In the world of online sales, the seller has their work cut-out for them. If you can get it right, the sky truly is the limit. But that begs the question; how exactly do you get it right? Especially when there are so many ways for sellers to get it wrong. You know I went where the answers are, just in time for the premier private-label seller conference and trade show, the Prosper Show, and on this particular topic, the answers sit with two very advanced companies providing seller tools for the modern, somewhat complicated, multi-channel market.
Both Skubana and Channel Ape can do more with the data, the listings, the channels already there, and putting them to work for you through platforms designed to integrate and optimize everything, because anyone who sells anything through more than one channel understands the exponential struggle.
Let's Talk About Those Struggles
The struggle for sellers getting beyond $1 million really comes down to systems. As Tim Calpin from Channel Ape so rightly puts it, "The ramp up is difficult both logistically and financially, and without the right systems in place, it is nearly impossible for sellers to succeed." He set out to do something about that, and Channel Ape has proven success in this arena, because Tim works with clients to remove barriers preventing them from growing to their maximum potential.
What Is Cognitive Commerce?
According to Skubana co-founder Chad Rubin, this means advanced ordering, automated everything, unification of your omnichannel business, with a heavy focus on profit, cognitive analysis, and making it all work for you. You can't bootstrap your way over that million-dollar hump. With this in mind, let's talk about a few key details he shared that are essential to your success as a private label seller building a bigger brand:
Experience reigns supreme. I could tell you a million times what you need to become a million+ private label seller, but if you lack experience in doing, it is going to be incredibly difficult for you to apply the information. That is why it is so important for you to focus on those core competencies of business and then leave the rest to the experts. If you have to spend $100 to make $1,000, overall, I'd say that's a profit margin you won't lose sleep over. The DIY/bootstrapping phase of business is amazing. You learn how to do it all with nothing. But as your business grows, and you grow with it, this phase shouldn't be the end of growth for you. Enlisting the right help also frees up your time to continue your personal development, as well as your understanding of your business and where it is going, or for things like market testing, product development, and connection.
Original products are the only proven way. There are so many sellers who are buying on Alibaba and Ali Express, and then reselling. Creating original products instead of reselling things everyone else can find too helps with these three things:
- Increased Barrier to Entry - It's so much harder for competitors to enter the field if there is R&D, expensive tooling or patented design/features preventing them from easily copycatting. Of course there will always be some competition but this helps keep the knock-offs to a minimum and lower quality.
- Less Price Sensitivity - Moving away from me-too products mean you don't have to compete on price because you always have something better to offer. Typical Amazon sellers have between 10-25% net profit margins, top sellers with original products have 25-55% net profit margins. That's a huge difference.
- Product Longevity - Original products last longer in the marketplace allowing sellers to recoup their investment in time, development, launching, and getting market traction. That means, the longer you can sell those products on auto-pilot using tools like Skubana and Channel Ape to manage them, the more profitable you will be.
We use Amazon with clients, for A/B testing, not only of the market and traction, but also for the product testing as well. I encourage clients to test out market traction with a cheaper, easier to source private label item first. If it is successful, you know it's time to quickly move to your original product.