20 Years on Amazon: The Hard Truths Experienced Sellers Won’t Tell You with Fred Adler

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20 Years on Amazon: The Hard Truths Experienced Sellers Won’t Tell You with Fred Adler

Fred started Cosmetic Solutions.com online store in 1996 and was one of the first third party sellers in Beauty on Amazon starting in 2003. Cosmetic Solutions is on the gorilla list of Biggest All Time Amazon Sellers in the top 260. Cosmetic Solutions’ first 10 years were dedicated to selling everything at one time boasting over 100,000 sku’s and offering everything from professional beauty and what you would find at your local drugstores.  Now as the business on Amazon has evolved Cosmetic Solutions is dedicated to selling its Brands as the authorized reseller and brands rights holder like skin care brand Dermactin and hair care brand Difeel and nail care brand Barielle.

> Here’s a glimpse of what you would learn….
  • Challenges of counterfeiting on Amazon and brand protection strategies.
  • The evolution of selling on Amazon and adapting to marketplace changes.
  • Importance of innovation and product development for competitiveness.
  • Strategies for maintaining healthy profit margins amidst rising costs.
  • Role of customer service in identifying product issues and enhancing satisfaction.
  • Necessity of monitoring key performance metrics for business success.
  • Building strong customer relationships to inform product offerings.
  • Importance of delegation and team building for business growth.
  • Navigating unexpected challenges in the e-commerce landscape.
  • The significance of having a clear vision for business direction and growth.
In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley interviews Fred Adler, founder of Cosmetic Solutions and a seasoned Amazon seller with over two decades of experience. Fred shares invaluable insights on tackling counterfeiting, maintaining competitiveness, and leveraging customer service for product development. He emphasizes the importance of a robust distribution strategy, constant innovation, and attentive customer service to stay ahead in Amazon’s dynamic marketplace. The episode concludes with actionable takeaways on protecting profit margins, optimizing operations, and engaging with customer feedback to drive business growth.

Here are the 3 action items that Josh identified from this episode:

1. Proactively Monitor and Protect Your Listings from Counterfeits
  • Regularly check your product listings for inaccuracies, such as image swaps or unauthorized changes, to prevent sales loss.
  • Implement unique SKUs for different sales channels (Amazon, retail, DTC) to help distinguish your authentic products from counterfeit ones.
  • Consider working with legal experts to safeguard your brand against counterfeiters and unauthorized resellers.
2. Optimize Operational Costs to Protect Profit Margins
  • Track daily metrics, including FBA fees, cost of goods sold (COGS), and overhead costs, to identify areas for optimization.
  • Work directly with shipping carriers and explore alternative fulfillment strategies to reduce logistics expenses.
  • Conduct regular audits of product classifications and Amazon’s warehousing fees to avoid unexpected financial losses
3. Leverage Customer Insights for Product Innovation and Service Improvement
  • Actively engage with customer feedback to identify pain points and improve product offerings before issues escalate.
  • Use customer input to develop new product variations or features that competitors may overlook.
  • Advocate for better direct communication tools on Amazon to enhance customer service and build brand loyalty.


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Sponsor for this episode…
This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures.

I started Hadley Designs in 2015 and grew it to an eight-figure brand in seven years.
I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.
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Transcript Area
Josh Hadley 00:00:00  Welcome to the Ecomm Breakthrough podcast. I’m your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Aaron Cordovez, and Michael E Gerber, author of the E-myth. Today I am speaking with Fred Adler, and we’re going to be talking about the three biggest lessons that he has learned after selling on Amazon for over two decades. He has a wealth of wisdom. He’s one of the top Amazon sellers, and he has moved millions of units and volume on Amazon. This episode is brought to you by Ecomm Breakthrough, where I specialize in investing in and scaling seven figure e-commerce companies to eight figures and beyond. If you’re an ambitious e-commerce entrepreneur looking for a partner or a coach, a consultant who can help take your business to the next level, I bring that hands on experience, strategic insights, and the resources needed to fuel your growth. So if you or someone you know is ready to scale or are looking for a coach or consultant, reach out to me directly at Ecomm Breakthrough.
Josh Hadley 00:00:48  Com. That’s E-comm with two M’s and let’s turn your dreams into reality. Today I am super excited to introduce you to Fred Adler. Fred started Cosmetic Solutions in online store in 1996, and he was one of the first third party sellers in beauty on Amazon, starting in 2003. Cosmetic solutions is on the gorilla list of the biggest all time Amazon sellers. He’s in the top 260. Cosmetic solutions first ten years were dedicated to selling everything, at one time boasting over 100,000 SKUs and offering everything from professional beauty and what you would find at your local drugstores. Now is the. As the business on Amazon has evolved, Cosmetic Solutions is dedicated to selling its brands as the authorized reseller and brand rights holder for skincare brands like dermatology and hair care brands like diethyl and nail care brand barrel. So with that introduction, welcome to the show, Fred. Fred, I am excited to have you on here because you have been on Amazon since nearly the beginning, the inception of Amazon, as you mentioned, one of the first beauty brands on Amazon.
Josh Hadley 00:01:48  You have seen things evolve drastically on Amazon. Today, we’re going to be talking about three of the main stories. But before we dive into some of those stories, Fred, just at a at a high level overview. Tell me your thoughts on how things have evolved on Amazon up until this point, and where you think things are going over the next decade on Amazon. So look into your crystal ball. Tell me what you’re seeing.
