Product Startup Podcast Episode 199: Selling a New Product on Amazon

00:00:00 Kevin Mako: Hello, product innovators. Today we learn how to sell and scale a new hardware product on Amazon from an emerging product company selling over $30 million per year on the platform.

00:00:09 Narrator: This is the Product Startup Podcast, a show to learn from top leaders in hardware product development, prototyping, manufacturing, product selling, and everything in between.

00:00:18 Narrator: Hosted by Kevin Mako, the leading expert on product development for hardware startups.

00:00:23 Kevin Mako: Welcome back, everyone. Today I'm very excited to introduce Tim Angel to the show. Tim is the founder of Zugu, an Amazon

00:00:30 Kevin Mako: e-commerce iPad case that sold millions of units online and continues to grow. They have been

00:00:34 Kevin Mako: perfecting the craft of direct-to-consumer selling on Amazon over the past 13 years, achieving over $30 million in sales per year.

00:00:42 Kevin Mako: Today, Tim is going to share some valuable knowledge for inventors, startups, and small manufacturers on the power of Amazon, how to get started in selling

00:00:49 Kevin Mako: a new consumer product on Amazon and best practices for growing sales quickly and effectively soon after launch. Now, on to the episode.

00:00:56 Narrator: This show is produced by Mako Design, the original firm providing end-to-end consumer product development services tailored specifically to hardware

00:01:04 Narrator: startups, small manufacturers, and inventors. Take your product from idea to store shelves at MakoDesign.com. Now on to the episode.

00:01:15 Kevin Mako: Hey, Tim, welcome to the show. Hey, how's it going, man? Thanks for having me on. Well, I've really appreciated you joining on the call today. Excited to talk to you

00:01:21 Kevin Mako: about how to sell products on Amazon and how to do it well. How to really build a business. Now,

00:01:27 Kevin Mako: You've sold millions of units of product, 30 million plus in revenue a year, across Amazon, across the platform, multiple different product lines now.

00:01:35 Kevin Mako: And we want to extract those nuggets of knowledge from what got you from an early stage business to a big success story with Zugu and how to do it as

00:01:44 Kevin Mako: an emerging hardware startup. We've got a lot of listeners on the show that have amazing new inventions and products.

00:01:50 Kevin Mako: Amazon is obviously top of mind for many of them in terms of not only getting onto the market, but scaling and building a business.

00:01:56 Kevin Mako: What better person today than you to talk about it, talking about your journey with it through Zugu.

00:02:01 Kevin Mako: Before we get into all of that, just give us a bit of a backstory of how you became the big success story that you are today.

00:02:07 Tim Angel: Well, it all started back in 2010 when I lost my job. I was always interested in inventing products and I felt like I had been waiting to start

00:02:15 Tim Angel: my own company, my whole life. And so when I got the opportunity, I just went all in.

00:02:22 Tim Angel: So I'm just going to go 100% in and burn the boats to where there's no option for failure.

00:02:29 Tim Angel: And I just kept, when things didn't work, try something else. That didn't work. Try something else. Try something else.

00:02:34 Tim Angel: And the only way you can fail is if you don't try anything else, if you just give up. So eventually, you know, I got my product selling decently well and a storm hit.

00:02:43 Tim Angel: And I was selling on the website and, you know, things were going bad. So I had to pivot and sell direct to customers.

00:02:50 Tim Angel: So that's when I really went on to Amazon and learned that system

00:02:55 Kevin Mako: and kind of, you know, really was able to capitalize on it. That's amazing. What a story that you continue to add products to the portfolio and variations of it.

00:03:05 Kevin Mako: And a lot of that comes down to great products in the beginning. But give us the Cole's notes of what it actually took you to get onto Amazon and start selling.

00:03:14 Kevin Mako: Because a lot of people look at that as kind of a scary enterprise, especially if you haven't done it before. Obviously, you looking back, you know, it's a simple process.

00:03:20 Kevin Mako: in the early phases, especially, let alone, you know, what it takes to scale is a much bigger venture. But just the act of getting onto Amazon, first of all, explain a bit of what

00:03:29 Kevin Mako: Amazon is, why it's valuable to hardware startups, and then how do you actually get your product onto Amazon itself? Then we'll get into the weeds of actually how to succeed

00:03:38 Tim Angel: through the Amazon platform. Well, I think Amazon is an amazing platform for really giving the best product a really good chance.

