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All right.
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This is an overview video of how Amazon works from A to Z.
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We're not going to go in-depth into anything in particular.
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However I'm going to just get you that mental framework so that you know from the start to the end essentially
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what all is involved.
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So essentially the way that we've talked about is that Amazon is where people go for products.
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OK.
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We've talked about the opportunity and e-commerce is this megatrend is growing more and more each year.
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As of right now it's about 13 percent of all retail sales and it's going to continue to grow over time.
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So essentially the way that this works is where is this big opportunity on Amazon.
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So if you're not familiar with it yet Amazon actually doesn't sell most of the products.
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So fifty five percent of all sales on Amazon are roughly it's growing more and more each year is by
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third party sellers so if we were to go to Amazon here and actually take a look at these Bose headphones
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which are my absolute favorite headphones you'll see that it says right here.
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Ships from and sold by Amazon.com.
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So this would be Amazon and they're 45 percent with the Bose headphones.
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Okay.
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And all the other products essentially what Amazon is doing is what most other retail stores do.
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They're just buying from the brand and they buy directly and then they sell it on Amazon.
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Okay so that's 45 percent of sales however.
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Fifty five percent is third party sellers.
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Now let me show you an example of that.
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So if we go ahead and we look up just not Bose headphones but bluetooth headphones we start to look
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at this for example we could look at this geo who food.
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Not exactly sure how to say this brand but you can see by here's the name of the brand.
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So this g foo foo or whatever brand is what we consider private label.
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OK.
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So what does that mean exactly.
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Now this is just essentially somebody making their own brand.
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Now anybody can make their own brand.
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They've always been able to.
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But the big opportunity now is that anybody can make a brand and instead of having to fight to get into
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those retail stores we can get there.
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Just a quick recap.
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Amazon sales are growing more and more every year.
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And now of that the percentage of this the percentage sold by third party sellers is growing more and
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more every single year.
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All right.
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So this is just a massive opportunity and it makes sense because Amazon can only buy and sell and make
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partnerships with so many brands.
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And it's going to be and already is the search engine.
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It's the Google of products.
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All right now we're going to talk about Amazon verse retail.
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This is where the big difference comes from in the past.
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And you're in a retail store.
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You know you've got this.
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And essentially you have a lot of mini stores within a store.
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OK.
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So let's say there's a big retailer such as Wal-Mart.
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They have different sections.
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OK.
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And I almost view this as separate stores within the store.
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So let's say this were the electronics
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OK so within the electronics.
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Now if this were to be the electronics section right here there's different sections.
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OK.
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So they'll have the headphones they'll have the video games in the hub all the other sections.
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But let's say Wal-Mart is going to sell headphones.
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Well what are they going to sell.
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They need to find products that are going to sell to the masses.
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So Wal-Mart is going to stock a certain amount of headphones.
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They have a limited amount of retail space.
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And so because of this and they have all these stores they have to provide the ones that what.
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So the most so they're selling the ones that sell the most.
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And that is pretty much it.
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Now let's say you are the sourcing agent for Wal-Mart.
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And I've seen these people and when I've been in China they're sitting there and saying well what are
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not specifically for headphones but other markets are saying which headphones do we stock.
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We have the opportunity to stock 10 different types of headphones.
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Let's say this is obviously just an arbitrary example.
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So now Wal-Mart has to choose the 10 best headphones that in the world.
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So they have to meet certain criteria such as a certain amount of profit a certain amount of sales and
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they have to be the best for their customers.
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And since they can only choose 10.
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Now they have to kind of say well you know for the kids we think that this will be the best one based
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off profit and sales and the price point and then you know what.
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So you know we have these certain market segmentation it's and for those what are they going to like
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the best.
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So maybe they choose 10.
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So they have to make their markets happier.
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So maybe they're like Let's go for the kids let's go for adults for males.
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You know maybe adult female and then maybe they're going to want to go for you know the best for work
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out.
