Original subtitles

All right.

This is an overview video of how Amazon works from A to Z.

We're not going to go in-depth into anything in particular.

However I'm going to just get you that mental framework so that you know from the start to the end essentially

what all is involved.

So essentially the way that we've talked about is that Amazon is where people go for products.

OK.

We've talked about the opportunity and e-commerce is this megatrend is growing more and more each year.

As of right now it's about 13 percent of all retail sales and it's going to continue to grow over time.

So essentially the way that this works is where is this big opportunity on Amazon.

So if you're not familiar with it yet Amazon actually doesn't sell most of the products.

So fifty five percent of all sales on Amazon are roughly it's growing more and more each year is by

third party sellers so if we were to go to Amazon here and actually take a look at these Bose headphones

which are my absolute favorite headphones you'll see that it says right here.

Ships from and sold by Amazon.com.

So this would be Amazon and they're 45 percent with the Bose headphones.

Okay.

And all the other products essentially what Amazon is doing is what most other retail stores do.

They're just buying from the brand and they buy directly and then they sell it on Amazon.

Okay so that's 45 percent of sales however.

Fifty five percent is third party sellers.

Now let me show you an example of that.

So if we go ahead and we look up just not Bose headphones but bluetooth headphones we start to look

at this for example we could look at this geo who food.

Not exactly sure how to say this brand but you can see by here's the name of the brand.

So this g foo foo or whatever brand is what we consider private label.

OK.

So what does that mean exactly.

Now this is just essentially somebody making their own brand.

Now anybody can make their own brand.

They've always been able to.

But the big opportunity now is that anybody can make a brand and instead of having to fight to get into

those retail stores we can get there.

Just a quick recap.

Amazon sales are growing more and more every year.

And now of that the percentage of this the percentage sold by third party sellers is growing more and

more every single year.

All right.

So this is just a massive opportunity and it makes sense because Amazon can only buy and sell and make

partnerships with so many brands.

And it's going to be and already is the search engine.

It's the Google of products.

All right now we're going to talk about Amazon verse retail.

This is where the big difference comes from in the past.

And you're in a retail store.

You know you've got this.

And essentially you have a lot of mini stores within a store.

OK.

So let's say there's a big retailer such as Wal-Mart.

They have different sections.

OK.

And I almost view this as separate stores within the store.

So let's say this were the electronics

OK so within the electronics.

Now if this were to be the electronics section right here there's different sections.

OK.

So they'll have the headphones they'll have the video games in the hub all the other sections.

But let's say Wal-Mart is going to sell headphones.

Well what are they going to sell.

They need to find products that are going to sell to the masses.

So Wal-Mart is going to stock a certain amount of headphones.

They have a limited amount of retail space.

And so because of this and they have all these stores they have to provide the ones that what.

So the most so they're selling the ones that sell the most.

And that is pretty much it.

Now let's say you are the sourcing agent for Wal-Mart.

And I've seen these people and when I've been in China they're sitting there and saying well what are

not specifically for headphones but other markets are saying which headphones do we stock.

We have the opportunity to stock 10 different types of headphones.

Let's say this is obviously just an arbitrary example.

So now Wal-Mart has to choose the 10 best headphones that in the world.

So they have to meet certain criteria such as a certain amount of profit a certain amount of sales and

they have to be the best for their customers.

And since they can only choose 10.

Now they have to kind of say well you know for the kids we think that this will be the best one based

off profit and sales and the price point and then you know what.

So you know we have these certain market segmentation it's and for those what are they going to like

the best.

So maybe they choose 10.

So they have to make their markets happier.

So maybe they're like Let's go for the kids let's go for adults for males.

You know maybe adult female and then maybe they're going to want to go for you know the best for work

out.

We have a special deal with Apple so we have to sell theirs regardless and there's high volume so courts

are going to have the apples.

Now let's say this you go to a Wal-Mart store.

OK.

They get a get a little smokestack on top.

So you go to the Wal-Mart store and you ask the guy what are the best headphones for working out okay

and he's going to look at one of his ten and know say well we have we have this one type of workout

headphones and we have these five colors.

So that's essentially the way that it works.

Now here is the big difference on Amazon.

So this is the way that Amazon works differently.

You go from you have an idea in your head or need and essentially we translate this into a word a word

that we think would best describe what we're looking for.

And then from these words then we go to you see what the product opportunities are.

So the way it works though is Wal-Mart you have an idea or a need.

You go to Wal-Mart and you give them words of kind of describing what your vision in your head and what

you need.

OK.

And they look at one out of 10 and they say well this is all we got.

So that one is the best for you not the same way on Amazon.

So Amazon as we said up here has an on limited amount of products.

So how does Amazon solve the problem of what to show you when you look up words.

Well it says OK well you've typed in the best headphones for work out.

So people look up best headphones for work out and Amazon has to solve this problem.

And essentially Amazon says what are the best selling items when people look up best headphones for

a workout.

That's as simple as it is.

OK.

And then now it says well based on this we found that Jang Fu Jehane foo foo or whatever their name

was should be on the first page because when people look that up it shows that they want these jarring

for fools and they don't want the bows.

Now what else sells well.

And essentially it just ranks it by the best.

Essentially Amazon just says what are the best selling products for when people type in those words.

So it's essentially a product recommendation for ideas.

We translate those into words and then those they will show us what's the best selling.

And that's the way that Amazon works is.

And here's the thing.

We all have ideas in our head and then we use words to describe it and try to get the best ones.

And there's so many phrases and there's so many ideas of products.

And here's the thing.

