Scott Needham, CEO of SmartScout & Host of the Smartest Amazon Seller Podcast. He'll be sharing an extraordinary story of how he interrupted his honeymoon to rescue the business when a product went viral on TikTok in 2020.  The same product that they aren’t even selling on TikTok Shop. Scott will also delve into the strategy behind getting SmartScout to the front page of Reddit.

> Here’s a glimpse of what you would learn…. 

In this episode of the Ecomm Breakthrough podcast, host Josh Hadley and guest Scott Needham, CEO of Smart Scout, delve into the intricacies of leveraging TikTok Shop for e-commerce success. They explore Scott's journey from a viral TikTok product to strategically using TikTok Shop to boost sales. Scott shares insights on utilizing data analytics platforms like Fast Moss to understand top-selling products and successful content creators on TikTok. He emphasizes the importance of adapting to Amazon's changing landscape, recounting a personal story where he had to make quick decisions to save his business during his honeymoon. The conversation also covers the significance of continually launching new products to drive growth and the necessity of optimizing main images for product listings. Scott's recommendations are geared towards helping 6-7 figure business owners scale their operations to 8 figures and beyond by embracing new platforms, refining logistics, and constantly innovating.

Here are the 3 action items that Josh identified from this episode:

Action Item#1 Embrace TikTok Shop: Don't be intimidated by content creation. Utilize influencers and creators to generate content and leverage duets to amplify your presence on the platform.

Action Item#2 Master the Fundamentals: Stay ahead of Amazon's evolving fee structures and logistics challenges by hiring experts or consultants to optimize your supply chain and PPC strategies.

Action Item#3 Optimize Main Images: Never settle for a static image. Continuously test and refine your main product images to ensure they remain compelling and effective.

Special Mention(s):

Related Episode(s):

This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures. 

I started my business in 2015 and grew it to an eight-figure brand in seven years.

I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.

If you’ve hit a plateau and want to know the next steps to take your business to the next level, then email me at josh@ecommbreakthrough.com and in your subject line say “strategy audit” for the chance to win a $10,000 comprehensive business strategy audit at no cost!

Josh (00:00:00) - Welcome to the Ecomm Breakthrough podcast. I'm your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Michael E Gerber, author of The E-myth, and Matt Clark from ASM. Today I'm speaking with Scott Needham. He is the CEO of Smart Scout and the host of the Smartest Amazon Seller podcast. Scott has lots of stories that he's going to be sharing with us, such as how his product went viral on TikTok before TikTok shop was even a thing, and he's going to also be sharing some of his success tips of what he's doing right now on TikTok shop. In addition to that, Scott is going to be sharing a story of an FBA change that he had to take care of while he was on his honeymoon, and he had to come rescue his business. And last but not least, we're also going to dive into the strategy that Scott used to get Smart Scout on the front page of Reddit. This episode is brought to you by Ecomm Breakthrough Consulting, where I help seven figure companies grow to eight figures and beyond.

Josh (00:01:01) - Listen, Scott, I started my business back in 2015 and I grew it to an eight figure brand in seven years, but I made a lot of mistakes along the way. That made the path of getting to eight figures take a lot longer than it needed to. There were times where I made bad hiring decisions. I had to take money from my own personal checking account to fund payroll for the business because of cash flow constraints. I also was stressed out in my mind when Covid hit and we saw a 90% decline in sales. I wish I would have had a mentor to guide me through the maze of scaling up the business. Someone who had been there, done that, and could share all the secrets to help me overcome those obstacles. And that's why I've decided to offer one on one coaching and consulting, where I share the nitty gritty cashflow frameworks, the sales strategies and operating systems that have helped me scale my own business. And because I believe in giving each entrepreneur my undivided attention, I only work with three clients at a time.

Josh (00:01:57) - , first step, I want to make sure that we're a perfect match. So I'm offering a completely free, no strings attached business strategy audit. And this audit is my way of showing you how committed I am to your success. So to our listeners, if this sounds like something you're up for, drop me an email at Josh at Ecomm Breakthrough dot com. That's ecomm with two M's. And in your subject line say I want to pick your brain. And then let's chat about how we can take your brand to the next level. But today I'm super excited to introduce you all to Scott Needham. Scott is the host of the Smartest Amazon Seller podcast and CEO of Smart Scout, a market and competitor research tool for finding Amazon opportunities. With over $450 million of revenue on Amazon under his belt, Scott shares his experience and knowledge about what it takes to succeed on Amazon. So with that introduction, welcome to the show, Scott.

Scott (00:02:54) - Hey, Josh, thanks for having me.

Josh (00:02:56) - Scott, longtime listener of your podcast.

Josh (00:02:59) - I've been listening to it for quite a while, so now it's great to have you on my show.

Scott (00:03:05) - , it's funny, it's like just hearing the name of my podcast, like, you know, it's like one of those ideas that you have, like one day. And what's funny is I've totally changed the angle, like,, I almost I put it, I was like, okay, this happens. And I thought, okay, I want to like, I want to challenge people that like, you know, I don't think I'm the smartest in every category. I'm not. But, now I've kind of been like, okay, the goal of the podcast, like, let's all be the smartest Amazon sellers. So,,, it's funny, like, even when I hear, like, your intro,, I'm like, oh, that name is like, am I that me?

Josh (00:03:42) - , I love it. No, I, I love the podcast and I love what you're doing.

Josh (00:03:48) - And obviously you have a depth of experience. You've interviewed a lot of guests. You have a really good pulse of what's going on in the Amazon ecosystem. But as of right now, as we're talking in 2024, kind of the most hot topic right now is the TikTok shop. And so, Scott, I would love to hear kind of your experience. You had an experience where a video went viral for a product even before TikTok shop, and then you've now transitioned over to TikTok shop. So give me the sweet, juicy details of that story.