00:03:47 Tim Angel: And I feel like if you're coming up with one product, it is so difficult to be successful on your own website with just one product because a lot of times

00:03:57 Tim Angel: a lot of the brands, they have to spend a lot more money to get that customer initially. So if it's a product to where somebody buys it once, you're going to spend $100 to sell

00:04:06 Tim Angel: a $50 product and you're not going to make any money on the back end. Whereas on Amazon, you can be successful with one product.

00:04:13 Tim Angel: You just need to make a really good product and keep improving it. And then you're able to scale it up and the conversion rates are way better.

00:04:20 Kevin Mako: especially when you get up to five-star ratings. I'd like to talk about those five-star reviews.

00:04:26 Kevin Mako: The quality of a product is so important to any hardware startup. We talk about this all the time on the show.

00:04:31 Kevin Mako: It's not necessary to have all the bells and whistles on your first version of the project. In fact, it's better to focus on really your core invention, the main value

00:04:39 Kevin Mako: out of your product, and then do a really good job at executing on that. And what does that mean?

00:04:44 Kevin Mako: That means designing, engineering, and manufacturing a world-class product that is reliable and fits very much the need that you were looking to address in that invention.

00:04:55 Kevin Mako: So talk a bit about why that is so important, especially on the Amazon platform, especially

00:04:59 Tim Angel: with the power of reviews. Yeah, I mean, I feel like it's so common on Amazon to have products that are four stars or four and a half stars.

00:05:09 Tim Angel: They're all, a lot of them are very, very cheap. So if you can really focus on making the best product that you possibly can by kind of

00:05:17 Tim Angel: looking out what is on Amazon already in that niche that you're looking at.

00:05:23 Tim Angel: And buy, you know, maybe five to ten of the products of your competitors, maybe buy a couple of the cheapest ones that

00:05:31 Tim Angel: are selling the best, maybe a couple of the more expensive ones and maybe a couple of the highest

00:05:36 Tim Angel: rated. Then you can kind of bring all those together, look at them in your hands and see what they did well, what they didn't do well.

00:05:43 Tim Angel: Look at all those different product reviews, and see what people love, see what people are complaining about.

00:05:51 Tim Angel: And then you take all those things and put them together, you know, all the things that people have an issue with, you try to improve and, you know, come

00:05:59 Tim Angel: up with a solution for them. So then you put all those things together and you can really make, you know, put your own spin on it.

00:06:06 Tim Angel: And then you slowly make more and more progress each production run. And each production run, you make more and more progress, just tweak small things.

00:06:17 Tim Angel: And over time, it's going to be a huge improvement. So you want to make sure for your first order that you're trying, that you place the smallest

00:06:26 Kevin Mako: order possible so that you can work out the kinks on future orders. Manufacturing improvement is such a powerful part of the hardware products journey.

00:06:35 Kevin Mako: And it's actually something that doesn't require massive changes or modifications in between production runs, but small tweaks and refinements based on real customer

00:06:45 Kevin Mako: feedback. You basically have two feedback loops. And I love the fact that you mentioned start small with manufacturing.

00:06:50 Kevin Mako: We're a big advocate of if you could do short run manufacturing, start there, get a few units out to customers, give a few units away as well.

00:06:57 Kevin Mako: So you have some people paying, some people that you're giving potentially to influencers or decision makers or key stakeholders in the industry to

00:07:03 Kevin Mako: then give you real world feedback in addition to, so that's your market facing feedback. But in in addition to your engineering, manufacturing, design feedback.

00:07:13 Kevin Mako: So making sure that you've really tested tweaked and refine those products so that when you go into the next production run,

00:07:19 Kevin Mako: if you go from short run into your first full-scale production run, you're incorporating those small little adjustments that make the product perfect, really

00:07:27 Kevin Mako: make it world-class. And then even as you jump from full-scale to large-scale production, you should be considering how you're both costing down.

