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Terminal Value

World Class Side Hustle


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Janine Bacani


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We have Lesley Hensell with us today, and what we are going to be talking about is what I like to call a world class side hustle. And so Leslie’s story is that she actually, a while ago now, is in 2010, she started selling on Amazon. And she originally did that to pay for to pay for some of the therapy appointments for her two boys who are both on the autism spectrum. But what it did was it actually turned into a full time business. And now it’s a consulting company where she has nearly 100 people who help other people to overcome the selling on Amazon challenges, which I think I’ll try to weave in a few pointed questions, because the Amazon nut is never something that I’ve been able to crack, principally because of all the hoops you have to jump through. But anyway,  Lesley, introduce yourself a little bit. And yeah, let’s get the conversation going. 

Thanks so much, Doug. So I have been selling on Amazon, like you said, for for more than a decade now, since 2010. Back in the day, I was a traditional old school business and marketing consultant and had done that for many years. I’ve been married forever. I’ve been married for 26 years. I have two boys who are now.

Let’s see, they’ve been married for 21 years. So it doesn’t seem like that long to me.

Maybe it’s having the boys, I don’t know. But my fantastic children are 20 and 15 now. But back then, I had an older son who was really struggling in school. We could not figure out what his problems were. We went to all the doctors and specialists, and they finally diagnosed him as being on the spectrum. But then having all these other learning disabilities, and you reach that point with a kid where you’re like, okay, what we’re doing isn’t working. School is not working. So we decided to pull the kid out of school and home school. But then what do you do? Because my income was gone. My husband’s working full time, my income is gone. And now we’ve got all these bills for therapy and for home school curriculum and all these things, and I felt really baffled into a corner. And that was when I turned to Amazon. 

Outstanding. Well, okay, so kind of walk me through a little bit of that, because now, granted, I don’t have an in depth knowledge of Amazon, but just from what I understand, essentially what you need to do is you need to figure out how are you going to procure product to sell? You have to figure out, okay, how are you going to set your pricing. Now, Amazon completely and totally controls the customer experience. So it’ll either be fulfilled by you or fulfilled by them. If it’s fulfilled by Amazon, it will involve fees. But it would seem to me that the tricky part with Amazon is that you have to cash flow, finance the inventory, meaning You Have To Buy The Inventory Before You Sell It. So you could very easily get into a cash crunch. And then also, from what I understand, ecommerce margins tend to be in the I mean, I suppose it depends on what you’re selling, but in a lot of cases, they’re under 50%, like your 20 30 40%, which can I? Don’t know if I’d say create problems, but as you’re starting up, you could be needing to put in a whole lot of cash before you see very much come out. 

Very True. And the beauty of Amazon, though, is if you do find the right product set you can flip it quickly. So even if your margins are 30%, which really, the pricing on amazon, what most people who are using it as a hustle are looking for a third of the final product price is their cost of goods. A third is their overhead and their FBA fees, because, like you said, there’s a lot of fees, and then a third is what you take home. But that’s the goal. But if you find the right products with the right ranking that are moving quickly, you can flip that inventory pretty fast. You can ship in a box of inventory and it can be gone in two, three weeks. 

Okay. Got you. Okay. That’s not so bad. All right. Well, I suppose this isn’t intended to be an Amazon tutorial, but I’ve always toyed with the idea of putting an ecom part of my business together. And so I’m trying to extract little nuggets of information, but okay, walk me through kind of how you transition from that to now. You have a consulting company that helps people through doing Amazon through their Amazon businesses and you’re scaled up to almost 100 people. That’s amazing.

