Season 1, Episode 41
Investing in Your Business
[00:00:07] Chris: Welcome back to Seller Performance Solutions, I’m Chris McCabe with Leah McHugh. Both of us of e-commerceChris seller consultants and former Amazonian myself, Leah worked on and managed a startup that was an Amazon business for how many years?
[00:00:28] Leah: I don’t even know too many.
[00:00:30] Chris: Several years and now a consultant for several years and you’ve got, I don’t know, a decade-ish of work on this material.
[00:00:38] Leah: I think it actually is a decade now.
[00:00:40] Chris: You’re at 10 years. Congratulations. So I think I just entered my 14th year of Amazon related work with only one year off, which is kind of sad, but, Anyway, in that year, I was working with a small business and we’re talking about small business approach to not just e-commerce, but to Amazon and you worked at a small Boston-based startup that was selling on Amazon and you saw lots of crazy stuff.
[00:01:07] Leah: They weren’t small, but I guess, small compared to some of the people we work with now.
[00:01:11] Chris: Well, I mean, people use the term small business in a variety of ways, right? We’ve heard Senator Elizabeth Warren talking about it in Congress, Senate subcommittee hearings, and so forth about Amazon being hostile in some ways to small business, of course, Amazon promotes and helps lots of small businesses grow in other contexts today.
I kind of wanted to hit this idea of some of the small businesses that we hear from on a regular basis, small brands, we understand there’s a lot of new brands. There’s a lot of small brands that are growing. But what we hear a lot is, you know, well, I don’t have the resources or the capital or the wherewithal to address this type of problem, like a competitor attack, right? Or brand abuse, or even legal issues. I mean, we’re not attorneys, but we hear from people that do have issues that are legal in nature, intellectual property based perhaps. And we hear this a lot, you know? Well, I don’t have the money for a lawyer or I don’t have resources dedicated to have somebody who’s competent in reporting to abuse prevention teams at Amazon. And the point I’d like to focus on or make today is you would probably consider lost or stranded inventory or damaged inventory with FBA a cost of doing business that you have to reckon with. You’d feel the same way about PPC or ad spend. The question I’d like to get your thoughts on first and then kind of pose open it to the wider listenership we’ve got is why is the not considered an acceptable or required cost of doing business, defending your brand, defending yourself, locking down your intellectual property within the Amazon marketplace.
[00:02:57] Leah: I actually think it’s less to do with business size and more to do with, at the risk of sounding like one of those coaches, it’s more to do with mindset. You know, there are certain costs and particularly to do with marketing for whatever reason that people are just like that’s what I have to spend money on.
But then there are other things where the bootstrap mentality can maybe go a little bit too far and they don’t do the math on how much is the problem costing me versus how much will it cost to get it solved? And particularly like how much is it costing me per day? Because a lot of times, you know, people are like, oh, well, I’ll just try to fix it myself. And then six months later, the problem isn’t fixed.
How much money have you lost at that point? And then we take over and sometimes get it fixed within like a day.
[00:03:45] Chris: I think the reason is they believe that the map is murky for that. Even though when we ask a couple follow-up questions like, how much are you losing per day?
Well, this listing is down. All they have to do is figure out how much they sell per day, usually, and the listing suspended, and they can give us a number very quickly. So it’s not a huge mental leap.
[00:04:02] Leah: But I think it’s also just, and this is not just in our space, this is across the board. I think it’s the "well I could just do it myself." And yes, there are lots of things you can just do yourself, but one, somebody who does just that thing all day, every day is probably going to be better at it. And two, your time is probably better spent elsewhere. It’s better spent in the area that you are actually very good at and very experienced in.
But I think that’s where it comes from. I think it’s this idea of like, well, I can just do it myself, so why would I pay somebody? I see that sort of across the whole industry a lot of times. And I think it does come from that, cause I’ve heard people say things like don’t hire somebody until you’re making at least a million dollars in a year. And it’s like, I guess, but one, you could probably get to a million a year, way faster with help. And two, how well are you going to be running things? If you’re doing absolutely everything up to a million in revenue?
