Ben and I worked together at Amazon, he now runs a series of brands on Amazon whilst holding down his day job at Gympass.
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In this episode we discuss:
[0:00:01] George Reid: Welcome to It's Always Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week on the podcast, you're going to hit industry experts, brand owners on Amazon employees share their answers to the basic yet fundamental questions. You should be asking yourself about your Amazon business. Now let's jump in. Hello, Ben Timmons. Thank you so much for coming back onto. It's always Day one we've already had a little bit of Ah, nat'l Andi. For those who didn't listen to Benn's first episode, Ben and I worked together for just under two years. We then both front for the job. But Kraft Heinz, he got it. I didn't so hard to think of other options, which was, you know, one of them sticking points in our relationship that such is life on. Ben now runs a serious little Amazon side. Hustles, which has been doing for some time, is well, Azaz does some role at gym pass spending. Give us a bit of a background on the side, hustle for 30 seconds and we'll get straight in some questions.
[0:01:05] Ben Timmons: Hi, George. Thanks for having me back. Sorry about the craft. Times, things you never talk about that multiple times. At the end of the day, if you're not good enough, you're just not good. But what? Fantastic. So everything happens to everything's in my brand. Uh, yeah, exactly as you say. Got a variety of of side hustles. Summer, very different life stages some very much in their infancy and single skew expiration businesses that spanned multiple categories, for example, just recently launched a board game kind of a a lock down, take on cards against humanity, for example on then I have two other businesses that are slightly more advanced that we're all in the fitness accessory space. So all use a very similar model purely on FB A, um, but yeah, very, very simple and straightforward. Small school businesses
[0:01:54] George Reid: on one thing we were discussing before before we kicked off. I think it's an interesting point. So over the last year, I think Amazon as a whole has accelerated. Um, you're your business, particularly your your primary one that you started when we're at at Amazon. So three years ago now obviously accelerated massively with that, you've you've achieved brilliant success for what is a very simple product, you know, which is always nice, but you still got the day job. You're still doing the 9 to 5. And at what point do you think you would ever leave that? Why you still doing the day job? Why have you not quit yet? And just going balls deep in on the Amazon stuff? Kind of what you're taking all of that.
[0:02:43] Ben Timmons: Yeah, it's a great question. And one that one that rears its head on a number of occasions when I speak to close friends and family about this and exactly as you say, I've been lucky enough to enjoy a Siris of continued success and growth with my primary business workout logs, Uh, 2020. It was a really good year, even considering the sales impact of lockdowns and the uncertainty that that created there is, of course, the benefit of the digital switch where Amazon benefited massively there. And then there's such vendors such as myself, but you know it. It was great, and the success from that has come from doubling down on and free, focusing on improving digital assets on advertising as well. That's been the real key driver of growth in 2020 but exactly as you say have been perfectly candid. I could very easily it quits what I do as a as a day as a day to day job. No, from a financial point of view, I guess it's more than sustainable to do so. E think for me, there's there's a few key reasons why not. The first one is thank you. The environment I'm in now with the company that I'm very lucky to work for. Jim Pass affords May some amazing opportunities and responsibilities. I wouldn't simply wouldn't get within my own side hustles, so to speak. Right now, one of those is the opportunity to lead a team, which is something that I actually loved doing and I'm extremely grateful for, because it gives me the amazing opportunity to help coach and develop some of the younger talent within the organization. And that's something that that's really, really close to my heart. And I feel that training development off junior members of the team is fundamental to eight. A fast growth cos future success. So that's something I simply wouldn't be able to get right now. It's not to say that wouldn't be able to get that in the longer term if my business was my side business was to grow. And secondly, to that, I'm also hyper aware of the fact that within my business off one, there's only a certain amount of learning that I will be able t do and gain access to within that time. So I take it upon myself to constantly trying to learn about different areas, how I can improve the business. For example, I recently read a book by Shepherd about reinventing retail and trying to apply some of those learnings. That's great. But the exposure that I have to people around me is so greatly reduced that I don't feel I'll be able to learn quite as much as I can in my current role on. It's a really interesting dynamic, because I learned almost as much from running my own business as I do from working at an organization. So it creates a real synergy where I can take learnings from one environment and apply them to the other on. I feel there's still an awful lot of room there for me to continue to grow and learn from from some amazing and really senior and really, really switched on commercial people. I'm really keen to continue to extract that knowledge and those people around me and apply that to my actual business and my business model and really use that to take that to the next level. I've been building the business up in a Sfar, a sales in large amount, but in far of what I'm doing, toe revolutionized what I'm doing. It's quite small increments of small little rations. I can continue to learn and and compound and aggregate that I can really help accelerate the business. You know, 10, 20 fold, rather than just doubling each year, which is still great. But there's still a north a lot, lot more that could be done there from extracting that learning from people that have that experience.
