Amazon FBA Failures
Matt Clark (00:04):
Hey there. Welcome to Branded by Amazing. This is episode number 14, and today we’re going to talk about our top product failures. And this is Matt Clark, the CEO of amazing.com.
Mike McClary (00:13):
I’m Mike McClary, the chief product officer amazing.com. And today is September 21st. Yesterday, the a news article came out about Shopify e-commerce giant Shopify who supports all the backend websites for millions of e-commerce websites, finally obtained something that they haven’t been able to, they surpassed Amazon with their number of unique visitors last quarter.
Now it’s kind of funny, and I were talking about that because Amazon’s one website, Shopify powers, millions, uh, and they’re pretty proud of the fact that they finally surpassed Amazon, but still nonetheless shows that Shopify an alternative to Amazon is definitely making some headway. And I think you have a lot to do with your business on Shopify.
Matt Clark (00:54):
Yeah, I think it kind of shows you the power of both platforms. Um, now I own an e-commerce business. We’ve kind of talked about it a lot in one episode here anyways, uh, own a coffee brand with a business partner. And we actually applied for two years in a row to the Inc 500 or 5,000 list. And last year, which I believe was the 2020 list. Um, that one, we ended up at number 200 and I think 71, uh, was the year before. And the most recent one that came out, which I believe what they call the 2021 list. Uh, we were actually number 80, so top 100 fastest growing companies in America. And this is a brand that we really just been scaling since the beginning of 2019, which I think kind of shows you the power of the stuff that we’re talking about here is we’re applying the same stuff.
You know, we do a lot on Shopify. We also sell a lot on Amazon, but in general, a lot of the strategies are pretty similar, but it kind of shows you the power of this business model. I mean, we’re probably one of the fastest growing e-commerce businesses in the world right now. And especially in the U S at least according to Inc magazine, which is pretty cool because we’re here on this podcast, teaching you all the same stuff that we’re applying in that business.
Welcome to EP 14: Amazon FBA Failures
Mike McClary (01:58):
Huge success, you know, guys are selling coffee, doing really well, but people always hear about our successes, what they don’t hear about our failures. I know you and I both, we’ve talked about this a lot. Uh, we have a lot of failures. It’s not always, it’s not always exciting to talk about it, but today we thought we talk about what our products that we’ve tried launching you, and I’ve done some together. We’d done some individually that just didn’t take off.
Um, and so I have to have a couple here with me. So if you’re listening to the podcast, you won’t see these, but I’ll talk about them, but feel free to check out the link below. We’re going to give you a link, how to actually watch the YouTube version of this. And you can see the products that Mike has long have launched, and I’ve totally been a utter failures.
Mike McClary (02:33):
Uh, the first one I’ll talk about is a flashlight. You know, that’s one of the niches that I’m in right now. We sell flashlights and camping lanterns. And we decided at one point, Matt, that we wanted to not only sell this flashlight, that looked really, really beautiful, but we thought we’d added all these other features. We’d add in a power bank feature. We’d make it look really shiny and like a metallic gunmetal on the outside.
We even decided for some reason to put a glass covering on the end that covered the power button, first bad idea right there. Uh, so in order to use this flashlight, people had to take off this end cap in order to actually push the button in order to turn on, uh, first, you know, probably an idea that wasn’t the smartest thing for us to do. Second thing was even if they were able to open that end cap and turn the power on, uh, it wouldn’t work.
Mike McClary (03:18):
Uh, we decided to go with a slightly cheaper rechargeable battery, our manufacturer, which we’ve talked about great friends with, he actually had access to a battery manufacturer, gave me a great deal on these batteries because they’re pretty much like an overstock. We can get them much cheaper, gonna help us save a lot of money. We didn’t realize is those batteries about two years old.
And with lithium rechargeable batteries, they have a life cycle to them where if you don’t use them enough, they actually lose their power completely. And so we had a thousand of these beautiful looking flashlights look like one of the prettiest things you’ll you’ll ever see out there in the fascia light flashlight world, it’s called the Titan rechargeable flashlight and power bank got all the units and to us here. And then once we tested them out, they only worked for a day or two.