Scott (00:04:21) - Yeah. So this is 2020. I'd already been selling on Amazon for like seven years, and if you've been selling that long, you probably have a healthy addiction to checking in on your sales, maybe 3 or 4 times a day. And the truth is,, at least the size that we were, it's hard for, like, a single day to move the needle., You know, every day kind of comes in, you know, 5% up, 5% down.

Scott (00:04:48) - , there's the weekly cycle. Rarely did we see something that was like, like, like it's like, oh, I have to pay attention to this., it was a Friday night, and I remember I was,, just heading out, and I was,,, dating someone at the time, and,, I'm just like, oh, my goodness. Like this. Like, the sales just, like, popped off. I'm like, what's going on? And,, I think it took me only like 2 or 3 hours. Someone on my team texted me. They found this, like, viral TikTok video, which ended up getting 20 million views. All it did is just feature the product and just like, like, hey, here's a cool little product., and like, I think we sold 20,000 units directly attributable to that video., this was during Covid. And so like FBA, we didn't have all the units in FBA. We had to like to reroute our entire team to, to be on about 1000 units a day.

Scott (00:05:48) - And that's actually harder than it sounds like. You know, just to like to sit there and do like labels, like, you know, one at a time., it was a big effort, but,, it was fun, you know, it's fun to see,, like I said, like, it's fun to see, like the sales needle, like, moves in a way you don't expect. And,, we've,, you know, the story does transition into actually just the last few months,, where we tried to, like, you know, the next year, like,, capture that lightning again a few times a video and maybe get, like, a million views, but nothing like that, you know, that that that first organic,, thing, even the even the creator, she tried to do it again because I think she was an Amazon affiliate. So she's getting a few percentage points out of each sale., and,, so we knew we had this TikTok friendly product,, just to like, you know, tell you people what it is.

Scott (00:06:49) - It's just like, it's a little glue. It's called bonding. It's for,,, it's almost like a super glue that doesn't get quite as sticky. And if you use UV light on the resin, it sticks things together. So it's kind of like a different glue., and it just works on TikTok. It's kind of like it captures your attention if you've never seen it before. So we just had to over the years we actually accumulated so much inventory. We're like, let's look at new channels and nothing seems like that appealing to us. Then in 2020, we're like, well, what's this TikTok shop? Someone told me that, like, it works. And so we go through the steps to set it up. It actually, you know, you have to go through a verification to do things the right way or TikTok will push you off. So they already have built like a marketplace with some degree of controls., that isn't does it feel too much like the Wild West?, and sure enough, we threw some ads on a video and, you know, you attached your product.

Scott (00:07:56) - Right there and like, it would sell and like,, we get a close to,, a row as of two, and that's where we want to be., obviously, we want to be higher, but, like, we have to be like, at at at two. And that makes this channel work.. So,,, I'm sure there's a few, you know, things I could say, but like, the TikTok shop feels very similar to Amazon in one way that I'm like, oh yeah, I get it. It's a closed system, kind of everything you need to, to grow the business is available through their platform., whereas if you're on Shopify, you know,, DTC site, you're like, well, I need you. I need to look at Google ads. Oh, I need to look at Facebook ads. I need to like SEO affiliates or whatever. Like, there's just, like, different levers. That is a bit more complicated.

Scott (00:08:52) - You're putting, you know, you're putting ideas together. Whereas like a TikTok shop, it's just like, you know, adds your logistics. It's all there on the platform, kind of like Amazon. So it's a closed system. And so I think Amazon sellers are finding their way to like TikTok shops because of that same feeling.

Josh (00:09:13) - Yeah, I love that. I, you know, for ourselves. We've experienced success on TikTok shop with a creator creating a video that's gotten over a million views as well. And I think that it's a hot topic right now because people are seeing immediate results. Right? I feel like it's much different than the Walmart sales channel. Everybody is like that.

Josh (00:09:35) - .

Josh (00:09:35) - I pick up a couple percentage points, but Walmart is still heavily favoring their retail products. Right. And that's what's showing up because they want to drive, you know, in-store pickup from their online site. And so you have your out that they have competing priorities. And so all of a sudden TikTok shops come along and it's like it's all e-commerce.

Josh (00:09:57) - Right. And finally, hopefully we have a real competitor to Amazon, which I think all of us want. So that Amazon feels a little bit of pressure in the fees and the margin compression maybe might abate.

Scott (00:10:12) - Items argue TikTok has almost, maybe even diluted their own,, service to push,, TikTok shop in that,, if you ever use TikTok now, you're like, oh, every fourth video I'm seeing, like this little product thing at the bottom. And so like, you know, consumers know they know when they're being advertised to,, and so, you know, in 2020 when like, everything was purely just for fun on TikTok, it feels a little bit different now. They're like, oh, there's like this e-commerce angle that any moment like, I might want to buy something., so yeah, no, TikTok is,, very aligned for making their e-commerce and actually like a random third party seller just working.

Josh (00:11:01) - Yeah. So, Scott, before we hit the record button, you had mentioned that you actually have a team member that oversees your TikTok sales channel.

Josh (00:11:09) - , and that's solely focused on that. So I'd be curious to hear, what are you guys doing?. What success? You know, what levers have you guys pulled on TikTok last December?

Scott (00:11:19) - There was no content about the TikTok shop. Nothing I almost wish I just would have, like, sold everything off and be like, okay, I'm going to build a course. And like, like if I would have been like the first one there was no one talking about, like what works? What levers are you?, but we actually found a contractor. After a few conversations, we're like, okay, yes, like, we need this resource., and, what he's doing is contacting,, finding affiliates. I think, like, we're talking like you have to contact you get a, you get a response rate of about 3% from creators., TikTok shop does this one thing where they align incentives of of affiliates,, with a shop where like if an affiliate,, promotes your product and sells, they get a commission of that sale and that commission could be like 20%.