[0:06:10] George Reid: Do you think any of it is also having that safety net? Does that come into it and also factoring in how easy the Amazon can be snatched away? Does that fear come into it all or or no?
[0:06:25] Ben Timmons: Yeah, definitely. I think the safety factor is something that again now, January 2021 it's probably more of a fact during the last 12 months than it's ever been. You know I'm very lucky. Toe have a role at an organization that's continued to grow, and I'm actually going to do better at the crisis than anyone else. And job security is really worth its weight in gold at the moment. So talk from the current situation. Yes, that's super important. And I think if you go back. So as you mentioned that Amazon three years ago, when I first started the business, there was always that question off. Is it gonna work? Is it gonna work? Is that cell just a fluke? Is this Is this customer going to come back to May and by again, because retention is a super important part and now we're three years off growth, Andi evidence. I'm confident to say Okay, I have a safety blanket in my assumption is there that business will continue to perform at X level? So that safety blanket it's still important piece, But it's nowhere near what it used to be, say two or three years ago, because I wouldn't have had the confidence at that point to move away. So that is, that is something that's still really, really important and does does play in my mind. I think when you look at, as you said, the ability that Amazon has to impact your business, that is what terrifies me. I've been on. We've talked about this in a previous podcast. I've been at a point where one of my Amazon account was blocked almost two years, and it is, you know, there's there's no words to explain. There's one word that does. But there's no words to explain how difficult it is to navigate that situation of Amazon on the recklessness. Almost and just how unapologetic they are in closing down accounts is the single most terrifying thing off Be independent Amazon, which, quite frankly I am. The reason for that is the fulfillment model, because it's the most low, low effort for myself. So that is the bit that worries me within that there are other considerations as well, one of which is and what's the likelihood the Amazon will just create their own retail variation. This product advertise it to kingdom come on, not worry about making money because a multi multi billion pound organization has far better pricing power than I do. Within that, there's there's another manifestation of that which is competitors quite confident in this sense. But there's nothing to stop. A super low cost competitors are that's trying to imitate the product coming in, which we have seen on occasions as well. So there is always a concern there, and that, for me, is one of the reasons why we talked about this before is for some of the businesses, for for one of them, especially, I'm thinking about what that exit strategy will be. So having a clear goal for that on building towards that exit strategy is important. No, it's always better to get to get off the elevator a couple of floors below the top before it gets off the top and just keeps going and falls off the side. That's how I'm trying to get it so that planning to an exit is an important point.
[0:09:24] George Reid: It's the new analogy that one I haven't heard of that widely used, but a great one there. I don't think many philosophies pitching that one. A
[0:09:34] Ben Timmons: paraphrase that slightly from Richard Soros, A who is who is, um, investor or a technical trade, essentially. But yeah, I'm a claim that you get the gist.
[0:09:46] George Reid: No, no, it was fantastic. A brilliant, brilliant job. But for you, what would what would that exit strategy look like? The moment you look at your business right now, you look at where it's at you Look at those threats, which would be Amazon, which might be a Chinese competitors. We've talked about before, and I've I'm gonna raise that flag of what you're doing to build that brand moat. Many of those things you're implementing. I'm not saying I'm responsible for a lot of your success. Some of my tips certainly contribute massive, massively. But what is that exit plan? Knowing how easily things can be snatched away? Is there a point? Is there a figure? Is their offer your waiting for or you would like, What does that look like?