Mike McClary (04:01):
Uh, then the batteries completely failed. The battery, the batteries inside were not replaceable. Um, since then we’ve put in some replaceable ones that makes it easier to take care of an issue like that. But we just realized that we can’t even sell these to our customers. We, we hope that it was just going to be a percentage of them that were going to fail. So we hired a company that I worked with in the past test out as many as they could.
It was every single one. Um, and even before that, you know, when we’re hoping that we’re gonna be able to sell some of these, we had this other idea, well, you know what, maybe they’re not the most useful flashlights or power banks in the world. Maybe they’ll be as a nice little gift set.
So we decided to purchase this little shot glass that’s called limited edition dad because at the time, uh, it was spring. And I think it was around 2016 or so, so father’s day was coming up. So we had this, another brilliant idea. We were going to combine these together and actually had the same company testing, testing, these, getting ready to put the shot glass into the box. That’s where this beautiful gift set that was going to be sold to all of these dads out there, one of these products. And then that’s, before we found out that every single flashlight had failed.
Matt Clark (05:04):
And did you already tried to sell the first
Mike McClary (05:06):
Product? Uh, no. We had not. We were holding off, waiting in our inventory, just kinda, you know, holding off thinking like, ah, you know, once we have all these tested out, we’ll get them shipped over times and had in our warehouse and you
Matt Clark (05:16):
Already knew some were working.
Mike McClary (05:18):
We knew some weren’t, but we’re still hopeful that, you know, we’d be able to salvage some of these, maybe half of them.
Matt Clark (05:22):
We don’t know if this fraud is working, but let’s double down and add more expenses to this product.
Mike McClary (05:27):
Uh, it seemed like a good idea at the time we were like, kind of in part of the problem was father’s day was approaching. So we were going to do that. We had to get the order for these shot glasses in before, and then had to line up the company that was testing them to special needs facility right next to our warehouse. So we worked them a lot for testing stuff out. It’s a great other thing that we do, maybe we’ll talk about that someday.
Um, that we already had them all lined up to put all these additional products into there. And then once we, the report came back from them that every single flashlight failed, all we could do is get rid of these. I have a case of these sitting in my garage. It’s got like 20 or 30 of them in there that I just can’t get rid of because it’s a reminder to me of one of my failures on I’ll probably $20,000 for right down the tube.
Matt Clark (06:06):
Yeah, yeah. Or giving you a hard time, just cause I’ve been there totally myself. It’s like human nature. I think it’s like the sunk cost fallacy. That’s kind of like a weird way that we think sometimes it’s kind of like, okay, this thing kind of isn’t working out or you’re starting to notice some things not working at first. It’s like rationally, you should probably just get rid of it and start back from zero.
But the human nature is like, no, we’ve already put all this time and money into it. It’s like we got to make this thing work. It’s like, maybe let’s add something else to it. I know we’ve done it with a lot with like marketing promotions and stuff. It’s like, it’s not going well at first. The answer is probably not to do it twice as hard. The answer’s probably to like, do something different. So totally been there before.
Mike McClary (06:38):
I think one of our, one of our reasons for trying to salvage it was we thought, what if we just are able to sell someone to break even? Um, but then we made this, this, I think it was the finally at the end finally made a smart decision. We decided not to sell them because the damage to our brand and reputation would not have been worth even trying to break even on these.
Matt Clark (06:54):
Cool. It looks like you have another product. Yeah.
Failed Bike Light/Power Bank
Mike McClary (06:56):
So next to that, we have, uh, another combination product. There’s a theme here. This is a bike light slash power bank as well. Um, so this thing here, it works great. I’m going to turn this on and shine at the canvas real quick and probably drive her video team crazy for those who are still watching. Um, it was a great product and it did all types of things that, you know, that no single product did at the time. This was probably five years ago.
So it is a, a bike light that has rechargeable replaceable batteries. One lesson learned we incorporate in here, so the batteries are bad. We replace them. And it also has a power bank function to them. And our thought was, well, bikers are going to love to be able to recharge their cell phone and also have this great bike light using this, this, this brand new type of light that didn’t exist out there.