00:07:37 Kevin Mako: So at that point, you've got economies of scale. You've got economies of scale. You've got volume, but you've also got a tremendous amount of feedback from real users. So you make

00:07:43 Kevin Mako: essentially your final round of modifications and tweaks so that as you're starting to scale

00:07:48 Kevin Mako: through Amazon, you make sure that you're hitting both product market fit and engineering quality, meaning the products like robust and reliable. And if you think about that as a

00:07:57 Kevin Mako: progression, then that allows you to essentially somewhat miss the mark potentially on your first

00:08:04 Kevin Mako: run, but have the comfort in knowing that don't worry, you'll tweak and refine it to get it in the

00:08:08 Kevin Mako: place it needs to be while having only, like you mentioned, produced a small amount of units

00:08:12 Kevin Mako: so that you can test the market, test the engineering, test the manufacturing, then really start to scale and grow by hitting those five-star reviews.

00:08:20 Kevin Mako: I love also how you mentioned looking at potential competitors, even if you've made a completely innovative product, which you don't

00:08:25 Kevin Mako: have any direct competitors, then you should be looking at the other buying options. What else can

00:08:30 Kevin Mako: somebody buy that's maybe an alternative to your product or what they're currently using in replacement of your product and figure out what people like and dislike? What a great

00:08:39 Kevin Mako: source of information than the public reviews that are out there. People telling you exactly why

00:08:44 Kevin Mako: they're either giving it demerit points or why they're giving it a five-star review. If you can

00:08:49 Kevin Mako: focus on those things really continually and progressively, which is something I love that you said

00:08:53 Tim Angel: there, a very powerful part of growing and scaling the brand from your initial version of the

00:08:57 Tim Angel: product in terms of, and then scaling that product bigger and bigger over time. Yeah, and I think

00:09:03 Tim Angel: also an important, important thing is on Amazon, if you're competing on price, there is a lot of competition.

00:09:10 Tim Angel: But if you're if you're not competing on price and you're going for a high quality product, there's very little competition. So I think that's a really important area to

00:09:18 Tim Angel: focus on, you know, make a high quality product, post your story about,

00:09:22 Kevin Mako: you know, your American company or European company or whatever. That gives you priority over the cheap products that are mostly manufactured overseas.

00:09:31 Kevin Mako: Something we always advise is to whatever your invention is, and this works for, I would say, 90 or 95% of the time, if you've come up with some sort of

00:09:39 Kevin Mako: innovation in the world, you should start with the premium version of it. Again, that doesn't mean the feature rich version.

00:09:46 Kevin Mako: That means a high quality of the version. First of all, you can always bring your price down. Second of all, you don't yet have economies of scale in

00:09:52 Kevin Mako: manufacturing. So to compete on cost, typically one of the variables is you need to be manufacturing

00:09:57 Kevin Mako: in the tens or hundreds of thousands of units so that you're cost effective in production. Well, you don't have that luxury as a startup yet. You can get that.

00:10:04 Kevin Mako: And no, you can always work your way down through all of the learnings from your higher quality version to make, let's say, a mid-quality version later.

00:10:13 Kevin Mako: And you could even release a different version of your product, a different brand name or a different price point or whatever.

00:10:18 Kevin Mako: There's lots of ways to do it, but you could have a cost-down version at a later date to hit a different or a larger, let's say, mass market appeal than

00:10:26 Tim Angel: your original premium one. But the best thing you could do with that premium product in the beginning, though, is use that to establish your brand quality.

00:10:33 Tim Angel: Better quality product, better brand perception. Yeah, exactly. And you can get people later on.

00:10:38 Kevin Mako: You get more people in the door with that less expensive option and a little bit, well, this company's great.

00:10:44 Kevin Mako: Let me try their, you know, put the money into buy their more expensive option. So yeah, I think that's great. What else would you suggest in terms of best practices

00:10:52 Kevin Mako: just in scaling up sales on Amazon once you start gaining some early traction? Do you like working with some of the ads platforms there, offsite ads push.

00:11:01 Kevin Mako: What are some of the channels that

00:11:02 Kevin Mako: people can use to get more eyeballs on their product?

00:11:07 Kevin Mako: Assuming, you know, they've done the work to get a great five-star product built. Now what can they do to actually scale that on the platform?

00:11:13 Tim Angel: Well, yeah, first off, it's tough at the beginning. I would not do any advertising at the beginning when you don't have any reviews because it's just like throwing money away.

00:11:23 Tim Angel: But, you know, at the beginning, it's hard to get reviews. You got a, I basically would give free product away. I would, you know, give it to family and friends, have them post

00:11:32 Tim Angel: reviews. But now, like, you don't, you don't even need somebody to purchase the product to post a review.