Fred Adler 00:02:10  The sort of, landscape is challenging, right? Regulation. Regulatory, even if they change it and compliance issues on Amazon and all the ways that they are also taking away the pie, they’re sort of serving you means like you’re going to want to diversify your channels like a Shopify that kills. It is certainly a lot more valuable an operation than an Amazon business that could be duplicated. So, you know, being mindful of the value creation that you can do over the medium term by investing. Now, if Amazon is training you in your own brands where you can see some protection and, you know, grow, in and at least own that growth.
Fred Adler 00:02:56  I think is, is is probably, the best way to align yourself is, is sort of the way they’re showing you. Because if you’re to resist that, you know, it’s going to be, you know, very difficult snowball uphill.
Josh Hadley 00:03:10  Yeah. I think that’s, that’s something that we all know is like an ongoing battle. And changing is like the road on Amazon. Okay? And selling there is constantly requiring pivots to the overall business. And I think that’s one of the most important things that brand owners need to to understand. And I think a lot of people got sold on the fact of, hey, if I come on to Amazon, this is a, you know, this is a passive income business, right? And I think that those that are still selling on Amazon have seen that selling on Amazon is far from a passive income business. And the brands that are going to win over the next 5 to 10 years are going to be brands that take it seriously, that run it like a real business.
Josh Hadley 00:03:46  And they aren’t seeing this as a passive income channel. yeah. Go ahead.
Fred Adler 00:03:51  No, I would say that. I mean, What’s interesting is I have been reflecting a lot on the importance and the primacy of Amazon in the marketplace. Meaning when I started, it was the exact opposite. Like, in fact, we would go into L’Oreal, Conair, all the big players, they couldn’t care less about what was happening on Amazon. They only cared about what was happening at retail. It was just an adjunct. What like it was a very dismissive, very dismissive attitude that everyone had about that. There was even business on Amazon. And so we would just see orders like piling. I’d be like, oh my God, look at that. It’s similar to now just astounded at the volume on Amazon. Just this is unbelievable what can happen. I mean, especially if you’re just selling like, you know, shampoo and toothpaste that people want and they’re not able to get it anywhere else there. You know, so it it similarly feels exciting that, you know, you have the reins on a humongous tech investment that’s ready to just sort of sell your little thing.
Fred Adler 00:04:51  And so that’s really still special.
Josh Hadley 00:04:54  Yep. Yeah I agree with that. So Fred, as we dive into the three stories today, we’ll give people a quick high level of the stories that we’re going to be talking about. We’re going to be talking about how counterfeiting has become such a big issue. And it’s still not going away on Amazon. What brands are doing about it and some of the war stories of having things counterfeited. We’re also going to be talking about how to stay one step ahead of Amazon. See where the puck is going so that you can protect your margin, because that’s an important lesson learned. And then finally we’re going to be diving into customer service. And why and how paying attention to customer service actually create your future product development roadmap for you. If you’re willing to listen to your customers and is also able to tell you at a quick glance if things are going wrong in some early warning signs there. So, Fred, those are going to be kind of like the big meaty stories that I know you’ve got some in depth in the trenches experience with.
Josh Hadley 00:05:45  Let’s go ahead and kick it off with The Counterfeiters. Tell me your story of like, what have you dealt with over the over the last two decades on Amazon as it relates to counterfeiters, and what are you doing about that today?
Fred Adler 00:05:56  You know, I think it’s important to note there’s like there’s it’s been hugely heaped together. The counterfeiting and then the different programs. Amazon has transparency and Project Zero. But like what I’m talking about is raw stealing and counterfeiting. Okay. That’s the difference that suddenly is smacking me in the face. Like, yes, we have all these trademark items that we also distribute to beauty, you know, distributors that are at your beauty store. And sometimes those stores pump them on Amazon, but it’s the item that comes out of my back. But what we’ve seen more, I would say recently in the last year is an item will start trending like it’ll go viral, it’ll start trending on Amazon, sales will explode, and within 90 days, a Chinese seller will will have duplicated the formula, the packaging, the label, the jar, the lid, the entire soup to nuts, item that we have and simply strip off the brand name.
Fred Adler 00:06:49  And so they’ll sell the same item, you know, with like a very, very discerning like I would say. So if you’re iterating like we do, we come out with a lot of new ideas all the time. And so these new ideas are, you know, some of them are received well. And, you know, it used to be that our problems would just be, oh my God, we can’t produce enough. And and similarly, that did happen to this item that went viral like we sold out. But then I didn’t even see that there was a Chinese seller for a month selling the item while we were out of stock on it, and their sales exploded. And now we’re similarly still trying to come after them. And there isn’t an easy mechanism where I can report a crime on Amazon that says, oh my God, the guy stole like it used to be. I think what it is, and you can say, this is, in my view, that Amazon’s made a massive investment in a in a new style app shipping from China here.
Fred Adler 00:07:45  There’s now a majority of Chinese sellers are selling on Amazon, where we are all talking about selling, and they’re obviously providing these people with software that shows them the best selling items in the category, much like what we have. And so they’re literally showing them what to copy and then saying, oh my God, they’re copying it. It’s unfair that they are are, are doing both things. And then, you know, not really moving quick enough when it’s obvious they’ve stolen it. They’re they’re making it seem like, well, let’s see who stole whose thing here. Right. Like, did you really make it first? Like where? It’s like you have the proof. It’s just the idea that you have to go to a court of law, right? It means that, like, we’re both going to get to share our side of the story. It gives them a venue of respectability that, you know, is already irritating. So, I think it’s that it’s early days for Amazon and they’re not out in front of this issue at all.
