Episode 38: E-commerce – Product Selection and Sourcin‪g‬

Episode 38: E-commerce – Product Selection and Sourcin‪g‬

I have a very different approach because I look for products that make that 20K a month, 30K a month, and then, I like to reinvest the profits, and then scale by having a range of products. 

Susanne Mariga:Welcome to the Profit Talk Show. In this show, we’re going to explore strategies to help you maximize profits in your business while scaling and creating the lifestyle that you want as an entrepreneur. I am your host, Susanne Mariga. I am a Certified Public Accountant, a Certified Profit First Professional, and a Certified Tax Coach. Today, we’re going to talk about strategies to help you maximize profits in your business. 
Susanne Mariga:Hello, Profit First Entrepreneurs and Thought Leaders. I am so excited today because we have a special guest. Her name is Laura Buhl and she is an E-commerce Consultant. She’s also the founder of E-commerce and FBA Boss Babes, which is a fast-growing community for female entrepreneurs and E-commerce. And, what Laura does is, specializes in helping businesses build six, seven, and eight-figure businesses that sell their products to Amazon. And today, we’re going to talk about a heavy product discussion and how to do product research, how to do product sourcing and how to make sure you are really going to be selling a profitable product. Please join me in welcoming Laura to the platform. Hey Laura, how are you?  
Laura Buhl:Hello. Thank you for having me. I’m very excited to be here. 
Susanne Mariga:Awesome. So, tell me, how did you get into this industry? How did you find that this was a problem? Tell us about your journey.
Laura Buhl:It started many years ago. In 2013, I was a new mom and I decided to start my own e-commerce business and totally flopped. That’s how I got started with e-commerce with a website and started to sell baby toys and it didn’t work out until the moment that I figured it out people actually sell on Amazon. Then I got really obsessive about it. I really thought that’s such a great thing like I was a buyer, but I never realized that people were actually selling on it. And yeah, that’s how I got introduced to the e-commerce world. Then, the rest became history as time has gotten.
Susanne Mariga:I love it. So, tell us, obviously, for our viewers and listeners that are manufacturers we’ve had to pivot in COVID-19, we’ve had to pivot and a lot of us had to go online and some of us we’re even just starting businesses that are manufacturing products. So, the question is, how do we do product research? How do we source these products, and how do we find profitable products? 
Laura Buhl:There’s that demand, you need to find a market, you need to have a better value, and then you need to be able to drive traffic, and the way to drive traffic if you sell on a marketplace, for example, like Amazon is, by going for products that have less stronger competitors. You don’t want to be competing with sharks like those big, big brands with 20,000 reviews.  You want to be going for those products that do have some competitors. It’s important to have some, because if there’s no competitor, it’s an odd thing, we might not be actually buying this. But, you want those competitors to not be that strong. And, that’s the approach I always go. I always do those three things. 
Susanne Mariga:I love it. Don’t get stuck in becoming a commoditized product. So, make sure that you stand out, and if there’s a few competitors, make sure that you bring it to market in a way that just beats everybody else. I absolutely love that. So, how do you research that? How do you make sure you’re positioned in that way to be able to do that? 
Laura Buhl:I started with a very simple search and that’s really on the Amazon page. So, whatever product niche that I find could be interesting, I started by just looking at what’s already there. Do I see big brands that I know? Is there an immediate recognizable value add that could be added like the colors, it could be like a bundle, offering a bigger set, things like that. So, I was trying to understand if at first glance I can already recognize if there’s something in there. Then, I used software, the tools like helium 10, it’s a very known tool, which is incredibly powerful because it gives you the chance to actually see how many people are searching for the keyword every single month. So, when you know what people are searching for, you can calculate demands and you can also see how much your competitors are making. 
Laura Buhl:So, when you have that information of what the revenue is of your competitors, how many people are searching for it, you can come in with a lot of data, and that data can really predict if this is going to work out and not. So, it has become really, I would say, safe to get started nowadays compared to like 2015 and so on, when there was no such data out there, you could only calculate if a product rate made sense by looking at the review count and looking at the bestseller count and making a calculation. If that is within the five percent of the whole cut, it was really complicated, and it wasn’t as effective as these days with those tools. It’s beautiful.
Susanne Mariga:It’s amazing that those online tools are able to provide now that weren’t there, even five, 10 years ago. 10 years ago, the internet was barely starting to get fun. But yeah, helium, that’s a good one to check out then. That’s good to know. So, what about this product sourcing, for those that are not used to the product world and for, at least knowing the sophisticated terminology of the product world, what is product sourcing?
Laura Buhl:Product sourcing basically means that you find a factory, a manufacturer that can supply you with a product that you want to be selling. That depends if you want to be selling an already existing brand so you would become a wholesaler, or if you are going to sell an existing product just with your own brand and you become a private label seller, which in these days, one of the most lucrative ways to sell products because you can say something that has already proven itself on the market. People are liking it and you just add your own brand to it. So, you can build a whole brand around, let’s say skincare, and have existing factories and laboratories create formulations for you and you just use your own branding. So, in the beauty world, actually private labeling is very known and used a lot. 