Scott (00:12:16) - We're happy to pay that.,, because the platform fees are just like lower the,, at least at least for, for, for now. And so we offer 20, 25% to, to creators,, for everything that they sell, every unit they sell, they get like, I don't know, eight bucks. And because we have to pay more in ads, we had to pay about 12 bucks in ads to,, to get a conversion. So, you know, happy to pay an affiliate a little bit less. And, and you get some of that organic content that,, can, can promote the product. So we're, you know, he is contacting about a thousand creators a week, and,, we're trying to place as many,, units in the hands of creators and hopefully a few of them, you know,, do really well, I, I think there's something as I was, as I was talking about,, TikTok shop changing their algorithm to benefit sellers.

Scott (00:13:21) - So I've posted TikToks for a variety of reasons. I've done some for my own amusement. I made my brother in law go viral. I've posted some to promote SmartScout, and then I've posted some TikToks to talk about my product., the this is just a test, and there's something different if you attach a product to a video. TikTok just gives it. They serve that. They serve that video to more people. I can show you 30 videos where they, like, served it to 200 people. And then the next one, I, I use a product and all of a sudden it gets to 4000 people, like,, as I've seen since I've seen this platform so many times, I'm like, they're doing something to juice., they're,, the product videos. So. Yeah., that's what I'm saying. Like, they've aligned incentives for,, for sellers.

Josh (00:14:19) - Yeah. No, I agree, we've seen the same things TikTok is definitely heavily favoring anything with some products in their videos right now, and it's still the Wild West of reaching out to creators.

Josh (00:14:32) - Any tips or hacks as it relates to how do you get creators there getting hit up? They get hundreds of messages a day, right? And so how are you getting their attention to actually be willing to promote your product?

Scott (00:14:44) - So we give a good affiliate commission, you know,, I think we're at 25%., I think if you're over 20%, you're probably going to get a little bit more attention. But you're right., they have this, like, this whole affiliate center, and I myself contacted, like 60 people,, got maybe two responses. So you do want to have a good message and a good product?,, our contractor is pretty firm on saying it's a numbers game. You know, you just never know when you're going to get people at the right time.. And I've seen that as like, you know, in sales, it's like you contact 100 people, 3% respond, well, if you do that same 100 people in a year, a different 3% will respond.

Scott (00:15:34) - It's just luck of the draw. It's timeliness. It's like when people are checking their messages and if they have an open calendar, if they're like, oh, you know, I've got,, my content calendars looking like this, I do need a new product. So that's why we're scaled this to like, no, we're talking to a thousand creators a week and hopefully we can get a few dozen.., videos,, out of it., and then, because what you really want to do is look at the creator videos, if any of them,, start taking off. Throw some ads on that, and then if that performs better than your existing ad, then you build out a framework, you're like, oh, videos like this work, they capture attention., and then, you know, your next batch of creators have different,, they have a different starting point. They're like, okay, this is the new best video. I gotta beat this and then you get a new one or like.

Scott (00:16:34) - And so that's kind of the strategy that we've started to undergo is, just keep trying to find the new best video and put ads on that one. Yeah.

Josh (00:16:47) - Makes a lot of sense. What about,, you know, are you driving the majority of your sales from just affiliates and influencers that you've reached out to and them creating videos, or are you personally creating videos for your own account and posting those? And are those driving sales? Tell me about that.

Scott (00:17:08) - So that's a good question., the content that we've created mostly is duets of creators. So if someone features our product, we'll do a duet and you could do a variety of duets. You can do a duet that,, you aren't even seen at all. And you can layer in some text,, you can do a duet where, like, we have this one where, you know, it's the person's talking about the product on one side. On the other side, we're playing Jenga with the product, like, and so like, you're just, you know, you're kind of hitting that, like, you're getting people into, like, okay, they're they're someone's talking to them.

Scott (00:17:52) - But the soothing anti-anxiety part is just like watching something happening., and some of those videos have actually gotten, you know, 20, 30, 40,000 views. And the great thing about duets is that it just takes less effort and creativity. We could create a duet in like five minutes without any script, without any, like,, I'm editing. So,, big fan of, like, you know, once you get like a creator that, like, puts out a video, just creates a bunch of duets with it and you, you kind of create a counter story. So, like, you know, the creator is like talking about the product. And then you can create like this counter narrative that like, so it's like these two ideas that people are handling at once, like, oh, here's this product. But like,, here's maybe more about the business. Like you could show if you have a warehouse you're shipping, it's being like, hey, this creator, like we did one where like this creator,, this video was so viral.

Scott (00:18:57) - We are just, like, working like crazy back here to fulfill things. And that video did really well So,, kind of people like to get behind the scenes. There's the story, then there's the behind the scenes story. So,, and it's not hard. Those are the easiest ones to create..

Josh (00:19:19) - That's brilliant. Yeah. I love that strategy I think so many people are like, just like standing in standing still because they're so intimidated. Like, I'm not the face of this brand. I'm not going to go start like, I'm not spending my time creating five TikTok videos and dancing or singing or whatever I need to do to get attention every day, right? But I love that. Like, reach out to your affiliates, let them create good videos, and then just create duets on the ones that are doing well with some very simple ideas and strategies that you shared. I really like the one of, you know, showing the warehouse just trying to keep up.

Josh (00:19:56) - Right? People love behind the scenes. Any other tips on how you, as the brand owner, come out with your own content? More so you got duets? Anything else?

