Michael: Hello, and welcome to the HaBO Village podcast. I'm Michael Redman.
Kathryn: And I'm Kathryn Redman.
Michael: We're glad you're back with us today. If this is your first time visiting us, this is a podcast that helps encourage business leaders build Passion and Provision companies, companies that are full of profit, purpose and legacy. And we talk about a holistic model. Today we have a special guest, Quin Amorim.
Kathryn: Quin Amorim.
Michael: Quin, we met Quin a while back, we were on his podcast, struck up a great relationship and said he has got to be on our podcast. So Quin, welcome to HaBO Village podcast.
Quin: Thank you for having me, Michael and Kathryn. It's a pleasure to be here.
Michael: All right, Quin. So let's give everybody a high level of who you are and what you do. So the businesses you have and stuff like that. Let's just kind of do the 30,000 foot.
Quin: All right. So what I do is private label and e-commerce and-
Michael: So private label marketing and e-commerce right?
Quin: Well, no, it's private label product creation.
Michael: Oh, okay.
Quin: Yeah. Selling online is the easiest explanation. So if you want how I started, let's say it was a long time ago, there was this website, and that it was called action web, auction web. Sorry. Auction web.
Michael: And for the sake of conversation, so everybody knows, you started back in what? It was like, if I remember correctly, late 90s.
Quin: Yes, it was 1997.
Michael: Okay, so we're talking the beginning of internet world here.
Quin: Yeah, the reason and I still remember, it was in 1997 because this website where I started, it changed names. And that's how I found out about it. So Auction Web was a two year old website that was auctions where you could sell anything at auction. And then in 1997, I heard on the radio, they changed names and they called themselves eBay in '97. And it was on the radio and I was in Europe, and I was driving home from work and I heard it on the radio, this site that they changed name, they now call themselves eBay. And they were generating 300 million. This is in the late 90s, 300 million for a two year old website or two and a half years old. And it just blew my mind. How can this be? So I went home and I have to go see what this is.
Kathryn: I got to get me a piece of that.
Quin: Yes. And I had this dial up connection that anybody had. At the time, there was nothing better than the phone dial up. And here I was, I checked out eBay. And I don't know if it was luck, or just my ignorance. I registered a seller account on ebay.com, which is the USA. So to be honest between us, I don't even know, or between everybody listening-
Kathryn: It's going to [crosstalk 00:03:14]
Quin: I don't even know if there was eBay in other countries at that time. The one I found was the.com because that's all I knew. I didn't know .cas existed or thought anything else, is just the.com. Because I mean, not that I wasn't the smartest, but nobody knew much about the internet.
Michael: Well, I know. In '97 we didn't.
Kathryn: Yeah.
Michael: And when I was building websites in '97, I mean, the funnest thing we were doing was making gifs blink online and watching photographs show up after five minutes. I mean, we were excited, come into the room and look. So yeah, if you didn't know anything else then you wouldn't have to. What country were you living in at the time?
Quin: I was in Portugal.
Michael: Okay.
Quin: I was born in Canada, but then my parents, because they were Portuguese, I moved over to Portugal. And like, who wants to leave? I just stayed there for the next 25 years.
Kathryn: Wow.
Quin: Yeah.
Michael: And then you came back to Canada, because you're in Canada now. So-
Quin: That's right, yes.
Michael: For our listeners. So okay, so you find eBay, you get yourself an account and then, I mean, take us through the quick chronology there of how long did it take before you-
Kathryn: What did you sell and what did you do?
Michael: When did this become a full time thing for you?
Quin: So when I realized what it was, my next thing was now how do I get me some of this, right? And I had to sell things, and I didn't have many things to sell because I didn't have any new products. I had stuff around the house, so I started thinking what can I sell? And the next day, I went to work again, like I always did, and I took my camera with me. And this was not a cell phone camera, it was actually a camera-
Michael: With a film.
Kathryn: [crosstalk 00:05:05] film, had to be developed.
Quin: Yes.
Kathryn: It's not instant. Oh goodness, such [crosstalk 00:05:10]
Quin: There was this store, and I smoked back then, it was a cool thing to do and that's why I smoked. And I remember coming outside from work, and I would go and I would walk back and forth during my smoke break, and there was this store that I loved. And they made, it was art. They didn't make them, they sold handmade wooden statues. And I think they came from Morocco and they were carved by hand. And there was figures of human beings with elephant trunks, and people like the thinker.
