is a private label brand.
And there's a few more criteria, right? It's a brand that is basically in the business of growing their product line. So adding new products, very prolifically, and they are, they are also not just selling products, they're actually growing a brand. Maybe the brand already fits outside of Amazon and they wanna be able to leverage that inside Amazon while maintaining the brand recognition. And the customer basically, really identifies with it.
[00:03:43] Chris: Are these people coming to you right at the beginning, you're helping them launch, or do they get their feet wet a little bit?
They start some selling and then they need help once they know a little bit more about what they're doing, but they want to do it better, do you jump in at that point when they're still trying to get established, but they've already kind of opened things up?
[00:03:59] Daniel: Yeah, we've done both. I would say maybe three Fourths are brands that already have proof of concepts.
And maybe that the last one fourth is brands that we've even taken pre-revenue brands. And to be fair, I speak with a lot of brand owners and a lot of them are not a good fit, especially these ones that are pre-revenue. But the ones that we took on, we just saw something special.
Usually just a product that was well differentiated. Or maybe it was similar, but the marketing was just well differentiated. So, no, me too products. That was a little bit what we looked for.
[00:04:36] Leah: Which is awesome. Cause I think that as the way the marketplace is going now, we've kind of cycled back to that like brand recognition being important as opposed to whoever can hack the data quickly and as well to do well I think it's interesting to see, because you know we've all been in the industry for a while. It's sort of cyclical, right? Where you have like lots of brand differentiation and then just like trading in the same products. And now we're kind of heading back into the brand differentiation, which I find really interesting.
[00:05:02] Daniel: Yeah. And I chat with a lot of D2C brands that they achieve success outside of Amazon already. So they're with social media, with pay media outside Amazon and Basically leaving money on the table, right? With these brands, like the biggest issue is they're being already searched on Amazon, right? And not being there, not having a presence is costing them tens, hundreds, millions of dollars. But not being there also correctly, it's also costing them, right? So that's a lot of what we see.
[00:05:39] Leah: Yeah, it's kind of crazy when you look up like major brands on Amazon, how bad some of their Amazon listings are because it's not what they do. They're good at all the other sales channels, they don't have like dedicated Amazon people. Still surprisingly, you'd think they'd kind of like get around to it, but I tend to use major brands as my examples of like what not to do when I have to give a talk because they're so easy to find.
[00:06:03] Daniel: So listing yesterday in the US that the images were all in Japanese.
[00:06:09] Leah: Oh yeah. Nice.
[00:06:10] Daniel: That's a brand, that's an example.
[00:06:12] Chris: So that works for Japan. Not so well here.
[00:06:14] Leah: Well maybe their demographic is Japanese speakers in the US. Yeah, very niche.
[00:06:22] Chris: Yeah. . I think some people think it's going to be straightforward.
It's going to be easier than it could be. What kinds of pain points do you see with some of the brands that you're managing? Is it just mostly costs, like rising costs of inventory, rising ads costs and so forth. Or are they just kind of unsure what their edge will be on competition and they haven't quite turned the corner on how to sell more units for their dollars?
[00:06:47] Daniel: Yeah. A couple of things. So for, for D2C brands, one of the biggest pain points is attribution. Because these brands are spending a few million dollars on social media ads and influencer marketing and etc. So they have a lot of traffic that's being generated, a lot of brand aware traffic going on.
Which obviously is ending up on Amazon. So how do we actually know what the real role is, right? Because there is efforts being done outside of Amazon. We feel a lot of brands that are little worried, right. How to scale profitably if I may say because there's many ways to do it wrong, right? So I think that's another. One Last is for these brands that maybe, are not D2C, maybe they've been selling to distributors and all of that, almost guaranteed there's gonna be resellers on Amazon. And that is a problem because, this Japanese listing I was mentioning, the issue is because there's a reseller and they don't care much. They made a mistake or the Amazon system or whatnot. But we see a lot of inconsistencies on catalogs on the brand when big brands are selling through distributors and a lot of them are, because of that, wanting to go D2C. Which creates a huge project. It's very difficult to iron everything out, but you know, when on it, it can pay off tremendously.
[00:08:12] Chris: And in terms of this year versus last year versus the year before, did you start working with some brands that their first year was like the covid year and they saw a huge impact and revenue was growing and easier and now they have to work a little bit more for it because more sellers.