[0:10:30] Ben Timmons: Yeah, it's a really great point. And us, your feedback on your tips have been invaluable. That's far, George. So I'll try my best. You in on equity deal off a very minority state. But yeah, for me, that exit strategy it involves just selling the business 100% essentially for it for a cash deal, maybe a longer term equity deal. There's a really exciting point now for Amazon sellers. Where? A business, Uh, and it's not quite simply this, but for ASIO. For example, a unicorn business in the U. S. Has made incredible waves in the space by rolling up Amazon businesses by purchasing them, increasing operations, doubling down advertising. There's a lot of operational synergies on because of that ratio has seen huge growth, primarily in the U. S. They are in Europe. But what we're now seeing is this proliferation of smaller businesses in a race to become the three CIO of Europe, even though they're already here on what that means is there's now a really exciting opportunity for sellers toe actively explore exit strategies that before might have been a little bit difficult to find. The reason for that is Amazon business models were still quite largely misunderstood. So there's still opportunities out there things like empire flippers to list and sell business. But there is now a lot of smaller businesses that will now, you know, look at purchasing. Amazon stores likes of ratios. I've mentioned heroes who recently secured a 60 в‚¬million million funding. There's a whole lot of a lot of companies out there, and I think that what That means if we look at the supply and the demand aspect, there will always be a a new supply of high quality stores and Amazon. But it's not going to increase that quickly, whereas what we're seeing now with so many new players, the pricing and the multipliers of these acquisition businesses on a position to pay is increasing, which is fantastic for sellers, multiples of you know. So between the 2 to 4 Ibadan region on, that means you're looking at a perfect opportunity to sell that business. So for May, that's what I'm looking at. There are minimum, you know, 12 months cells that you have to look at in order to be eligible for purchases from these people. That varies across the board from them. But for me, I have a figure in mind, which is okay when I hit X amount, then this is what I want to have the conversation and look at. Look at what that cell process looks like
[0:12:59] George Reid: on. It's an interesting point about three ourselves on bond. So many people are reaching out to me at the moment. Who wants to do similar things and you know, the kind of I just want to chew your ear off for a bit and get some free advice and what your thoughts are. But one thing that I think many of them, perhaps they're challenged by, um, is setting themselves up properly. Is a an FBI acquisition company or business or plan or whatever you wanna call it if we're thinking off these F B A acquisition companies, um, asking you, Ben, what would you do if you were to set one up? What would your plan look like? What would you focus on? Who would you hire first? Because I'm entry to know where you feel the most important part of being successful with such a business with the
[0:13:50] Ben Timmons: sure I think that there's there's a few key things that I would look for an enormous step. You know, you look at the business model what someone like ratio has e don't see that many, many loopholes in it anywhere. I think, actually, this is where they need to improve. The actual business model itself, I think, is pretty spot on, and I think that starts with First of all, selection on Amazon. If we look at the basis of your requiring vendors not necessarily skews. It's going to be looking for specific categories where you know there are massive benefits to be had. So that's looking at things like with higher conversion rates, ones with slightly higher average spend or, in certain instances, lower average spend because of the likelihood for impulse purchases. I'll also be looking at categories for potential competitors where there is an overlap because if, for example, it's my business workout logs, you were to purchase workout logs. Yes, you can increase the amount of traffic that that listening is going to capture. But ultimately there's always going to be visitors who go and purchase another product. That may only be 2030% but you also own those competitors of which there's one primary one. Then you own almost the entire category, or that subcategory so looking for the opportunity where there's competitors are actually going to be completing each other rather than competing each other. E think is a large opportunity as well on because you're in that process of purchasing. If you were to purchase, say, workout logs, which is the number one in the category, if you then turn around to the number two and say, Look, we're purchasing the number one. This is our plan to grow the business, which means ultimately you're going to struggle. Yeah, could be seen a strong arm and slightly, but it's providing that person the next opportunity as well. Whilst the government is still as good as it can be for them on that provides you as a role of business with even more proliferation. Within that category, which I think
[0:15:49] George Reid: regards to first and foremost, 100% is strong arming right there. Let's just clarify. Clarify? Yeah, we're buying your big competitors. Number one. We're gonna pump money into it. I'm gonna crush you, but we're not strong arm. And you, I swear with its very much. Bezos.