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We have a special deal with Apple so we have to sell theirs regardless and there's high volume so courts
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are going to have the apples.
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Now let's say this you go to a Wal-Mart store.
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OK.
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They get a get a little smokestack on top.
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So you go to the Wal-Mart store and you ask the guy what are the best headphones for working out okay
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and he's going to look at one of his ten and know say well we have we have this one type of workout
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headphones and we have these five colors.
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So that's essentially the way that it works.
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Now here is the big difference on Amazon.
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So this is the way that Amazon works differently.
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You go from you have an idea in your head or need and essentially we translate this into a word a word
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that we think would best describe what we're looking for.
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And then from these words then we go to you see what the product opportunities are.
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So the way it works though is Wal-Mart you have an idea or a need.
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You go to Wal-Mart and you give them words of kind of describing what your vision in your head and what
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you need.
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OK.
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And they look at one out of 10 and they say well this is all we got.
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So that one is the best for you not the same way on Amazon.
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So Amazon as we said up here has an on limited amount of products.
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So how does Amazon solve the problem of what to show you when you look up words.
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Well it says OK well you've typed in the best headphones for work out.
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So people look up best headphones for work out and Amazon has to solve this problem.
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And essentially Amazon says what are the best selling items when people look up best headphones for
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a workout.
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That's as simple as it is.
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OK.
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And then now it says well based on this we found that Jang Fu Jehane foo foo or whatever their name
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was should be on the first page because when people look that up it shows that they want these jarring
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for fools and they don't want the bows.
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Now what else sells well.
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And essentially it just ranks it by the best.
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Essentially Amazon just says what are the best selling products for when people type in those words.
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So it's essentially a product recommendation for ideas.
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We translate those into words and then those they will show us what's the best selling.
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And that's the way that Amazon works is.
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And here's the thing.
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We all have ideas in our head and then we use words to describe it and try to get the best ones.
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And there's so many phrases and there's so many ideas of products.
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And here's the thing.
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So here's where the opportunity exists.
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So while there is 10000 desired products on Amazon or you know in people's eye and heads into the world
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has only been creating 300 choices or so these are arbitrary numbers.
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But this is the general concept that people want different variations.
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But what was sold it was only what sold best.
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And now we're able to go to the same manufacturers who are already building these 300.
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But we're just saying hey we just we wanted a different color.
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And to add one feature and they're able to easily do that because they already have all of the manufacturing
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equipment and they know they can just add up add apart or you know add an accessory or add a feature
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or change things a little bit.
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And it very simply because they already have the process there.
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We will then buy and make these products based off of our demand which I will explain how you choose
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what are good and bad markets to go into.
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I would not go into bluetooth headphones but this is the general process that I want everybody to understand
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here.
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Essentially what we're trying to do in general here is the fact that demand is much greater than supply
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when it comes to the choices and the variations in this is the model that I believe is the absolute
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best.
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Now you'll see later how most people preach of it and you'll see a lot of mixed results of success and
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failures because people aren't teaching the model right.
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In a long term business and in a long term sustainable model that actually makes business sense.
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So the way it used to be on Amazon was there was about 10000 desired variations of headphones or whatnot
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or different ideas in people's heads.
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And there was about 50 choices on Amazon.
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OK.
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So it was very easy to get to the top and then anybody could just go and copy a product and as long
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as you got one variation or something it wasn't even on Amazon or there was only one other person there
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so you could just kind of it was just a rush to getting products on Amazon.
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That game is over now.
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But here is the big opportunity.
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And the way to actually build a business that's successful it's not an Amazon arbitrage.
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It's it's going after e-commerce.
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This megatrend that we've talked about in this growing percentage every year that's going to third party
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sellers and the ability it's just the best ability to build a brand.
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So what how does this work exactly.
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All right so this is where the massive opportunity comes so most people will look right here and say
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wow this is a 10 million dollar a year opportunity.
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And this is one product
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and then they'll kind of go in and say wow if I could just have that bit right there that green part
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then I would be happy.