Josh Hadley 00:08:38  Yeah. Oh, I would agree with that. I think Amazon’s trying to plead the case of like, hey we’re not going to be the the judge and jury here. it seems like they want to push things and be like, oh, you think you have a problem? Go get the court order for us. Yeah, we will freeze their assets, but give me a court order first. Right.
Fred Adler 00:08:53  So they said that to you? I haven’t seen even that level of discourse where that’s a process that you can do. Like that seems to me like, oh, where do I go to do that then?
Josh Hadley 00:09:03  Yep. So there’s actually that’s true.
Fred Adler 00:09:04  Like where do you go to get a court order against Amazon and have you even seen of one? And here’s an interesting question I haven’t googled. Have you seen one person sue Amazon in a trademark space? And when and where is that story in the news?
Josh Hadley 00:09:16  I don’t know specifically on on the trademark issue. we had, Hilton Heart on the podcast.
Josh Hadley 00:09:22  His company is Edison IP, and their entire business model is revolved around how to take down counterfeits. And so what the strategy is, is can you get a group of these, you know, knockoffs, you go take them to court, right. And you can get an initial judgment assigned against them because they’re going to be overseas competitors. If they just don’t show up at court, you get the initial judgment, you’re then able to freeze their assets on Amazon and the court order goes straight to Amazon. So this is this is a very viable strategy, that many people have been using.
Fred Adler 00:09:55  Amazing. I didn’t even know it. I’m amazed at like. So what I’m saying is that is something I will have to look at since I’ve never been aggrieved enough or had it be valuable enough to really go to the mat and sue them.
Josh Hadley 00:10:09  Well, and that’s that’s the trick, though, right? And it’s like, okay, is it worth me ponying up 20, 30, 40, 50 K? Right.
Fred Adler 00:10:17  And it’s usually as soon as I have to start paying the lawyers I feel like I’ve lost. Yeah. But every so often, you know, it’s it’s that valuable to do it and that you’re, you know, not it’s just still worrisome. Right. As a trend and as something clearly like even now, you know, I don’t I’m like, I would, I would have to go and do that, but I don’t even know exactly where to file or who’s my lawyer to file. And even though, Know, I should know that, you know, and and similarly, not when it’s counterfeited, but when it’s my item that I simply don’t want that person selling it on Amazon. And I’ve sent them letters. I don’t really know that next leg up to sue them. Right. Even though I know I, I don’t even think I would win right on the actual law. Like, I could say there’s I don’t know if you’re aware of the the nuance on takedown requests where I would have to say they’re selling something materially different because of the return and other promises that we make, you know, being the manufacturers representative and whether that would prevail really at, you know, court and I and in our category of beauty, you know, L’Oreal is very protection areas as well as Coty and some of these very large European, you know, brand owners, have spent a lot of money to protect their marks, and they set the bar Are really on what’s possible.
Josh Hadley 00:11:42  Yeah. It’s true. So I guess my question would be now it almost sounds like your defense strategy to prevent these knockoffs is launching more products more quickly, and just simply staying ahead of the competition.
Fred Adler 00:11:53  Best selling item? It’s in a three ounce, right? And they’ve duplicated it. But I’m quickly coming out with a 12 ounce. I’m you know, we’re going to have a different item and yes. And the trademark. Right. So they’re not going to be able to for long do what they’re doing. You know, it will be enforced eventually. Right. And so the perseverance, the knowledge of that eventually rational analysis of this will bring us the rights. And, you know, we will at least win in this dispute. So I think it’s a belief in the honest that, you know, and that you’re not trying to get away with anything. In fact, we’re trying to, you know, whereas in the past I would have been that middleman trying to punt that item that I didn’t own the trademark to, and, and then, you know, now it’s sort of flipped, if you will, because that’s the nature of the business.
Fred Adler 00:12:44  is that you really don’t want to be borrowing the customer for creating a business of value. Right. Like, you can definitely even now, like, there’s a lot of sellers selling our stuff in Europe where it’s become very difficult to manage the business. I used to be a very large seller in Europe, but the but the, the managing of the shipping issues with the VAT issues with this, with the, breakage stuff, it was just untenable shipping liquids thousands of miles through the mail and they’re low cost. You know, the cost of shipping greater than the value. So, you know, we were addicted to the volume for a very long time. But, you know, you want to make sure if you have, like, a long time business that you reexamine shipping costs as well. I guess I can’t speak enough to just how important that relationship is to, you know, an Amazon business if you’re not all FDA is to really get in the weeds and manage, you know, how you’re printing labels.
Josh Hadley 00:13:35  Yeah. No, I think I think that’s a that’s a great segue into, you know, how we protect our margin, to kind of, you know, put a bow on, you know, how do we protect ourselves against aggressive competition, especially coming from overseas competitors? I think that this has been the stance that we take, because we are yet to actually go sue somebody in court. Now, we know that that is a playbook, that when it makes economic or business sense to say, okay, I’m willing to pony up 30 or $40,000 to go sue hopefully a group of counterfeiters. Right, because you want to batch these things together. That is one playbook. The other playbook is kind of what you talked about, Fred, where it’s like, just always stay one step ahead of your competition. And that would be my encouragement to anybody that.
Fred Adler 00:14:17  Is.
Josh Hadley 00:14:17  Facing.
