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4 Things We Learned When Amazon Destroyed Our Business
It always catches people by surprise when we talk about how Amazon accidentally destroyed our brand new business, almost right off the bat. But even more surprisingly, we’ve heard similar stories from a LOT of other Amazon sellers. It seemed important, then, to write an article about what happened, the 4 most important lessons we learned, and tips for how YOU can help avoid the same mistakes (or at least minimize the damage).
“Don’t put all your eggs in one basket.”
This is the most commonly heard (and probably most obvious) piece of advice in the entrepreneurial world.
It is also something we’ve tried to implement in our own entrepreneurial experiences from day one. Multiple platforms, multiple products, multiple streams, yada yada yada…
So when we nearly lost EVERYTHING because of a few random workers in an Amazon warehouse, I cannot even put into words how furious I was with MYSELF for putting us in such a vulnerable position.
I broke the entrepreneurial golden Rule.
*Bangs head against table*
So what the hell happened? And how can we help YOU avoid making the same mistake?
We wanted to share with you the 4 BIGGEST lessons we learned when Amazon (unintentionally) destroyed our business. Take what you can from it, and hopefully you’ll be smarter at the end (smarter than I was, at least, right?!). With any luck, these tips will help you have a smoother, more successfully run business with less room for error.
First, you should probably get the cliff notes version of what exactly went down, so you can get the full benefit of our massive blunder…
When we decided to develop our brand of wine glasses, it was our third brand launch. We were kind of pros by this point! It was easy peasy, lemon squeezy. And everything went according to plan. (Mostly.)
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But we had just moved to a new country with our five kids. (Want that backstory? Click here!) They spoke a new language that we hadn’t learned yet. There was a lot of paperwork and bureaucracy to sort through.
And, we kind of moved to paradise, so seeing the sights was definitely on our calendar in BOLD ink.
So while we were swept up in launching the wine glass brand, we were simultaneously distracted with this brand new world around us, and we let our other businesses slip into the back burner.
It wasn’t a big deal at first. The wine glass launch was a huge success. We were selling out faster than we could restock them. Things were going amazingly well!
But then we started getting messages from customers. ‘We didn’t get what we ordered.’ ‘This is a different set.’ ‘I exchanged these but it came with the wrong ones twice now.’
These messages just kept coming.
And what most people don’t realize is that Amazon sellers pay for returns, pay for exchanges, and have their items dropped down in the search results when things like this happen.
So we were scrambling. Hours on the phone with Amazon representatives. Multiple attempts to check every box on the shelves of every warehouse throughout the country and have them sorted all correctly. Six months of Investigations and inventory checks, phone calls and emails, tears and frustrations… and very little progress.
As it turns out, when they checked our inventory in the first receiving Warehouse, the Amazon workers labeled all of our units incorrectly.
It would cost thousands and thousands of dollars to pull all the inventory out of the warehouses manually. Our only option was to let the units sell out and pay to replace them when the wrong ones were sent. So we did.
Madre Miá, ay diós! (See, I’ve learned some Spanish, at least!)
There was ZERO profit at the end of it all and maybe even some losses, but shhhh, let’s not talk about that… *sniffle*
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But on the bright side, most of our customers were in love with the glasses, even when they got the wrong ones.
So we knew our product was amazing and worthwhile. (Check them out here, if you’re curious.)
How frustrating it is to see that you’ve done everything right- develop a great product, brand yourself, successfully launch, and then by no fault of your own watch everything crumble down around you.
So what would I do differently?
Enter the 4 things we learned when Amazon destroyed our business…(by mistake, but still…details matter, people!)
LESSON ONE: SMART DOESN’T ALWAYS EQUAL SAVINGS
Hands down, our number one BIGGEST mistake in this situation was not exploring all of our warehousing/storage/shipping options. (Amazon business tip fail…)
It was significantly cheaper to have our manufacturer ship the entire inventory to Amazon, where Amazon would sort, store and ship orders quickly and efficiently. Or so they say…
We should have invested in off-site warehousing.
Our profit margin would have taken a fairly sizable cutback, but it would have eliminated this entire nightmare from growing out of hand (or happening at all).
Our next shipment will most definitely be stored in independent warehouses and shipped to Amazon one SKU at a time.
What seemed like an unnecessary expense at the time would have been our lifeboat. *facepalm*
Plus, if we had done this to begin with, we would have saved ourselves THOUSANDS of dollars.
LESSON TWO: FOCUS, FOCUS, FOCUS!!
Oh, the power of distraction! We had a GREAT idea, and to be fair, we executed it fantastically!