Mike McClary (07:40):
Well, one of the failures for this one was really just all on me. Uh, at the time we thought that we could really market this as a combo product, like sell it as a power bank and bike light, even less flashlight went out there, touting all the different features. When in reality, uh, you never kind of talk about this to people who ride bikes probably just wanted a bike light.
And, uh, they also might like the additional features of having a power bank, but there was certainly no demand for a tool that did everything out there. And I wish we would have had the tools we have now like brand analytics that tells you how many people are searching for the combo. If you go look today, there’s no one looking for the combo bike light power bank, which I would wish to know about four or five years ago.
Matt Clark (08:18):
Yeah. So what would you have done differently with that one to avoid that for other people?
Mike McClary (08:22):
I think what I would’ve done is focused on the primary function of it, that it is a bike light. It’s still a really good product and it still works. Even after these years, these are chartered batteries to work in there. I would have sold as a bike light and then I’m like, you and I were talking about earlier, I probably would have added in that it did have these additional features, sell them heavy on the bike light and then make them happy that they got this product and just realize that it comes with these other features they can use and find useful as well. Then maybe you drive demand for that type of product, but certainly focus on the demand that exists. And that was just for a bike
Matt Clark (08:54):
Light, I guess. There’s that whole metaphor about like, uh, something along the lines of like, it doesn’t really matter how fast you can climb a ladder if it’s kind of on the wrong wall. Um, done that sort of thing before, too, where it’s like, you can go.
Mike McClary (09:04):
Cause I mean, this product looks cool. I mean, it looks great. It’s high quality. I was kinda messing with her earlier, but if it’s like literally not something people want, then he’s like all that time and effort is kind of wasted, um, cotton a lot, you know, things that we think people want. We try to sell those types of products. When in reality it’s pretty easy now, as we found, you can find out exactly what people want, if you give them what they want, you’re much more likely to be successful.
Matt Clark (09:25):
Yeah. And I think along with that too, is like kind of like testing small, which it doesn’t sound like you went too crazy with that. So maybe it’s like, wasn’t completely like a bad decision there. Uh, cause you know, some people do that kind of thing and they’ll put like 50, 60 grand into a product and they’re like, oh crap, people don’t want this thing. Um, you know, kind of for us, one of the, one of the failures on the coffee business side, which by the way, the company is life boost coffee.
Um, but on that business, we were kind of looking at things and like, you know, it’s a physical product business. Like I’ve been involved in selling digital products, uh, training software, that kind of thing. I’ve also been involved, lots of e-commerce selling physical products. And so we’re like looking at our margins and stuff, which are not bad, but it was like, okay, we’re selling all this physical product stuff.
Matt Clark (10:01):
Like what would happen if we could get some percentage of all these people buying coffee, literally physical bags of coffee to buy a digital product. It’s like our margins would go through the roof. It’s like we can produce so much more profit without necessarily selling more units to more people. And so we kind of surveyed our customers a little bit and we’re like, Hey, wait, what kind of main health issue is your biggest concern?
And you know, the one that popped up was the most popular was inflammation. And so we’re like, and we’ve kind of heard it, another physical product brand with that kind of a doctor expert guy that they were doing pretty well selling courses through webinars and stuff like to their e-commerce people. And so we’re like, okay, we’ve got a great idea. So we paid this guy, we know that’s, you know, one of the health experts and to basically create a course on inflammation for us.
Matt Clark (10:40):
And so we fortunately, cause I’ve been through this a million times before with these kinds of dumb decisions. Um, I knew I didn’t want to like spend a ton of money on this, but we’re like, okay, you know, we’ll spend like $5,000 on this. And so we spent $5,000 one time, fortunately on this course took a bit of time, had a set up that you learning thing integrated with Shopify so that we could offer it as upsells and that kind of thing.
And then, uh, you know, we’ve got a pretty big email list with that business. Like I don’t know what it was at the time, maybe like 60, 70,000 people or something like that. Um, and so we push it out to them and we know we’re, we’re selling coffee, different flavors, that kind of thing all day long. So we know how well promotions can go when they, when they sort of are what people want.