Of course, in the last two years coming in, more sellers are coming in all the time. But it's not quite what it was a couple of years ago. Have you gone through pain points like that with some of your clients?
[00:08:40] Daniel: Definitely. And you mentioned it something about cost per clicks going up. That's a real thing. And what we have seen is that because of the pandemic, it drove so much shopping activity to e-commerce. I mean, basically the whole retail sector switched to e-commerce, brands had a phenomenal year or couple of years. But as retail stores started to open back up, right?
The traffic, retail traffic went back to normal somewhat. But then there is these sellers, these brands sitting on tons of stock because they bought, based on projecting that this craziness will continue. So one of the biggest challenges we see is, okay, how do we move product, oversupply of product profitably or somewhat efficiently, right?
That's one of the challenges that we've been dealing with and also because there is this oversupply of stock and arguably demand on Amazon went down a little bit last Q4, right? I think the first year that Amazon just had like a little, like tip down. There are some solutions for that.
[00:09:46] Leah: Yeah. I think also because Bloomberg yesterday published an article about how this is the first year that Amazon is essentially taking about 50% of sellers revenues by the time you calculate ad spend and all of the fees associated with it, you're only really getting 50% of your revenue on Amazon. So, if you have too much inventory and not rising costs that's a tough spot to be in.
[00:10:06] Daniel: Yeah. So Amazon is love and hate, right?
And there's brilliant people working there and they know what's going on and I think they've been very prolific with their advertising products. They've launched new ways of targeting customers. For example, right now, what we are doing a lot of is CPC is a common term, stands for cost per click.
That's what advertising has been based off of for many years on Amazon. Recently they launched something called vCPM. Which basically means instead of paying per click, you're paying per thousand impressions. This is something that has been available on platforms like Facebook and whatnot.
Yeah. We're noticing that we're getting cheaper clicks by adopting these new options from Amazon, and I think they're being so prolific to bring the cost per click down temporarily, right? Because when the avalanche of sellers come and adopt one of these new methods or targeting options, et cetera, obviously the clicks, become more expensive, right?
My advice, what we're doing with clients is adopting these vCPM there's a new sponsored display video ads, which right now, also at the beginning, they tend to be cheaper. So few things to take advantage of.
[00:11:22] Chris: And any other words of advice for brands out there that are new to Amazon or looking at the year ahead in terms of planning for Q3, Q4 planning for Prime Day?
If you had to give one big piece of. To brands in 2023 for the rest of this year, what would it be?
[00:11:44] Daniel: I would say to mind more the curation of what gets sent to Amazon. To really, really reserve Amazon to those hero SKUs. In the past, Amazon was very friendly with restock limits and we could pretty much send everything to Amazon.
But going forward, Amazon has realized that their warehousing is a very expensive part of their business, so they want quick turnover. So I think this year, really the focus should be on the top 25 SKUs or top half SKUs via FBA.
And I think FBM will probably make a little bit of a comeback.
[00:12:21] Leah: I think it already is.
[00:12:24] Daniel: It's trendy right? Right now?
[00:12:25] Leah: Yeah. It's climbing. It's climbing again. Yeah. Because Amazon isn't building as many warehouses now. I mean, they were in manufacture or construction overdrive before the pandemic even started. And then they doubled down during the pandemic as well, and then they pulled it all in 2022.
[00:12:41] Daniel: Yeah. So I would say don't overlook FBM would be the other piece of advice and the last one is Amazon is pay to play. Right? It's really allocating that budget, to be able to get exposure.
The days of reliance simply on organic ranking is no longer there. Advertisement or paid media sales, and then organic sales. There should be a strategy that implements or applies both.
[00:13:06] Chris: Great. Thanks. And I guess we might not see you at the Prosper show.
Maybe we'll connect with you at one of the South Florida Wizards of Ecom events in the next few months. Where can people reach you if they have questions or wanna hear more about your agency?
[00:13:20] Daniel: Yeah, definitely. And I hope to see you, here in south Florida. So my company is a AMZ Clever. We have a website, LinkedIn, everything. But really to anybody listening, I invite you to send me a direct email, at Daniel@amzclever.com.
Great. Sounds good. We'll catch up with you next time. Thanks everybody for listening to Seller Performance Solutions. Thank you, Leah, and have a great day.