But in reality, we should have waited to launch the brand after things had settled down from our move, AND after we had fully streamlined our first two businesses.
Both of our businesses were already pretty self-sufficient, but with everything else going on, we just didn’t take the time to monitor our stock levels, audit our advertising effectiveness, and all the other little things that keep our biz ops running smoothly.
So in hindsight, make sure to set enough time aside to monitor ALL THE THINGS you have going on.
Make lists, set reminders, put things in spreadsheets or a calendar. But whatever you do, make sure you have all the necessary actions that you take do your business scheduled so that you don’t get overwhelmed or sidetracked.
DON’T get so swept up in the fun stuff that you forget about the little details elsewhere.
LESSON THREE: DON’T PUT ALL OF YOUR EGGS IN ONE BASKET.
Ah, there it is. You were wondering when I’d get to this, right?!
This is already a little bit related to the first two lessons (or maybe it’s intertwined in everything) but it’s also something we need to explore entirely on it’s own. Let me tell you why…
Before we launched our wine glass brand, we were selling on multiple platforms, had different websites for each other brand, and OF COURSE we set up a stand-alone website for our new wine glasses as well.
But Amazon makes it SO EASY to get sales rolling, that after our launch, we didn’t NEED to keep up with outside marketing, or put energy into driving organic traffic to our website. So we didn’t. We let Amazon become our bread and butter (bonus business tip: don’t do this).
And the worst part?! (Oh yeah, we get dumber than this…just watch…)
After Amazon mixed up our entire first shipment, we still sent our SECOND shipment to the Amazon warehouses!!
(OMG…please, someone smack me…)
We had full confidence that they wouldn’t make the same mistake twice. I mean, really, what are the odds??
But they did. We changed our labeling and took other smart, preventative measures to avoid errors, but they still screwed it all up. AGAIN.
Fool me once….shame on you. Fool me twice… *looks around sheepishly*
Even this alone might not have been too big of a deal. It COULD have been recoverable.
But we didn’t just slack off on marketing to our standalone wine glass website- we slacked off on marketing to ALL of our alternative marketplaces for all brands.
We let Amazon be our one-stop shop for everything! While we were moving and transitioning *flashback to lesson two* it just seemed like the easiest option.
So we went with the easiest flow, with the intention to pick up where we left off after things settled. Except it didn’t.
See? I told you we got dumber. You didn’t believe me, did you?
LESSON FOUR: EVERYTHING IS FIXABLE.
Even still, after all this- after repeated mistakes and lessons learned a bit too late, things are almost always recoverable.
With some smart damage control, you can cut your losses and start moving forward again.
50% of businesses fail in the first 5 years (see those stats here).
This is mostly because of mistakes (like ours) that are easy to make, hard to identify and even harder to prevent without adequate research.
Being able to detach from the situation and look at things objectively is crucial to survival.
In our case, we put a FULL STOP on the wine glass brand. We were able to put all of our marketing and operation efforts on our wine glass brand on hold until stock ran out (again).
We then put full force back into our other brands. We had a lot of work to do, making up for lost time.
We got our stock levels rolling again, we focused on smart marketing tactics, and we looked for ALL of the possible ways we could work smarter instead of harder- even if it meant less profit but more productivity.
We traded our bottom line numbers for more controllability and streamlined our operations to create more time for advertising, networking, and new ideas. We started consistently looking for fresh, new information (about Amazon, the market, etc) and other business tips to keep ourselves improving.
And of course, more time for those little details that keep all those little business cogs in motion.
So if you find yourself in an impossible position, with your back against the wall and your head spinning- DETACH.
Step back, take a breath, and explore your options. Branch out to other ideas, other marketplaces, other products, whatever it takes to keep yourself moving forward without digging your own hole deeper.
And if you can’t get that figured out, be humble enough to ask others for help.
Gather ideas, get fresh perspectives, and reach out to other entrepreneurs who have already learned lessons like these. *Raises hand*
Let me just quickly summarize the four (hopefully valuable) lessons I’ve addressed above:
- Smart doesn’t always equal savings, so explore ALL of your options.
- Focus, focus, focus! Make time for the boring details and don’t get distracted.
- Don’t put all your eggs in one basket. Diversify and explore new ideas.
- Everything is fixable. Be objective, find solutions, and ask for help when needed.
You’ve got this, just keep moving forward.
With the right tools, you’re going to be a GREAT success!
And with the ability to learn from the mistakes of others, you’re going to get even further.
Congratulations! You’re officially smarter than 2017 me. Knowledge is power. Use it wisely. *wink wink*
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