How To Sell Your Amazon Business For $600,000 | Amazon FBA Success Story // THE TOM WANG SHOW EP. 24
Had I said no to this offer. I would've probably had to wait like a week before I booked more calls. And then my listing would have been up for like three weeks.
At that point, I think it was live for like 10 days when I got the offer. That's still like, okay. I don't know by everyone else.
But to me that's extremely fast. Like literally you posted it. We have four inquiries and the fourth guy who was just like, here's half a million dollars, there you go. Or like here's $600K like take my money. Um, that's I think that's just goes to show what's going on in the marketplace.
I think a lot of people don't know, but, uh, there is a huge demand for Amazon brands, like an insane demand for Amazon brands. Right now, I trust that life will take me to a better place based on the action that's taken today. Hey, you're about to watch a in-depth interview of how Daniel McGill, who's only 24 years old was able to sell his Amazon FBA business for $600,000. He didn't go to college.
He's just a normal kid. In fact, I actually met him at a WeWork event. It was my very first Amazon event that I held in Vancouver and he just happened to be working at a WeWork. So he didn't even know the actual event that was going to be there. And then from there he attended the event. Uh, we connected.
We actually became friends and he was also a mentee and a student. He helped me out with, uh, some of my local events by literally folding chairs and putting away chairs. But anyway, I'm so proud of him. So happy for him. He's so young and he's able to share with us how he was able to go from again, zero to $600,000 as his purchase price.
He was able to sell his Amazon FBA business for that much. So I really hope you guys enjoy this, this interview. In fact, this interview will switch things up. I'm not the one who's actually interviewing Daniel. It's actually by Stephen.
So let me know who you like better. Is it me? Is it Stephen? If it's Stephen, Hey, maybe this will be the end of the Tom Wang Show, start of the Stephen Zhao show. But anyways, I'm just kidding. Anyways, guys, sit back, relax.
Enjoy this interview. Hit the thumbs up button, subscribe to the channel, comment something down below, and I'll see you guys in the next video. Let's get started guys.
So I want to give a quick introduction here to everybody, uh, to Dan. And of course, we're going to dive more into Dan's story. And while we're telling a story, he's going to be able to share a lot of practical advice in terms of starting this business and from the outside, it's always, it always sounds easy, but once we, whenever we hear, have you guys heard Tom's latest video on YouTube about how he started Sdara? If you watched that, then you know that there's always ups and downs, right? So we definitely want to hear about some of the ups and downs that you probably have gone through as well, Dan, but, um, Let's get into it. And at the end, we're going to save time for Q & A. Okay? So I want everybody to have a realistic picture in terms of what it's actually like to run this business and hear it from someone who's been there and done that himself.
Okay. So just to give you guys context, welcome everyone who's jumping on. This is live. We are just getting started. You haven't missed anything at all, but welcome.
Welcome. Welcome. We're just getting started. So we have Dan McGill here.
Dan is a young man. He started his business back when he was 21, 22. He's now 24. And in a very short period of time, he grew his business from zero to $10K $20K $30K. And eventually he hit $50K a month consistently with just three products. And now he sold his business for $600K from what you'd share with me, Dan, earlier, you said that, uh, the ca- the buyer basically made an offer on the first call.
He was so excited that he made an offer to you on the first call. And with that money, we live in an expensive city. We live in Vancouver. So if you guys don't know, Vancouver is really damn expensive, uh, but Dan was able to move into a new place. Congratulations, Dan, thank you. In Kitsilano, which is a great, great area.
So without further ado, everybody give Dan a warm welcome and let's get into the interview. All right. So Dan, uh, let's take us back were you always, growing up, were you always an entrepreneurial kid? Were you like the classic guy that you hear? Oh, I was selling lemonade, yada yada, yada, I would say it kicked in like when I was maybe 17 or maybe a little bit later than that. So it wasn't like from an early, early age, but at some point I was like, okay, Shoot, you know, I need to make money. Um, I want to buy a car, you know, my friends are buying cars.
I need to make money. And that's when it kinda like kicked in, but it wasn't like super early. I wasn't someone who had like a lemonade stand or something, but not like Tom, all these like sites told me to start selling pens in his class when he was like seven years old. Yeah.
Not that extreme, but there was like, yeah, when I was like 17, 18, I was like, that's what I wanted to, uh, get into starting a business, uh, e-comm making money. What got you into e-comm? Was it was Tom at the beginning? It was just some random guy on YouTube. And I think he was just trying to sell me like these courses. Like, it was just all like affiliate links and stuff, but he, like, I was, I would watch this guy on YouTube and he would make it seem like so easy. Like, oh, you can just write an e-book and then it'll make you like $20,000 a month. And he got me like super, um, excited about e-comm.
So. But I don't know if he was just trying to like sell me a sell me stuff, but it got me super interested in this space. And then I started meeting people who were actually like, you know, making a full-time income, including Tom, just like doing e-commerce.
And that's like, what got me really interested. Really cool. How did you meet these e-comm people? When I started making a little bit of money, I got an office share at, uh, at WeWork, which is, there's been a lot of controversy around WeWork, but, uh, when they first came to Vancouver, um, when they first came to Vancouver, I signed up and I, and I actually met Tom through. WeWork cause he was doing like a presentation there and that's where I first, uh, met Tom. And then after his presentation, I just went up and talked with him about, about Amazon. Cause I was super curious about how that whole process works and I just hadn't really met someone who knew it like inside and out.
So went up and talked to him after his presentation. You just went up to him. And then what was the first thing you said? Do you remember? Hey we have to make money. Yeah, I was just, I think it was just some random question about like freight forwarding. I was like, Hey man, like I have a product idea. I just have no idea how to ship it into Amazon.