[00:05:04] Chris: I think it’s the psychology of: I’m a business owner. I need to know how to do everything.
[00:05:08] Leah: Which I don’t disagree with. I think you should at least have some knowledge in how things work. So you, if you are hiring other people, you know what they should be doing. Like you should at least have an idea of how all of these things work.
[00:05:22] Chris: But there’s a big leap between I have an idea of what goes on with this and I’m going to do all that myself. I agree completely.
And like you said, I mean, unabashedly, we do work on this stuff every day. We do touch these types of cases every day. So you would only expect that we would know more about reinstatement appeals then you would. There’s no shame in that. We’re not sellers, we’re not doing all the other stuff you’re doing all day.
[00:05:47] Leah: Right. And I’m the first to admit that I don’t know how to run ads on Amazon and I will not try to run anybody’s ads on Amazon. If I were running ads on Amazon, I would be hiring somebody else to do that.
[00:05:59] Chris: And it’s not that we don’t like ads. It’s not that we don’t think ads are important. It’s that if we want to get our listeners access to an ads expert, we can have them as a guest on the podcast because they know more about it then we do. And we talked about this before, but there’s no shame for us in not being a full service agency. A lot of people are wearing that as a badge, like we’re full service which means, Jack of all trades masters of none, in our experience. We’re not saying in other spaces outside of Amazon, but in at least the Amazon space, we see the Jack of all trades masters of none and we don’t really subscribe to that or believe in it because there’s too much at stake. Like you said, there’s an ASIN that goes down. I mean, how many people have we worked with who had 10,000 in sales a day on that product?
[00:06:47] Leah: Yeah, I mean like tons of them, I mean, I don’t even count them to be honest.
[00:06:51] Chris: I’m not asking you for a hard count, but a lot of people, dozens if not hundreds.
[00:06:57] Leah: Most I would say.
[00:06:59] Chris: I think to answer the earlier question, marketing costs translates in everyone’s brain to more sales, better marketing, better sales. They do that math, whether they know the actual hard numbers or not, quicker. And with something like loss of revenue, because of something that’s less tangible than damaged inventory or lost inventory, like that strikes them as tangible, in ways that a suspension appeal doesn’t because a lot of sellers think, oh, account health reps or seller forums or XYZ source is giving me the tools to write a suspension appeal. So that’s more like, kind of like soft skills. Let’s say that they think they can absorb versus inventory is getting lost. Inventory is getting damaged. You know, that’s a tangible cost of doing business that they can actually see a damaged product when it gets back to their work.
[00:07:54] Leah: Yeah, I guess it is. It’s just more front of mind, but I mean like same thing I’ve also seen people worry about cost centers, not realizing that it’s also a profit center, I’ve worked with sellers who were like well, we can’t buy more inventory because our cashflow isn’t good. So we’re just gonna buy less inventory and then go out of stock. But then you can’t make any more money because you’re out of stuff.
[00:08:19] Chris: It’s self defeating. But how many sellers are out there doing their own ads? Like just to use the ads part again.
[00:08:25] Leah: I think there’s probably a good amount. There’s certainly a lot of software for doing it yourself with this software. So, I imagine there is a good amount of people doing their own ads.
[00:08:32] Chris: I’d be curious to know how many people do their own ads and do it with the DIY software for a while and then they bring somebody in who knows the area a lot better than they see the results and then they’re kicking themselves for not hiring earlier.
[00:08:44] Leah: Yeah. I mean, that happens all the time. I mean even doing your own bookkeeping like I think hiring a bookkeeper was like the best decision I ever made. It was one, I hated doing it. And to like now, like, know exactly what’s happening with my finances and my time is better spent elsewhere.
[00:09:02] Chris: Yeah. That might be the best example, bookkeeping. So I mean, just again, we hear from a lot of people, the reason we’re talking about this so much now is because we hear from a lot of people who use, I don’t know if I’m going to say excuse, but they give the reason of I’m a small business so I can’t do what you’re suggesting and what we’re suggesting isn’t necessarily about reinstatement appeals all the time. We’re just talking about quality control, right? And even at the Seller Velocity Conference we had Sajag speaking about better quality control, operational things, due diligence, not just about suspended this or that, but you have to think in terms of not, well, I’m too small for that and it costs money. Amazon doesn’t care how small you are. If anything, over time, they’re more and more hostile as Senator Warren’s hinted or said without hinting. They are making life more difficult for small businesses, small sellers. So you have to kind of absorb that reality.