Scott (00:20:09) - . Let's see. I mean, it's tough. I'm going to say it's a big challenge if like, you're trying to create videos and it has to go to editing and like, you have to like write a script, we've done that and, you know, got results within a week. Like, that's like the hard approach. There's always something easier and even maybe more authentic, that, you know, don't don't be afraid of the low budget, low effort stuff because,, that does well on,, you know, people like seeing real people. They don't always like seeing, like, doctored advertisements.. So there's so much you could learn from just watching successful videos. What is that? There's this tool out there. I think it's called fast MOS. It's all right as an interface, but it has a lot of data about successful TikTok shops.

Scott (00:21:14) - , and I think it was like a Chinese business that they created then they like, then they kind of skinned an English version., a lot of good stuff. In fact, I've been, like, interested in copying that business for a second. I'm like,, I want to do the smart scout for TikTok. And,, but, like, you want to see successful ideas, you want to see, like, okay, what are the top people doing? Okay, I can copy that. You don't need to reinvent the wheel. Let's let the creators do that. You as a brand owner, just find out what works and which ones. There's going to be, like ten things that work. 1 or 2 of those are going to, like, work for your product.

Josh (00:21:52) - Yeah, I love that. So I pulled up fast Moss, just as you were talking. And yes, they say that they are the first and largest TikTok data analytics platform. Right. The best choice for sellers brands, let's say rapid TikTok data update accuracy, comprehensive data coverage so that you can see what's trending, finding the right creators,, finding the hottest lives.

Josh (00:22:16) - What are people working like? What's the best type of life, yeah. To be doing.

Scott (00:22:22) - And so,, it's definitely, you know, it's definitely a Chinese owned company. So the customer service will be a little bit weird. I've even heard that their data isn't, like, always accurate, but that doesn't matter. It points you in a direction where you're like, okay, these. What is the best on TikTok shops are, supplements and like kind of like, you know, think skincare any like emerging brands do really well,, on TikTok shops. So you just want to see what they're doing. You know, some, some products have sold already, you know, $10 million in revenue in just like the last six months. How do you know? Who are they? Who are they working with? What are the creators that are promoting and fast. Shows you a lot of that stuff. I think you could get some of the stuff for free. Never paid,, tier, but,, so it's worth it if you're taking TikTok shops seriously, it's worth just like, just browsing it.

Josh (00:23:22) - Love it. Scott, any other,, points, tips, strategies for TikTok shop that you think our listeners need to hear?

Scott (00:23:32) - , sure. There it is. Okay. Here's one: we just always throw a coupon on our product. So it's at $30. But we know people convert way less at 30 than at 25. It's a big conversion lift. So we just throw a $5 coupon at $30 and,, leave it on for a month, then turn that coupon on again. It's,,, it's something I learned from the Amazon world and just applied it to TikTok.

Josh (00:24:06) - People, just like the fact they feel like they're getting a limited time promotion and it increases the conversion rate.

Scott (00:24:13) - Yeah, it may just be that our product just converts better at that price., we just back our way into it.

Josh (00:24:20) - Yeah. It makes a lot of sense. Awesome. All right, Scott. Let's transition,, now into your story where you're on your honeymoon, you know,, and your Amazon has an FBA change.

Josh (00:24:34) - You have to come rescue your business. I think Amazon sellers. You know, that's the thing that I think is, like, this story may be an older story and the change is in the past, but the point of it is this Amazon is only going to be continuing to change, and you need to be able to adapt. So Scott, I'm interested to hear this story.

Scott (00:24:54) - Well, the only reason I volunteered this story was because I really liked today's application. There's two complicated fees that Amazon's adding right now. I think one goes live for like three days on April 1st. And, that's like the low inventory fee. Then they have, they also have this placement fee. And when I started thinking about these like new, like structure changes that actually, you know, this placement fee is really changing people's, like, shipment,, plans the way that they, like, you know, where they deliver, how they do it. Do they break up the shipments like, oh, my goodness, this reminds me,, so I got married in 2021.

Scott (00:25:38) - , you know, most Amazon sellers did pretty well in 2020 and 2021. If you actually had inventory, it just sold.. And,. Me and my wife were like, we're going on honeymoon to Italy. We are not bringing our laptops. We're not going to work. And I was like, cool. Yeah. That's great. Two weeks sounds like a lot of fun. We talk a lot about going back to Italy right now, but, I think our third or fourth day in, I get a message. I'm like, hey, like, these storage limits are like, we are now below the line. They have reduced our storage capacity. And that means our 100 employees working on our Amazon FBA business. They can't work. They usually can fill up 1 or 2 days of work with, like, you know, prepping products, getting everything ready, cleaning things up. I don't know, they do, they did a good job of staying busy.

Scott (00:26:43) - But man, this hit me. And I like, you know, getting into flight or fight or flight mode. I'm like, I've got a few hours. I can't interrupt this honeymoon., I, I don't have a laptop. I don't know what to do. And I'm like, I maybe can squeeze 2 or 3 hours. So what I had to do is like, I was like, okay,, wife,, go shopping in Florence for a few hours. I've got to go to the Apple Store right here, buy a laptop and connect to computers in the US, or do whatever to destroy inventory. I actually because the reason I had to do this is like we had 60,000 different SKUs. I've got to connect to a database and,, find, you know, query the worst of the worst performers. And they had to destroy about $200,000 of inventory and get that submitted to Amazon. Hopefully that submission works, because if you've ever, like, submitted a feed to Amazon, sometimes it can break.