Quin: And they were... I just thought they were so cool, made out of wood with such detail, but I couldn't buy them. I wanted them all, but I couldn't buy them because it was a fair amount of money for me at the time. So I thought, you know what, this is the kind of stuff that is hidden here, but I bet you there's a lot of people in the US that have enough money to buy everything in this store. And if they love them as much as I do, they will.
Michael: Right. Okay.
Quin: I started taking pictures in the store, and I made something. Listen, Michael and Kathryn, this is something that may blow your mind. I invented a term for what is, I don't know, today, a weird form of drop shipping. Because I didn't know anybody else doing this and YouTube didn't exist. So there was nobody teaching any of this. And I call this selling the picture.
Michael: Okay.
Kathryn: Okay.
Quin: Because that was the only thing I owned, was the picture.
Kathryn: So wait, so wait, you took a picture, you waited for someone in the US to send you money so you could then go back into the store and buy the thing and sell it to them, but at a profit, I would imagine.
Quin: Yes. Sometimes at a profit.
Michael: Sometimes.
Kathryn: I love it.
Quin: Because the software wasn't all there at the time. There was no way to automatically calculate shipping fees.
Kathryn: Right.
Quin: So I only knew how much to charge for shipping after I got to the post office.
Kathryn: Okay. That, will get you.
Quin: I would physically go to the post office with this thing that I bought, and it wasn't always the same price. Right? I thought okay, I'm shipping to the US, so shipping to me doesn't make a difference if I was shipping to California, or Texas or Illinois. To me it's the same [crosstalk 00:07:42]
Kathryn: Yeah.
Michael: Welcome to e-commerce shipping problems.
Kathryn: Right, right. Welcome to eight different zones in the US. Yes, we understand.
Quin: The country I was living in, if I jumped in my car and I drove for one hour, I would be in another country.
Kathryn: Yeah.
Quin: Right? I would be in Spain. If I drove for seven hours, I would be in France. 12 hours, I could go to Paris, and driving. So I thought how different can it be if I [crosstalk 00:08:09]
Kathryn: So geography wasn't your strong suit in school?
Quin: It was [crosstalk 00:08:16]
Michael: Give him credit, he was a European. Oh, come on, give him a break. Your own mother didn't know how big United States was the first time she came here.
Kathryn: I know. It is big. My home country of the UK would fit in California, I think three times. So I get it.
Quin: Oh, yeah. Yes. Yeah. I didn't know any of that either, and I know now because I live in the second biggest country on earth now. And there's a lake in the city on Ontario, where you could fit the country where I lived in, you can fit the country seven times inside that lake.
Kathryn: Right.
Quin: So-
Michael: Ain't that crazy?
Kathryn: Yeah.
Quin: It's insane.
Michael: Okay, so you're selling the picture, I assume we're still in 1997. Right?
Quin: Yeah, it was-
Michael: '97, '98, '99?
Quin: Yeah, probably around '98 where I started getting any sales or something.
Michael: I mean, it's 2020 now, that's just ancient history at the moment. So I mean, some people weren't even alive then, come on, that are listening to this. Okay, so you've got this period of time, you're doing that, when did it start to make sense that this was something that could be a real deal, and you started actually getting good at it? How long did it take you to get proficient at it?
Quin: Well, the real answer, although I may want to say that it was immediately, it wasn't, it took me at least 10 years to realize that I could make this as a real living. Because at the time, that wasn't considered a real job.
Michael: Right.
Kathryn: Mm-hmm (affirmative).
Quin: And I don't think even in the US, people at that time would consider that selling things online that you didn't even own was a real job. It was a real job, had to involve physical-
Kathryn: When you say it like that Quin, it sounds shady. Selling things online that you don't own? Hmm.
Michael: It sounds a little [crosstalk 00:10:05]
Quin: It wasn't anything to brag about. It really wasn't. No.
Kathryn: It's awesome.
Quin: I mean, a real job had to be physical, where you go to the factory and you work for eight to 10 hours a day, that was considered at the time a real job.
Michael: Yeah.
Quin: So it took me a long time, many, many years to decide, okay, this is going to be full time. And now the internet exploded, there was social media. And I realized, okay, let's just do a full time and this is a real business.
Michael: Okay, so help us out, and let's jump forward a little bit in this and kind of, I'm going to jump us through a couple of different hoops here, as we jump through time. Let's say we're here 10 years later, help everybody understand right now, because there's people listening who are in service businesses and into different types of things like that. And one of the things I've realized is there's categories of entrepreneurs. And what I hear you, as you're talking about this, I realize that the old, old, old school of being a merchant, this term gets used on the internet now, but I'm thinking let's go back 50 years, 100 years, 200 years. Do you know Ezra Firestone? Do you know who he is?
