It’s all about being thankful, so the question that I have for you is a question that I posed in the Late Night Internet Marketing Facebook Group. What is it that you have to be thankful for specifically regarding your business? What things are going on in your business or what do you have as a result or get to do as a result of your business that make you really thankful?
Sometimes the answers are obvious. A lot of people with online businesses are thankful that they’re able to stay at home with their kids, or do whatever it is that they do, or the reason that they have the business in the first place, they’re thankful for that.
For example, I’m thankful for three or four major things. One of them is the relationships that I’ve built as a result of this business. That’s very high on the top of the list. The guys in my Greenroom Mastermind, Cliff, Leslie, Pat, Mike, Ray, I’m thankful for that. Every week when I get to talk to those guys, I’m reminded what a special result has come to my internet business. It’s really cool.
I’m sure that you, in your internet business, have met people that you enjoy, or I’m sure you will meet people that may become your lifelong friends. That’s one of the really cool things about internet business is that it opens up opportunity to meet people. Not just people that are in your industry, but it also opens up to people that you can meet through the work that you do. Listeners of this podcast come to mind. I recently got the opportunity to actually meet a bunch of them face-to-face at Cliff Ravenscraft’s event out in Tennessee. I’m very thankful for those relationships.
I’m thankful for the opportunity to help people. Maybe that really is the largest thing for me. I really love those emails when they come in that say, “Mark, the podcast that you did here,” or, “the blog post that you did here,” or, “the advice that you gave me here, made the difference and got me to the next level,” or got me to the next thing, or helped me get past somewhere where I was stuck, “and now I’m able to better accomplish my goals, help my family,” whatever it is that those people need to do. I’m very grateful for those things.
I think the typical way we think about gratitude is we think about what we call additive gratitude, so what is possible now because of something, what has been added to your life because of something. I think it’s also useful to think about subtractive gratitude, to think about what would be missed if this was not possible. What things would you have missed out on?
For me, one of the subtractive things is I love to learn things. One of the cool things about internet marketing in general is that it’s just always changing, so there is so much to learn. If I had not had the opportunity over the last 10 years to learn about internet business as it has changed itself and really changed commerce in the modern world… Literally, the modern world has been changed by ecommerce. Imagine a modern world without Amazon, or a modern world without websites. That has all happened in the last 20 years. The fact that I’ve been working on this for most of that time is really exciting for me. I would have missed out on all of that without my internet business.
What are you grateful for? I’d like to challenge you to think about the things that you are grateful for in your business and why.
“Mark, fine, you’re grateful. Great. I’m busy. I have stuff to do, I have a podcast to get out, I have content to create, I have a Black Friday sale I’m working on. Why should I spend time on gratitude? It seems like a waste of time, frou-frou,” etcetera.
I like to talk about mindset and things like that, but there’s actually real science behind the benefit of gratitude. In fact, there’s a great article in Psychology Today that talks about the benefits of gratitude that have been substantiated by actual medical studies. Real scientists doing real work in real universities and research centers around the world have found proven scientific benefits.
A couple of them are pretty obvious. For example, it’s scientifically proven that having a mindset of gratitude can improve your psychological health. When you have a gratitude first mindset, or when you shift your thinking to a way of thinking that is based in gratitude, it naturally shifts you away from negative thinking, or what Zig Ziglar used to call stinking-thinking.
It gets you out of that and there are measurable psychological benefits where you can impact your psychological health. I’m no psychologist, so your mileage may vary here. If you’re a person who gets the blues, who is feeling down, or just isn’t feeling very motivated at times, I think spending some time with understanding what you’re grateful can really help your psychological situation.
There’s also data that suggests that it helps your actual physical health. There was a study done in 2012 where they found that people who have a grateful mindset are more likely to take care of their own physical health. This gets to one of those subtle things that if you’re feeling positive, you’re going to feel better about doing things for yourself. You’re going to feel like you should take care of yourself, because after all you’re so grateful for all of the things that brings.
