For nine years now, Pilar Newman has been selling products on Amazon, where she got started selling bulk items she bought from big-box stores and other online retailers at a markup. Now the game has changed, and she’s offering her expertise to others with a new premium course on her website PilarNewman.com. Today, she uses private labeling to sell her own brand on Amazon, which is the focus of her course. She is now in the top 25 percent of sellers on Amazon and has a six-figure income that allowed her to become completely self-employed four years ago.
Newman recently spent an hour talking with us about how she got started, how her process of selling on Amazon changed over time and what she covers in her course. The transcript of the conversation has been edited for clarity.
Matt Haldane, Global Sources: To start, go into your history how you got into sourcing. How did you get started selling on Amazon?
Pilar Newman: December 1st of 2016 marked my ninth year and I started off with retail arbitrage. The short story is my nephew had originally asked me for a Christmas present that I could not find anywhere in the States in the regular big-box stores. I asked him where he found this toy. He shows it to me on Amazon. Back then, I didn’t really have a lot of money, and I went searching for where I could find this product cheaper by doing some Google research. I found the product; gave it to him for Christmas; (he was) very happy with it. I saw an opportunity there where I was able to get the price a lot cheaper from finding it on a different source online. So, I bought another 12 of those, threw it on Amazon. That started my Amazon career nine years ago.
I started looking at what other people online were doing and I had heard about people going into big-box stores. Going through the clearance sections and flipping items on Amazon. So that’s pretty much what I did on my weekends, because I did work a nine-to-five, Monday through Friday. I did that for a period of three years.
After the course of nine years, things started changing a lot. Private labeling started becoming a big deal. I originally got into that about five years ago. (I started) bringing in products from China, private labeling stuff on my own.
MH: Did it help sell things? What’s the advantage there of private labeling?
PN: The advantage of private-labeling is that you are able to gain higher profit margins on your product line as well as to keep competition at bay. It’s totally different from doing any sort of wholesaling or retailing where anyone can come on in and drop the price. You don’t know at what price they are buying it and it just becomes a race to the bottom.
MH: What’s your criteria for selecting products? Before private-labeling, how did you know what you wanted to sell?
PN: Retail arbitrage was pretty simple back then. Target and Walmart would have all sorts of different sales where you can get products at 70 percent off, 85 percent off. That was a great way to make money because a lot of people did not know that you can buy those products and flip it on Amazon. Now online arbitrage is being taught.
There was no criteria other than price. If I can get it cheap enough, maybe I can flip it high enough on Amazon. As things evolved and private labeling started to come into play, the criteria was being keen to who my target audience was, whether that was to children, to arts and crafts people, the industrial sector. I sell in all those areas.
At the beginning, when I was doing private-labeling, I focused a lot on finding items that were lightweight. When you’re importing items from China and you want it to get here fast, you want to make sure that you’re not paying too much in shipping. If you’re doing air freights, you’re keeping the costs low by making sure the weight is low.
The advantage of private-labeling is that you are able to gain higher profit margins and keep competition at bay
MH: Do you keep multiple stores to differentiate your product lines so people associate this specific store with these types of products?
PN: I have two stores, but my main store is the store that I flip everything on. It does not matter what my name brand is, because that’s such a seasoned account, and it did not start off as a private-label account. I create new items with new brand names and continue flipping items on that account without being a niche store.
The second store that Amazon authorized me to have in 2016 is a niche store. That’s more of me now saying let me start off with one brand and let me expand along these lines. This is the way a lot of people are building out brands on Amazon.
MH: Have you noticed any differences? I know the niche store is relatively new for you, but have you noticed if it draws more people back to the store because they’re familiar with what it sells?
PN: Because I know how to get good enough traffic for my target audience just within the Amazon ecosystem, it’s very easy for me to pump out items on the first storefront. It’s pretty much any item that I can make money on. When you’re looking at the niche store, and sticking to a particular product line and trying to come out with complimentary items, I think it has become more pertinent to have an outside website. So I do have an outside website on that. It does become more pertinent to have a Facebook presence with that brand name.
On top of that, I actually picked a grocery item because I’m more interested now in having replenishables. So I’m noticing a couple of things about people changing their behaviors on some of the grocery items that they’re picking. So that’s been more of a learning process.
MH: Can you talk about how you got into sourcing from China?
PN: I started reading more about what people were doing on Amazon. Everything I learned, I learned on my own through trial and error. I remember at one point finding these electronic phones on AliExpress, I think. They had some new technology and it was kinda cool. So I actually did a Western Union payment to someone in China that I had never met, which I would not recommend doing, and I ended up getting this electronic phone. And I got it for a cheap price. I put in my SIM card and it was working. (The process) was totally brand new to me.
Now you can’t do that as much. There’s a lot of competition. It really is evolving into brand building. And that’s exactly what Amazon wants us to do and that’s exactly the route I’m going.
MH: A lot of people who will be reading this will probably be people first starting out. Is it easy with all the competition now?
PN: I think it’s still easy in the sense that there’s still lots of open room to get in and make money. Now the barriers to entry are starting to change. You need a lot more dollars to private label an item because you need to hit certain minimum requirements to get your brand name on there. But there is still a huge space.