Quin: Yeah, yeah.
Michael: Okay, so-
Quin: Zipify.
Michael: Yes, Zipify. So Ezra, for those of you who don't know, who are listening, Ezra is a very successful online, e-commerce business person. And he trains and equips any... they have a software to help with Shopify, and we highly recommend their tools. They're great folks, and they're good people. But Ezra talks about his great, great grandfather in Russia, was a guy who had a team of horses, or probably donkeys, a wagon, and he took his wife and his kids, and they went back and forth between two cities. And in one city, they would pick up what was commonly made in that city, and they would take it to the other city and sell it. And then they would buy what was commonly made in that city and take it back.
Michael: And he was a merchant, he was somebody who actually sold stuff. And as I'm listening to you, I'm realizing, as we talk to entrepreneurs, there's all these categories of, well, this is a business and this is a business, but they're kind of some of them are really old. Some people share knowledge and sell it, you've had the legal profession, and doctors and things like that, some of them sell actual merchandise, which is where merchants come from, right? And so I'm like, I'm terribly fascinated by this, because it's like, wow, this is like the evolution of being a true merchant in a digital world.
Michael: So when 10 years later, you start to assess what's going to happen. Let's take a moment and say, before we do that, what is this whole idea of white labeling? Because there's a lot of people who-
Kathryn: Private.
Michael: ... private labeling. Private labeling and white labeling and there are different terms use for it, what is it and how does it work in today's world.
Quin: So private labeling is where I don't create a product, the product already exists. So what I do is I research the demand of things that already exist. And private label is when I grab a product that already exists, that say, I don't know, a tennis racket, or Bluetooth speaker, or a microphone. So I'm not reinventing the wheel, I'm just changing it and rebranding it.
Michael: Okay.
Quin: So I can talk to the manufacturer of any Bluetooth speaker company, microphone companies, coffee mugs, anything you name it, and even things that are a lot bigger than that, kitchen cabinets, for example. I've done it so that's why I mentioned it. But-
Michael: Okay.
Quin: ... you can contact them, you can make your own, you can change them because now at this point, you know that somebody somewhere is already selling a tennis racket. So you can go and see what are the issues that some people have with that, you look at the reviews of those people that are selling it that could potentially become your competitors. And I realized that everybody mentions that the handle doesn't have enough grip, so I can build the exact same one but make mine have more grip on the handle. I create a nice packaging, now I add my label which is a lot of people think it's just a logo but it's a lot more than a logo, we have to build a brand around it if we want some future in this brand. And then we give it some perceived value and real value, and now I have the Queen brand of tennis rackets, for example.
Michael: Right.
Quin: And this can be done really quickly and really easy like today. Back in the day it wasn't, but today with all the technology that exists, I can own a microphone company tomorrow, if I want, right? I just need to figure out first, is there enough demand, then I find trustworthy manufacturer, then I decide on the quality because as everybody knows, everything can be done in China. If it doesn't go in or on your body, it can be done in China, right? If it's electronics, or anything that is not food or supplements. So I can go to China and I can get the cheapest... I can get, I don't know, not just microphone, but I can get a microphone for a couple bucks made. Or I can get the same factory to make a microphone for 20 bucks. The difference is the quality. And a lot of times people think everything that comes from China is poor quality, but it's not really their fault, it's what we're willing to pay for it.
Quin: Because if they offer a lot of new sellers a $2 version and the $20 version, 90% of people are going to pick the $2 version, because they think there's more profit to be made. And then of course, the quality is what suffers with this pricing. So we create any product, and when I mentioned a microphone, or tennis racket, or cell phone covers or anything, it actually can be anything. And we have two ways of doing this. It's like one brand where we can sell anything that has lots of demand, and it's like a everything store. And then there's other stores that have, let's say, if it's in the supplement space, or the health space, now you need to focus on only supplements.
Quin: Of course, those would be sourced in North America, Canada and the USA, I wouldn't risk going much further.
Michael: Of course to you, and most people listening are like, oh, really? That's where we get them. But yes, that's where we get them.
Quin: I mean, yes, it happens. A lot of people get them from places where it's not really trustworthy, is just because of price. But let me tell you, if it goes into somebody's body, your return of selling that product is going to be higher, but if it harms that person, your return is going to go away real quickly.
Kathryn: Real quickly.
Quin: Yeah.