And he was like, join my Facebook group. And I was like, okay. And then, uh, yeah, that's how I, I talked with him for a little bit. And then I, he was looking for like an intern, like a summer intern type thing.
And, uh, I volunteered, um, and that like really helped me learn the whole process. That's good. So you went out to him and you actually, a lot of people don't have the balls to do that. Right.
But you, I guess you were pretty clear what you wanted and he seemed like someone who can help you. What happened after that? After that? Um, I would just kind of like go over to his office or to his apartment and just, he was kind of like, just teaching me like how to find products, how to. How to do, uh, because originally I was, I was just helping him like with product ideas.
So he gave me like this big criteria of like what to look for. Um, and then I just was using like viral launch helium 10 to like, make a list of like all these different products and just trying to like, um, find products that, you know, I thought of, or, or just like had an angle on and so helped him with that. And then, uh, that was kind of what I was doing for the first month. And then eventually we ended up launching, um, a product and we were, um, gonna start an entire store around this certain niche. Um, I don't know if he wants me to disclose the product, but I think it's fine.
It was like the product, the first product we ended up launching was like a set of rose gold cups, which was for like parties or something like that. Or, you know, Very cool. Very cool. So this was even before you launched space sales, your brand.
Yeah. Yeah. Cause I had no idea what the process was like. So I was like, okay, I'll work with Tom. Um, kind of learn the process from him, um, launch a product with Tom.
And then once I kind of understand like the ins and outs, then I'll take a crack at it myself. Cause I didn't want to launch something and then have like no idea how to get it onto page one. Right. So I just was kind of waiting to see what would happen. Um, but yeah, I ended up both, uh, the rose gold cups. I think they were selling like $16K a month, uh, when we launched it.
And then, uh, shortly after I launched my first product, which was, uh, a set of a hundred, like basically weed baggies and uh, that product did like $13K a month pretty quickly. So it was, it was lucky that my first product was, um, profitable, because I didn't have that much money in the savings to launch a second product. So the first one kind of had to be a win. Yeah. How much did you start with? Cause you were a student back then. Right? I wasn't a student.
I was just kind of, of trying to do like a dropshipping store and that was making some money, but not a lot. And I had to like, you know, pay rent, pay car insurance, all that stuff. So I needed, um, I needed my Amazon product to be profitable. Otherwise it would've been kind of screwed.
Um, I, I, the first round of inventory I think was like around five grand. Um, but then I had to like reorder again. So I'm not a hundred percent sure the total investment, but it wasn't super expensive because with weed packaging, it's, it's pretty cheap to manufacture. Like each little baggie was, um, like 2 cents. So instead of a hundred was, uh, $2.60.
So, um, Not super expensive. Uh, and the good thing was the profit margin was really high. So I was able to get my money back, like pretty, pretty quickly after it started selling 60 grand. And how much, uh, when you say profit margin was pretty high, uh, what profit margin were you selling at? The color that I launched of the packaging. Wasn't actually on page one yet.
So when I ranked it, I was the only person with that like color. So I had, I was able to get like a ridiculous, um, profit margin. So like, it must've been like 60% profit margin for the first few months just because nobody else was selling that color. And then as people started to copy it, that's when I had to like lower the price a little bit.
And, um, the profit margin was usually always above 40%, which was, uh, which was really good. That's solid. That's really solid.
I mean, 60% is really damn good, but 40% is still really dang good. Uh, hello, Tanya. Hello? Melody. Melody. Yes. Uh, Dan, you launched the gold cups with Tom, right? Uh, Melody's just saying that, you know, Tom also launched, you launched it together with him, correct? Yeah. Rose gold cups.
I'm not sure if he launched, if he launched gold ones as well, but the ones we did was, yeah, that was really cool. That's great. Okay. Sorry.
Got distracted there. But the, the margin, so you're saying that, you know, started off a little bit higher as more competition came in. You, you, you had to lower it a little bit, but it also always sitting around 40%. That's really good. And then what happened after that? Did you, were you just like, okay, I'm going to launch way more. Weed baggies.
Uh, did you go into other, I dunno, weed products. What, what happened then? Yeah, just bigger sizes, different colors, variations, just kind of like went down the list of what I could expand with. Um, and then at one point I was like, I don't know if I want to sell weed packaging. I want to sell something like more, uh, useful to people. So I launched this, um, this back wrap with an ice pack in it.
So it can like help you recover faster if you have, uh, like back pain. Um, so it's like a backdrop with an ice pack in it and, uh, that product didn't do as well. Um, I think there was just so many comp so much competition for like back pain relief, uh, devices. And then, um, and then after that I just went back and I started launching like these shipping envelopes, which are like, um, it's like a fancy shipping envelope.
That's like aluminum. Uh, almost like aluminum foil material with, and it was like a gold color. So it was like kind of a very luxurious looking shipping envelope. And I think people really liked that because if they had like an Etsy store and they wanted to ship their jewelry, you know, it comes in like this gold, uh, envelope, which stands out for their customers and that product did really well.
How did you decide on that? Was it because the manufacturer also, it kind of sounds similar as a weed baggies. Yeah. They also made them, so I basically just reached out to the manufacturer because they were so solid, they were able to finish the orders within like 20 days. And then, um, so the lead time was super fast, so I just kind of went down their list of products and one of the products they manufactured were these like really nice high-end shipping envelopes.
So I ended up launching that and, uh, yeah, super, super good margins as well. Okay. So you went from baggy, weed baggies to shipping envelopes, but they're still kind of a similar, I guess it must have saved you a lot of time because, because it was the same supplier.
You don't have to, you know, rebuild the relationship or anything like that. They're already kind of like, you already have good rapport with them and stuff like that. Yeah. It's a relationship. Sorry. I think that's important for like a newbie, like to have a supplier with a lot of variety of product that you can also choose from.