Amazon has stated to us that about 50% of the products that are sold on Amazon come from third-party merchants such as ourselves. They need us and they build more tools to make it easier for us to sell on their website. I think it’s becoming more difficult to take a generic item, let’s say a silicone spatula, and just throw a generic logo on it when 10 other people are doing the same thing. It’s becoming more pertinent to get to know your audience and then start finding items that are pertinent to them. Not enough people do that customer research.
And then additionally now, you have to know how to do social media traffic. It is now pertinent to have an outside website to funnel traffic to. These are the things that are starting to change on Amazon.
MH: You built your initial consumer base up through retail arbitrage, which you say isn’t much of an opportunity anymore. How do you teach people what they need to look for to build their audience?
PN: If you’re coming in brand new to Amazon and you don’t have a target audience, it is always more fun to start with something that interests you. So what you could do is write down a list of your hobbies or anything that interests you in general and then join groups on Facebook. Go on Pinterest, do some research.
For example, sports fans. What are (football) fans interested in? They might be interested more in seasonal products right now because it runs for a few months. But you might start having a calendar of product launches where from August to February, I know that I can sell some item related to football because I know football people are watching right now. It’s a high traffic time. Start around some of the things that interest you and work your way backwards to a product that you can private label.
MH: In previous interviews you’ve done, you said you now use a sourcing agent in China. Is it something that you recommend? Is this something that people should do right off the bat?
PN: I think it depends a lot on what your strategy is. If you do go straight to a manufacturing company, you may have difficulty with the language or the customs. In that case, the agent does help, especially for beginners.
I personally like to use agents because it makes it a lot easier and faster for me to launch products. There’s so much time that goes into looking for manufacturers and making sure they’re good. I prefer to work with agents that I’ve worked for years with now.
MH: Does that affect your (profit) margins?
PN: Yeah. Oh, yeah.
MH: But you find it’s worth it in the end?
PN: Yeah. It’s a common question I get about margins. I take it back to strategy choice. There are there are times where it does make sense to go straight to a manufacturing company. If you have the funds and you are also selling to big-box stores, you want you want to make sure that you’re getting the best pricing and high-quality products.
So I did bring in a 20ft container three years ago, and I did go straight to the manufacturing company. I had flown over there, got a tour of the warehouse and got these products super cheap. I think it was six or nine SKUs, and that was great.
At that time, I only knew to sell on Amazon. So I had way too much inventory. It took me about 14 months to sell off that entire 20ft container. So if you have other outlets, if you want to make big purchases, then definitely go straight to a manufacturing company. If you do use an agent, they are taking a cut, so you have to make some considerations in terms of your prices.
MH: Do you believe it helps you competitively if you’re getting products faster and the process is smoother for you?
PN: It definitely does. I do buy some generic, white label stuff, but what my agent gets a differentiated product to market faster. If I was selling a spatula with my logo on it, I might go a little different route there. But I create packages or I’ll do one product with my designs, which are totally different. So I’m pretty much in a game by myself, unless someone wants a copyright infringement letter.
Join groups on Facebook. Go on Pinterest, do some research.
MH: Do you design products yourself?
PN: When I say design, I mean like a different layout of something that looks different. I’m not an inventor. I do understand some of the things that I’m good at, and some of the things that I’m not as strong at.
But within one of my niches, I do come up with a bunch of my own different designs with the help of a designer. It’s so you can’t replicate my products. Depending on what product I’m going to put it on, whether it’s a cup, a t-shirt, a sticker, I have him take care of a bunch of stuff, package it the way that I need it and send it to Amazon. It’s easier for me.
MH: Can you go a little more into how you differentiate your products?
PN: I sell so many different product types. Sometimes I’ll find products for which I noticed on Amazon that there’s a hole. So if there’s something I see that may be selling well, I may come up with a bulk package of a particular item, and then I switch up the colors.
Another thing that I do is I will redesign something that may be popular or trending at the time with my own design still fitting the trend. Trending items is something that I’m really good at. So, for example, one of the biggest trending items this year and last year are emojis. Everyone uses emojis, so you may want to come up with some sort of emoji-inspired product. Someone came out with emoji beach balls this summer. I could just take some headsets and say, okay, emojis are popular right now, so let’s do emoji inspired headsets.
MH: Is Amazon still a good place for beginners?
PN: Amazon is still a good place for anyone who wants to take advantage of the opportunity that’s available on their site. Whether they’re a beginner or in the middle of their Amazon career, they should keep at it. They do have this insane built-in traffic that you can’t really get anywhere else unless you pay for it. You can throw up a product and get a sale that day without doing anything else. That’s a best-case scenario, but that stuff still happens on Amazon.
What’s happening is that it’s shifting from what it was before. Most people get so fearful when something changes, which means now that so many people have dropped off.
Amazon’s telling us that they’re changing their entire platform to creating brand pages. They’re creating everything necessary for a brand to tell their story. If you combine that now with an outside website, you’re in really good shape. It’s great opportunity to have a brand now on Amazon and expand it with the traffic that they give us.