Scott (00:27:51) - And, I just had to do it all right. It was like a very stressful 2 or 3 hours. I needed to get it solved. And on top of it all, I had to work on an Italian keyboard, which sounds very similar. You know, it's like it's like, okay, yeah, it's the same Qwerty keyboard, but man, there's a few small differences of like where,. Where certain characters are, how to get them. It's like they have one caps locked and they have like the second type of caps lock type of key. I don't really know what I'm doing.. Eventually I figured it out. I submit the feeds they go through successfully, and I think I did as much as I could, but,, all the while I am, like, forming my business around Amazon's,, requirements and which is always been the case,, that FBA phenomenal program, real rigid in certain aspects where you come up against hard walls where like there's like storage limits or there's long term storage fees, monthly fees, it is designed and incentivized to get the one behavior that Amazon wants and not sell through.

Scott (00:29:14) - And so, yeah. Even these new fees that are hitting it is like they're basically telling Amazon sellers, lean into our systems and this will work for you. If you don't want to lean into our systems, you're going to have to pay a little bit more. And, right now Amazon wants inventory available nationwide. So they're like, if you don't have inventory nationwide, we're going to charge you a little bit extra. This new low inventory fee where they're like, if you don't have inventory nationwide, we have to ship it across the US., and it's expensive. So,, that's, you know,, it was a very personal story for me, like it totally disrupted me. But,, I honestly, like, we would have,, the business would not have survived if we didn't react fast. And if I didn't disrupt the honeymoon and destroy and liquidate $200,000 of inventory so that we can get our new stuff in, because,, if you've ever had an Amazon business with a lot of SKUs.

Scott (00:30:34) - Josh, I know you have,, many it's that stuff that goes out of stock once you get that in stock, like, whoa, like that is like the lifeblood is,, whatever runs out getting replenished is the lifeblood of your business. And so,, yeah, that's,, that was a story that I'm never going to forget., just because, like, the weird things from, like, the,, the Italian keyboard to,, like the honeymoon and, like, the 2 or 3 hours that I had to, like, make that work.

Josh (00:31:10) - Yeah, well, it's funny because, you know, now you're now jogging my memory here, I, I remember that exact same day when Amazon rolled out the new inventory,, you know, restrictions, right. Or storage placements. Right. And that you had a limited amount of storage that you could use overnight. Right? Amazon was like, hey, you've got six months to prepare. It was like, by the way, this is happening in a couple of weeks.

Josh (00:31:37) - , and, and we had up until that point, our business, we had a lot of seasonal items and we're like,, if it doesn't sell this year, it's not a big deal. It'll sell again next year. And the storage fees at Amazon, they're relatively low. So not a big deal. Well, I mean, the game has completely changed from that time, right? That was almost four years ago. And,, I remember I had to do the exact same thing I went through. And I remember the exact day and time and place where I was sitting at my desk, like, I've got to liquidate a ton of inventory and this is going to hurt, but I have. And then we worked with our manufacturer. We're like, Amazon's going to be returning a bunch of crap. And that was like their most horrendous experience because it was like thousands of units coming back to them in the US and just Amazon. If anybody's done the Amazon-like removal orders, they come back to you and you might remove a thousand units.

Josh (00:32:33) - You're going to get what, 500 boxes. One has one in it, another one has 50 in it, another one has two in it. And it's just this mess. Right. And so I think that is like the important story though, what you talked about, which is just like you've got to learn how to adapt. And I laugh at all of the Facebook ads. I think there's probably few of them now of the people that are like, create passive income on Amazon, I'm like, oh, Amazon is the least passive business that I know of right now.

Scott (00:33:07) - Yeah, well, they're still around because like, there's a scam component to those ads. They're trying to get you to spend $30,000, $40,000 on a passive business., but yeah. No, no, your story, like, it's,, it's painful. And, you had to make a lot of quick decisions.

Josh (00:33:31) - Yeah, 100%. So, Scott, I'm curious to hear from your perspective, you've been in the e-commerce space for a long time.

Josh (00:33:38) - You interact with a lot of sellers. Give me some of your predictions of what you think is going to happen over the next 3 to 5 years on Amazon. Do you see, you know, just continuing margin compression because I feel like for 2023, everybody's story is like I was not as profitable as I once was. And now with these new inventory,, these new inventory placement charges and,, you don't have enough inventory, Amazon's asking you to be perfect. And if you're not, then we're going to take more margin from your business. So what? Where do you see the puck going over the next 3 to 5 years?

Scott (00:34:17) - . So I think people's margin compression can depend a lot in their category,, their brand positioning., like, if you are able to, like, sell the premium,, price points, you know, you don't see as much as the compression versus the,, commodity type products that are erased to the bottom., and, yeah, there's some., one thing that is unavoidable, that is just like, kind of here to stay.

Scott (00:34:55) - And,, I do have a thought on this is just,, advertising the reliance on advertising seems to be as high as ever. And some business models. This really hurts. It really hurts. If you are a one time seller, someone's going to buy your product once, and they're likely never to buy it again. They're likely to forget your brand and you have to pay money for that transaction. That's where advertising and the like hurts that business model the most., because they don't they're not they're not building brand equity. They're not building like., you know, some products you talk to your friends like, hey, this product, like, solves this problem. You know, where, like, if you're in that situation, the more units you sell, the better. So this reliance on advertising on Amazon is very challenging. And what I saw someone,, like, a week ago, I think I took a screenshot just like this guy's comment in a, in a chat group.

Scott (00:36:04) - It's like, this is really intelligent, where he stops worrying about organic placement. He's like, I don't control that. I do control our ads, and I do control,, you know, our, like, our price point. And, do those ads convert at a profitable rate? He cares about that. He's like, I'm going to assume that I'm going to, like, advertise forever. I need to make sure that everywhere that I advertise. Is still profitable. So, you know, you probably need to have decent margins like we're talking. Let's say you say your margins are really good on Amazon. They're 50% like we're talking gross margin. You know, like if just like someone checked out, you know, you'd have 50%. And, that's on the high side, I think more normal, good margins would be like 40%, maybe 30%. And but can you advertise and still leave,, some healthy profitability? I actually I've seen this happen in our business and my private label business.