Michael: So Okay, so we've got a concept where we can go online and there are, let's call them marketplaces. For some of you listening who don't know, there are places and Quin probably knows 10 million more than I do, but there are places where you can go online and connect with manufacturers. And you can see different manufacturers that make different types of products, whether it's Frisbees or tennis rackets or microphones. And then you connect with them and you say, okay, this is what I want, and you can even discuss the quality. And I love the part you're talking about quality because everybody, especially in America, a lot of people think if it comes from China or Taiwan, it's probably going to be cheap quality, unless we're talking about our electronics. And we think well, most of our TVs or everything else are built over there.
Michael: But other than that, it's like, I know a lot of these folks that are trying to build businesses on Amazon, they're looking for something that's going to cost them a buck, and they can charge five bucks for it, and they're staying at that low price. But I've never heard anybody talk about the idea of actually thinking about a higher price product that was higher quality, and there would be more margin in it. Talk to us about that a little bit.
Quin: So that's one of the things that I like the most, is having the higher quality. Because the marketplace, for example, one of the most used ones by us is Amazon, and there are 3 million sellers on Amazon right now. So I know that if I'm going to launch a microphone, there's going to be another 100,000 people that are selling microphones that may not be the exact same thing. But they're going to be ranking for the same keywords, they're going to be at least paying the same PPC, the same Pay Per Click advertising. So technically, it doesn't matter, if in real life if they're our competitors are not. On Amazon, they become my competitors because they're taking my space, right? Anybody that's on the first page for a keyword that I want is a competitor, and if they're advertising on PPC for the keyword that I'm advertising, basically we're competing.
Quin: So because a lot of people want to go with the $1 microphone, and that's coincidentally something that I don't sell microphones. But if everybody's going after the $1 microphone, there's always like 90% of people want to go for the lowest one. And then they're going to sell it for the lowest price. But their margins are always the lowest. And because everybody's selling the exact same thing in that low $1 range, now it's so hard for them to actually make money at the end of the day. And that's very unfortunate because the highest amount of Amazon sellers, or the highest percentage, they actually don't make profit, they're just moving money back and forth. And Amazon takes their commission of the product, either if you're not profitable or you are, Amazon is still taking their commission out of the gross.
Michael: We have experienced that.
Kathryn: We've definitely experienced that.
Michael: We've definitely experienced that with our hay company. But you took a look at that, but yeah, absolutely. It's like, oh, my goodness this is-
Kathryn: Amazon's making money no matter what.
Michael: They're smart.
Quin: Yes.
Michael: And-
Quin: Exactly.
Michael: ... they're almost... all of us are out there like a bunch of feeding fish looking for that one scrap, and they're like charging admission to every one of us to get into the fight.
Quin: Exactly. So that's why it's beneficial to have the high quality products, that basically when you get to a certain level, your competition is going to be less. So the person that's just trying something, just starting out, and they had $1,000 budget to launch a product, they market it, they're going to be in the lower range. So you're going to be up competing with the top 5% only. So it makes it a lot easier. And one of the good things about it is you always get five star reviews when you have the highest quality of anything. Because if you're looking at a microphone to cost $20, it's an impulse buy. You look at it, it's 1999, okay, let's buy this. You don't have to think about it and go ask your wife, or your wife to go ask the husband, hey, should we buy this? Because it's 20 bucks, you do it.
Quin: Now, if you're selling a microphone, for say, 250 or 249.99, you think about this. And because you put all this thought into it, you didn't just buy something that tomorrow you don't want, right? You actually do want it and now you're going to think like, wow, this is a wonderful microphone, and it is top quality. And a lot of times you have that perception because of what you paid for it, like an iPhone, right? And an iPhone now costs five figures to buy an iPhone. Sorry, five digits, right?
Kathryn: You're like, "Oh, no." Like, wow [crosstalk 00:23:06] it's going to be brutal.
Quin: Yeah, it cost you at least 1000 bucks. That's four, right? Thousand bucks, or above to buy an iPhone. And we all know, they're not near that price. There's no electronic near that price being manufactured, and they're still made in China like everything else, just designed in the USA, right?
Michael: Well, and Apple's a great example of creating a brand that the value is in the brand, the value is in their reputation. When we're talking to folks, we use the term brand just to try and define it better, we say brand is your reputation and branding is bonding. And that's kind of the way we use the language to kind of simplify it. And if you're talking about your brand and your reputation, Apple has a reputation. That little apple logo has a reputation and they have a reputation for being a very innovative, creative, high end company. But the value of their product is their margins. The reason they're so wealthy is there's so much margin in the reputation. They're not just getting a penny per phone and taking over the world. So-
Quin: It's the trust as well.
Michael: Yeah, absolutely. That trust that how do I like them? Do I care? I mean, I'm an Apple guy. I've got Apple everything. And you're half Apple.