Yeah. I would say if you can like find somebody who you can launch, you know, three to four different products with, um, it helps. Cause yeah, like it, we had a really good relationship. Um, I had a good relationship with the factory rep.
Like they would send me like Christmas presents and stuff. Um, yeah, it was good. What did you send them? Money, They buy you gifts and you just keep ordering from them. You know, I was always like looking for what else to launch with them. Like I would always be like, oh, send me, like, I would order samples of this and that and try and work it out because it was so easy to work with them.
Did you ever ask them, so did you ever ask them, Hey, what's selling what's hot right now and, you know, can you recommend other products for me? Did you ever do that? No, it was more like I would do product research with viral launch or helium 10, and I would find something that was really niche, um, selling really well. And I would just send them like a picture of it and the, the thickness and the dimensions and ask them if they can make, you know, this. Certain types of packaging. That was really cool. I feel like there's a lot of tips that you can share about, you know, building relationship with the supplier. Do you think that it's pretty important to have a good relationship with the supplier? Whenever there's an issue with the product or an issue with something they're just like on it way faster and, um, yeah, they just, it just makes life like way easier.
Whereas some suppliers that I've worked with, like they, if something goes wrong, like they don't really care and that like, I've seen both sides of it and it's just way easier. If the factory rep you're dealing with, like really cares about, about you and the products and, um, it just makes your life a lot easier. So if you can like, just try and build that relationship with your factory. So this one, this second product of yours also did really well. How come you think the one before that you were mentioning the backpack, right? The back? Um, oh, the back wrap. Yeah, the back wrap, how come that didn't do as well? It's like a very niche product, and like people have to have back pain in order to order it.
So the market wasn't as big. Um, and then another advantage that I had with the weed packaging products was that, um, because the quality was so good, like if people ordered it once and it was something that they needed for their customers, they would just add it to like subscription. And then, so that a lot of people were actually on like subscription for the, the packaging, which helped because if I ever went out of stock, the subscriptions would kick in.
As soon as it like went back in stock and it would help me to re-rank. So that's brilliant. Was that intentional? That was a strategic move you did? No, I didn't even, I didn't even know about, like, there were subscriptions on Amazon and then someone was like, oh, you should, uh, Add like discounts for people that subscribed and ordered every month. And so I set it up and a lot of people ended up, um, just getting it delivered to them every month automatically. Um, yeah, that helped a lot. It also helped when I sold, uh, the business.
Cause one of the things I mentioned in, I guess like the pitch to the buyer was, Hey, like there's all these people on subscription. And um, so even if the ranking drops a little bit, you still have like a base of people that are getting the product ordered every month. And I think he really liked that. That's a pretty cool tip.
Okay. So some products was subscription that also helps with your evaluation and when you're selling the brand. That's cool. Here's a harder question. How come? Okay.
So you basically, you were working with Tom or working on the rose gold cups, the baggies, and I'm assum-, I'm assuming he also helped you with the, uh, the back product. Right? Um, I kind of launched that later on. Like that was probably a year after I launched the weed baggies. So yeah, you use the same process though, right? Like for like a, of launching weed baggies and the back product. Why do you think that one, you know, if it's exactly the same product, was it just because the marketplace that it bombed? yeah, because the keywords for that product were a lot more competitive.
Like people would just be searching like back pain relief and you'd have some products on there that were like, had like 2000 reviews. So a new product that comes in, it's harder to stand out, even if the product is like completely different. Cause there's all sorts of different stuff for back pain. Like you have like these massagers and all sorts of stuff.
And who knows if the person's looking for an ice pack and there was keywords, like ice pack wrap, but then there's like, you know, different. Lots of competition. And the one that I sourced had like a compression component. So you could like adjust the back wrap to the perfect tightness with the ice pack. And it was hard to like advertise that on the main image, because you can buy ones that are just like this Velcro wrap around with a ice pack.
But it's, there's not that many that have a compression component and it's hard to like educate the buyer on that with just like an image, like on page one. So it's a bit harder, but it was still, uh, a really good product had like five star reviews and stuff. What would be some like lessons from that that you can share with the audience? So like, don't go with, stay away from products that are maybe that take more education on the customer part. Would that be one of the lessons? Yeah. Like if you're improving a product, um, that already exists, but you have to like educate people.
Like what exactly that improvement is. And it's like a little complicated than it's just a bit challenging, but then sometimes it can pay off too, because if you improve it and then people understand right away what the improvement is, and they can see that from page one, then you'll, you'll dominate a lot of the sales. It's just hard. It's just like, will people be able to see the improvement from your listing when they're scrolling down page one? Right.
Gotcha. So if we're going to make an improvement, then let's make sure that it's communicated through the main image right off the bat. And it can't be confusing if it's confusing, then it's going to make things worse. Yeah. Plus like, because I added the compression component, it probably increased the price, um, by like $10 compared to the other ones. So that's probably another reason why it didn't do as good as the other products, but.
Okay, so that one bombed, but you kept on going, you launched the, the Etsy packaging one and that one did good. What happened after that? Um, yeah, I just kept launching variations and then I started running into like issues with inventory restrictions. I'm sure a lot of people in this call have, have had that issue. So basically I sent in like a lot of inventory, um, before there was the restrictions and then Amazon started adding these inventory restrictions and it made it almost like impossible for me to launch a new product because in order for me to launch a new product, I would have to, you know, sell out of all my current inventory.
And, uh, it wasn't moving as fast as I wanted. So that's one of the reasons why I decided to sell this particular Amazon store was because of the inventory restrictions. I was like, didn't want to wait, you know, whatever four months to launch a new product, I was just like, okay, I'll just sell this one and start a new Amazon account.