MH: Do you do you look at other avenues or is it still mostly just Amazon?
PN: I think I’m one of the few people who have actually been able to stay relevant and make a significant amount of money on Amazon over the course of nine years without having an outside storefront. It’s also not a great way to do it going forward. I’ve gotten very comfortable with just sending all my items to FBA and just collecting my profits and my pay every two weeks. It’s not a way that’s going to keep me relevant for another nine years.
I do have an outside website on my second storefront. I am doing ads on Facebook for the grocery item. When you do outside traffic, it’s not just one touch, its multiple touches to get a customer and then have a lifetime customer.
I do have a Shopify store for my grocery item. This coming year, I’m focusing a more on it. I have been able to run traffic to it. It’s just been more expensive traffic.
Amazon has this insane built-in traffic that you can’t really get anywhere else.
MH: Do you have any advice for launching new products, especially now that Amazon is taking a harder stance against incentivized reviews?
PN: That’s the million-dollar question right now. So far, the best route has been social media marketing. Get on Facebook.
What Amazon says we can and can’t do right now was left very open. I’ve even had to call Amazon to ask them can we do this, can we do that. They give you some very vague answers.
I would recommend Facebook as the best way to gain velocity orders. You can still give your product away at a discount. That’s not against Amazon’s terms of service. What’s against terms of service to say, I’m giving you this discount or this free product and in return I’m expecting a review.
MH: How effective is Facebook advertising? Do you explore other avenues as well?
PN: Facebook is pretty much the only one for me right now. I can give people a good discount and they’ll take it up. The hardest thing about learning social media is to make sure that you end up becoming profitable at some point.
It’s still a lot of experimenting. There’s a lot of great people who are awesome at it, which is why I continue to say that I’m highly surprised that I’ve been able to stick with Amazon. Now I’m continuing to experiment with my Shopify store and Facebook ads.
MH: Do you have any idea of a figure that people might want to start out with to start an Amazon business? It could be a big investment.
PN: I shy away from giving people an exact number.
It is becoming harder to start an Amazon business with having very little startup capital. That is certain. Sometimes you may get a product that starts moving with your sponsored ads and now you’ve run out because you have no money to buy more inventory. That’s one of the worst things that can happen on Amazon. Your ranking tanks. Sometimes it’s harder to get it back up the second time around.
The other reason I don’t like telling people how much to start with is because I work on trending items. I’ve taught other people how to find trending items. You can spend $1,000 and all of a sudden you made $5,000. Those are products that have no criteria whatsoever. If you’re creative enough, you can stretch $1,000, but it is becoming harder to start with a very small budget.
MH: Can you talk about the course that you’re offering now? What was missing from other content that you believed you could offer?
PN: My course is specific to Amazon, so it does not dive into having your own outside storefront. Because I never took a course for myself to learn Amazon, I really did come up with my own very unique way of finding products. In particular, I have been able to really focus in on product choices without using any tools. So my course focuses more on an area that a lot of people have trouble with. How do I pick an item that has a good probability of selling on Amazon?
It’s also keeping current with the review policy change. As of right now we are adding more material to it, which is going to discuss how exactly to find profitable products, to bring them in from overseas. We are closed right now, but people can go to my website and sign up for the free training at www.pilarnewman.com. Then when the course opens up again, they’ll hear about it.
If you’re creative enough, you can stretch $1,000.
MH: Do you have a launch date for the course?
PN: My course opens and closes at different periods of time. I don’t have an actual date right now when it’s going to open up again just because I want to make sure that the members are going through it properly. And I want to make sure I have enough bandwidth to support them.
It is a private labeling course, which is one of the important things I forgot to mention. This is not anything about wholesaling, retail arbitrage. We’re learning how to find a product that we can private label. How to get started testing items out on Amazon before you go ahead and make any big type of purchases. How to go ahead looking for a target audience. And how to run traffic to your listing simply using the Amazon ecosystem.
MH: Is it interactive or is it more of a straightforward webinar?
PN: It’s a self-study course. But because I did the VIP launch not too long ago, a lot of members do have access to me directly, which was one of the benefits that I had given. I wanted to work with them closely so that I can make sure that they’re going through the course fine.
The course is only a couple of months old. It came about after two years of doing one-on-one Amazon coaching and hearing the same questions over and over again. So I thought why not just come up with a course and hit all the points that people are asking me about on these coaching calls.
MH: Is there a price for the course?
PN: I don’t actually want to mention that right now only because we’re still working it out.
MH: That’s everything I wanted to cover. Do you believe there’s anything that we missed?
PN: I think just to end it off, (I’d like) to remind people that there’s a lot of different strategies for how to sell on Amazon. If someone out there is brand new to selling on Amazon or still trying to figure it out, it is important to stick with learning from one person, because they may just be teaching one strategy. If you combine that with someone else’s idea of how to sell on Amazon, it might not work hand-in-hand.
You can always grab little tidbits here and there, but I find too many people get so confused. It’s always good test things out, but stick with one strategy, and see how that works before you decide to move on to another strategy.