Kathryn: I'm a half Apple. Yes, so I am a PC girl, so I'm an Apple phone person, but I'm not an Apple person.
Michael: Apple phone and Apple iPad.
Kathryn: Yeah. Where are you?
Michael: So-
Quin: I'm like you then.
Kathryn: Yeah.
Quin: I'm half Apple.
Michael: Half.
Kathryn: Half Apple. Half eaten Apple.
Michael: Boy, amongst all these half Apples. Okay, so now I love this private label concept. And as you... private label as you understand Amazon really well, and you've been doing stuff a long time. You also coach and help other folks do that, right? And do consulting work and have an agency, correct?
Quin: Right. Yeah. So the agency side is where we manage other people's accounts, that there's companies that are, for example, 20 year old companies, that were shelf only, retail companies. They sold on Walmart and Target. And because not everybody adapted as quickly as others, not every company adapted so quickly, they were stuck with the retail shelf space. And when the Target start closing down, they lose a big customer that used to cut POs to them every month, and then Walmart loses a bit of space in those companies that some of them are well known struggle. And we all know about big companies that struggle now because they didn't adapt too quickly.
Quin: But some of those decide, and this was one of the best years for that, some of those decided, since we don't know, let's shortcut this learning period, and they contact the agency, and we do everything online. So they can still focus on everything they did until now and we focus on the online space while keep growing your everything you didn't [inaudible 00:26:27] when we do online, we learn Amazon, we do this for a living. So we study the algorithms and the little things that a lot of people don't realize, because it's so different from selling on a shelf on Walmart, where they cut you a peal for 10,000 units or 100,000 units. And now your biggest priority is just to get them delivered to them, and that step, that's that?
Michael: Right. Right.
Quin: Online, there's so many little things that you need to worry about, and other things that there's not that you have to worry about them but it's so beneficial to know and do them. Because like I said earlier, if I'm selling a chainsaw and you are selling an Apple iPhone, but you are ranking on the first page for chainsaw, you are competing with me, because you're taking my space.
Michael: Does that happen?
Quin: For short periods of time, because one of the most important things that algorithms, have all of them, is relevancy. So if I search for Apple and the chainsaw up and I buy it, it becomes relevant. And then if you search for Apple, and the chainsaw shows up and you buy it, it becomes relevant. So if nobody buys it, it goes away. It loses the relevancy, it disappears. But conversion rate is relevancy online.
Michael: Right.
Quin: You search for Apple, you bought a chainsaw, that is relevant.
Michael: Yes.
Quin: That's all the algorithm knows. They don't care it's a chainsaw, they care that 30% of the people or 20% of people that search for Apple... this is a weird example, but if they buy it, the chainsaw will be the on first page. So it's how it works.
Kathryn: Perhaps it's an Apple brand chainsaw.
Michael: And people are wondering, some people listening are going, A, could that happen and B, why would it ever happen? And this is just, as Quin said, just an example. But I mean, correct me if I'm wrong, Quin, but all the time, there are those of us that are intelligently choosing keywords. And the algorithms trying to do it saying, and Facebook has done an amazing job of this too, of going if you like X, then you might like Z. And they don't necessarily always make sense logically to somebody thinking about it, but if I'm an outdoors person, I'm going to like Tents.
Michael: Even though I might be looking for a chainsaw, the algorithm knows that I like tents also, and if I type in the Apple and I buy a Tent, that's how those kind of things can happen is like it's an associative thing. That sounds about right. I mean, at a high level, that's how it works, or does that need to be adjusted?
Quin: Well, at a high level it is like that. It's has to do with relevancy, and it's all ones and zeros. So it's not like there's an actual human being that's checking that okay, Michael did this search, or it's all algorithms, they measure this. And I'll give you an example that happened to me because of COVID. When COVID was announced, the first strong wave of news about COVID everywhere, a lot of people panicked and they started hoarding, buying things online, like toilet paper. You heard of the stories about toilet paper where people would buy 10 years worth of stock to have it there in their basement. And another thing happened with vitamin C.
Michael: Oh, yeah.
Quin: There was, somebody somewhere said that vitamin C would be very beneficial for anybody exposed to COVID, and I don't know if it is or isn't. But what happened was, every one of the top sellers on Amazon ran out of vitamin C, because the supply for the manufacturers of all those pills and sprays and serums and all that, the suppliers were also out of stock. And now, a lot of transportation was delayed, there was no... well, they couldn't get restock back into Amazon. So what happens is they get replaced.
Michael: Right.