Gotcha. Gotcha. So the inventory restrictions at that point, you already had, was there any other products that are doing really well that you had the Etsy packaging product, you had the weed baggies, any other kinds of products within this brand? Uh, so I launched a desk mat, um, and yeah. Yeah.
Cause I, I was just following this Instagram page, uh, which was basically dedicated to like home office setups. So people would like post their home office set up and like have like cool lights and like, you know, kit it out, like. Uh, desk system. And one of the products that I kept seeing on there was like these cool desk mats.
And I was like, oh, that'd be a cool product. Something that I would use. So I decided to launch that, um, and that product was picking up really nicely, right before I sold it. And that was one of the, the buyer was asking me, um, you know, which products had like more potential. And that was one of them because it only had like, sorry, how much was that one doing? Um, so it only had like 20 reviews and it was doing like $10K a month and it was, the sales were going up, uh, month after month.
Um, so I, I, I think that product probably could do like $30K a month. Um, but I sold the business, but that was like one of the, another reason why I think the buyer. Bought it was, he was seeing like, you know, this new product that was just launched, like picking up steam and, um, yeah, probably helped. That's really cool. Okay. So this one is picking up and then at this point, you're just like, you know, because of restrictions, you want to just start a new one, so you decide to sell, uh, what, what was going through your mind when you're selling or is it just like, did you have any kind of hesitation at all? Like, you're like maybe I should keep this and an open, another company start to start another Amazon brand, or we just like, you know, what time to cash out? What was the reason? It, um, so before I, before I listed it for sale, um, I opened another Amazon account, um, under my girlfriend's name and we launched a product on that account.
And then that product started doing pretty well. So I was like, okay, if I sell this store, I still have this other store that's making money. So I'm not going to be.
Completely not making like income. So I decided to sell this current store because of the inventory restrictions. Um, you know, I wasn't, I wasn't too sure how long those inventory restrictions were going to last, because this was kind of like, this was 2014, right? Like I saw Jen was asking inventory restrictions in 2021 COVID hit, correct? Yeah.
Yeah. So my sales actually spiked during the COVID lockdowns. Um, I'm not sure why, I guess people were like buying like stuff for food packaging. Cause some of the weed baggies were like, like decently big.
So you could vacuum seal food in there I guess. Um, but anyway, like the sales spiked, um, during the COVID lockdowns and then I was seeing like the sales starting to like drop off. So I was like, okay, I want to use this spike to get my evaluation higher. So I can sell, like during this, uh, record sales year, it sounds like you've had a, your track record for launching successful products is like, all I've heard that did poorly was basically the back product. Was there any other field products at all? Girlfriend's product did good. Your first product did good.
Rose cup. It's like, I'm hearing like four or five, like good products. And then the only bad one was basically the back product. Yeah. Some of the like weed packaging, um, some of the colors were pretty like stagnant.
Like they were still getting sales, but they weren't like over $10K a month in sales. Like I wh- I launched like a white color and like a gold color. And like, some of those colors weren't, weren't like hitting like big sales numbers, but they were still selling it just wasn't as, uh, wasn't as well as the other colors and sizes. So, but nothing like really, I don't think anything really lost money. Um, I guess with that niche, like as long as the quality of the packaging is good, like people will, will buy it if the reviews are there and stuff.
So what kind of tips do you have for people to have more like, if they want a track record, like yours, you know, a few, one product that bombed a few that are kind of stagnant, but mostly doing really well. Like when I launched the weed packaging stuff, a lot of the competitors were like, um, were like random brand names. Like I think the biggest competitor was called, like QQQ packaging or something. And so I was like, okay, I'm going to actually like, build like a, I'm going to actually build like, sort of like a cool sounding brand name.
So I called this Space Seal. I had like this whole like space theme, which was kind of like tied into the whole stoner thing. So it kind of sounded more like legit, um, Right. Cause like, there was people that were launching under like r-, like it's like they just like hammered their fist against the keyboard and like, that was their brand name. And like, that was like just like letters. Yeah.
So I think that helped, uh, cause then people would also like, remember the name of it easier I think. And, um, it would help with like reordering cause like if they can sort of remember what the brand name was and they can like reorder again easier. Um, did you, did you go through any kind of like branding courses or like pay a bunch of money for branding? How did you create the branding? I think my girlfriend suggested the name. She's like, oh, you should call it space seal. I was like, okay. Um, Yeah, I didn't really go through any courses or anything.
I just knew that because there was people that were just like letters, like, like TKD packaging. So I was like, oh, if I can just out brand these people, then I'll probably like, make better sales, right. One way of differentiation then. When you're in a marketplace where there's, you know, these competitors making money and they're not branded, then you should probably create a brand.
Is that what I'm hearing? A brand that, um, sort of like connects with the products a little bit. Um, and like that audience, like the audience who is like buying the products, like they can like resonate a little bit with the brand name. I think that like definitely definitely helps a lot. So let's go back to when you were selling the company. You had this one product that was still on the rise. Uh, you said that they also liked the reoccurring buyers.
Right? What else made this a, you know, a smooth exit because let's be real two years for business. Is that normal to be able to sell your business so quickly? Cause you don't, people usually want to see like a longer track record. Right now. Like there's so much demand for Amazon businesses that you can get away with just like one year of solid sales. Um, One year? Dang.
Yeah. I think that's the minimum for like Empire Flippers. Um, they want to see like at least one year, because I think like the buyers and they like understand like how fast moving e-commerce is and just because your product selling good three years ago doesn't necessarily mean it'll be selling good this upcoming year.
So if they see solid sales over like a year period, they can kind of. Like, know, it's, it's going to be still solid like a year from now. Right. Um, so, but yeah, I think that definitely helped like having the reoccurring buyers subscription. Um, cause I definitely pushed that hard and like the, the calls with the potential buyers, I was always saying like, it's a steady product, you know, there's not like a weed baggy is still going to be a weed baggy 10 years from now.