Fred Adler 00:14:18  Say, controlling the distribution of a product. You know, we have a number of brands, some of them exclusive to Amazon, some that I sell, you know, all over the country as a, you know, to get distribution on and, and so managing, you know, an Amazon like there’s just both ways you could go about growing your brand in business.
Fred Adler 00:14:38  If we’re talking about which we are here, the Ecomm Breakthrough strategy, you know, it’s you’re going to want an exclusive to Amazon item that’s not going to be competing with yourself at retail. You’re going to want that ability to have it go viral and and enjoy all of that volume and deliver on on the experience of your product working for people. Right. So I think and then selling them a second glass of water. So I’m thinking, you know, that beautiful thing, which is that the item is selling and like, oh my God. Write that experience. And and then being able to ship it and keep it in stock. Right. Those are the kind of sequencing of events that, you know, are exciting. And I think it’s it’s likely that you can predict or stay ahead of it entirely. but it’s finding the right ways to do that for your operation. that that I think is going to make you, you know, really successful. So, like I’ve recently seen, I don’t know if you guys have explored that where you can put inventory directly into Amazon like it’s your own warehouse and they drip it into FBA.
Fred Adler 00:15:47  So I think, you know, for space considerations that Amazon has created a complete vertical for people to operate at scale without needing any real infrastructure.
Josh Hadley 00:15:57  Yeah. So I think as, as we wrap up, you know, how do we beat the competition, really? I think it comes down to number one, you stay ahead of your competition. You stay ahead of them in the trends. You’re continuously coming out with the next skew, the next variation faster than they can. Right. And you need to overshadow. It’s not it’s not how do I pull down my competition. It’s not how do I hurt my competition? It’s more how do I grow so big, so fast that I’m overwhelming my competition, that there’s no other true solution or true product that people would trust, rather than my products? Because I have overwhelmed the market with the number of products, the number of quality products that I have there. So that’s number one. But then number two you talked about this Fred, which is distribution.
Josh Hadley 00:16:36  This is a massive thing that we have a huge advantage of over our overseas counterparts okay. These guys cannot sell effectively into brick and mortar retail because they don’t have a story. They’re just cheating and they’re just copycats. Right. You can’t go sell that into a Walmart and be like, oh, well, we copied the best seller on Amazon, right? Like that’s not going to fly. If you’re going to go to a Walmart or to a specialty brick and mortar store, you’re going to need to have a story behind it, like what is your brand? And that’s where the distribution itself do the things that the overseas suppliers can’t do and the manufacturers, and they can’t get the distribution because they don’t have a story to tell. They can’t think of the next new product to come out with because they’re not in tune to the market. Right? They’re living in, hey, whatever selling well, just copy it. That is their only playbook. That is a very easy playbook for any US based or North American based seller to go and dominate those competitors, because all you have to do is stay in the game long enough to watch those guys lose, because a copycat business does not succeed very long overall.
Josh Hadley 00:17:37  So, Fred, let’s now pivot to what you were talking about as it relates to protecting your margin, right. You’ve evolved your business. You had said over the first ten years, you guys had over 100,000 SKUs on Amazon. And it sounds like you’ve kind of scaled that back because you were having high revenue, but maybe not as much margin. Tell us the story about what you’ve seen in terms of margin on Amazon over the past decade, and what it is that you’re actively doing to ensure that the margin stays healthy, because certainly Amazon’s got the margin squeeze on right now, right? High higher fees. We’re implementing a new fee shipping into Amazon, etc..
Fred Adler 00:18:10  What I did want to reflect on is as you were speaking, is that over time, you know, you the the business on Amazon is is oversight like you need. It’s not a set it and forget it type of operation. You’ve got to constantly review your best selling items to make sure they’re still represented correctly. We often would say Amazon could bathtub an item.
Fred Adler 00:18:31  They took my bestselling nail polish and would replace the image with that of a bathtub and then claim, like someone else did it. And it was just while it was always, you know, going and sales were surging, you know, in a way that was, you know, we always had that feeling that they could throw the bathtub at us. And, and I would say that requires you to always lean in, right. There really isn’t a, you know, 2 or 3 hours that go by without me looking over the orders. Right? Even still, I’m constantly analyzing the order flow to see if something is going on awry, and I’m often astounded that it is. And I have to surface something that we all have to stop what we’re doing and figure it out. So you have to be able to triage issues on Amazon daily. I would say almost, and have a staff that is experienced enough to know where to go to create the case, to start the process. So I think that is a, you know, almost habit now, but it’s it needs to happen for you to succeed.
Fred Adler 00:19:24  It’s not like you can just come up and iterate items all day long and think that’s enough, right? It’s like it’s not. It’s not sufficient. You know, you have to run on all the hamster wheels that Amazon has and they keep investing more, which is why you’d rather see a really strong business on Shopify over the long term, because those are your customers completely. And I don’t know if you do, Josh, like how do you compute the value of an Amazon customer? So if I have a million Amazon customers, what is my business worth? Right? Or if I have a million customers on my Shopify store, what is it worth? I’m saying it’s like this Amazon can can give us sellers better value for for what we or what we’re doing by giving us more tools to communicate with our customers more effectively. And they’re starting to do that. Right. But I think they have a long way to go.
Josh Hadley 00:20:08  Yeah, I do believe that if I look into my crystal ball, I do think that Amazon starts to open up your ability to communicate with customers in a more, you know, structured fashion.
Josh Hadley 00:20:19  but I.