Laura Buhl:So, even if we go to a shop, even next to it, for example, you will find that even the different brands are often produced from the same factories. So, on Amazon or in e-commerce overall, you will find that a lot. If there’s a product that you find that you’re interested in or a niche you would like to go into, if you’re looking to source, you would then start to look for resources that are openly available like alibaba.com. It has a famous page where you can search for manufacturers. You just type in the sort of product that you’re looking for, and you will find a whole list of different suppliers, mostly in Asia, but you will find other countries as well. And, then there’s a lot of alternatives to Alibaba, which is like the search engines for all around the world. So, you can get manufacturers from the US, from Europe, from India, from Vietnam, I mean, everywhere in the world where there are incredible suppliers. And, of course, there are advantages and disadvantages to buying from certain places or not. That’s the beginning stages of sourcing, doing your research where are the manufacturers.
Susanne Mariga:I love that. So, are there better places to source than others? What would you suggest in terms of honing because obviously, even if you’re private labeling, you want to make sure that you’re bringing yourself to market in a way that it is the best. So, is there a way that makes sure that you pick the best person or best company to represent you in terms of being able to produce your product?
Laura Buhl:Yes, but I like to go outside of Alibaba. I like to be sourcing where others often are not sourcing because of oftentimes laziness. So, I like to go a bit of the extra mile and find manufacturers that are not that easy to find, because that puts me into a competitive advantage. People are not going to copy that quickly. And on the other side, I’m going to often find products that are not yet available in a way that I then, or the customer is going to bring it to the market and it can be very strategic that way. So, I like to go about that. Also, sourcing locally can be a great, competitive advantage, especially because it gives a lot of perceived value. The customer, like the American customer, likes to buy American-made products a lot.
Laura Buhl:Also, the European customer likes to buy European products a lot, or the other way around too. The European likes the American-made and American likes the German-made, for example. They find there’s this attachment to, like a perceived value, higher value, compared to made in China, for example. That can be a strategy to go that it can be very, very effective. Oftentimes people think that it might be really expensive to go that round. It doesn’t need to be really that much more expensive, especially if you consider shipping because you don’t need to be shipping from all around the world. So, it does make sense to look closer as well when you do shop around for a manufacturer. 
Susanne Mariga:I love that. That’s very true because you’re right, it depends on the item. If I’m buying, it just depends on what you’re buying exactly. But, if I’m buying pharmaceuticals or some type of cream, maybe I want to get a locally sourced product. There are certain things, certain items that you want to buy that depend on where they’re from and the purpose, and there should be a perceived value with that, too. So, you’re absolutely right on that. Now, where do you see sourcing go wrong in the manufacturing business?
Laura Buhl:It goes wrong a lot of times when sourcing from overseas and there’s no proper sampling, there is no process of actually having a checkup on a manufacturer. Have all your stock before have it sent to you or to a warehouse, it needs to do some inspection. There are specific inspection companies that have businesses overseas and are producing in China, for example, to oversee the whole production and to make sure that the quality that was agreed on is actually what you’re going to get. Buyers that want to save that money often have trouble afterward when they’ve received the order and they see that half of it isn’t really in the quality that they’ve made, that they wanted. And, that can cause a lot of issues with the customer, like returns, bad reviews, and so on. So, that’s one of the biggest issues that you want to avoid right from the beginning. Have an inspection company that doesn’t even have to cost you a lot of money. For a few hundred dollars, you get a really good inspection company that is going to check up on that. You just need to be careful on that too, that you don’t have a corrupt inspection company that is going to get paid. 
Laura Buhl:So, it needs to be a very independent inspection company and there are plenty of those there that can help you for a few hundred dollars. And, it’s a really good investment.
Susanne Mariga:I love that. So, make sure that you hire an inspection company just for quality control. Making sure that things don’t go wrong with what you’re doing, of course, you gotta pay attention to the local politics, too, because in certain countries there are certain ways of doing things, and you want to make sure that you, at the end of the day, it’s about serving your end-user and serving your customer and keeping quality in order to keep your brand and to keep it well-positioned. I absolutely love that. And, Laura, I want to just hack your brain for just a moment for your expertise because you know we’re a Profit First channel, and so, we’re all about the profits. We don’t lie. We don’t pretend, we are all about the profits. What can we do to make sure that we get the highest margins on our profits and really build our profitability? 
Laura Buhl:That’s a very good question. There are different ways to go about it. A lot of people want to get started in e-commerce and they are searching for a product and they already have a bit of a budget. They usually lookout for the big winners, the products that make a hundred K a month. I have a very different approach because I look for products that make that 20K a month, 30K a month, and then, I like to reinvest the profits, and then scale by having a range of products. The thing there, what you get is that you do diversify a portfolio. And, what we find with the customers is that your profit margins increase a lot because you don’t have that dependability on a single product or a single smaller brand, but you have been branching out in all these different directions. 