The article in Psychology Today also talks about how it can impact your relationships. Which seems obvious, people want to hang out with people who have this kind of positive mindset. Also, a study in 2011 indicated gratitude or having a grateful mindset can improve your sleep. There’s other stuff that you can read about in the Psychology Today article, but I’m not just saying that you should feel grateful because it seems like a good thing to do, there’s actual evidence (and certainly my own personal experience) that suggests that being grateful can actually help you. It also can help your business.
If you Google gratitude in business, you come up with a wealth of articles about how gratitude can help you be more successful in business. I think, simply put, if you’re grateful for the opportunity to do business with people and you’re grateful for the opportunity to take care of people and help them, and you’re grateful for the opportunity to solve people’s problems, the people that you do business with feel that. They feel lucky to be in that relationship with you, because they can tell that you feel grateful.
This can be true for consultants who are face-to-face and one-on-one all the time, but it can also be true for people who are working the cash register at Target or Walmart. When the cashier at Walmart seems to grateful to have had the opportunity to help you get the heck out of Walmart, which if I’m ever in Walmart my life goal is suddenly to get out of there, if that person makes you feel that they really appreciate having had the opportunity to help you, that can change your entire shopping experience. That kind of gratefulness makes you want to come back to Walmart.
It’s going to take a lot of gratitude to make me ever want to go to back to a Walmart, but you get the idea. If people treat you that way and pay that forward with that gratitude first mindset, that’s going to change the way people do business with you as opposed to a customer-facing attitude that doesn’t express gratitude, doesn’t let the customer know that their business appreciated, and doesn’t give them a reason to do business with you as opposed to someone else.
I think there are real business reasons to feel gratitude. So, how do you do it? How do you get to this place of gratitude? The first thing you do is the action that I told you, which is to stop and write down some things that you’re grateful for that are specifically related to your business. Not just the things that the business has brought you, the additive gratitude, but also the subtractive gratitude, the stuff that without the business you would be lacking, the stuff that you would have missed out on.
For me, I never would have met Michael Hyatt, for example. I met Michael Hyatt a couple years for the very first time, I’ve met him many times. One time I got to MC an event where it was a panel discussion and I was the moderator and I got to talk to him and really interact with him. That’s something that was important to me, because I had been following Michael Hyatt for a long time. I never would have been able to do that without my internet business, I never would have had that opportunity. Heck, I might not have even ever known about Michael Hyatt in the first place.
There are lots of things to be grateful for when you consider those two angles. That’s just today. Let’s say you pull the car over to the side of the road right now and you do that. What about tomorrow or the next day? I think that the answer most people will have for you is to undertake some kind of gratitude journaling. In fact, what you see in a lot of these premade business success journals from guys like Michael Hyatt, John Lee Dumas, and others that are publishing physical paper journals that you can use to journal every day is there’s usually a gratitude section.
You can do that, or you can just go get a notebook. I prefer the Moleskin ones, but the Amazon Basics ones are really good, too. You can just write down periodically what you’re grateful for. Just take time to do that. If you look at recommendations for how to do that from experts who focus on the topic of gratitude journaling, I think what you’ll find is that depth is better than breadth. It’s certainly okay to write down the two or three things that you’re grateful for every day and you get this kind of list-based thing if you do that.
I’ve done this before and for me it means that it’s late in the afternoon and you’re trying to complete this gratitude journaling because you said you would, you write down the two things that you’re grateful for, and one of the things that you’re grateful for is that there weren’t any shells in your scrambled eggs this morning and the other thing is you’re grateful that you have a great life or whatever it is. It’s a lot of breadth. You’re doing it every day, you have this long list of things at the end of the month that you’re thankful for, but unless you’re more diligent than I am, which is quite possible, unless you’re super diligent you don’t get much into the meat.
Assuming that you’re going to spend the same amount of time, I think it can be better to once a week or once every few days really focus in on a thing that you’re grateful for. I think more importantly, like most things in life, why are you grateful for this thing, what makes it important to you.
I met Michael Hyatt; why is that important to me? There are a lot of reasons for that for me. Whatever it is that you’re grateful for, if you’re truly grateful for it there are going to be some reasons why. As you unpack that, I think that has the opportunity to sort of amplify the power of the gratitude. It amplifies it when you really understand what is underpinning it.