[0:16:09] Ben Timmons: Look, we're talking very candidly here. Obviously, that's not how that conversation would go. But that's the reality of it, right? Like if if someone is gonna purchase and acquire your main competitors are they have even mawr economies of scale to leverage. You're a real struggle
[0:16:25] George Reid: on with regards to hiring. What? Who would you like to hire first from the ground up your building at your team? Who you bringing in first?
[0:16:36] Ben Timmons: Sure, So my answer is probably quite bias here, because I'm going to answer it based on where I struggle the most and where my specific weaknesses are. Which eyes I would hire on a rock star in operation. So when I say operations, I'm talking primarily supply chain. So how can we build agreements with suppliers, which we're going to give us the most favorable terms to both parties, but one that's sustainable for us? How do we look at stock level optimization again, something that I've personally really struggled with? And if we are going to require multiple businesses, especially, they are in supplementary categories. How do we reduce the total number of suppliers on try to merge and aggregate that and again dry for service energies, their cost saving benefits, less logistics toe worry about so on and so forth. For me, that would be an area off immediate opportunity, because even if you did nothing on the front end of Amazon didn't change, you advertise and didn't change the listings, you'd continue to gain that residual traffic on every change that you make on the back end on the operational side would benefit your bottom line purely you know, if you reduce the cost, benefit your cost price that all that does is add to your bottom line, which means in term, when you pour that into advertising, spend the return on investment that you get is so much higher. So that would be, in my opinion, the absolute verse place to start. The second place would be as you just alluded to. There is, is someone that is world class Amazon advertising from my experience in 2020 that has been the biggest driver of growth on Amazon without changing anything else on the listing and so on without bringing new digital assets to the fray or looking at off Amazon advertising channels that purely on Amazon advertising support has been absolutely massive. On between those two things you're unlock. Ah, large percentage of the overall benefit to be had from rolling up these businesses. There will be supporting roles of in that as well, and I think if you were to pick only three people, the third person I would look at would be someone that is no a market here, but in the more more conventional content sense. So who's gonna be able to produce amazing digital assets for enhanced brand content. Who's gonna be able to keep bringing our store from up to date? Who's going to be able to bring that on trend so that we're constantly, you know, front of mind for customers and that we should remain to be the only the only choice in that category. So that would be my my tremendous three. That would be my all star team if I could pick those three people.
[0:19:09] George Reid: Yeah. To be honest, you didn't ask my opinion, but I'm gonna give it anyway. E show. I guess I could do that. I would agree with that entirely. Building up the operational bases is paramount, for Amazon is the whole particularly given what we've seen in the last 12 months on by just staying in stock. You know, on Ben, that's a large part of the operational base. Again, the advertising traffic is becoming ever more publication. Having someone dominating that is gonna put you on the forefront, um, off dominating Amazon as a whole. Then yet your assets, those digital pieces keeping that all updated massively concur. I'm only fund The question then is still linked back to kind of this kind of topic of FBI acquisition businesses. Andi, what brands conduce If they are in this position, that is the exit they're looking for. What are the some of the things you're thinking about to drive your value up? Yes, a really
[0:20:10] Ben Timmons: good question. And one that I've been one I've been exploring over the last few weeks and a few months. I actually think a lot of this comes down to your basic Amazon fundamentals that we've talked about before on the podcast that you talked about in Launchpad Academy, which is do things right from the start. Ensure that you have a really robust framework on how you're going to build your listings, because how you build your listings and your stories, how you build your success. So ensuring that you have really well researched keywords that you're going to include on the back end of Amazon ensure that you're structuring your title on bullet points in a great way that's going to drive conversion as well as bringing that traffic. The ultimate is going to drive conversion on ensuring that you have fantastic digital assets, so making sure that you know your listing images as an absolute minimum are really, really high quality. Those three things in and of themselves don't necessarily mean that business is worth X amount more. But what that will do, in turn, is Dr High Foot for higher conversion rates on within that business. Such a thrashing, our aggregation business will look at that and look at the opportunity for growth. Now myself, as someone who is not necessarily might not have that skill set are not, might not be able to put a tangible figure on that. But business like that that has a huge pleasure of data to look at it. So okay, we've taken