Matt Clark (11:15):
And so we push this thing out there and I think we maybe got like one or two sales to list of 60,000 people. And the course was only like 47 bucks or something. And so completely bombed, nobody wanted this thing. Um, and then we also try to offer as an upsell, completely bombed. Like we made way more money offering like a super discounted bag of coffee for like $16 that we did off. And this is after taking into account, the cost of goods sold.
Then we did offering a $47, purely digital, a hundred percent margin product. Like we were better off just selling more coffee. Um, and so that was kind of one of the eye-openers for us, uh, with, with life boost is, you know, I think it was good that we test a small, but I think that, um, kind of getting too far away from our core business and also probably like, I think sometimes people find in surveys, they don’t really tell you the answer that you’re looking for.
Matt Clark (12:01):
And maybe you’re not asking the right questions. Cause I know there’s like an example that I read about recently. Like, you know, the whole thing when new Coke came out, that kind of, uh, people gave them a lot of crap about over at Coca-Cola and you know, they did hundreds and hundreds and hundreds of surveys and they hired consultants and everyone said they liked the flavor of this new thing completely blew up in their face. They were getting hate mail and everything.
And they basically had to switch back to their old formula. So there’s no guarantee that cause you know, a lot of people are kind of like, I think it’s a little naive. A lot of times people are like, oh, you just serve at your customers and that’ll tell you all your answers. They’ll, they’ll tell you exactly what products they want and that’s not completely true. And so it was definitely not, not true in our case.
Mike McClary (12:37):
No, it sounds like, you know, you definitely not that you shouldn’t always be looking to expand as anyone you’ve got to grow the business, but definitely kind of stay what you know. Well, like I think your story and I think of Michael Jordan, uh, you know, life booth, it might be the Michael Jordan of the coffee business. Uh, but when you go play for the Birmingham barons and the minor league baseball team, you might not have the same success. Yeah,
Matt Clark (12:57):
Yeah, exactly. Um, yeah. And we’ve done the same thing with some kind of more supplement related products. Like we, at one point, uh, tried to sell like a very healthy fish oil kind of product under that brand. Cause we’re like, oh, we’ll give you like a lifestyle brand kind of like Bulletproof that has supplements and coffee and everything else. And the performance of selling that versus just selling another flavor of coffee, not even comparable.
And so like that’s when we kind of realized, okay, we got to stay focused, let’s stay in our lane, best coffee products possible. And just very gradually if ever expand from there rather than jumping into all these different kinds of products. Um, so last kind of a product failure is more on the amazing side, but to, that’ll be interesting because there’s the amazing podcast. Um, at one point, you know, we’re kind of known for our big program called amazing selling machine.
Amazing Product Failure
Matt Clark (13:40):
That’s kind of like start to finish, helps go build an e-commerce business, focused on Amazon at one point, uh, we were like, okay, you know, this is a more expensive product because we think that’s what it takes to actually teach people everything they need to know, give them all the resources. We’re not counting pennies here. Like if you need help from our team, from our mentors, like we’re there for you. And so to offer all that, we have to charge a bit of a premium price, but it’s like if we charge less than we feel like we can’t deliver the same results and it’s just not worth it to us. But at some point, and this was mainly me, I was like, well, you know, I feel like we could probably reach a lot more people if we could do this way cheaper. And so we felt like we knew how to create good courses.
Matt Clark (14:18):
And so at one point we decided, or I decided mainly to completely get rid of amazing selling machine, which is what we were known for all the traffic, all the sales, all the reputation, everything was built on that and replace it with a low price course membership. And we were getting courses from all kinds of people, creating some ourselves and it, uh, never sort of met our expectations. We kind of thought that, you know, it was going to make it up in volume, but it just never seemed to be the case. It just wasn’t what people really wanted. So,
Mike McClary (14:44):
And entirely you, I was still around at that time. That was a late 2016, I believe. Cause you and I were, we were, we were starting to work on another brand that, you know, we’re kind of testing out and that’s when the idea of Kevin, this monthly membership came up, we talked about it. Um, I definitely didn’t say no way. You know, it sounded like an interesting thing. Netflix was blowing up at the time. So monthly content subscription services were definitely popular. Um, and we definitely tested it out and I don’t think people disliked the service. I just think there wasn’t as much demand as we’d really hoped for it.