Fred Adler 00:20:20  Create connections now to hopefully.
Josh Hadley 00:20:22  We do use creator connections. Yeah. And which is pretty open ended. Like, you can message and send whatever you want to them. But I think to your point, like Amazon right now in the M&A space right in Amazon only brand, you’re lucky to get a 1.52 maybe 2.5 x your EBITDA, right. In terms of your value when you have a Shopify brand, I think you’re going to see more, you know, starting at a two to go to three, maybe 3.5. So like there’s more value there. However, I would say this right, whether you’re on Shopify, whether you’re on Amazon, guess what? You’re always beholden to somebody else, right? If you’re generating all of your traffic on Shopify through meta ads, guess what your weak point is. As soon as as soon as Facebook meta shuts down your ad account, poof goes bye bye, right? Same thing happens on Amazon. As soon as you cross the term, you know, terms of service.
Josh Hadley 00:21:10  Poof! There goes your business, right? So no matter where you’re you’re putting your eggs in whatever basket, whether it’s Shopify or Amazon, just know that you’re playing in somebody’s backyard. It is somebody else’s sandbox, and you are only as good as you not getting suspended on meta or getting indexed. If all of your traffic is coming from SEO and Google flips their algorithm, it’s like we’re prioritizing Reddit now by blogs, right? And overnight you watch your organic traffic to your website, go bye bye because your SEO is gone to trash just because Google made an update to their algorithm, right? So at the end of the day, you in the e-commerce space, you are beholden to the big three tech companies no matter what. And so what do you do about that? Right. And I think it does go back to like tried and true. You know, distribution is selling into brick and mortar.
Fred Adler 00:21:55  But that’s not the Ecomm Breakthrough. I would say that that yes, in fact that’s how we establish our product runs, is by being able to have distribution that will let me run 20,000, 30,000 pieces.
Fred Adler 00:22:07  You know, you sell it into a traditional retailer. And then I just punt a little bit of what’s left on Amazon, whatever. You know, that was the previous way to run your business. I really want to say that the the real value is in creating a unique to e-commerce Amazon product that that you have margins on so that you can make and, and at least own a little bit of a mode on. So whatever that is where you to have that widget that is. And it happens only once in a while that you get something that kind of all the the ingredients fit together. Right. And it flies at e-comm. Yeah, right. There’s nothing more exciting. And that’s why I’m still here after so long. It’s like there really is no better horse to be on than than a stallion that’s flying out the door. And we have to get another Gaylord to throw this stuff. You know, that excitement on the, you know, where we can’t keep it in stock in FDA and we need to get more.
Fred Adler 00:23:04  And we have, you know, thousands of orders is is is what’s and delighted customers. So I’m just saying like when that all was coming together. That’s exciting. And and I’m saying it can only happen when you’re making the margins. You do it retail. If I’m selling it into to Sally or like I’m not making much rely on per unit. It’s. I gotta sell them 100,000 pieces, and then even then, I’m worried they’re returning it. Whereas on Amazon. Yes, I’m worried they’re returning it now to quite frankly, all the reasons for returns are mind boggling. In fact, the one I’ve recently become like is like, I, I didn’t want to buy it. Did you see this? Like, but but you bought it. Like, how could you not want to buy like, how could that even be something you could say, like twist your wrist to buy it? But that’s now like 10% of the returns are saying, I didn’t want to buy it. Yeah. And we have to deal with that.
Josh Hadley 00:23:49  Yeah. It’s true. What else are you doing, Fred? To protect your margins and your business?
Fred Adler 00:23:56  Well, we really are excited about the relationship with the post office. They changed their ways. They were dealing with the consolidators like the male innovations of the world. So as of January 1st, we’re working direct with the post office, and we’ve seen a responsiveness, we’ve seen better rates on their ground advantage product because we sell a lot of stuff under a pound and with that free shipping supplies. So, you know, like, where’s every bag? Every box I ship is. Previously I was shipping it with costing me money. So it’s it’s finding ways in our fixed costs that I can get something like. Right. And really, there’s nothing more intractable than my shipping costs in the shipping business. You know, when I’m looking at Amazon, similar. In fact, we see often Amazon ways my product wrong or dimensions are wrong, like materially wrong. And if an item is just wrong by a little bit, you know, over time those problems are very valid, you know, meaningful.
Fred Adler 00:24:53  So I think you have to stay guarded and continually like not set it and forget it. These things are designed to ding you. And so as long as you’re, you know, ready to like I still get seriously offended. Like it’s not like I’m like, I think I’m like, really? I like when I’m. I feel like they’re doing it to me personally. You know, I still get that level of, of, of irritation about these charges and stuff that are completely erroneous. Yeah, but what I mean is it’s those are where the margins are getting eaten away is like legitimate stuff, right? Shipping costs, Amazon’s warehousing fees or returns. And so, you know, working out the mechanics of those irritating things are where the margins are. You know, at the end of many days, you know, if I got my returns down, I got because I fixed the item that they were complaining about and I got this, you know, a little bit on the box. Now we have no problems with we don’t have to put it in a box or the box has the label on it.
Fred Adler 00:25:48  And so I’ve taken out my labor for inputting it into Amazon. those are where like you watch your sequencing to see, you know, right now where we put a lot of touches on the product because of Amazon’s labeling requirements. But when I’m really on top of it, I’m putting the Asin on the box and I’m getting it in right, and I’m not touching it. So I’m still doing both because I haven’t gotten smart enough to, you know, not touch it, But, you know, I’m working on it. You know, I would say. And so working on the efficiencies is never ending. And then, you know, finding some people to do it.
