Sometimes you have to fight fire with fire to win. And fighting with fire is exactly what Patrick did so he could get his barbell collars ranked number one on Amazon. Through a strategy of repricing, reporting fraudulent sellers and freight forwarding methods, Patrick was able to beat Amazon counterfeiters and climb sales rank.
Patrick began selling his barbell collars on Amazon September 2015, under the brand name Clout Fitness. His original design was a simple set of black barbell collars in a polybag with no branding. His original selling price was $11.98, which was competitive with the other offers at the time. After a couple of successful promotions and following up with shoppers for feedback and reviews, Patrick’s barbell collars started to gain traction. This is when the counterfeit madness began.
Amazon counterfeit sellers dramatically increased the competition for his barbell collars. By April 2016, there were 12 counterfeit sellers on his listing. Whenever Patrick changed his price, the counterfeiters would lower their price to counter him. For instance, he lowered his price to $8 and the counterfeiters changed their prices to $7.98. By the end of April, his barbell collars were priced as low as $4.99—almost half of what he currently sells them at—this is how bad the counterfeit price war had gotten. But an unintended consequence of the pricing war was that the ASIN was selling 4x more than normal. As a result, it started to appear higher in the bestseller ranking.
If Patrick was going to remove the counterfeit sellers, he had to start improving the brand of Clout Fitness. He began to differentiate his barbell collars by adding a Clout Fitness logo to each collar. He then added a storage bag with his logo on it. From there, he updated his packaging to a frustration-free style box with his logo on it. All of these measures would eventually pay off big in his fight to remove counterfeit products.
His original barbell collars cost $3.50 to make; the additional branding on the product was free to add. The branded carrying bag cost $0.10, and the branded packaging cost $0.10. Altogether, the barbell collars cost $3.70 to manufacture—a 5.7% increase in cost from his original design.
As Patrick was adapting his pricing and product to compete with counterfeit sellers, he was also working to purge them from his listing. In June 2016, he purchased all 12 counterfeit products on his listing and reported them to Amazon. Using pictures, he was able to show the key differences between his product and the fake ones. Once Patrick reported the fake products to Amazon, it took up to 24 hours to a week for all 12 counterfeit sellers to be removed and/or banned. He was then able to get his Clout Fitness Barbell Collars in the Amazon Brand Registry a few days later. Subsequently, several of the banned sellers contacted Patrick asking to be allowed back on his listing.
Some of the counterfeit sellers asked if he would be willing to set a price so they could all get a percentage of the Buy Box. He didn’t respond to any of the sellers as to avoid a digital footprint because there was nothing to be gained. Sellers who agree to price fixing are engaging in illegal activities that can have serious negative consequences. Another reason why you don’t want to open correspondence with a counterfeit seller is because they could take anything you agree upon and use it against you. This could result in them reporting you to Amazon resulting in your suspension—which is ultimately what many of them want.
Along with purging counterfeit sellers from his listing, Patrick used a pricing and freight forwarding strategy that ultimately ranked him number one for barbell collars. In early 2016, Patrick’s listing was on the bottom half of the Amazon SERP for the keyword “barbell collars.” Realizing that pricing and volume were ultimately going to be his competitive advantage, Patrick set out to source his product significantly lower than the competition and still make his margins.
He currently sells his product $4 cheaper on average than everyone else. How so? By freight forwarding 8,000 units at a time from China. This saves him around $2 per unit. His competition is ordering smaller quantities and using air freight forwarding, which increases the cost per unit significantly. Patrick uses a combination of boat and air freight forwarding methods when he needs to ramp up his supply. For Black Friday and Cyber Monday this year, he did a dual order of 1,600 units by air freight forwarding and 4,000 units through boat freight forwarding. Doing it this way costs him $3.20/per unit to go by boat and $5.50/per unit by airplane. Placing an order of 8,000 units costs around $20,000 and takes 6 weeks to arrive at U.S. ports. This makes his cost per unit $2.60. With a retail cost of $9.98, $1.50 for Amazon commissions, and $3.02 in FBA fees, he profits $5.46 each sale.
Ultimately, having greater amounts of capital available to order large quantities of products from China will drive down your cost of goods. This can be extremely difficult for new sellers trying to launch products on Amazon. But this strategy is ultimately what will get your product to rank because you need sales velocity.