Scott (00:37:15) - There are some keywords. It does not matter. Like if it's now or if it's in a year. We generally just make money off of this. We have such a high conversion rate on this high intensity stuff. And. And then I'm going to spend money. Now I'm going to spend that money on that keyword next year, because it is so close to the unique value that we're serving., and so I almost think finding those little,, slivers of ads, is an unlock to your businesses. It's an actual improvement., and you could sideline it and be like, I'm always profitable here., because this,, just assume that, like, like, organic sales will come through., people start searching for your brand, but,, you gotta have this. Like, if you could build a profitable discovery phase, you now have a real good business. And so that's when I think of, like, what's going to change and like, like what's not going to change.

Scott (00:38:21) - What's not going to change is Amazon loves advertising., and so how can you lean into that and make that a strength to your business?,, so, you know, it very much depends on your category. It's not like I can answer. I can answer our specific, like the one that I just brought up was,, we have these pickleball paddles. That's part of the legacy of this private label business. They were one of the first pickleball paddles. It's now very competitive and it's hard without some serious backing to make money. But where do we go? Well,, if someone adds a specific keyword to a search. Pickleball paddles, gold pickleball paddle zebra or pickleball paddles for women, pickleball paddles for,, you know, or pink. And so we serve that product on those niche keywords. Maybe they only get like 30 searches a month. But guess what? We'll convert a third of those searches, and all of a sudden this is a profitable product for us.

Scott (00:39:29) - If we're able to keep accumulating like profitable keywords for us, we don't need to win on, you know, the race to the bottom. You know, people just type in pickleball paddles, like, it's brutal., because it's a very it's actually turned into very much of a commodity product. And, or like the top end brands are now, like, spending millions of dollars on like,. Sponsorships with like, athletes and stuff and like, that's not the game that we're in. And,, so.

Josh (00:40:05) - That's why I love that. I think that's a great mindset shift. I think, yeah, 3 to 5 years from now, what's going to change on Amazon? What's not going to change on Amazon. And advertising is only going to become more predominant on Amazon and inventory and FBA fees. Guess what? I promise you they are only going to go up at this point., so get used to it, right. And Amazon's going to want better efficiency from their sellers.

Josh (00:40:34) - And so that's not going to go away. And so I think for me, my recommendation for any Amazon seller is to get really good experts in your supply chain team. And then you also need to get some really good experts on your PPC team. Those are going to be some massive levers that you're going to need to pull, and they have a direct correlation to the profitability of your business. And so really honing in on that, I think you'll look back 3 to 5 years from now and be grateful. The decisions you make today to bring those types of people in. Scott. Another thing we talked about before we hit the record button on the podcast, as I said, you know, do you have some ideas of how to help seven figure sellers grow to eight figures and beyond? What are some different tactics or levers they can pull? And then you took down some notes to make sure you didn't forget those. So, here's my question.

Scott (00:41:30) - We actually hit one of those. One of them I wrote down was profitable advertising.

Scott (00:41:35) - I just felt like that fit that question that you said of like, what's not going to change here?. Here's what I see. This is,, that I think we miss,, often,, sometimes we build a product, and maybe. Maybe it's a base hit product. All right. We kind of set it and forget it when,, there are small improvements that you can make and do it from this lens. You're going to make improvements. Assume people are making a split decision on your product. They're giving you two seconds. They're there.. They're scrolling through the top five results in two seconds. What stands out about your product or do you look like everyone else? If you look like everyone else, you're going to get everyone else's results.. Can you differentiate your product in just your hero image? And I would argue there is more. There's always more you can do with your hero image, whether that's improving the shadows, whether that's improving,, adding in something that gives it texture.

Scott (00:42:51) - You're seeing some of the top,,, supplement products will, like, have a little bit of the product out in front of the bottle. It's like sitting there as an accent item, and maybe they'll have something. Maybe they'll have the box behind it either way. Like these, like small little things. You're giving that person comfort in trusting you., and. Going. They don't have a lot to trust you from, but they do make judgments off of your image. We are so susceptible to good design, to making us feel like the product is actually better. You can have the same product as someone else. And guess what? The one with better design that kind of hits our psychology, is going to do really well. So, you know, just take that assumption. People are making split decisions on your product, and the thing that you control the most is your hero image. And I know what you're thinking. You're like, you know what? We have a good hero image.

Scott (00:43:51) - , I can't do anything more. I don't agree with you. I think there's more you can do. Then there's more you can experiment with. And,. So I can give you one brand to, like, look at, like, hey, who's pushing the envelope here?. This brand turned a commodity type of category into what I think is defensible.. Maybe people are actually getting to know them.. That's Zulay Kitchen Z-U-L-A-Y. If you just, like, search them on Amazon.

Scott (00:44:28) - You will see a few unique things about their images. And I'm the founder of this is Aaron. He's a regular in the Amazon content space. So you can hear his like take., but I'll just give you a summary that he has someone on his and his company. All they do is think and worry about hero images. The first image they like, they do the accents. They do like to improve the shadows. If you look at their hero images, they're just very like,,.

Scott (00:45:08) - There's nothing weak about the image, the lighting. It is just like rounds. Really. Well, that kind of gives you a very comfortable feeling. And then if there's color variations, they put the different color variations in small,, accents because you want to like I just improve the click through. And you wanted people like, oh here's this one that has a lot of different colors. I want to choose this option because I want to explore there because as soon as you get them on your page, if you win that click, you have a better chance of winning the sale., and they even this is kind of where you get into the gray area is they even put some specific text on their packaging. They put text on their packaging so that people read it while looking at the hero image. And, you can put your packaging on your hero image. And so, you know, you could experiment with all this stuff. I,. That's it. Kind of like in a nutshell, e-commerce.