It's not like a niche that keeps evolving really quickly. Um, so that definitely helps. And then having like buyers who are just like, they don't want to have to think about shopping around, they just want to like buy it on Amazon, put it on subscription, get it to their business and sell it to their customers. Right.
So it's just, uh, once they're on subscription, like, um, I, I like, I don't think they cancel very often unless they're like. Not having as many customers. Right. Did you have like an Etsy or an Instagram? Did you have influencers shouting you out? Like where the biggest stoners kind of like Snoop Dogg is talking about space seals now No, just on Amazon, I tried to, like, I tried to like get the people who were subscribed through Amazon to subscribe to my Shopify store and give them like, incentive, like a discount, like, Hey, you're subscribed already.
Like on Amazon. Why don't you subscribe to the Shopify store? And I'll give you like a discount, but it was hard to convert people. Like most, most people just wanted to stay on Amazon. Um, so I just kind of stayed there and I never really, one thing I wanted to do, but never did, was to try and like cold call, like dispensaries or people that are like mass producing weed and trying to like sell them every month with this packaging. I never tried to do that.
Um, but that's something I probably should have done in hindsight. Uh, why, Why do you say that? To add to the valuation of your exit or, um, what was it for? Yeah. Yeah. And just to get like people that are buying like bigger bulk, um, on, on like a subscription, like every month, because a lot of the people that were on Amazon, like they were subscribers, but they were only buying like, you know, two to three sets every month. Cause they don't need like a huge amount.
Well, I guess some people did, but a lot of people were just buying like lower volumes on subscription. Whereas if I could get like somebody mass producing, uh, weed. I could like, you know, sell them huge quantities every month. And that would really add to the bottom line.
And then if I, when I sold the business, I could say like, you get these, whatever these contracts, these deals included with the, with the sale. But, um, what the buyer, when the buyer was asking like, Hey, how can I, you know, increase the revenue? I, you know, I was like, oh, I never tried doing this. And he, he liked that too.
So I was like, you're an excellent salesman. Like, you're great at selling your brand. You had so many of these value adds, future revenue, products coming up, reoccurring, right.
A real brand, all of these things added to, you know, selling your company for more. Uh, what else did you do to be able to sell your company for more? And so I also pushed that, like I'd only been focusing on amazon.com. I hadn't liked, I hadn't expanded to .CA, .UK, or like any of those marketplaces. Um, so I was kind of like, yeah, you know, if you want to increase the revenue, you can just send inventory into Canada, you know, Europe, Australia, whatever.
And, um, and you can like, who knows, maybe you can double the revenue. And so he was like, yeah, we'll do that. And, uh, but yeah, that was something I hadn't done prior to the sale. I hadn't sent any inventory into like .CA. It was just only focused on .COM.
No wonder they made you an offer on the first call. Like, if you were doing all of this yourself, if you had outside contracts, which you could have easily done, also launching from what I understand launching, or if you're on .COM launching on .CA, .UK, whatever. I mean, it's a, you have to start a new listing and you have to rerank, correct? But you have the supply chain, you have the branding, you already know that it's, there's proven demand, uh, et cetera, et cetera, et cetera. So like at least like 50 to 80% of the work is already done. Am I understanding that correctly? My, my thinking was like, oh, instead of putting in the effort to extend, expand to all these different countries, I should just launch a new SKU.
Um, but I couldn't because of the inventory restrictions. Um, but yeah, I think it also helped because like, had I extended to all these different countries and stuff, it would have been, you know, harder to like rank on all these different Amazon country, you know, pages and then logistically it would have been a lot more work to like send all these like shipments and all these different places. So, yeah. So it's a good pitch to like someone interested in buying your business, but, um, It's also a lot more work, but I think he had like a team of people that were going to take on that. Very cool. I think you did a great job on pitching this guy for sure.
So that's really cool. So you sold your company, how long was the whole process and, uh, yeah. How long was the whole process? Start it off with just like an email.
And then, um, I had to give them like API access to my Amazon account so they could like get the reports and everything. Um, and I also was doing this kind of like around Christmas, so that probably delayed things a little bit. And then once they kind of had the evaluation, um, which was, uh, I think they originally said 38x of like my monthly profit. Um, and then I pushed them. Yeah. Yeah. And then I pushed them.
I was like, can we get it up to like 41 X? Can we just list it at 41 X? Because, uh, it's like more subscription. Like I just wanted to get a higher, multiple. And they were like, okay, sure. We'll list it at 41 X.
Um, and then they started booking like calls with people. I think I did calls for like a week. I only did like four calls and then, uh, yeah, the, the fourth call or something like that was the guy who ended up making me the offer. And, uh, it was listed at 41 X and then he offered me 36 X and I countered him at 38 X of the monthly profit. So.
Okay. How much is that in terms of annual EBITDA? Like uh 38. Let's do some quick math here. I'm just curious. So 38 divided by what? 12.
Right? So that's three times EBITDA right around there. Yeah. Yeah. Like my average monthly profit was like around like $12,000 per month. Oh yeah. And you have, you have slightly higher margins too.
Okay. So it's probably a little bit more that's super cool. So they listed it and you say you have four calls within the first week? Like a week before Christmas. So I think part of me was wanting to hold off to sell it, but then this guy like made me the offer and I was like, oh, because they also said too, like the sales rep from empire flippers said, uh, he was like, yeah, you want to take, I dunno if he just said that. So he was like, you want to take like, usually like the first few offers that come in are the best offers.
And then as your listing stays up longer and longer on empire flippers, like people start to like. Low ball you and stuff like that. So he's like, if you get an offer quickly, like it might be a good idea to accept it.
