What Makes a Sustainable Amazon Business With James Thomson

Whether you are buying or building an Amazon business, you want it to be sustainable. There can be a lot of mystery around buying or building an Amazon business and what worked in the past may not work today. To explain the difference between a sustainable Amazon business and an Amazon business that is not sustainable, we brought in an expert.

In this episode, Mark interviews James Thomson. James spent five plus years at Amazon. He was business head of Amazon Services and the first FBA account manager. He is the President and co-founder of the PROSPER Show a seller education organization that shares best practices for online businesses. He is also a partner at Buy Box Experts a marketing agency for Amazon sellers.

James is an extremely smart and trustworthy guy. We do business with a lot of intelligent people, but he really stands out. Mark asked James what he would look for in a business if he were going to buy it, and how to build an Amazon business that would be sustainable. We talk about the importance of continual product creation, and how it’s much tougher to be really good at selling on Amazon than it used to be. We talk about the importance of having a brand beyond Amazon, the importance of having more than one SKU, and so much more.

Episode Highlights:

  • James introduces himself and talks about what he learned at Amazon and how he is on the other side helping sellers now.
  • The number one problem FBA sellers have now is not paying proper sales tax on the orders.
  • Many states are getting aggressive about auditing sellers. The state of Massachusetts is suing Amazon to get a list of the FBA sellers.
  • The sales tax amnesty program allows sellers to come forward and to start collecting sales tax and back taxes are forgiven.
  • To be successful on Amazon every seller should understand what their profit and loss is on every skew.
  • Look at the data and see what your return rate is along with right off cost and acquisition cost.
  • Understand your overhead cost things like heating, shipping, warehouse, employees, etc.
  • Ask yourself where your competitive advantage is coming from. With Amazon there is no limit to the amount of competition you can have on one skew.
  • A lot of sellers source exclusively for one particular brand.
  • Private label brands are another common method. You can make a lot of money, but you have to be extremely disciplined.
  • Sellers must excel in operational discipline. You must have a daily, weekly, and monthly process. Inventory, data, and making adjustments and course correcting.
  • You need to know how to create amazing Amazon listings and to bid on great advertising rates. Know how to play the Amazon game.
  • The importance of building outside traffic such as Facebook traffic.
  • Put a value on your social media following because that is the secret sauce to drive traffic to your listing.

Resources:

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