on businesses off X one said that have a similar profile, similar size to the company that we're looking at acquiring on these air the growth trends that we've been able Thio, Thio, identify when we have acquired them so we can look at what that return investment will look like based on those those few things on one of the really important factors that I believe is a Z we talked about for so fundamental. But it's so easy to overlook is reviews, So we talk about reviews for being extremely important as far as social proof to drive again traffic and conversion. But a business if you have to look at business that has, you know, ah, 100 reviews and it's a four or five star product dedicate that looks great. That's obviously done quite well. We talked about before about that 20 being the mark, obviously the turning point in that social proof aspect. But then you have the same business that has 1000 reviews on that product. Then for May the purchases. It's an absolute no brainer. You always go for the product that has that higher level of reviews, because what also is really second to account. And some of the I've seen is that naturally, as you go through the life cycle of a business, you may look at ways to potentially start value, engineer the product or potentially increase bottom line. So as you start to do that, that may mean that their sacrifices that you make, which will impact the customer experience So it might be that your plan change for a business if it's on the lower review product could be really detrimental to the foundations that you built there and you might leave yourself with a bit of an uphill battle to ensure that you continue to provide an amazing customer experience whilst trying to grow the profitability of that business, because that in today, that's what those businesses air there to do. So looking for a business or a skew that has a phenomenal base of reviews is absolutely fundamental. We talked before about building a moat around your your business for May, in a sense of on Amazon, looking at acquisitions, that moat manifest itself as a high number of great quality reviews. So that's one of things I think is incredibly important,
[0:23:37] George Reid: I think so. I agree with both of those points about that robust framework for your listings building those reviews from the offset. But I think one area that is really going to drive a lot of value now, which you didn't include, but no doubt you would if you had more time to note down or answer would be this around. The data is the whole Onda having very accurate, comprehensive data off repeat purchase behavior conversion rate, return on investment across your advertising channels, Amazon as well as off Amazon on data on your customers just as a sweeping statement, just having very good data. Collecting it regularly on bond, interpreting and visualizing it as well is only going to be putting you in a very strong place when it comes down to a negotiation. And when it comes down to even that first conversation.
[0:24:39] Ben Timmons: Yeah, absolutely. And I think that's such an important, important point. I think now we talk about data data centric city to businesses. It simply comes down to survival. Thrive. If you're not a data centric business, you're never going to thrive in environments that are much more competitive. I completely agree, and I think again, looking it from the point of acquisition business. It's really interesting because you can look at a business that has a low retention rate, but essentially amazing product. Okay, why is that is that I get an operational issue that we've talked about? Is that a problem that we believe that we can solve? And does that mean we can purchase this business that has amazing potential? Ah, lower multiple and we can increase our our I Or do you want to look at businesses that have a high retention rate on? Just look to optimize those in a slightly different sense. Because, you know, if you have a lot of attention business, a Z analogy goes, you can have a leaky bucket becomes a lot more difficult to keep putting water in that it's just pouring out of the bottom where we have that sound business model already. You could just look at growing on that top of the sales funnel through advertising. So again, that's not something you look at on a case by case basis. But you're absolutely right that customer data is so, so important on on arms. And now that data is becoming easy to find and easy to manipulate as well. So that's quite rich live started, including Yeah, exactly, I
[0:25:59] George Reid: think is only going to get more comprehensive as well. We can see that May Let's round things up there. I know you've been a busy morning ahead of you on dure swinging at the start, so you needed to go to the bathroom, so I'm not gonna keep any longer. It's been good chatting. Ah, shorter session today. But let's catch up soon.
[0:26:17] Ben Timmons: Top man. Thank you, George. Thanks. Having duck,
[0:26:19] George Reid: just let it bite. Hey, guys, just a quick one. If you are enjoying the podcast on, either have some actionable next steps or new ideas, I'd really appreciate if you could one subscribe to the show and leave us a review. Thes are really, really important to us. As you probably know, being in the Amazon world, aunt to If you're looking for additional support with your brand, head over to the website. It's always day one dot co dot UK where we've got links to other resource is as often our guys speak soon.
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