00:11:39 Tim Angel: So you can just give the product out and then say, hey, can you leave a review here on the product listing? But, yeah, I think that's really important. And you kind of need to

00:11:48 Tim Angel: get, like, over 100 reviews, in my opinion, before you can kind of push the gas on the

00:11:55 Tim Angel: advertising, but it would mainly be on Amazon where I would focus on the advertising.

00:12:02 Tim Angel: You got to get the reviews up to five stars, if you can. But you know, you're not always going to be able to get there right at the beginning.

00:12:09 Tim Angel: So you're just going to have to start out slow with the advertising. You got the sponsored products advertising, and then you got the banners.

00:12:17 Tim Angel: For me, what I did when I did advertising with the banners, it doesn't show the prices of the

00:12:23 Tim Angel: product. So you don't want people to click on it that are looking for an inexpensive product.

00:12:29 Tim Angel: You know, so like for an example, we would put not cheap, but worth every penny. So anybody

00:12:34 Tim Angel: looking for an inexpensive product is not going to click on it. It's not going to cost me money. It's really about focusing on improving the product.

00:12:41 Tim Angel: And over time, you can scale up the advertising. But I would, I would seriously focus on learning the advertising system

00:12:50 Tim Angel: yourself in Amazon, it's not that difficult to understand. I did it myself every day for years, so I got pretty good at it.

00:12:59 Tim Angel: But it's also been a few years now since I've actually done it myself, since I replaced myself there. The nice thing about what you're saying here, too,

00:13:06 Kevin Mako: is that the key from everything you said is these reviews. You've got to, first of all, build a great product, then get great reviews.

00:13:12 Kevin Mako: The nice thing as a hardware startup is that you have the time and the effort to be able to curate those reviews. Like you said, you can be giving

00:13:18 Kevin Mako: them away and then reaching out to those folks. You could be selling them. You could be selling them at a discount and then spending time.

00:13:24 Kevin Mako: You even as the founder can reach out to every single buyer

00:13:27 Kevin Mako: and make sure that they had a good experience. And if they had a good experience, then simply ask for that review.

00:13:32 Kevin Mako: And that is a powerful way to start getting some of those earlier reviews, which then it's kind of a snowball effect, as you're saying, as you start to get more reviews,

00:13:39 Kevin Mako: people better validate the product. And all of a sudden, now you've kind of tilted the needle

00:13:43 Kevin Mako: where your return on ad spend becomes valuable because not only do you have a great product and

00:13:47 Kevin Mako: hopefully you're advertising it or at least showcasing it correctly and properly on Amazon

00:13:52 Kevin Mako: using proper formats for photos or renderings or whatever you're doing to make it at least look like a world-class product on the actual listing itself.

00:14:01 Kevin Mako: And then once somebody actually comes and sees that you have a bunch of five-star reviews in addition to a great product,

00:14:06 Kevin Mako: in addition to great photos and an explanation, then it gets them closer to that buy state. And then the snowball starts churning.

00:14:13 Kevin Mako: The more people to buy, the more Amazon's going to feed it, the more spread it's going to have. and so on. You just continue to make the product better over time.

00:14:21 Kevin Mako: And if you're focusing on all those different variables, it starts to balloon and scale. Do you sell on a bunch of other things as well?

00:14:28 Kevin Mako: Obviously, you sell directly on your website. Are there other platforms that you think are important for startups to consider that are going to an Amazon style method for selling?

00:14:36 Tim Angel: I think Walmart's been growing a lot lately, but I mean, Amazon's still the main one. And in my opinion, you know, I think it's really good to focus there.

00:14:46 Tim Angel: And I feel like on Amazon, you're also going to want to make sure that you have a product that's not too inexpensive.

00:14:54 Tim Angel: Like, if you, if you're trying to sell a product that's $10 or $20, I feel like Amazon is very

00:15:00 Tim Angel: difficult because after shipping and spending money on advertising, there's like, there's like nothing left.

00:15:06 Tim Angel: So, for example, our product, our competitors sell for like anywhere from $10 to $20 something.

00:15:14 Tim Angel: and we're at $40 to $90.

00:15:18 Tim Angel: So that's $4X, the least expensive option.

00:15:21 Tim Angel: And that gives us the ability to be able to spend more money than our competitors on advertising. So we can take that real estate from them.