And I don't know if he was just saying that, but I was like, okay, because they get paid based on the transaction closing, right? Yeah. They got a commission. Um, because, because it was so close to Christmas, um, had I said no to this offer, I would have probably had to wait like a week before I booked more calls and then my listing would have been up for like three weeks. At that point.
I think it was live for like 10 days when I got the offer. That's still like, okay. I don't know about everyone else. But to me that's extremely fast.
Like literally you posted it. We have four inquiries and the fourth guy who was just like, here's half a million dollars, there you go. Or like your $600K like take my money.
Um, that's really good. I think that's just goes to show what's going on in the marketplace. I think.
A lot of people don't know, but, uh, there is a huge demand for Amazon brands, like, and then sane demand for Amazon brands right now. Uh, so you sold the company and now you're working on a new brand with your girlfriend, is that correct? Yeah, I started another, so I have sort of like three Amazon stores on the go now. And my plan is just to like build them up until they start to plateau and then trying to exit, uh, do the same thing sell within the first week, putting it on the market. Yeah. Rinse and repeat. Cool.
Very cool. That's thank you for sharing all that. So is there, okay, now that you sold it, what's you got these three brands, anything else that you're working on? And what did you do with the money? So another thing I'm working on, or I did was like a Kickstarter, um, and that was for like a heated jacket product.
Um, and I think I wanted to do that just because I wanted to try like, Kickstarter, like I'd seen how well Bessie did you probably know about Bessie? Um, I was like, oh, that's super cool. I was super inspired by their Kickstarter, so I want to do something cool. Like, um, so I did a Kickstarter for that.
Um, and then with the money, like I bought a place here in Kits. Um, just use some of it for like a down payment and then I'm using some of it just to like launch new products on Amazon and then, um, just buy like some index funds and stuff like that, but not nothing too crazy. Like I haven't really, yeah. I did buy some crypto. Um, and then I bought like a, like a road trip van. So.
Super. Cool. Thank you for sharing that. And that's, uh, that's really cool. What I like about hearing about like Amazon, uh, brand owners who actually sell their company. I swear to God, 100% of the time people are just like, oh yeah, I've sold the brand, but I'm still going to sell on Amazon because it's like, that's where the money is at right now.
That's like literally a hundred percent of people who sell their brands. Uh, that's pretty cool. Well, the valuations keep going higher. Like I was looking on empire flippers and a lot of them are like 45 X, 48 X. So part of me wishes, I held on a bit longer.
But then with those inventory restrictions, like, it was just so annoying. I could, this was like, they didn't know what was going to happen. So it was like, you know, it was a good time to exit, um, a lot of uncertainty with like how. Right.
Everything was going to happen. Yeah. Well, thank you for sharing your story. Dan, let's dive into Q & A. I definitely want to spend, like at least 15 to 20 minutes on all the questions people have, so I'll read them and you can, uh, you can give us your expert opinion. Okay.
Jacob Sago, how did you meet your suppliers? What is your product? Okay. We kind of went over that. How did you meet suppliers? I mean, you went on to Alibaba, right? Any comments on that? So, because it was my first product that I ever launched on Amazon. I, uh, I ordered so many samples. Like I ordered probably from 20 different factories from Alibaba. And like, most people, they don't go that extreme, but I was like, no, I have to make sure that the, this is the best one at the best price. So I ordered from like 20 different factories.
Um, so I like really put in the effort to find the best one and, uh, yeah, paid off. You ordered 20 samples? Yeah. From like 20 different factories. So it was like, it was kind of expensive, but especially for something like so similar, like packaging, but then like once you feel them, like you can kind of like tell which one's the best quality would you recommend that for people to order like, you know, a solid amount of samples? I mean, it's a lot of work, but, but it's kind of worth it. Cause like, if you have the best factory out of like 20 factories, then you're probably going to be the best product on Amazon on page one.
Um, cause I think most people test maybe from like three different factories or something, um, twenties, like kind of overkill, but it definitely helps. Yeah. So this is an add on question.
What were the factors and criteria to help you choose a supplier in the end? Like the quality of the product, um, how fast they like responded to my questions. Um, and then like the pricing. Uh, was really good.
Um, I also, it was like a film manufacturer, not a trading company. I think that helped with the pricing. Um, and then like the lead time.
Cause some of the, some of the factories had like a really long lead time. Um, whereas this one was like 20 days. So like they just ticked all the boxes and they also had the best quality. So it was a easy decision. We also covered that in FBA masterclass, quick plug right there. Um, Ryan asks, what is your education? I went to BC it for like a semester and then I was doing like a finance program and I wasn't really enjoying it.
So I just dropped out. And so Nike is like a local college, right. For people who are pretty like hands-on compared to, to other universities. Um, I think Tom went to BCIT to right.
Yeah, there you go. You see it by the wind. So that's about it. And you dropped out, right? Yeah.
I have to do drop shipping, made some money, but it was pretty like up and down, like not stable. So you put in the work of course, and then learning from Tom at the beginning, take what you learn and just rinse and repeat. It sounds like, but it's learning from Tom just gave me the confidence to you. Don't put five to 10 grand of like my savings into it.
Whereas with something like dropshipping, like you can kind of get away with like really low investment, but then the downside is like it's so up and down and fluctuating and not steady. Whereas Amazon is a lot more stable every month is like sort of predictable. Um, Which is awesome. When launching products, should I stay within one niche or is it best to go into different categories? Anonymous attendee? Yeah, I would say if you're planning to exit, um, one niche is probably the best because when you exit, um, they usually make you sign a non-compete for like, at least two years. So if you're in one niche, it doesn't like you can launch a different product, um, and not have to worry.
Whereas if you have like eight products in all different niches, then you exit, it gets kind of like messy when you want to like start a new Amazon store. Um, so I would say like, try and just stick with one niche, just build the brand. Um, unless like the revenue is, is lower than you expected. Like sometimes you launch a product, the revenues lower, you know, maybe you do want to try different niche.