Quin: They get replaced. So if you are the number one seller of vitamin C, you run out of stock, the second you run out of stock, your product disappears from that first page and another one, the one that was in second becomes first. And then they run out of stock, there's never an empty space, or this guy is out of stock, they get removed from the first page. And what happens was, products started getting replaced. And we have skincare products that contain vitamin C, because it just makes it easier for the body to absorb it. And those skincare products start to rank for vitamin C, because all the vitamin C sellers ran out.
Quin: And because ours contained vitamin C, it start getting sales because of that. People would search for vitamin C, because the top sellers are gone, and our product had a lot of reviews and it contains vitamin C, it start to rank for it. And because people would buy it, the more they would buy it, the higher it would rank for vitamin C. And I mean, it did have vitamin C, but we never marketed as a vitamin C product. Of course it had it in the bullet points and it had it in the title as well, with x milligrams or whatever of vitamin C-
Michael: So the algorithm just said, I see a product with vitamin C in it and people want it and these people who don't have it anymore, so we'll just pull whatever we have in the library that has vitamin C and start offering it. And when people said yes, I'll take it, then the algorithm said, this must be the right choice, correct?
Quin: Yeah. And it stayed there until all the big sellers of the real vitamin Cs start coming back. And-
Kathryn: That's awesome.
Quin: ... we actually got some reviews that were not as good saying, well, this is not really vitamin C. It's not.
Kathryn: Well, no.
Quin: It's an anti aging product. This is an anti aging cream. It's not vitamin C, it has vitamin C.
Michael: Absolutely.
Quin: It's not like we're advertising it as take this is, this is vitamin C-
Kathryn: That's so funny.
Quin: ... but we actually got bad reviews for it.
Michael: So let's-
Kathryn: People.
Michael: ... I think there's one other thing... we're doing great today, we're cruising along, but I don't want to stop. So we're going to keep moving. And because I think there's one more topic on this thing that's, I think, at least worthwhile before we end today. And I like talking with you, Quin, so at some point in the future, we'll have to have you back and talk a lot more, because there's a lot of wealth in your mind. So okay, one of the things that I know you care about is people paying attention to their numbers, paying attention to the analytics, paying attention to their financials.
Michael: And I think one of the questions that at least is running around in my mind, and maybe some of our listeners is, and I say this, because when we work with clients, it's amazing how much we realize people don't look at numbers either. And they don't understand the difference between a net profit and a gross profit and margins and then advertising costs. And they're like, I bought it for a buck, I sold it for a buck and a quarter, I must be making a profit when you know the fees and everything else costs, it turned out to be $3. And they're not counting any of the other stuff.
Kathryn: And then I shipped it for $5 to the United States.
Michael: So the first question I have when it comes to as we talk about numbers and finances is what does it take from a financial and number perspective that you have to look at to say, if I'm not making this much of a margin, or I'm not doing this well, what does it take to make a profit and stay in business when you're dealing with this type of business, this type of private label merchandise selling online?
Quin: So it is very important to make a profit. I tell everybody, not everything in life is about profit. And that's absolutely true. There's things that are not worth anything, they bring people a lot of happiness.
Michael: Absolutely.
Quin: But in business, you have the profit.
Kathryn: As it turns out.
Quin: If there is no profit, you cannot pay your staff, they will not have a job and your business will eventually shut down. So in life it's not about profit, in business, it is. We have to be blunt.
Michael: Yes.
Quin: You have to make money in business. So, it is my biggest pet peeve, because I see people, they launch products online. And we all are part of masterminds in Facebook groups where people talk about their net margins. And just the other day I saw somebody talk about your 67% net margins. And in real life, net margins of 67 don't exist.
Michael: Absolutely. They don't. Or I want that business.
Kathryn: What?
Michael: Tell me how to get it.
Quin: [crosstalk 00:35:49] And they had a screenshot of their 30 day sales, so when you divide the 30 day sales by the number of units sold, we got a price of $8 per unit. Amazon's pick and pack fee plus their 15% gross commission of that was almost $4. So that's 50% gone just from Amazon fees. Even if they have the product for free, they cannot make 67, even if the product was free. And it's just that people sometimes get sold because they take a course and of course, the course creator wants to sell the course. So they say you can quit your job tomorrow, which is a big mistake, let me tell you, because I quit my job several times.
Quin: And I want everybody to know this, you could be making thousands, many thousands of dollars, but a real net margin, what you're going to put in your pocket could be 20%. And 20% is decent, is very good. So for example, one of the times that I quit my job, I could be just to break even, I would have to sell $30,000 a month, just to break even, after paying people and for my own mortgages, and vehicle payments and everything, 30 grand was my breakeven. So if I sold 30 grand, I would break even, if I sold 25, I'll be losing money.
