The Big Problem With Private Label and 5 ways to fix it.
“Stupid is, as Stupid does.” – Tom Hanks as Forrest Gump (1994)
Most people HATE movie spoilers. When we find out someone knows the plot ahead of us, we don’t want them to tell us anything about the film and avoid those people at all costs until we have had a chance to enjoy the experience.
Spoiler Alert: You’re being robbed and you don’t even know it. For every seller in the Amazon space there are ten times as many pieces of horrible advise – even from sellers pushing huge revenues. The sad thing is that it all comes down to a single, yet absolutely key, missing piece of the puzzle you haven’t thought about – your customers.
If you understand them better, the rest of the entire business becomes infinitely easier and more stable. Even if you are already making money, you aren’t making anything compared to what you will make when you put your customers ahead of your product.
I know this may sound like an obvious answer but for 99% of amazon sellers (and most sellers and marketers of ANY sort) it goes without saying that they don’t really know a damn thing about their customers – aside from what the numbers say about consumer behavior.
You must realize that in economics and the world of big data 2 + 2 = 4 but in the real world that is simply NOT the case.
Example: A fabulous 5 star restaurant books the last 4 person table they have for next Friday night and the bean counters (accountants) cheer because they have filled to capacity. That is the entire conversation when you are only looking at the numbers.
Now here is the problem…… It is your wedding anniversary and the first time you’ve been able to get a night out together in 6 months. Work and home life have been off the wall stressful and you are simply looking forward to a lovely evening at this revered restaurant.
What if you are sitting there and that last table of 4 comes in and sits next to you and they are 4 perfectly civil adults, uninterruptive of the atmosphere? The answer is nothing happens. You have a lovely evening, the food is amazing, and you leave a raving review and plan on coming back as soon as you can.
Now what if you are sitting there on your anniversary and a couple comes in with their 4 year old and 6 month old and sits at that last booked table next to you? The little one starts crying and 10 minutes through the meal the 4 year old decides to start running around the restaurant making all sorts of damn noise and banging his spoon on the back of your chair each time he passes.
All of the sudden your food is taking entirely too long to get to you and tastes like shit when you get it – just because the environment has changed.
The restaurant gets 4 negative reviews the next day and has likely lost at least 10 patrons from the incident that were potential repeat business – not to mention the business that they lost from the negative reviews.
Still believe that 2 + 2 = 4?
The problem with the private label model:
There are 4 parts to selling something online and most sellers (or aspiring sellers) are taught to look at the process in this extremely flawed order (tragically) by the 7 figure guru crew on Youtube.
Product -> Offer -> Funnel/ads ->MAYBE Audience
1) Product: go and look at numbers and data on the same tool everyone else uses and find a spot where you can sell something. The flaw is that the way you are looking at the data has nothing to do with WHY people are buying at the volumes they are in a certain niche or from a certain vendor, and what each of those sellers are doing in providing for the needs of their customer base.
That hidden information is SUBJECTIVE and has nothing to do with numbers.
2) Offer: price it, bundle it, run giveaways, discounts and all other manner of foolishness that has everything to do with economics and nothing to do with understanding value in any real way.
3) Funnel / Marketing: run some ppc ads, or facebook ads. In other words, test to FIND an audience for your product…. DUMB. ASSES.
4) Audience – IF you even get here, you try to “provide value” to people when in reality VALUE is a purely psychology measurement and you don’t know shit about that concept. Keep reading and we can fix that.
Fixing the Problem with Private Label
The correct firing order to get this engine running smoothly is as follows:
Audience -> Product -> Funnel -> Offer
Find out as much as you can about your audience first.
Then develop a product to make better the things they complain about. Don’t offer them something you want to sell, sell them something you know they want to buy.
Next, setup a system of touch points so you can control the context with which people receive messages and shape their opinions.
Lastly, you make an offer to the audience AFTER you have made them problem aware and product seeking.
With this order, you’ll make a ton more money, have a lot more reviews and have huge amounts of customer retention at a fraction of the cost of the original way you were taught.
Where to start?
You should get started with Social Listening. I wrote all about that months ago. Most didn’t take any action then, and still won’t with this article because most people are lazy and will only burden themselves with enough temporary discomfort to move their life forward incrementally.
Starting with your audience and bringing people to you is perhaps the biggest competitive advantage you can take in the game of selling.
Let’s look at a few other psychological phenomena you aren’t aware of in the amazon game.
Cognitive Bias – Once people make up their mind about something or someone, they don’t ever look at any information pertaining that subject with any objectivity moving forward. They simply look for reasons to confirm their assumptions and opinions. Think back to the restaurant example I gave you earlier.
The first touch point with your business sets people in motion to either see the good or see the bad at ALL of the other touch points.
By starting with your audience as the beginning of process, you can make sure you frame your business and products in such a way that you have invisibly guided them to see the good about your offerings – even before they buy!
Do you REALLY want the first touch point of your business to give the idea that your product is about the same as all of the other hundreds of products it is sitting next to on the Amazon search results screen?
Value – price has nothing to do with value and value has everything to do with context and perception.
Why is it that a flight from Nashville to LA is 4 hours commercially and costs around $500 in coach class but for $5000 I can take the same flight in 5 hours on a private jet?
Why would I be willing to pay 10 times as much for a slower flight? The truth is that it has nothing to do with the utility of the flight itself and getting from Point A to Point B.
Some people value the status of a private jet. Some people value the space of the seating.
I would personally value and pay the $5,000 for a very different security experience at the airport, a place to stretch my legs properly, being able to read a book or study in peace, and having conversations with those closest to me without having shout over the other sardines in the filth infested flying shit tin that is a commercial aircraft.
The products you sell on Amazon have the same scenario. The ultra-competitive keywords you can’t make money on may only be unprofitable because you are a commercial airline competing against a private jet in the mind of the audience you want.
If you start with the audience, you’ll have a much better time selling because you’ll better understand what they are really looking for and have an opportunity to help them understand why they should choose and pay more for you.
Buying decisions – People can’t make a choice when they don’t understand. Give your audience too many options OR sell a product that has too many functions and they won’t buy it. Google destroyed AOL because Google is good at one thing, when AOL tried to give you 40 things on the home page.
The Ipod is the modern day Sony Walkman. It does ONE thing and does it extremely well. It PLAYS music. That makes it extremely easy for people to decide whether or not they want it. If it were to record as well, people would have to guess as to how they would use it and wouldn’t have bought nearly as many.
Steve Jobs understood this psychology in developing the Ipod and look where that took Apple.
If you start with the audience first, they will quickly point out the SINGULAR feature they wish a product had….then you can go produce it and sell it to them profitably out of the gate.
This concept is called goal dilution. To read more about it, see the study and model here.
That should be enough to get you moving on the idea of what you are missing by not putting your Audience first. Do some social listening and the time you put in will save you months of frustration and tens of thousands of dollars.
There is truth in the idea that your product is 99% of your success on Amazon……but your product is only as good as the demand your audience has for it.
Bonus Truth: The worst way to find out what people want is to ask them directly.
Your audience has no damn clue why they want what they want. When you ask someone for the reasons behind their behavior, whatever answer they give you is complete bullshit. All they’ve done is grab whatever post-rationalization logic they can find and spit it out at you.
If you really want to sell at a different level you need to understand why your customers buy the things they do, even if they themselves do not.