Maybe it's a lot more, uh, Profitable to be in a different niche, because there are some niches where the profit margins like really low. And if you just stick with that niche, you're just going to stick with a lower profit margin and it'll hurt your cashflow. What criteria did you use to identify products that will sell? First product? I wanted it to be like, sort of similar to what I was launching with Tom, because I knew like Tom knew what he was doing. Um, so because we launched those like rose gold cups, which was like this disposable kind of like one time use type thing. Um, you know, people don't, people like it, like people use it once and it, and cause then they don't like return it.
Right. So I wanted something like kind of similar and weed packaging was sort of similar, but still a different niche. And um, some of the products that I was drop-shipping before the Amazon. Store was in that like kind of marijuana niche. I kind of understood it.
Um, that's basically why I decided to launch those products. Um, but I would say if you're looking at niches, like trying, like you want to find something with a good profit margin, like faster lead time. Um, if it's your first product, maybe something that's not super expensive. Um, yeah, because with my, with the weed packaging, like it was $2 for a set of a hundred. So it was like pretty cheap to order a thousand units.
Right. Christina Garcia, Christina asks, what are some tips for starters? It's got two thumbs up, like, uh, recently I've been using like Pinterest a lot to find product ideas. Um, I think Tom covered this recently too, because with Pinterest, you have like people up voting, like what they like and that some of those like product designs or products aren't necessarily on Amazon yet. So you can use Pinterest as a way to like find new product ideas.
Um, so I've been doing that, like the product I launched with my girlfriend, we, we saw on Pinterest and then just found a factory that could make it. And, uh, it's doing really well on Amazon, uh, corny ass question... Do you think it's better to jump into college for business or join the class and learn that way? Um, it depends like what you're going for. Probably like, if you want a more steady job, maybe, uh, the college route, but if you want like the flexibility to work from home and, um, Travel and kind of like work from your laptop, which is what I wanted then I would say definitely try and start an e-commerce business and, uh, go with FBA masterclass.
Rachel, does shipping work, do I need to hire an accountant? Okay. I'll just answer this one. Uh, Tanya, you do not need to hire to accountants at first. Viral launch or helium 10? I'm pretty sure it's similar. Right.
Rudy asked me I prefer a helium 10. Um, just because I think it's like a bit faster and then I think they include like, or tools, but that's just my personal preference. You go Rudy. So helium 10, uh, for Dan, but I also know that Tom found all his products and did everything he did with Viral launch. With a business making $10K a month, how much money was implemented? Into costs and advertising, etc.
Yeah, I actually, I didn't run too much PPC, which is like Amazon's advertising. Um, I would just sort of like keep rebates, uh, at like do a few rebates a day and now I keep my ranking super high, so it wasn't too expensive. Like maybe like 500 to a thousand bucks a month was spent on, on marketing. Um, and that was really just to keep the ranking high. You can do advertising PPC, or you can do what would Dan did. If you were going to work on getting better at one thing when you're new, what would that be? I guess that's the question.
If I had to sum up it's like, if you're new, what's the one thing you should focus on? Ask Matt. He lands. Great question. Um, I think for me.
The thing that I can get to improve the most when I was first starting was like the listing quality. Like the pictures could have been better. The copy could have been better. Um, even Tom, like when I showed him like my first listing, he was like, he's like, dude, your pictures are shit. And I was like, oh yeah, you're right.
But it was still selling. So I was like, whatever, like it's making sales. You can't, you can't talk shit if it's maybe sales. Um, but yeah, like just making sure, like you actually hire like a good photographer, maybe somebody who knows how to like write copy, just to make it like super professional. You want it to be better than everybody else on the first page. Um, so yeah, I would say just focused on, cause I think a lot of people on their like first product launch, they, they want to do it as like cheapest possible.
They even tried taking photos like with their iPhone and um, I think it's worth just like investing in. And good pictures, making sure your listing looks like really good. And, uh, yeah, I think that would have helped me a lot in the beginning.
What's the why behind that? I mean, you're making sales already. Why do you need to spend extra money and costs? Because you can get, you know, more sales if you're, if it looks cleaner or if it looks better. And then, um, another thing that happened to me was because I was kind of like the first person to market with this particular color. I was like, I had the most reviews at the beginning. So I was like, okay, I'm just going to charge as much as I can, uh, for mine to get like the most profit margin. But then what somebody did was they came in like copied exactly what I was doing.
And then just undercut me by a lot just to get their volume of sales higher. So just because you have the highest, just because you can charge a higher price, doesn't mean you should, because you know, maybe if you lower your price by $3, you'll get twice as many sales coming in and. You know, you'll get twice as many reviews. Um, so it's not always the best strategy to just try and price as high as you can. Sometimes it's good to lower the price to get the reviews up and just leapfrog.
Uh, everyone with Ruby. There you go, Matt, Jilez. Thank you for asking that. And here, here's an interesting question, uh, with COVID and everything going back to normal, do you think sales will drop now that people are going outside? Probably for some niches? Yeah. Um, like I was in like the packaging, uh, cause people could technically vacuum seal food and like some of the stuff that was selling. So like my products will probably see a dip, but I think like overall people kind of got used to using Amazon, like people, maybe people that necessarily weren't using Amazon before are now using it more because they had to shop online during the pandemic.
And I think they kinda got used to, to Amazon and shopping online. So I think like. It won't dip too much. Um, but it's hard to, hard to predict any kind of last questions, type them all in guys. Think about questions that, you know, if you're on the fence or something like that, or was starting this business, or maybe getting into e-commerce or maybe joining epi masterclass, any kind of stuff. You have someone here who has been there and done that, and it's continued to improve his skillset and his abilities in selling on Amazon.