Quin: And of course, that starts to accumulate and you think, if I make 25 grand a month, that's a lot of money at the end of the year, gross. But it's not enough to pay your rent. Right? So, of course, not everybody has the same amount of expenses and everything, but that's why it's so important before we find a product, before we source a product, or we find it, but before we launch it, we need to know, what can I sell it for, and what are all my expenses going to be?
Quin: So some of them, if you're selling on Amazon, you know they're going to take 15% of the gross, you know that there's going to be a pick and pack fee, because they're going to ship it to the final consumer, they're going to put Amazon box there. And so you're going to have to pay for those, that's called the pick and pack fee. Maybe you're going to have some storage fees, if you have thousands of units stored on Amazon, or anywhere else. And then there's some that are a bit unknown or uncertain, which are the marketing fees, right? Everybody has a different budget for marketing. If you're going to be paying using Pay Per Click, for example, I don't know, in skincare, a click can cost $4.
Quin: Every person that clicks on your ad can cost $4. Now, if you're selling Bluetooth speakers, it could be 80 cents or something like that. But it depends on the number of competitors, how much profit is in each, because if we're in the supplement space, there's higher margins, so some people have higher profit margins so they can spend more on ads. And I mean, those are things that we have to take into consideration and those are the ones that before launch, you're not sure how they're going to be but you can put in good guesses.
Michael: So let's hold there for a second. Let's go back to that skin cream analogy, that's interesting to me. Okay, so it's true that different industries are going to have different ranges of what the ads are going to be, and if you don't understand Pay Per Click, every time you see an ad online and in Amazon and you click on it, somebody is getting charged for it because somebody put that ad there. And so if it said sponsored right now in Amazon, that's an ad.
Kathryn: Or in Google or anywhere else.
Michael: So in skincare, you're saying that an average click is going to cost you four bucks. So if my product doesn't have enough margin, and if let's say I have out of every... I'm going to be really crazy here, this is not normal, but let's say one in 10 for the math. 10% conversion rate, out of every 10 people who click on that thing, one person pays for it. That means that that costs you $40 to get those 10 people there and one person buys your cream. Your cream has got to be super, super expensive or you're going to have a lot of margin if you're going to be able to afford $40 for every customer, because you're buying a customer on top of your pick and pack fee and your 15% margin and everything else.
Michael: What's boggling to me at times, and I know a lot of people who even think about it, who aren't there is how can anybody ever make any money on Amazon? How's it even possible?
Quin: That's the thing, is what you actually mentioned is not too unrealistic, because Amazon has huge trust by the buyers, 10% conversion rate is very easy. That's actually the low point of conversion rate.
Michael: Okay.
Quin: Yeah. So we can see, I have some products that have up to 60% conversion rate, which outside of Amazon, that is insane. I get two or 3% on Shopify. So 60 versus three, and three is good on Shopify, that's insane. But what we work with mostly, there's two things that we can do with ads. We can use ads to generate sales and of course, try to make money where you lower your bid, and you're just going for the low bids. Because I don't always have to have my bids at $4. I can set them to two and a half, I'm just not going to... my ad is not going to show up on top of the first page. So instead of being shown 100,000 times a day, it's only going to be shown 10,000 times a day. Right?
Quin: And those are things that we have to consider. Are we setting up our ads to make profit, or for ranking? Because I can use my ads to rank a keyword. As we mentioned, it's all about relevancy. So if I want let's say, skincare to rank for vitamin C, I would create a campaign where I add the keywords vitamin C, and now for vitamin C, you probably are bidding five or $6 to get there. Now, because my ad shows, the ad conversion also creates relevancy for a product. So if somebody clicks on my ad after searching for vitamin C, if they click on it, and convert, it becomes relevant, so it also helps create relevancy. So sometimes we create PPC campaigns that are have no intention of being profitable. They're there to create organic ranking so tomorrow I can get organic sales.
Michael: Oh, that's creative.
Kathryn: Interesting.
Michael: Wow.
Quin: Yeah. So it's called the strategy. It's, we use something that's called TACOS, which is Amazon has something that has the ACOS, which is Advertising Cost Of Sales, and tacos is Total Advertising Cost Of Sales. Because when you create an ad and you sold, that ad, for example, sold 20 products today, you also gained enough ranking and you got for example, another 10 or 20 organic sales because of that, because your ad is on the first page, but your listing is also on the first page organically, and you get organic sales. So we divide the total sales by what we spend on ads. And now we know that, okay, although the ad wasn't profitable, the total of the brand actually was profitable, because we gained more ranking. And tomorrow, instead of having 2000 keywords on the first page, now we can have 2050, and we gain more and more keywords onto first. First page is actually very relevant because-
Michael: Yeah, absolutely.