So here's where the opportunity exists.

So while there is 10000 desired products on Amazon or you know in people's eye and heads into the world

has only been creating 300 choices or so these are arbitrary numbers.

But this is the general concept that people want different variations.

But what was sold it was only what sold best.

And now we're able to go to the same manufacturers who are already building these 300.

But we're just saying hey we just we wanted a different color.

And to add one feature and they're able to easily do that because they already have all of the manufacturing

equipment and they know they can just add up add apart or you know add an accessory or add a feature

or change things a little bit.

And it very simply because they already have the process there.

We will then buy and make these products based off of our demand which I will explain how you choose

what are good and bad markets to go into.

I would not go into bluetooth headphones but this is the general process that I want everybody to understand

here.

Essentially what we're trying to do in general here is the fact that demand is much greater than supply

when it comes to the choices and the variations in this is the model that I believe is the absolute

best.

Now you'll see later how most people preach of it and you'll see a lot of mixed results of success and

failures because people aren't teaching the model right.

In a long term business and in a long term sustainable model that actually makes business sense.

So the way it used to be on Amazon was there was about 10000 desired variations of headphones or whatnot

or different ideas in people's heads.

And there was about 50 choices on Amazon.

OK.

So it was very easy to get to the top and then anybody could just go and copy a product and as long

as you got one variation or something it wasn't even on Amazon or there was only one other person there

so you could just kind of it was just a rush to getting products on Amazon.

That game is over now.

But here is the big opportunity.

And the way to actually build a business that's successful it's not an Amazon arbitrage.

It's it's going after e-commerce.

This megatrend that we've talked about in this growing percentage every year that's going to third party

sellers and the ability it's just the best ability to build a brand.

So what how does this work exactly.

All right so this is where the massive opportunity comes so most people will look right here and say

wow this is a 10 million dollar a year opportunity.

And this is one product

and then they'll kind of go in and say wow if I could just have that bit right there that green part

then I would be happy.

And that was the beginning part of it.

But that's not the way we go anymore.

Now we say wow look at this whole market here.

OK there's one product there.

But what about this.

Where is that in-between space where nobody is building anything like that.

You know I see all this green demand here.

Or people have these different desires.

And could I fill these.

You know could I choose one there and could I could I choose one there and maybe I could even steal

a little bit of that because mine is a better opportunity.

And then actually you know for this part of the market right there it's better than that one.

That's what we're going after and the the model that I preach is a sustainable business model.

OK.

A majority of the work goes into actually getting the idea.

So I just want to show you what happens after you get the idea in the market OK what you do is we go

over to this thing called Alibaba.

It's essentially the search engine for factories.

We talked about how Amazon is the Google for products.

This is the Google for factories.

They list products just like on Amazon.

But when you go there essentially it represents that they make that product and then you talk and you

find ones that are pretty good to deal with and they're good business people and they have good products.

You get a sample and then if you like their sample then you see if they can change the product by.

It's not like you have to go and physically change it.

You just ask can you do what you want in and how do you do that you do what I just did here.

You draw a picture and you describe it.

OK.

So you just say like hey this we want flamingos on this or whatever.

OK and that's it.

And they'll say yes we could do it or yes not you go back and forth with some designs and then they'll

be like OK this is yeah we could do this.

Great.

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

them.

And then this is what happens.

So we're at that factory.

They make the product.

OK then.

Now here's the confusing part it's like how do you get it to Amazon.

OK well it's actually pretty easier.

This is amazing person in the world called a freight forwarding.

And basically what he does is you go to him and say Hey I got this stuff in China and I want to bring

it over to the Amazon warehouses.

So he figures out how to get it all the way to the dock all the way onto the ship.

And then he figures out how to get it to the other dock and then brings it all the way to the Amazon

warehouse for you.

And then people go to Amazon you go on to Amazon and they look up words as we talked about and then

when they find out the words that you use to describe your products while it's in the sea.

So one other thing I forgot to mention while it's in the sea you're getting the listing made.

OK.

You put in the right words and pictures but how do you get good pictures.

Well there's people that will take pictures for you and I'll teach you how to get good pictures.

So that's it.

You make good pictures.

You write good words you get you changed and made it a pretty good product.

Somebody else did the product for you.

Somebody shipped it there for you Amazon brings you the product brings you the customers when you have

the right words.

And then if you have good pictures and good words people buy it and then they start to show you more.

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.

It's not like this complicated thing.

You literally just say I want to show for you just pay for traffic on that word.

So you show right up at the top the Amazon search bar for whatever words you want.

It's not complicated at all.

You just find the right words and you learn over time what words sell and what words don't.

And then this is it.

And then somebody buys it through your word.

OK Jim Jim in Iowa has bought your headphones or flamingo whatever you made.

OK.

And then Amazon then Amazon will send it to Jim and then it says Wow Jim bought it through that word.

We should show that again.

And that's how the process works then eventually then eventually over time you're showing on the top

because whenever Jim types in that word you are the best showing one hour at the end of the day it all

comes down to having a good idea.

Now how do we find good opportunities and have good ideas.

What all comes down to data.

So there's these wonderful things out there called product research tools what they do is they are going

to re categorize the Amazon database and give us all the info that we would need such as sales and historical

trends and basically everything that we need to analyze all in one easy to use interface and the ones

that I suggest are helium 10 and viral launch and viral launches the one that I suggest for the beginners

because they're kind like the apple of product research tools they're going to give you ideas and give

you data so that you can find the good ideas.

So I'm going to show you guys how to use that in the next chapter.