Laura Buhl:Even within a brand, you can do that, but I’ve seen that those businesses scale really quickly and have a long-term, healthier profit margin. When we look at profit margins and selling on Amazon, for example, we always look at around 30% to 40%, which are really pretty high-profit margins compared to a lot of other industries. When you look at the return of investment as well, we also look that we get a hundred percent return of investment every time we get into a new product. So, profits are very, very important and it’s the way that we can get to really scale, and that’s how businesses can get scale pretty quickly from six to seven and so on. 
Susanne Mariga:I love that. That is really good about diversifying your portfolio in order to scale, and then just continue to reinvest to add more products. Here in Profit First, we’d like to pay attention to something called the Pareto principle, that 80-20 rule where you’re looking for the product that takes 20% of your effort but produces 80% of your bottom line.  That’s what we’re looking for.  80% of your margin in the case of a manufacturing company. Sometimes you have to experiment a little, and invest in different products in order to find which one is going to be your real one that you want to really start focusing on diversifying with. So, that is really great there. 
Laura Buhl:Well, the thing is, the bigger your product is going to be, you often have issues with hijacking and all that stuff. So, that’s why it’s nice to stay a bit under the radar, so you don’t get those issues with Chinese copycats or whatever and there’s like a lot of that, too. But, you can use that 20-80 principle as well as automating it with a team so you can, at some point, be really semi-passive with that business because a lot of processes can be just automated and you can have a simple, small team of virtual assistants that can take care of most day-to-day tasks because the strategic part is temporary I would say. 
Susanne Mariga:I love that. You’re right, when you’re sourcing, they’re really responsible for the day-to-day and the quality control. So, if you’re hiring overseas quality control inspectors, that’s totally like massive income for you from that standpoint. That is magnificent and a great idea, too. Now, Laura, in terms of getting on Amazon and positioning your product so that it’s known and able to be found, do you have any tips surrounding that? 
Laura Buhl:I do. We want to understand what Amazon is trying to achieve. They want to have customers that spend a lot of money that are happy. So, at the end of the day, they’re always tactics to get a better ranking, but the only tactic that is always going to work long-term is going to be a good product and being value-driven. If you bring value to your customer through your product, even if you’re not good at ranking and doing all those things, at some point, you’re going to get there. Of course, if you now have the support to do the ranking part as well with keyword optimization, and you have a great product, that’s how you’re going to succeed in the long term because you are then in alignment with the goals that Amazon is having as well. They’re happy to promote you if you perform well. 
Susanne Mariga:I love that. There are times that I order something from Amazon and I get this little card in the box that says, “Hey, if you like my product, can you go ahead and give me a review on Amazon? And by the way, if you don’t like my product, make sure you call me directly.” That’s what the little card usually says on the inside of the box. 
Laura Buhl:Yeah. Although that’s not really allowed, a lot of people do that. 
Susanne Mariga:That’s funny. I didn’t even know that it was not allowed. That’s a great way of keeping the ratings up though, I guess. So, Laura, as we close out today, one of the questions I’d love to ask is, what would be the one piece of advice that you can leave our viewers and our listeners, it can be personal, it can be business, it can be anything. What one piece of advice would you leave our viewers and listeners with today? 
Laura Buhl:I would say to just do it, really. I find in personal life, or even with customers that there’s this hesitation of going forward with a certain plan or daring to go into this new brand or let’s start to sell on Amazon, or let’s start that thing that I wanted to do for a while. So, this year has been so unpredictable for everyone, but I think something that I have really learned personally as well for myself is just doing it. Just going for it. 
Susanne Mariga:You guys heard Laura, just do it. Nike, just do it. Get started. Stop waiting for next year. Next year we will have different situations, so just do it. 
Laura Buhl:Exactly. We don’t know. Everything is unpredictable, but something that has been really good for the e-commerce world this year, at least it has grown tremendously. So, if you’ve been waiting to do this, now is really the time. Just do it.
Susanne Mariga:Exactly. And, everybody has gone e-commerce now. How we do business just within the last six months has just completely changed. Those bricks and mortars, you have to find new ways to sell where no longer going into the stores to buy. Everything’s happening online.
Laura Buhl:Yeah, for sure.
Susanne Mariga:So, Laura, as we close out today, how can our viewers and listeners contact you? How do we find you so that we can work with you? 
Laura Buhl:You can just email me at hello@laurabuhl.com and you can find my Facebook group on Facebook. It’s E-commerce Boss Babes. 
Susanne Mariga:I love that. E-commerce Boss Babes or hello@laurabuhl.com.
Laura Buhl:Exactly. 
Susanne Mariga:Perfect. Thank you. And, I’ll also put that in the show notes so that you guys can go ahead and click on the show notes to contact Laura directly for that. Thank you so much for coming on our show and sharing your wisdom and knowledge with us.
Laura Buhl:Thank you so much for having me. It was really a pleasure. 
Susanne Mariga:Thank you. 
Susanne Mariga:I want you to have your most profitable year ever. Yes, no matter what’s going on in the economy, no matter what’s going on in the world, you can have your best year ever. I want to show you how. Join me in our private Facebook group where I will be hosting our Free, Yes, I said FREE Profit First Masterclass on Facebook. Please join the Profit First Master Class with Susanne Mariga. Again, I look forward to seeing you there and watching you have your best year.

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