Quin: On a phone, first page could be for 10, 15 results while on a desktop, you can have 50, depending on the category.
Michael: Okay. So we have to start heading into the end, unfortunately, of this episode, but I had... Okay, this is one last question that's in my mind. I hear a terms like, if I'm going to be successful on Amazon or something like that, I need to have... if I'm looking for a product, I need to have a 5X or a 7X markup. If I bought it for two bucks, I need to sell it for at least 10 bucks. Is there A, any truth in that at all, and in that number 5X? And is that concept true too, where you can say, if you're looking for this kind of margin, a multiple of the original COGS or cost of the goods sold? Is that true? Does that work that way?
Quin: Yes, and no. I hate these answers where it's yes or no, but I have to give you that answer because, for example, a 5X a markup can generate sometimes loss of money. For example, if you pay, let's say a 10X, you pay $1 for the product, you 10X it, so you're selling for 10, you will lose money. With a 10X markup on a $1 product, you will lose money because of fixed fees. When you have fees that are percentage based, there's no problem, because 10% of $1 is not much. But when you have a fixed fee, like Amazon's pick and pack fee, depends on the size of the product, and how much volume it has. So it doesn't even have to be heavy, but if you have an empty box that's the size of a shoe box, you're going to have, let's say $4 worth of fixed fees that are at the pick and pack for Amazon to ship it and all this.
Quin: If you're selling the product for $10, that's the one you paid plus the four that is fixed fees, that's 50% gone immediately no matter what. So now, if you have to pay any marketing, and then of course, you're going to have some returns, and then you pay 15% of the gross sales. So just 15% of that is another $1.50. So you're at six and a half of fees for a $10 product without even paying anybody, paying any taxes and zero advertising costs. So that's 65% gone to what you [crosstalk 00:47:32]
Kathryn: Yeah. But if you 5X a $25 product, you could make money, right?
Quin: Absolutely.
Kathryn: It's-
Quin: Exactly.
Kathryn: Yeah, that makes sense to me.
Quin: That's why we never sell products that are below a certain price point. If I have a product that is worth $10, what I do is I put two of them together or three, and I sell those three, a three pack for 30, because now I still only pay $4 for the pick and pack fee, but now percentage wise, the $4 fixed fee is not 50% of my product anymore, so I have a lot more dollar margin to collect.
Michael: Yeah, yeah.
Quin: Right.
Michael: So it really depends on your multiple is going to be product and industry specific way more. There is a multiple there that you're looking for but you're going to have to customize it for product A versus product B and in different industries, it sounds like.
Quin: Yes, exactly.
Michael: [crosstalk 00:48:31] as a guideline, as a thought process, as opposed to a hard rule across the board or you'll lose money with that.
Kathryn: That makes sense.
Michael: Okay, I'm sure that everybody's like going wow, this is really amazing and everything else and some people have more questions and some people are going okay, I've taken in enough today. This is super cool.
Kathryn: Make it stop. Make the fountain stop.
Michael: If people want to learn more about this subject and about you, Quin, and about your services and everything else, what do they do? Where do they go?
Quin: Well, they can go to, if they want to hear more they like my voice, I have a podcast all about this and it's QA Selling Online. The QA could be questions and answers, but it's also Quin Amorim. QA Selling Online.
Kathryn: I see what you did there.
Quin: And then I have also the Fail Fast podcast which is another podcast about entrepreneurial failure [inaudible 00:49:20] and successes. The Prolific Zone or prolificzone.com is my agency and you can find me there on Facebook, I'm Quin Amorim just with one N, Q-U-I-N. So anyway, you can search it, you can find me on social media and I like to connect with everybody.
Kathryn: Right.
Michael: Quin loves people, folks. He's a wonderful hearted person with a wealth of knowledge. We've enjoyed getting to know him and I look forward to long relationships over the years to come, because Quin's just one of those kind of guys. I thank you, Quin, so much for taking the time today out of your schedule and to be with us. This is cool. So I appreciate.
Quin: Thank you. It's a pleasure to talk to you and it's pleasure to see your smiling faces. You're great people.
Kathryn: Thanks, Quin.
Michael: So thank you for joining us today. I'm Michael Redman.
Kathryn: And I'm Kathryn Redman.
Michael: This is the HaBO Village podcast and I hope you found something value today. Take care. Have a great week. We'll talk to you the next episode. Bye bye.