I encourage you to really make it about real emotions, real people, real things, but don’t overdo it. You don’t need to do this every day, I just think periodically we all need to sit down and be thankful for the things in our business. It will make you a better businessperson, it will make you a better person, it will improve your life situation, whether that’s health or psychology or whatever it is. I think it’s a practice that I want to encourage you to undertake.
Be grateful and Happy Thanksgiving.
Amazon FBA Wholesale Pricing
As I mentioned in the last episode, my intention is to create revenue as part of an Amazon business to see if I can meet my own challenge. I’ve been getting ready to do that. It’s taken me a little longer than I anticipated to get turned around to that, but I’ve been starting to do some things.
One of the things that I’ve been doing is clearing out some old inventory that is at Amazon that I hadn’t been able to sell. When I say I hadn’t been able to sell it, it hasn’t sold in general because for whatever reason the price that I had set for those products was higher than what the competition was selling the products for. The way the Amazon buy box works whenever your price is substantially (a few percent) higher than the competition, Amazon will not award you the buy box.
What are we talking about? I talked to you about this wholesale approach before and what we said was let’s say you’re going to sell blue widgets, and you want to buy blue widgets from a blue widget wholesaler, and then you’re going to send those blue widgets in to Amazon properly labeled and ready for Fulfillment by Amazon (FBA), which means Amazon sends them out in the Amazon Prime box with the smiley tape on the outside of it, they ship it to your customer for you. For doing that, they take a commission for the sale and they take a fee for the delivery, the fulfillment charges. You’re left with the remainder of what the customer paid from which you need to pay for the cost of the goods that you actually sold.
The issue is how is it if there are five people selling blue widgets that you get to sell yours? Why don’t all of the blue widgets get sold by the other four guys? The way it works is Amazon does something called buy box rotation if you have a product available that other people are also selling and if your price is the same as or very similar to within a few pennies the lowest price, and if you are a seller in good standing offering Prime. That is to say if you are having Amazon fulfill your order that’s automatically Amazon Prime eligible, that would be in contrast to the idea of you shipping it to the customer from your house. If you’re having Amazon ship it from their warehouse you are automatically eligible for Prime. In fact, that’s sort of the whole point of using FBA.
The question is how is it that when a customer goes to buy a blue widget that they end up buying it from you? It’s very simple, Amazon rotates the buy box between the people that meet all of those criteria. They have the lowest price, or they’re tied for the lowest price, they are a seller in good standing, which gets them on the list, and they’re offering Prime, they’re using Amazon FBA. That’s all the criteria that you need to meet.
If there are 1,000 blue widgets sold every month on Amazon and there are five people selling them, that means on average you’re going to sell about 200 (one-fifth) of the blue widgets on Amazon, provided that your price is the same as everyone else’s price.
Probably you’ve noticed that the price of things on Amazon can change. What happens when you’re selling blue widgets for $19.95 and there are four other people that are selling blue widgets for $19.95 and all of a sudden one of the other people decides they can afford to sell blue widgets for $18.95? Now one person is selling blue widgets for $18.95 and four people are selling the exact same blue widgets for $19.95. What is Amazon going to do?
Amazon’s concern is making sure that Amazon customers have the best possible purchasing experience. One of the elements of that purchasing experience is making sure that they get the best possible price. In this scenario where the five blue widgets are exactly identical except for price and all five sellers are in excellent standing with Amazon, what Amazon is going to do is award all of the buy box to the one seller who is selling for $18.95.
What does that mean? That means if there are 1,000 blue widgets sold on Amazon a month, like we said before, now you’re going to sell zero blue widgets at $19.95 and the seller at $18.95 is going to sell 1,000 blue widgets.
Of course, there is no doubt that these other four people who are selling blue widgets are going to want to try to match that price. If they can, they’re going to move their price down to $18.95. Now suddenly again there are five people selling blue widgets and everybody gets their fair share.