Right, so like I had mentioned before, my background is actually old school consulting. Like working for accounting firms old school? So I had that skill set for many years. And then when you’re out there in the Amazon world, you start running into other sellers who have challenges. With Amazon. The biggest challenge is when they actually suspend your entire selling account. It happens more often than people want to believe. Or they can suspend your key asin So if you’re a brand or private label, you have a few products that you’ve invested a bunch of money and they will take down that asin. And so you’ve got to convince Amazon to reinstate you with a plan of action. That plan of action has to be backed by actual facts, things that you’ve actually done in the business. So I used those old consulting skills to say, hey, I’ve got your back. I can help you write these plans of action. Let’s work together. Figure out how to change your business. Improve product quality, whatever that is. And so now we also have scaled to do other things like VA work for tool assistant work, answered customer service messages, getting reimbursements on FBA inventory. A lot of the day to day, really time consuming tasks that don’t make you much money on Amazon. What you really need to be doing is sourcing great products and finding good deals. That’s where the money is made. So we try and take some of that day to day off the hands of sellers. 

Got you. Okay, well, if you don’t mind me asking, what are some of the things that will generally result in an account being suspended? 

So it really comes down to product quality a huge percentage of the time. It means that the buyer didn’t get what they thought they were supposed to because it didn’t look like it was new, it was opened, it didn’t match the listing detail page. And sometimes people, we all know this, they make complaints that aren’t even true because they want the free return or the free product. That happens too. And then there’s a lot of, shall we say, administrative rules at Amazon, things that they expect you to follow. There are lots of them. So the bigger you get, the more you really have to learn how they do things and that you follow their regime. 

Got you. That makes sense. Well, okay. Now one of the things you’re talking about is to help take some of the I don’t want to call it tedium or ticky tacky details because if you don’t do this stuff, your account gets shut down very quickly. My background is from finance and accounting also. So I would think it’s the proverbial bookkeeping of the high end finance because, for example, if you go to one of your CPA firms and they’ll come up with some kind of blended bill rate for running your financials, but 90% of that is bookkeeping. 

Absolutely. And you’re right, because

 if you don’t answer customer service messages, if you’re not noticing that your return rate goes through the roof on a product. So obviously you’ve got a product quality problem. If you don’t see that you’ve got a bunch of bad reviews. If you’re not paying attention, you’re going to get in trouble really quickly. If you have someone even a lot of times you can use VAS from overseas who are extremely affordable and they can watch all these things for you so that you have that finger on the pulse without actually having to sit at the desk and manage that account all day, every day, which does become very tedious.

And again, it’s just not the best use of your time as a business owner or someone, even if it’s a side hustle. You mentioned the accounting part. So if you do Amazon FBA, where they fulfill the product, that’s the preferred method by most people who this is a side hustle because the fulfillment actually packing and shipping orders can be so time consuming and it can get away from you where you don’t get the orders out on time to ship it all to Amazon? Well, sometimes they lose your inventory. They damage your inventory, they don’t receive it, and you have to file claims with them so they’ll reimburse you for the money. The process of finding and proving that they lost the inventory is a bookkeeping nightmare. So that’s why I’m like, no, let RVAs do I have RVAs do mine because I’m not willing to spend the time. It’s tedious and difficult and you get money back. So yay, right, but that’s not the best use of any business owner’s time. 

Precisely because if I think from Amazon’s perspective, amazon is trying to say, okay, how do I make sure that people aren’t just trying to say the inventory was lost so they can essentially try to create a fraudulent claim? In that case, what you’ll need to do is you’ll need to show evidence of your purchase, evidence of receipt. You’ll need to show evidence of when it was sorry, I’m going to get a little nerdy here. At which point it was Fob shipping, which means free onboard shipping, or when did you release custody of it? And then if you have confirmed delivery, can you have a receipt that says, okay, well it was confirmed, delivered to location X on date Y. And so, you know, if you can create that paper trail, I’m sure that gives you a much stronger case for trying to get your money back from Amazon. 

You’re absolutely correct. And then beyond that, there are these reports in Seller Central, which is where you manage your Amazon account that show like, which warehouse has how many units of your product. It’s spread out all over the country and you have to prove that some of those are missing in the first place. 