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And that was the beginning part of it.
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But that's not the way we go anymore.
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Now we say wow look at this whole market here.
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OK there's one product there.
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But what about this.
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Where is that in-between space where nobody is building anything like that.
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You know I see all this green demand here.
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Or people have these different desires.
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And could I fill these.
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You know could I choose one there and could I could I choose one there and maybe I could even steal
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a little bit of that because mine is a better opportunity.
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And then actually you know for this part of the market right there it's better than that one.
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That's what we're going after and the the model that I preach is a sustainable business model.
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OK.
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A majority of the work goes into actually getting the idea.
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So I just want to show you what happens after you get the idea in the market OK what you do is we go
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over to this thing called Alibaba.
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It's essentially the search engine for factories.
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We talked about how Amazon is the Google for products.
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This is the Google for factories.
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They list products just like on Amazon.
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But when you go there essentially it represents that they make that product and then you talk and you
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find ones that are pretty good to deal with and they're good business people and they have good products.
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You get a sample and then if you like their sample then you see if they can change the product by.
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It's not like you have to go and physically change it.
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You just ask can you do what you want in and how do you do that you do what I just did here.
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You draw a picture and you describe it.
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OK.
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So you just say like hey this we want flamingos on this or whatever.
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OK and that's it.
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And they'll say yes we could do it or yes not you go back and forth with some designs and then they'll
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be like OK this is yeah we could do this.
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Great.
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So then it's like yeah we can do this for you and you want us you have a good idea and then you pay
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them.
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And then this is what happens.
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So we're at that factory.
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They make the product.
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OK then.
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Now here's the confusing part it's like how do you get it to Amazon.
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OK well it's actually pretty easier.
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This is amazing person in the world called a freight forwarding.
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And basically what he does is you go to him and say Hey I got this stuff in China and I want to bring
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it over to the Amazon warehouses.
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So he figures out how to get it all the way to the dock all the way onto the ship.
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And then he figures out how to get it to the other dock and then brings it all the way to the Amazon
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warehouse for you.
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And then people go to Amazon you go on to Amazon and they look up words as we talked about and then
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when they find out the words that you use to describe your products while it's in the sea.
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So one other thing I forgot to mention while it's in the sea you're getting the listing made.
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OK.
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You put in the right words and pictures but how do you get good pictures.
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Well there's people that will take pictures for you and I'll teach you how to get good pictures.
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So that's it.
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You make good pictures.
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You write good words you get you changed and made it a pretty good product.
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Somebody else did the product for you.
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Somebody shipped it there for you Amazon brings you the product brings you the customers when you have
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the right words.
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And then if you have good pictures and good words people buy it and then they start to show you more.
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If you're not showing up for a word you can just buy ads on Amazon but it's not as hard as you think.
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It's not like this complicated thing.
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You literally just say I want to show for you just pay for traffic on that word.
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So you show right up at the top the Amazon search bar for whatever words you want.
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It's not complicated at all.
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You just find the right words and you learn over time what words sell and what words don't.
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And then this is it.
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And then somebody buys it through your word.
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OK Jim Jim in Iowa has bought your headphones or flamingo whatever you made.
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OK.
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And then Amazon then Amazon will send it to Jim and then it says Wow Jim bought it through that word.
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We should show that again.
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And that's how the process works then eventually then eventually over time you're showing on the top
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because whenever Jim types in that word you are the best showing one hour at the end of the day it all
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comes down to having a good idea.
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Now how do we find good opportunities and have good ideas.
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What all comes down to data.
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So there's these wonderful things out there called product research tools what they do is they are going
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to re categorize the Amazon database and give us all the info that we would need such as sales and historical
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trends and basically everything that we need to analyze all in one easy to use interface and the ones
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that I suggest are helium 10 and viral launch and viral launches the one that I suggest for the beginners
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because they're kind like the apple of product research tools they're going to give you ideas and give
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you data so that you can find the good ideas.
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So I'm going to show you guys how to use that in the next chapter.
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