So think about some questions that you can't get anywhere else. I'm looking at it. A lot of these questions, you can easily Google this and find it within five seconds. Okay.
So ask questions where you cannot find on Google within five seconds, please Phillips asks, what would you do outside of FBA Masterclass that helps resources? So, one thing that really helped me was I went to this Amazon seller conference. I actually went to Tom's as well. His was called e-comm hub summit. Met a lot of Amazon sellers there that helped a lot.
And then I went to this one in Vegas called seller con. And, uh, I went with a buddy that I met from Tom's summit. Then in Vegas, we met like all these different Amazon sellers, people who were doing like crazy numbers, like $200K a month. Even this one guy was doing like, like a couple million dollars a month just on his Amazon store.
Um, I just like talking with these people, um, really like inspired me to double down on like, and take it like super seriously. And then also with some of the people that I met at these conferences, I s- we started this, uh, this mastermind, um, which is like a call every week with different Amazon sellers. And we just kind of like, uh, do like a Skype call once a week. Set goals set a plan for the week. And if we don't hit our goal, then we have to pay $50 to a charity. So it kind of like motivates you to hit your goal.
That's super cool. Hope that helps fill up. So mastermind groups and also events surround yourself with bigger sellers where you can get inspired, correct? Yeah.
Uh, Kimberly Alpert asked. What's the biggest mindset advantage that you gave that gave you an edge in this business? I think just like having the, the mindset of like building a solid brand and like, um, launching products that are really good quality because I think some people they'll like get, you know, they'll get samples and there'll be like, okay, this is good enough. Like, you know, I'll just launch this. I don't want to, I've already put in, you know, three weeks of waiting for these samples. I don't want to wait for more samples.
I want to get started right now. Um, but I think if you like take the time and make sure, like, the quality of your product is like really, really good, um, that'll help. Like that'll pay off in the long run. So mindset tips. Uh, we're going to wrap up in the next couple of minutes here.
One or two more questions. How do you feel that feel? Okay. Good.
Good. Yeah, of course. You feel good, man.
Guys move into your place yesterday. All right. I like Aberdeen's question. I like Ebony's question here because well, a lot of people have this fear around risk and investing into, uh, not just FBA Masterclass, but in this, in this business in general, right.
Takes a huge chunk out of your savings, you know, a few thousand dollars. And that could be a huge chunk for a lot of people. So the question is what is the biggest risk, um, to you when starting this business and, or joining a program like FBA Masterclass. The biggest risk would be like you not taking it seriously or like are, you know, you're not willing to actually like put in the work and, um, and put in the effort. Cause like there's people that they don't like put in the effort and then get upset when they lose money. Um, so just like not cutting corners, like if you don't cut corners, like it helps minimalize the risk a lot, but there's like risk with no matter where you put your money.
Like when I sold the business, I bought like some tech stocks I bought like some crypto, um, and still like the best performing asset was me just buying inventory for my new Amazon business and selling it on Amazon. Like by far, um, you know, my tech stocks are probably down right now. So like there's risks with no matter wherever you put your money and at least with like an Amazon business, you can kind of like control the outcome. You can control how well it does, you can control the quality quality of your products.
You can control what product you're launching. So, yeah, I definitely like it a lot better. Great answer Ebony and everybody who has named question, you know, totally great question. Uh, hope that damn McGill's answer helps.
We'll wrap up with one final one. Let's find a good one for you. We'll find a good one.
And then you can, while I'm finding a good one, think about your exit speech. Think about your, uh, your, your words of inspiration for everyone. All right. You know what, here's more questions around risk and investing in this business slash FBA masterclass. Okay. What are some do's and don'ts for people starting out and then after this we'll wrap up, I would say like, you want to, you want to test a lot of different samples.
That's a definitely a do. And then I would say, I would say don't launch like a me too product. Um, there's a lot of people that.
They see something selling on Amazon and then they try and copy like that exact product. Um, so if you don't, if your product looks exactly the same as like someone on page one with 5,000 reviews, like you're not going to sell too well. So I would say, um, I would say try to avoid launching a, me too product, try and, um, have some sort of different quality about your product, a different style, different color and improvement, something like that. Yeah. And then work with like, uh, a freight forwarder, like contacts that are actually trusted.
Um, cause recently I actually, I actually used a, uh, a three PL that I didn't get any referrals for. I just found them on Google. They're called prep FBA. And, uh, they actually lost some of my inventory. So I would say like, Yeah.
And they're not, uh, they're not willing to cover any of it. So that's. Yeah. Yeah. So I would say all the contexts that you're going to use for your business, whether that be a freight forwarder or a three PL whoever, like, make sure you like have someone who's used them before. And, uh, otherwise I can cost you like a lot of money if the freight forwarders bad, if you know, whatever, like there's a lot of, like, you got to find someone who's been used by a lot of people who's trusted.
And that definitely, um, yeah, I would, I would say that's a big one. All right. Well, that's a wrap guys. Thank you, Dan.
Miguel. Thank you everybody who attended. Thank you for everybody who is engaging in the comments, keeping it positive and learning. Thank you for taking the time to learn and, um, spend the time with us.
So any kind of wrap up words, Dan, 24 year old kid can do it. You can do it. Um, not too late.
You're a mature man. How old are you? Steven? I'm 30. I look like a dad. Uh, but yeah, thanks for everyone who, uh, tuned in, uh, shout out to Tom for inviting me on, um, great guy and, uh, yeah, just, uh, get after it even no matter, even if there's a pandemic, even if there's COVID going on, you can still, um, do really, really well on e-commerce and, uh, and yeah, that's it. Thank you.
There you go, guys. Go for it and don't give up. All right. That's it. That's a wrap.
2021-06-10 21:01