Okay, all right. This is making me think to a disturbingly long time ago when I was a constant inventory analyst at intel. So yeah, it’s making me think about thinking about running Raw Whip and finished goods reports out of the supply chain management system and then doing the monthly inventory reconciliation and then putting a days of inventory report together, all that good stuff.

You’re totally on the right thought process. It’s just with this someone else’s giant system instead of yours. So that’s why this and so many other things on Amazon makes sense to outsource. And the cool thing for anyone who wants a side hustle is that there are a lot of very highly trained, highly skilled virtual assistants out there who already know all of this. And yes, you should have your own SOPs your own standard operating procedures and understand how often you need to check the customer service messages, how often you need to make sure Amazon received the inventory. But there are so many great skilled people out there who know how to do it. So you don’t have to teach them if you’re learning something new. And this is just going to be a side gig on the weekend or at night. 

Okay, yeah, totally. Because at least my observation is that I think a lot of the people who are in kind of the sell on Amazon ecommerce space, what they do is they’re trying to get you to buy their $997 course. They’ll shoot you over to Kajabi where you can watch about 20 or 30 videos. And then it’s like, okay, well, now I have about 500 things that I need to do in a specific order. And I watched the video, which is great. Now, what’s next? And so I think it’s filling in that gap is really important.

 It absolutely is. And I’ll tell you, I personally get perturbed by a lot of the make a million dollars in three weeks on Amazon out there and the guys laying across their Lamborghini hoods and showing their 9000 square foot house

It’s just like any other business. It’s hard work. You have to be consistent, consistency of everything. Keeping books is important. Understanding your profitability, closing your books every month.

Or not even $9,990. That number always has to end with a seven. No matter what you’re pricing anything online, it always ends with a seven. I was like, okay, well, so did somebody split test this? And the closest I was able to find was that somebody split tested it like 25 years ago. Like just ancient, ancient time frame in terms of online. And everybody’s done it exactly the same since then. And so I don’t know that it has any kind of net effectiveness. But online marketers always end the price of everything they sell with the seven. 

Now I’m going to be looking for that everywhere. So the most challenging thing for selling online is finding a great product that isn’t already completely saturated. So if you do the old school retail arbitrage flipping, where you’re going to stores and finding hot products for Christmas and you throw them on Amazon, good luck. Yeah. The problem is there’s 250 other people selling literally or more selling the same product, and you get this rush to the bottom because everyone starts panicking and they start dropping the price really fast and you end up making nothing or even losing money. So you’ve got to find a way to offer something no one else is offering. So if you’re a new guy, you’re the little guy, you don’t really have anything to compete with. What you do have is wherever you live, there are business parks, there are office and industrial business parks. And when you go to those business parks, there are local businesses who are selling through distributors. They’re selling through other traditional marketplaces, and they’re not online. And they don’t want to be online because they don’t want to take the time to figure out how to sell online. You hit up business parks near you, you’re going to find two or three businesses that are like, that would be interesting to sell on Amazon, but I don’t want to do it. And you can talk them into a great deal where you’re buying direct from them, wholesale, maybe even at a better discount because you’re putting up their listings, you’re creating great pictures, you’re managing their online presence. You promise you’re going to run some pay per click ads to build up a presence. And it doesn’t have to be consumer goods. Everyone says, oh, but it’s business parks. They’ve got b to b. There is so much b to b, even like industrial and scientific products on Amazon that sell quite a bit and make a lot of money. You don’t have to sell more than 50 units a month to be pretty happy with a single asin you find ten or twelve of those from three businesses. You’ve got a nice side hustle with no competition on Amazon.