00:15:30 Tim Angel: So that's really helped us too. I think whoever can spend more on advertising is the one that wins. And good reviews, like I've said 50 times.

00:15:38 Kevin Mako: It seems like when you keep coming back around to it, like building a quality product, something that really meets the demand of the customer is the Holy

00:15:47 Kevin Mako: Grail for many reasons, not just your reviews, but also the ad spend,

00:15:52 Kevin Mako: the price that you're able to charge, the brand recognition. There's many different elements, especially for a hardware startup where the quality of your venture is so important.

00:16:01 Kevin Mako: So I love hearing it from you and much appreciated for all your words of wisdom. Talk a bit about what you guys are doing at Zugu and how people can buy them.

00:16:09 Tim Angel: Obviously, they can go to Amazon. We've been working on iPad cases for 13 years now, iPad cases and accessories, but for 13 years

00:16:17 Tim Angel: perfecting the product, you know, and we're starting to branch out into other product categories,

00:16:23 Tim Angel: but yeah, it's been a long road of just trying to improve constantly. We sell on our website, ZuguCase.com.

00:16:30 Tim Angel: We also sell on Amazon.com and the top 100 Amazon cases for the iPad.

00:16:37 Kevin Mako: There's only four that have five stars, and all four of them are us. Right on. So yeah, like I said, the reviews, it's key, it's key. Very powerful stuff.

00:16:46 Kevin Mako: And it's amazing, too, that you've done millions of units in sales in a very specific niche vertical. That's the other thing.

00:16:52 Kevin Mako: I think it's important for hardware startups to understand. The global marketplace is big.

00:16:57 Kevin Mako: And even though you might be focused on some tiny little fragment of a market, a niche within

00:17:02 Kevin Mako: a niche, let's say, it's still very powerful when you think of the global size of the market. So many people look at a new product and say, well, if I pigeonhole

00:17:10 Kevin Mako: it to this particular area of the industry, you know, I'm missing out on this mass market

00:17:14 Kevin Mako: appeal. Or if I make it too high quality, only a handful of people are going to be able to

00:17:18 Kevin Mako: afford it. But you're selling worldwide now and with this platform, which gives you incredible

00:17:23 Kevin Mako: reach. So if you build a great product, even though it's at a higher price point, even just within that bracket of people that can afford it, that bracket is massive.

00:17:31 Kevin Mako: It can create a huge multi-million dollar business. You guys are doing 30 million plus now on really one type of product line, obviously

00:17:38 Kevin Mako: a few verticals within it, but still within a very, very, very tight, specific niche within the

00:17:43 Kevin Mako: market overall. And only now are you started to branch out into other things as you've now hit that critical mass scale infrastructure size that you can grow in that way.

00:17:52 Tim Angel: Yeah, I think, you know, what really worked for us was focusing on one product because we had one product at the beginning.

00:17:59 Tim Angel: Then we started to expand to different products thinking that that was the answer. But really,

00:18:04 Tim Angel: we got to like 30 products and we decided this is not working. We're doing a bunch of things okay and we're doing nothing great.

00:18:12 Tim Angel: So we got rid of all the products and focused on our best selling product, put all our time and energy into that, improving it

00:18:20 Tim Angel: 100 times as much as we could. And that's when we just took off and things went crazy. That's amazing, Tim. Great to hear

00:18:29 Kevin Mako: the success story there. As always, I'll put the show notes below to Zugu case in the show for anyone that wants to click through. Thanks again for all your words of wisdom

00:18:37 Kevin Mako: and much appreciated it for you spending time today on the show. All right. Thanks, man. Appreciate it. Thanks, Tim. And take care.

00:18:43 Narrator: Thanks for tuning in to this episode of the Product Startup Podcast. If you found some value in the show, please do us a huge favor and hit the like button and subscribe.

00:18:52 Narrator: If you have any questions, guest suggestions, or anything else, feel free to reach out to us anytime at our email, podcast at makodesign.com.

00:19:01 Narrator: This show is hosted by Kevin Mako, America's leading expert on product development for hardware startups, and the podcast

00:19:08 Narrator: is produced by Mako Design, the original firm providing end-to-end consumer

00:19:13 Narrator: product development services tailored specifically to hardware startups, small manufacturers, and inventors.

00:19:19 Narrator: Take your product from idea to store shelves at MakoDesign.com. That's M-A-K-O Design dot com. Thanks for joining, and see you again soon.