Josh Hadley 00:26:27  Yeah for sure. I do think that when you can grow a business, I think like once you start crossing that 5 million in revenue, you should be able to start looking at your PNL and looking at just like, little efficiencies. Can I shave off a percentage point or two for my FBA fees by making sure that they’re weighed properly? Right.
Josh Hadley 00:26:43  Create the or create the remeasurement cases in Amazon to get them corrected. Get your reimbursements. what can you do to negotiate with your supplier for a couple percentage points back? Like when you start doing that and you’re doing five plus million dollars like these, now start to become and add up to six figure amounts into your bottom line.
Fred Adler 00:27:01  And I would love to be better at modeling my business in a fiduciary, responsible way that I knew how profitable I was when I’m running. Like, you know, quite frankly, that is very valuable, right? I’m not Particularly inclined to do that as much as I would be rewarded if I did. Meaning you can get a lot more investment. You get a lot more help from your suppliers if you knew the profitability. But as we all know, there’s such friction in the Amazon Marketplace that it’s very hard to rely on those numbers that I could crunch, right. And so, you know, I would say you’re left running in a not optimally efficient business because of the peculiar nature of it.
Fred Adler 00:27:39  Still, you know, it’s certainly not as reliable as, you know, one would want, you know, those stable mostly it’s still tenuous and feels fraught. Right. So yeah, we’re always contending with those tensions. Right. And even when things are going well, there’s always a shoe to drop. So so I think you know it. You know, we’re hoping for, this, you know, got, you know, more business over the items that we want to sell, but it’s, it’s always elusive to get it to work as you think it will. Yeah. So we’re always chasing our tail. I would say, and having a new problem that was unexpected take a lot of our time. So I don’t see how you manage that other than, you know, get more hours from somewhere.
Josh Hadley 00:28:23  Yeah. You’ve got to be able to delegate, right? Be able to delegate. Bring in the right team members so that you are able to really, like, level up your business. And you, as the owner and founder, are continuously focused on growth.
Fred Adler 00:28:33  Again, I’m also a big seller. I still do a lot of the work, and I would love to say to you, now I know how to operate my business and other people are doing it. You know, and that’s the next level maybe. But I was like, I wonder how one would achieve that. As you have spoken to a lot of guys who may have done that. I’m saying I think the Amazon business is is peculiar to hand over to an agency. For instance, I know there’s agencies. I’m meeting with a guy tonight who’s got a big one, and I’m always wondering, like, how does he have the bandwidth to manage businesses on Amazon when they’re not his? Like, you know what I mean? Like, how would you lose sleep? Like what is like how does that work? It seems. You know, like. Like it wouldn’t to me. So I haven’t done it, you know. But what is your experience with that?
Josh Hadley 00:29:17  So ultimately. Yeah. So I attended Alex Rosie’s workshop.
Josh Hadley 00:29:21  And one of those things that is talked about is, hey, in order to like, really ramp up the value of your business is you’ve got to get rid of the key risk, right, which is typically the owner and the founder. And it is possible. It is possible even if you’re the the sole designer or the painter of a particular product. Like that’s a pretty hard one to be able to get rid of yourself in. However it can be done. And Alex has showed like, this is how we do it. And really what it comes down to is it comes down to hiring really, really, really good people. If you go back and listen to Alex Ramos’s podcast where he summed up, here are my biggest lessons learned in 2024. As he has met with other billionaires, he has learned that business comes down to one thing, and the one biggest focus is how do I find the best talent? All of the top tech companies, all of the tech, all of the of the top companies anywhere.
Josh Hadley 00:30:10  Their entire focus is on people, and it’s finding the right person. Because you find the right people. They are able to unlock growth and able to handle challenges that sometimes you and I say like, oh, nobody else other than myself can handle this. The right people are out there. And that’s what those top companies have proven right. They’re able to replace CEOs over and over again, yet they’re still able to grow and the valuation of their companies continues to grow. You look at Uber replace the CEO. We have a new CEO in place there. Right. And things are able to continue to grow. So ultimately as you scale your business, the one thing that becomes the most important thing is the who. The who that are in your business are going to make all the difference in terms of your ability to scale to nine figures or not.
Fred Adler 00:30:52  No, I feel like you have to have the, you know, some infrastructure to succeed. You know, you can’t simply just, you know, figure it out.
Fred Adler 00:31:03  But but I would want to add like it it does appear like in the last six months let’s say, just taking that into account. You know, it’s it’s, you know, it’s very hard to see. Like I’m often wondering that point is the key, man risk. Like, you know, your business. It’s not easily understood. Like I’m I’m constantly met, whether it’s my items being misclassified on Amazon as a collectible coin instead of a best selling hair product. You know, these items were doing six figures a month, and then you’re like, you know how you fix the problems where the whole collection is mischaracterized, where Chase Bank decides to bank you, and how you figure out how to get funds again, where they’re saying they don’t thank you and you have to fix or you are counterfeited. The best selling item did a quarter million last month. Now zero. Like, you know, these are just three problems that came up in the last six months. And there’s been other bigger problems along with personnel, people sleeping with people in the warehouse, whatever it is, that becomes a huge problem.