Well, I dig that. And I’m probably going to go back and I’ll re review the audio and take notes since I’m trying to be attentive while we’re talking. Because the thing that always kind of seemed odd to me because usually about every few months I’ll go into a little bit of a research selling on Amazon rabbit hole before I decide that it’s too much hassle to deal with. Because I’m like, I go, okay, because retail arbitrage is clearly out. Because as you said, it’s a race to the bottom and your acquisition cost is too high. So option B is you go to Alibaba and you buy a huge quantity of something to resell to basically ship, take possession and resell. But then I’m like, okay, well, minimum order quantities on Alibaba are usually 500,000, 5010 thousand. Let’s just say that I’m going to order 500 units of something that costs $2 and I can resell for eight. Awesome, right? Except that, okay, well, 500 times $2 is going to be $1,000. And now you’re going to put shipping costs in there. Okay, well, so now I’m going to need to receive it, and then I’m going to need to res ship it to the Amazon warehouse unless I trust Alibaba to ship it, which I may or may not do. And so now you end up notching up all this cost. And I’m like, okay, by the time you do that, you’re going to be a good 1000 $502,000 in before you know whether you can sell a single unit or not. 
That is absolutely true. And Alibaba is so scary. And it’s funny, a lot of the people who are like make a million on Amazon, they actually push going to Alibaba. Most of that stuff is not branded Amazon only once branded product. They don’t want generic product, so don’t go there. And also that’s like 5000 other people selling the same stuff in Mount Alibaba, right? So that’s why I love this idea of going to small businesses near you. A lot of times they’ll let your minimum order be almost nothing or they’ll even let you buy in 30 days because they want to find out, isn’t my stuff going to sell on Amazon? That would be a cool new channel, right?

Okay, so I was going to say, I think you actually just you, I think you just inadvertently spilled a million dollars secret and I want to unpack it a little bit. Okay. So for people who are a little new to how a lot of times the manufacturing distribution system works, in a lot of cases what will happen is manufacturers will end up selling something on a receivable. So for example, say if I buy something from a local manufacturer and a lot of times the payment will be due what’s called net 30, or in other words, the expectation is you take possession and then you pay for it 30 days later. Well, if you time this right with a low minimum order quantity, what you can do is you can set a purchase order, take possession, send it to Amazon, and ideally get to where you have at least sold enough product to create revenue to pay for the shipment before the receivables are due. That’s golden nirvana. Because at that point, as long as you have demand, you can grow kind of without restriction,

right? And like you said, you don’t have to pay for all the goods. You just have to sell enough that you can pay the bill or pay enough of the bill that you’re not having to cash flow too much out of your own pocket at the beginning. Because at the beginning it takes a while. And I’ll tell you one trap that people don’t understand on Amazon. If you want to really grow, you don’t really take out much money for a while. Now if you’re flipping and you find some really cool niche to flip, some RA or OA, sorry, retail arbitrage or online arbitrage.

Thank you very much. I was about to ask for the alphabet soup translation.

Yes. And so retail arbitrage is where you go buy stuff at the Walmart and then you sell it on Amazon. Online is the same thing, but you’re doing it for websites that you get it delivered to you and then you ship it to Amazon or your customer.

 Sometimes you can find a great resource out there, find something other people haven’t found, and you can make great margin on that. There are people who will use that to then cash flow things like my business park idea, or they will use that to cash flow developing their own products or private label brands. So there are some risks and some challenges to retail arbitrage, online arbitrage. But if you find the right thing, it can just help you grow the other parts of the business until you don’t have to do that anymore. 

Yeah, that’s excellent. I like this because in traditional economics, they say that the economic profit of any business or industry eventually progresses towards zero. And economic profit is a nerdy term for profits that are above and beyond what is normal for an industry. And so in the case of, say, like selling on ebay or selling on Amazon, a lot of times what happens is when it first starts, people figure out how to go out and source inventory for a low cost and they’re able to make great margins. Then you have new entrants that come in. And now all of a sudden, the pricing starts coming down, your margins get squeezed, and you have a lot of people who are really struggling to figure out how they do. This principally because in a lot of cases, what will happen is you go out, you acquire inventory, you have a thin margin, and now you can’t afford to outsource all of your stuff, like your customer service returns, reconciliations, all that. So you have to do it yourself. Which ends up meaning that you buy yourself a very low paying job, 