Scott (00:46:19) - It's like,, people are making split decisions and they're solving their problems, and you have to win them,, through that. Not easy , it's not easy. I'm not pretending this is easy. Like, we have struggled to, like, improve our images, you know, involves graphic design and like, okay, now I got to submit it to Amazon. There's some operations here. But,, you know, it just improves the perceived value of your product at every second you can.

Josh (00:46:47) - Yeah, I love that. I think that's a great note. And we have Aaron Cordova's. He's going to be coming on the podcast here. coming up. So everybody should stay tuned. He has one that comes up frequently in our conversations. And he's doing a great job with the Zulily Kitchen brand. Scott, any other levers or, you know, tips or ideas to help these seven figure sellers grow to eight figures and beyond.

Scott (00:47:14) - . I, I hear quite often and I see this is the people that keep growing.

Scott (00:47:24) - It's because they keep launching new products. I know that, you know, every business is different, every category is different. But,, if you have that muscle of, you know, launching a product every week to a product a week, three products a week,, we, we know that there's three types of products. There's the duds, there's like the, the base hits, and then there's the heroes. You just need to find more hero products, ones that you like, that can drive your business. And so if you want a very flat business, don't launch products. If you want to keep growing,, have a playbook involving,, launching and expanding your, your, your portfolio and expanding the unique ways that people can,. A star purchasing from your brand. And, because every human is a little bit different, we all need different things at different times. So, yeah, there's always a, there's always an adjacent category to what you're selling. And that's probably one of the better places to start.

Josh (00:48:35) - Yeah. I think you hit the nail right on the head. You even said, you know, if you want a flat business on Amazon, don't launch a new product. I would actually say if you want a declining business on Amazon, don't launch any new products. Because what I feel like I hear time and time again is that those old products that you launched 2 or 3 years ago, those are the products that they're actually declining 15, 20% year over year. And unless you're coming out with new stuff on a regular basis, you will find yourself shrinking overall. Scott. As we start to wrap things up, I do love to leave the audience with three actionable takeaways from every episode. Here are the three actionable takeaways that I've noted. You let me know if you think I'm missing something here. Action item number one. If you're not currently on TikTok, shop a get on TikTok shop. But the biggest strategy that I think I learned, from Scott here today. Is that you don't need to go crazy thinking you've got to do all this in-house content thinking, I've got to hire all these models, I've got to have a studio, I've got to create these professional videos.

Josh (00:49:48) - I love Scott's approach of we're reaching out to a thousand influencers and creators every single week to 3% take rate at this point, but we're getting dozens of videos per week, and then we're going to go create duets, very simple videos that don't need a spokesperson per se, that don't need a lot of editing. You mentioned just like five minutes. You could have a new TikTok up, and you're already taking videos that have done well and then layering them on your own channel and platform. And so again, I think that TikTok shops have a lot of opportunities to continue to grow. And I think its first mover advantage is going to be massive right now because eventually I think TikTok shops will eventually start to get into that. The search feature, right? Right now it's all driven by like videos that you're seeing. But I do see maybe there comes a time where people are actually searching on their platform, and there is kind of a ranking algorithm like there is on Amazon for products. Action. Item number two is going to be getting really good at the basic fundamentals of your business.

Josh (00:50:56) - 3 to 5 years from now. We don't know exactly what Amazon's going to look like, but there are a few things that are not going to change. That's going to be supply chain and logistics. And those fees, FBA fees, inbound placement fees, those are only going to get more challenging. So having an expert or working with consultants that are going to help you level up your game is going to reap dividends. In addition, PPC is not going to go away. And so up leveling your own game, hiring consultants, and ideally bringing in somebody in-house that knows your brand, that knows where you find success, and leveraging that person is going to reap dividends in the future as well. So start hiring. And then last but not least, I think the one thing that you, you talked about that is very basic. It's not game changing action. Item number three is to optimize your main images always. You should always be testing. You should never just say, well, this image won the pig food poll that I ran on it five years ago, so surely it's still the best image or even something that you launched two years ago and you're like, well, I did all these Pickford tests.

Josh (00:52:08) - It should still be the best, right?, I love that you called out like Aaron Cordova has like, one single team member that that's all they do, constantly refining that main image. And I think that's definitely something that a lot of sellers could take out of that playbook. Scott, is there anything you think I missed that we need to share with the audience?

Scott (00:52:28) - That's great. I need to write my own notes and just double down on that stuff. In my business.

Josh (00:52:34) - I love. It's always easier said than done for sure, right? Yeah. All right, Scott, here are my final three questions for you. Number one, what's been the most influential book that you've read and why?

Scott (00:52:47) - , sure. I had a hard time choosing one.. One is business and one is just fun., so I'm going to, like, just get to two real quick. So,, the Naval Almanac,, like, why can't I think of his first name? Naval? Is this,,, let's call him a business philosopher,, where he has succeeded in a few of his, you know, some of his business.

Scott (00:53:12) - One of his business angel lists has over a billion in valuation. So he's successful. But his writing and thinking is so clear. So, applicable to anyone's business. He has this one,, tweet where, like, it's like, how to get wealthy., so, no, it's how to get wealthy without being lucky. I just like, love that sentence. I also love that the Twitter thread wasn't involved with the almanac. It is someone who collected all of his,, best,,, posts that he's written either on Twitter or other platforms. I know, it's kind of strange. I just put it in a book, but like, there's,, amazing wisdom,, there, that really applies to a business. It's basically like it's under this assumption. Let's say you live 100 times, how do you become wealthy? And at least 99% of those situations? And he answers that here's like, here's the things you do to like, build leverage for yourself that, you know, you can be wealthy.