Fred Adler 00:32:09  you know how another like, like how someone would be prepared to handle problems that weren’t in their lane? Right. And be running the business like I didn’t expect to have that problem. How do I fix? It’s not even possible. It’s like I’m constantly met by these problems that are like, how is it possible that people even run business? Like, how is it even possible that they’re even paying for dinner? Like, you know, you get so grasping and it becomes like the wonder of, like exactly how someone else would contend with these critical issues and have the metal to kind of work out like it’s often I often say it’s like a, you know, the Star Trek and the unbeatable exercise that was the Kobayashi Maru. You know that.
Josh Hadley 00:32:49  One? I don’t know that one.
Fred Adler 00:32:50  Oh, my God, it’s in. I think it’s the start of, I want to say, Star Trek. It’s with Ricardo Montalban, and he’s, I’m going to look it up the coast. so you’re met with these, basically unsolvable Solvable problems.
Fred Adler 00:33:06  where, you know, he actually cheats at Captain Kirk, cheats at the game in order to win. And so you’re met with these, you know, problems, I guess, which you have to like problem solving, I would say, to really and be good at it to succeed in, in this industry because you’re going to be met with very interesting, complicated problems that are seemingly, you know, only for you.
Josh Hadley 00:33:32  Yeah. Well, ultimately what you go do, the playbook to hiring really good talent is you go find somebody else that’s been there, done that. So that means go and hire somebody that’s already exited from their brand. You need to be able to cast a vision and a mission that gets them excited. Let them get some stake in the game and let them see that, hey, I can come in here. I can go blow up what you’ve done here. So really, it comes from finding those that have maybe either crashed and burned or those that have had success, but now want to take some chips off the table and want to see something else that has a lot of potential that they want to take to the moon, right? At the end of the day, you as the CEO, or if you want to step into the owner’s seat and not be the CEO, it all comes down to the vision that you are able to cast.
Josh Hadley 00:34:10  And what is the mission. Because you can go get really, really good talent that is maybe even willing to take a salary pay cut because they believe so strongly in the mission that you have, and they see the impact that your products can have in the world. That’s how Alex does it. That’s how the top guys are able to do it. It all starts with the vision. It all starts with the mission. That’s why Elon Musk is able to do what he’s able to do. He can go get anybody to come work for him. Now they pay decent salaries, but he can go poach anybody he wants because they’re committed to that vision. They’re committed to the mission of like literally taking and colonizing Mars. They don’t like they’re maybe even willing to work for peanuts, but they believe so much in that mission they’re willing to do it. And so that’s that’s where it comes down to. Like we always talk about like, well, what’s your vision? What’s your mission? What’s your values? And people gloss over it.
Josh Hadley 00:34:54  But like truly that’s the heartbeat of your company. That’s how you attract a level talent. And a level talent is attracted to a a mission that is bigger than themselves that they can contribute to. Now, as we wrap things up, Fred, share with us why you believe paying attention to customer service really provides the roadmap to success in your business.
Fred Adler 00:35:13  You know, I just know that having an ear to the ground related to any issue that’s of relevance to your business, it’s going to come across the customer service, either email or phone. If the product is malfunctioning, the product is mislabeled. If someone’s been defrauded, if a check has, you know, been bounced, if an item has been, you know, burned someone’s scalp. If any number of issues of importance are surfacing in the business, it’s going to come through the customer service line. They’re not going to talk to their salesmen. You know, they’re not going to come through a back door. They’re going to try to call the 800 number or email them.
Fred Adler 00:35:49  You know, like like it’s hurting me. I’ll email them like, right. What would I say if something’s like, screwed up with this product I’m using? Deal with these people. Right. Like that’s pretty much when you’re going to want to know what’s happening. Because then quickly you could stop it. Or mostly they’re vanilla problems, like a person is getting the wrong item, right? Like we mislabeled it on the way out. They got the brown instead of the dark brown or the black. And then we have to recall all those. So by being responsive to the customer service and knowing first of all, that’s where it comes from. It’s not like a mystery where the problems are going to be known about. They’re coming through customer service, so there’s not another place for it to come to you from. Right? So that’s why it’s really a simple of like, what? Where do we learn about the issues that are important? It’s that and maybe you have a few other people dealing with suppliers or your customers that it isn’t vanilla customer service.
Fred Adler 00:36:41  Like if I, if I ship a store and the stuff is damaged or, you know, that is pretty much stuff like the packaging around our products, like it’s there’s too much space in the box or, you know, and it’s moving around and what can we do? And you know, I think Oh, like it’s just those. You know, we wouldn’t have listened in a previous life. It was just called breakage. Whatever, kid. There’s breakage in mail order, right? Like who cares? Like, you have margins. But Amazon has taught us that you can’t allow for that. You can’t have breakage. There’s no such thing as breakage anymore. That’s what I know. Because of that, we have to listen to the customers and continually to minimize breakage. And then you have a successful operation, right. Because then less complainers.
Josh Hadley 00:37:21  Yeah.
Fred Adler 00:37:22  I love that complaining at home and the complaining in the business. The main operation.
Josh Hadley 00:37:27  Well well summed up here Fred. Now we’re running up on time here.
Josh Hadley 00:37:31  And so I want to leave the audience with three actionable takeaways from every episode. So, Fred, here are the three actionable takeaways. You let me know if I’m missing something here. But action item number one is how do you handle and protect against counterfeiters? In my response to that. And what we’ve uncovered is twofold. Number one, it can be your distribution strategy, right. So do you have SKUs that are unique to Amazon, SKUs that are unique to retail, SKUs that are maybe unique to your Shopify storefront? We also talked about how just staying one step ahead of your competition always be launching, right? Always have that new product ready in the pipeline to come out with. Because inevitably on Amazon, as soon as you launch a product, it’s a melting ice cube. You’re going to have copycats that are after you within three months. And as a last resort, if you have the financial means or that many people copycatting you then go partner up with a legal firm. And we talked about having Edison IP as one that you could look up their strategy.