right? You’re absolutely dead on. However, just so people understand, you can find overseas VAS who know Amazon who are very affordable, so don’t assume you can’t afford them. That’s one positive. It’s not like here in the US. Like if you had a construction business and you got to hire help where they’re costing you between a minimum $20 $25 an hour, that’s not the case. However, Doug is absolutely right that you can get yourself in a hole by being way too aggressive, going way too fast, saying, oh, I know this is all going to move. It’s all going to flip. There’s some really great inexpensive software out there. There’s a bunch of them to choose from. There’s like one called Helium Ten, another called Jungle Scout. There’s some stuff from carbon six. These all have a lot of the same functionality. They would say they don’t, but they all have a lot of the same functionality where you are putting in an asin. So an Asin is the identification number on Amazon for an individual product. You can find it on the detail page. You put that asin in, you figure out what’s the profitability on the product? What is the ranking, how fast is it moving, how many units sell a month? So you can decide, make educated decisions and say, okay, if there’s 1000 units moving a month, but there are 20 other sellers on the listing. Is this worth my time? To me, the most exciting thing about Amazon is the endless niches. There are people who say that riches are in the niches, and it’s true finding niche products that other people think aren’t exciting because as I said earlier, you can have several products that only sell 50 units a month and make a great living. You just got to find the things that everyone else and their mother and their dog and their pets parakeet aren’t selling to.

Yeah, well, again, I think another gold nugget that I want to make sure to unpack because that say 50 unit a month volume, those low volume products, those are an ideal place to get started if you’re a sole proprietor, if you’re a solopreneur. The reason being that those niches are not going to have enough revenue to attract somebody where this is their full time business. That is a perfect side hustle place. Because if somebody is saying, all right, I’m looking to scale to 5 million total revenue, say 900,000 margin and then like say 400,000 take home after allocating for growth or whatever. Okay, if that’s the case, they need volume. And a 50 unit per month micro niche, even if it has amazing margins, isn’t going to help somebody in that situation who’s trying to scale. So if you’re solo, just getting going, that micro niche is golden. Because what it’ll do is it’ll help you get your foot in the door and then, ideally, will generate enough margin to where you can start outsourcing some of the more repetitive tasks, so you can focus on finding the things where you might be able to scale.

And you really don’t need that many products where you’re making $1,000 of products. If this is a side gig, a lot of people out there would be very happy with the side gig that netted them $3,000 a month. A lot of folks that would be doubling their household income or paying for their kids private school or their kids therapy bills, like in my case, or the vacation they’ve always wanted to go on, or being their extra job because their hours got cut. I mean, we’re entering a time of economic uncertainty, having side hustles and extra strings of income, even small ones, that can give you so much security and such a feeling of, I know I can do this and if I lose some of my other income, I just have to scale it up and find one more thing. I was just going to say that there’s so many negative things to say about Amazon, but I always see it as a place of hope. I know that sounds cheesy, but I also have known so many single moms and people who are taking care of elderly parents and people who’ve lost their jobs and gone through difficult times that this has been their lifeline. And I’ve known young men and women very young men and women who have paid their way through school or have decided not to take a traditional job because they have a very free lifestyle doing this, even though it’s hard work, you’re going to put in the hours. I’m not saying you’re going to lay on the beach all day, but it really is a way that you can open up some opportunity for yourself without incredible risk.