Amazon does this on purpose because it drives the marketplace down to the minimum sustainable profit margin. You’re not going to sell blue widgets at a loss, unless you’re getting out of the blue widget business entirely, you’re going to sell them at the lowest price you can afford to sell them – so is everybody else, and may the best man or woman win. Usually, since all of the blue widgets are coming from some blue widget factories in some other part of the world and everybody has sort of the same shipping costs, usually these prices will stabilize to something that is reasonable. They’ll jump around maybe a few pennies here or there.
The first observation is that’s one of the things that makes this business more difficult than it might be otherwise, because Amazon has set up the system to naturally take the fluff, the extra profit, the margin out. It’s almost like eBay in reverse, in the sense that you bid on eBay and automatically the price for whatever for whatever is being sold will go up to whatever the market will pay. On Amazon the price automatically goes down to whatever profit margin people are willing to get down to.
That makes it tough if you run up against a really big seller with fantastic purchasing power and the ability to negotiate really aggressive pricing with their suppliers. For example, Amazon itself. If all of a sudden Amazon starts selling blue widgets, they come into the supplier pool as Amazon with an enormous amount of negotiating power and they’re able to negotiate a price for blue widgets at wholesale or direct from the factory that allows them to sell blue widgets at $16.95.
We see this all the time. You’ll be cruising along making a nice $3, $4, or even $6 per item, and all of a sudden Amazon will come onto the listing and in some cases sell the product for less than what you’re buying it for, because they’re so powerful in the marketplace that they just crush you. It’s the same kind of idea, that’s the way Walmart works. Walmart has amazing buying power and they’re able to deliver products to market at lower prices because of their enormous procurement engine that they have, where they’re able to go get these things at great prices.
What do you do? We’re going to be talking about this in future weeks. You’re careful not to overextend yourself. We don’t go buy 12 years’ worth of blue widgets and send them into Amazon. We buy an amount of blue widgets where we stay pretty light with our inventory and we reorder periodically. Instead of buying a 12-month supply and hoping that the price stays stable, we buy two or thee weeks, or a month’s worth of supply at the most, and we keep a close eye on the price.
We keep an eye on the price with something called repricing software. There’s software out there that will monitor this competitive situation and you can give it rules, like never go below this price, because after that price you’re at a loss or below minimum profit margin. If a competitor changes their price up or down, you change to match it. That’s what you tell the software.
You can see this in action, you can see these repricings going on by looking at a tool called Keepa, which is a Chrome extension. If you load Keepa into your browser and then go to a product on Amazon, it will show you the historical pricing for that item for a year. You’ll see with almost every on Amazon that the price is jumping around.
The reason it’s jumping around is because pricing is part of marketing and people are moving their prices around based on market conditions and the prices that they’re paying in business and how quickly they want to move inventory. They’re moving their price around on Amazon to try, in general, to get more sales or make more money. There’s automated software that helps you do that, so these pricing tools are a big part of Amazon strategy and something we’ll be talking about in future episodes.
What I found when I looked at my stuff is I’ve got some old products on there where I set the minimum price at a point that my repricing software was never able to get low enough to sell that, because I didn’t want to sell at a loss. In general, these are things where I made a bad purchasing decision. I bought something at what I thought was going to be a good price, where I thought I was going to make money, and in general the market collapsed or the pricing collapsed and in order to sell that inventory I’m going to have to sell it at cost or maybe at a small loss to liquidate it.
This week I’ll be working on that, that’s my main thing is to get that inventory moving and order new inventory and start getting the machine going so that in January I will be really back on the revenue trend, hopefully hundreds if not thousands of dollars a month in Amazon inventory in January or February.
That’s sort of where we are on that. That’s Amazon pricing. If you have any questions about that, I would love for you to drop me a line on the show notes or, even better, you can join the Late Night Internet Marketing Facebook Group. If you’re interested in this business model, this is one of the things that we talk about in there. It has been a little quiet lately, but I try to answer every question that is posted in the group.
It’s almost Thanksgiving here in Dallas, Texas. I hope you guys have a fantastic day. We’ll talk soon.