Josh Hadley 00:38:22  Go back and listen to that podcast episode. We dove into the weeds of how you can actually go sue and actually be able to freeze the assets of those overseas competitors. That’s the best way to send them a message that you’re not to be messed with. Action item number two is how do you stay ahead of Amazon and the margin compression that is going on. And Fred, you talked about it, how involved you are in the business, watching and really being a fiduciary of your own business, being so attuned to the daily metrics that are happening. What were my FBA fees as a percentage of sales yesterday and what were my Cogs as a percentage of sales yesterday? And what were my tacos numbers yesterday? And what’s my overhead? It is. You are going to win in the inches, in the millimeters, in the centimeters that come down to optimizing the FDA fees by 1% or so. Getting more efficient with your supply chain. Fred, you talked about what you have done transitioning over and creating a partnership with the US Postal Service and how that shaving off percentage points of margin.
Josh Hadley 00:39:18  And so I think as the game of e-commerce gets more and more challenging, it’s requiring every business owner to get more creative in the ways that they can shave off a percentage point here or there as it relates to Cogs, supply chain FBA fees and advertising. And it is those three buckets that if you can shave off a couple percentage points, if you’re doing a $5 million plus brand, that’s adding an extra six figures down to your bottom line, which allows you to launch more products, which allows you to scale faster. Third and final action item here is you touched on it, but customer service really, this is the lifeblood of any business. If you want to know what your your customers think about your products. Like listen to the customer service. But if you really want to know how you can beat the competition, launch products that they would never come up with. It’s listen to your competition. It’s listen to your customers. What feedback are they giving you? How do you solve those problems? And that’s how you continue to win.
Josh Hadley 00:40:08  The customers will tell you, hey, I’m looking for X, Y and Z product. Or hey, it would be really nice if this included that. It is those ideas that are going to allow you to scale your business faster. So, Fred, is there anything else that you feel like I missed here that we need to double down on?
Fred Adler 00:40:21  I feel like, you know, you’re a great resource, and even the few things I’ve learned on the podcast I’m excited about. So I just hope, you know, to excited somebody enough to kind of, you know, get in there and have some serious problems because it’s more fun than the alternative, which is to have, no good problems. So meaning all the problems more or less are good problems because it means you’re, you know, in, in the, you know, you’re on the ball field and I feel like, you know, the Amazon, affords us really a state of the art experience to to do the business, in so it still represents the greatest potential for, you know, an enterprise to, to really catch fire and do serious volume.
Josh Hadley 00:41:05  I agree.
Fred Adler 00:41:06  You know, you have to fight. It’s just there’s a lot, you know, it is a brawl. At the end of the day. It’s like living in New York City as I did, you know, for many years. I’ll be there tonight. I mean, it’s a fight, you know, literally just to, you know, get in and out. But it’s similar now with Amazon, I would say you have to be ready to, you know, to, to go after to go after it.
Josh Hadley 00:41:24  Yep. Agreed. All right, Fred, here’s my final three questions for you. Number one, what’s been the most influential book that you’ve read and why?
Fred Adler 00:41:31  You know, just taking to heart. There just be two. You know, it used to be Snow Crash by Neil Stephenson, but but seeing as the recent experience and that I now live in Western Mass, you know, I’m going to have to side with Moby Dick and Melville because there’s no and that is the Amazon experience, you know, literally trying to conquer the big as well, and it’s undoable.
Fred Adler 00:41:50  It is a serious challenge. And and you need Neanderthals with you to really succeed.
Josh Hadley 00:41:56  I love that that is a great book recommendation and great analogy to Amazon. Question number two. What’s your favorite AI software or ChatGPT prompt that you’ve been using?
Fred Adler 00:42:05  I’ve been using well, just the, I guess ChatGPT with, a bunch of, photo add ons so as to create, prompts that are photorealistic. These are just, you know, really stout prompts that help add a lot of explicit, exact photo, specific, to make me have product shots that I would have only dreamt of. But it has limitations. So I guess, you know, but that’s of the minute. Now using it for photorealistic imagery.
Josh Hadley 00:42:40  Love it. That’s a great use. Third and final question. Who is somebody that you admire or respect the most in the e-commerce space that other people should be following and why?
Fred Adler 00:42:46  So I feel like, gothy ranker for us in our area is still up, you know? They are one of the larger direct to consumer, brands and have really set what the standards like.
Fred Adler 00:43:01  They’re like the, the people, if you will, at QVC and, and and have really created some $100 million products, you know that’s like and also light and. Right, which is something I didn’t discuss enough. But as you saw before, what I was doing was a lot of haircare in liter bottles. That is the opposite of light and right. Light and right would be like a one ounce skincare cream, right that I’m shipping for three bucks instead of ten. So in this industry, you want to also really know light and right means light underground. And then you can have, you know, easier to enjoy margin.
Josh Hadley 00:43:35  Yeah love that. Well well encapsulated there with the light and right at the end Fred, thanks so much for your time and coming on the show today. It was a pleasure having me on.
Fred Adler 00:43:42  Really good to see you again and thanks for the time.

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