Yeah, well, because one of the other things, a use case that I was thinking, too, that I wanted to append on to what you were saying is that this is getting into a part of my personal belief that I think the contemporary notion of retirement is tremendously broken. All right, I’m just going to go on a 32nd rant here. So the way that the traditional retirement the traditional retirement I will say scam, but that may be a little that may be a little inflammatory. The way the traditional retirement mentality goes. Is that okay? You know, you go to school, you go to college, you get a job, and then you want to try to select into the job that pays the most you can possibly earn, which almost certainly means it will be something that is boring, tedious, and requires that you follow a lot of rules that make absolutely no practical sense. But you do it because that’s your job. And then the idea is you want to stay in that career path and progress as fast as possible, to make as much money as possible and get as much into your four hundred and one K and all this other stuff so that when you are inevitably fired that you will be able to retire and not have to go to work again. Okay? So basically what we’re saying is for somewhere between 30 and 50 years, you need to do something that by definition you would rather not be doing, so that when the time comes, you will have enough so that you don’t need to go on public assistance. When you say it like that, it doesn’t sound like a very I’m like because I’m a good Gen Xer, right? You know, you know, but, you know, work hard, work harder, you know, save plan, all that kind of stuff. And but, like, all of us kind of got we’re in this you know, we’ll go and, you know, work you know, work nights, work weekends. You know, you need to get ahead. And but it’s like, okay, if you can put if you can put a side hustle together with a few thousand, that puts a few thousand bucks of income away. And now you can start reinvesting some of that. You don’t need to scale it to 50,000 a month. Say you scale it to like 8000 a month. Well, if you can live pretty comfortable, if you don’t need to live in the US. Which you don’t. If you’re FBA you can live extremely comfortably on. Even like three to 4000 a month. So then at that point, the notion of having an enormous amount of money saved for retirement becomes a non factor.

Well, and it also can even take away some of the rat race feelings on things. If you do feel like there are some more traditional things that you need to have for your family. Because one of my kids was special needs and the other one was special medical needs, we did private school with them because the regimen of public school was not going to work. So even after I stopped home schooling the older one, we kept the Amazon business going so we could pay private school without having a heart attack every month. Brightened the checks. 

Both of my kids are in private school, so I can completely sympathize there. 

Yeah, you totally feel it. And you teach your kids to work, and you teach your kids an entrepreneurial mindset, not the mindset you’re talking about. Where nine to five till you die or till you retire for two whole years before you die to five?

Let’s not be let’s be real. Eight to six. 

Okay, true.

 Let’s be real here. I don’t know anybody who I don’t know anybody who works, like, who starts at nine and is done at five.

That’s true. You make a good point. But my kids have always worked and contributed in this business because they know what’s to pay their tuition. They know the tuition is expensive. We tell them not as a guilt trip, but as a let’s work as a family. You’re going to learn how to work. And now I’ve got one in college who knows how to work, likes to work, wants to have a job, all the good things, right? This is exciting these days. But also, if you’ve got something, anything that you’ve got that is like, I worry about paying this expense, or I can’t put money in retirement, I can’t put money in my four hundred and one K I can’t save because of this expense. If you can just cover that expense with five to 10 hours on a weekend, you’re doing pretty awesome. Even with Riverbend being my main business now, and I do spend a lot of hours in that every week. We still have our Amazon side hustle going because we still pay those tuition bills out of it as a matter of principle for those kids.

Outstanding. I love it. All right, well, Leslie, I think we’re getting pretty close this time, so just give me one or two last thoughts and then and then, yeah, let everybody know where they can learn more. 
Sure. So do not okay, here’s my here’s my big last thought.

Do not get sucked into a super expensive course. There is so much great free information out there. If you’re interested in selling on Amazon. There are tons of providers who want to give away free information. It is not less valuable because it is free. The classes. A $5,000 class is $5,000 worth of inventory you could buy to start your business.

And for me, we are@riverbendconsulting.com we do something really crazy. Doug. We have a phone number, and we answer our phone. 

What?

 Yeah, and we talk to people about their problems. It’s crazy. So I know these days it’s actually a differentiator isn’t it nuts that that’s a differentiator but also, if you head on over to LinkedIn and look for Leslie Hintel, I have new Ecommerce and Amazon content up almost every day. We’d love to see you there.

 Excellent. Excellent. Well, Lesley, really appreciate your time today. 

Thank you so much for having me on. This is fun. 

All right.

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