Matt Clark (15:15):
Yeah. And I think, um, yeah, I think it was done with the best intentions intentions. It was meant to give you more value for a lower price, reach more and help more people and that kind of thing. But it’s like with that is like a perfect example of like, you may have an idea in your head of what people want, but you don’t really ever know until you put it out in the market. And so I would assume that most of your assumptions are going to be wrong. And so if you are completely wrong about your assumptions before you put a new product out there what’s going to happen then, um, if you will have gotten rid of your entire rest of your business and stuff, like it’s gonna bring pretty bad things like it did for us. Um, however you need to try new stuff.
Matt Clark (15:51):
And so it’s like whether it’s an e-commerce business or any kind of business, you got to keep trying new stuff. So we’re talking about our failures and the answer is not to never try anything new. The answer is to expect there to be a high failure rate and then be able to stomach that and accept that. I mean like, you know, Jeff Bezos and Amazon and companies like Google, uh, but I think Amazon especially is notorious for this. Like they try all kinds of stuff and they do it, you know, at a level of scale, uh, because they’re such a big company, but they try all kinds of stuff and if it doesn’t work, they kill it and they try some else.
And if it doesn’t work, they kill it. And so as long as they see a very high potential reward and a low potential risk relative to their size and, and sort of, um, the amount of cash that they have, then they’re willing to take those bets. And so I feel you gotta keep taking those bets. You just gotta make sure they aren’t like kind of a bet. The house, the company is gonna burn down if, if you do it, um, that’s, that’s what I’ve kind of learned from a lot of these experiences.
Mike McClary (16:38):
I mean, Amazon once had the Amazon phone right. Then I believe that was one of the things that we’re betting on. And probably no one listening has an Amazon phone right now because it just failed me. They pulled the plug. Yeah.
Matt Clark (16:47):
I mean, even a lot of things that they’re known for now, like Amazon prime was just a bet. At some point, people thought they were crazy. It was never going to work. And now it’s kind of one of the cornerstones of their business, same thing with their hosting service was also just kind of a bed at some point. Um, so eventually these things turn out and we’ve had some, uh, whether it’s an amazing or, you know, life boost or anywhere else, but we’ve had some that are just equally kind of uncertain at the beginning and they ended up kind of adding a ton to the business. So, um, there is a good side of failure here, but we wanted to kind of let you all see some of the mistakes to, to hopefully avoid.
Try Something New & Set Metrics
Mike McClary (17:16):
You know, one of the things that you’ve taught me and we use an out amazing is that anytime we’re trying something new, um, set some metrics first, you gotta make sure you’re measuring whatever the new product or service or whatever it is. So you can tell whether or not it’s going to be success or failure and then set what those metrics are. So, you know, what would it take for us considered a success and what would it take for us to pull the plug? And so that we don’t lose any more than we’ve already invested in it.
So I think we’re a lot smarter at that right now. And if there’s one piece of advice and that everyone should take that away, you know, set your definitely we’re trying something new, make sure, you know, what’s going to your metric, your you’re measuring this by and then determine what’s going to be success. What is gonna be a failure? And don’t be afraid to pull the plug so that you limit how much you’re willing to risk.
Matt Clark (17:58):
Loosen it. Yeah. A lot of times, if you don’t write that stuff down at the beginning, like you’ll be kind of way down the road and the thing will be going terribly. And you’ll like, completely forget why the heck you got into this thing in the first place.
I think that about wraps up today’s episode. Uh, we’d love to have you subscribe to our podcast. You should be able to subscribe on Apple Podcasts and on Spotify. Uh, if you have any questions for us, go to amazing.com/branded and you can submit questions and we’ll answer them in future episodes. So thank you for listening and we’ll see you in the next episode.
Matt Clark is the Chairman and Co-Founder of Amazing.com, a serial entrepreneur, and investor. He’s been featured on Forbes, CNBC, and Entrepreneur.com.