Scott (00:54:21) - So that's a great one., I listened to it on audio. So that's the Naval Almanac., a,. Now, a non-business book that I love is called Over the Edge of the WorldI think about it often , it is just basically Magellan's travels around the world. I mean, everyone's heard of Magellan, but like, if you actually dig into the story in the details, I'm shocked. No one has created a miniseries on this, like an HBO kind of like ten parts because,, they started with five ships. They ended with one ship. They had about 250 people, and then only about 17 people made it back home. And people died in every single way possible. It's really challenging, really tough, and it's just an awesome story. So, I can definitely recommend that book. It's not for the faint of heart.

Josh (00:55:18) - I love it. Those are some great recommendations, Scott. All right. Next question. What is a new productivity or software tool that you've recently discovered that you think is a game changer?

Scott (00:55:28) - Yeah I know.

Scott (00:55:30) - , this is becoming really popular. Riverside does this, but this is the one that does this. The best short video content.. It can be very hard to build, but I found a tool that does it really well and does it really fast, and, and I can give a lot of value. That's this tool called Opus Pro.. Are you familiar with it?

Josh (00:55:54) - I am, yes.

Scott (00:55:56) - Oh, shit. I'm speaking to them. Well,, to the converted. I started really implementing this about two months ago., as we create a lot of short form content, it does the best captions I've ever seen. Riverside,, does captions, but it's not quite as good. It just doesn't, like, solve it for you. And you can edit the short form videos right in the platform. And,. As you can see, I'm very reluctant to work with editors if I want things fast, if I want results fast. And so, I just loved that tool.

Scott (00:56:38) - And,, it's been a way to, I don't know, give value to,, people that I work with.

Josh (00:56:45) - Yeah. No, I love it is a great tool. The other one that I've also heard of, vidyo.AI is also another good one. It allows you to do more like custom branding on it so that it produces like the captions and like custom color. All right, Scott. Third and final question. Who is somebody that you admire or respect the most in the e-commerce space that other people should be following and why?

Scott (00:57:12) - Okay. Well, again, I found two people very different., marketplace pulse Joe, he writes a lot about kind of the big picture and really focuses a lot on Amazon., so his blog marketplace is I think it was recently acquired, but it's just good writing. It's kind of always nice to be aware. He did a recent piece on how, like, hey, everyone's talking about Shine and Shine and Timo and TikTok shops, but he's like, Amazon's real competitor is Walmart in terms of like a competitor at scale.

Scott (00:57:50) - And it's just interesting to hear him like the way he said that. It's like, okay, we have all this shiny object syndrome, but here's what's actually the big picture., another person that's worth following if you want to like,,. A view on e-commerce as a whole, not just to Amazon is this guy Rick Watson. He writes often on like, you know, if you want to like someone that really understands Shopify, if you want someone that understands the other,, e-commerce platforms, he comments,, it just seems like he has insider info because the takes that he has, the data he brings., it I'm like, I'm like, here's how I feel. It's like, it's like I see, I see Joe, I see other people that, like, are very smart. I'm like, I probably can do that. If I focused. I look at what he produces. I'm like, I can't do that. This guy has insights. He has connections. He knows,, he knows the big picture,,, really well.

Josh (00:58:59) - Scotty. Those are some great people to follow along. So Scott, thanks for those recommendations. Now, Scott, we didn't get too much time to really dive into your software smart Scout, but I would love for you. Go. Go ahead and tell people about your software, how it can benefit their business and where people can find you at.

Scott (00:59:18) - Yeah. I, so I, you know, I sell on Amazon, but when I say I sell, it means I usually tinker and develop stuff. And,, so this is the second service that I've built for Amazon. So the first one we actually sold off in 2019,, successfully then,, so smart Scout was this idea that,, we wanted just to look at every brand on Amazon at once. So there's about a million brands on Amazon. And we want to look at top level data. Okay. Who's selling $1 million a month?, or maybe I'm selling pickleball paddles. What's happening in the pickleball paddle category.

Scott (01:00:00) - So if you think of helium ten and Jungle Scout, those are very product centered tools. They focus on a product. SmartScout is more of a market. So,, instead of product research, it's more of like a market research tool. And here's where it's really applicable. If you let's say you sell pickleball paddles. Okay. Here's the ten brands and their market share in this category and how it's trending over time. So we give you that idea of how things are moving., you could be sure. You could jump in an individual competitor, look at the full brand strategy or just look at an individual product., and. Oh, then we do a really good job of showing you adjacent categories. Take this. Like, say the,, dog dog toys. There's ten types of dog toys. And turns out some of them are huge. They're selling like, you know, $10 million a month. And just like one category of dog toys, there's other dog toys that are like, you know, $100,000 a month, like literally like 1% of that size.

Scott (01:01:15) - So if you're doing really well in one, you want to move to an adjacent category. We have this category browser that lets you see. You know, what are the adjacent categories that probably make the most sense for you and are a good opportunity? So, that's kind of how we think of SmartScout, what we've built. We ... It's been a wild ride. It's not an easy business, but it's been fun. We have over 3000,, paying customers right now, so it's,, honestly been my favorite thing that I've worked on in,, you know, my Amazon career of, I don't know, 13 years.

Josh (01:01:58) - I love that Scott. Sounds like amazing software. You're a wealth of knowledge today. You are the smartest Amazon seller. So thank you.

Scott (01:02:08) - Thank you.

Josh (01:02:09) - Awesome. All right, Scott, thanks again for your time and coming on the show.