This is kind of where I got the idea for this podcast today. When you’re appealing to Amazon, you don’t lead with well, we’re a small business so there’s only so much we can do. I mean, people are still saying that in the first few lines or the first bullet of their root causes or the first POA plan of action solution, they’re still saying that heading into 2022.
If you get nothing out of this podcast today, other than this point, Reinforce the notion that you have to stop writing that in your appeal, because all you’re doing is giving them a reason to say no to you. You think you’re giving them a reason to give you another chance. And I think that’s basic human psychology on some level that we all want to appeal to the better side or the better half of someone’s human nature. But that’s not what Amazon is. With Amazon, you’re giving them an easy layup denial when you say but we’re small and we can’t do that yet. Or we can’t source better, or we can’t hire a new quality control company, or we can’t do XYZ due diligence in a different way because of the cost.
[00:10:57] Leah: All that’s telling Amazon is that you’re not ready to sell on Amazon.
[00:11:01] Chris: Or that you’re not ready to be re-instated for that particular product if it’s just that one listing. But you’re standing up and waving to them and you’re showing them red flags. Like, I can’t do what you’re asking me to do or I can’t do what you’re expecting me to do because I’m small. That’s the exact opposite of what you want to tell them.
[00:11:22] Leah: Yeah. And I think, just going back to the mindset of it, I think the main thing to think about is not how much this is going to cost. It’s how much is this going to cost if I don’t spend that money now, because things like due diligence can cost a whole lot of money down the line whether it’s legal fees or fines or whatever the case may be.
And again, like we said before, how much is it going to cost in lost revenue because you didn’t do something as well as it could have been done. I am certainly not advocating that you just pay for everything to be done for you, but there are certain areas where it is absolutely worth the investment to hire somebody or implement a new way of doing things. Whatever the case may be. It’s very important to think about not the cost, but the cost of not doing it.
I mean, some people are hiring other companies or agencies to do everything for them, but they’re hiring poorly. And that’s kind of a story for another time in another podcast.
I think there should be a differentiation or better differentiation between a management company and a full service company, because those are two very different skills.
Like one managing a business is not the same as doing every single little thing in a business and the most successful ones that I see are the management businesses because they know when to outsource for better quality and they know what should be being handled at any given time versus an all in one company that’s like pay us to do this and pay us to do this and pay us to do this. Not actually looking at the needs of the business.
[00:12:59] Chris: Without the value-add being that well-defined, it’s really just convenience that they’re selling you at that point. And when everyone’s busy, of course, convenience is appealing. So thank you for setting up a whole other podcast.
We’ll close with this, because we started talking about our backgrounds in small business. I mean, e-commerceChris is a small business. Back in the early days, six, seven years ago, I was a one man show. I understand what a brand new small business looks like.
You worked at startups. You’ve worked in e-commerce for 10 years in a variety of small businesses. You’ve owned small businesses. You’ve owned multiple businesses at the same time. We’re not unfamiliar with that. We’re not coming at Amazon consulting from only having worked at fortune 500 companies.
In fact, Amazon is the only fortune 500 company I’ve ever worked on, I think. So we’re familiar with that and we love talking with e-commerce entrepreneurs, even outside of the Amazon context. So we’d love to hear your background, your stories on this particular topic. Do you think of yourself as a small business that’s ready to grow or already growing into a medium sized one? Or are you playing it conservatively and kind of small business, small minded where we’re too afraid to think about ways we can make ourselves grow better or quicker because we think that’s a kind of a small world of mindset and that’s fine if that’s what you’re comfortable with but it’s not so great for Amazon.
So thanks again for listening in and we will catch up with you next time on Seller Performance Solutions. Talk to you later.
Hosts & Guests
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