“FBA”, as I found out, stands for “Fulfillment By Amazon”. “Amazon”, as in, the giant Internet retailer amazon.com. But even though I now knew what those three little letters stood for, I still didn’t really understand what they meant.
So, I decided to ask someone who did.
John Curnow – one of Chiang Mai’s FBA kings, agreed to sit down with me and explain the ins-and-outs of it all.
As he entered the cafe that we had arranged to meet at, the first thing I noticed was that Curnow seemed even younger than his 20 years of age. His boyish features, stick-like arms, and baggy t-shirt gave him the visage of a barely-pubescent teenager – the type you might expect to find loitering around a shopping mall or at a skate park. And yet, here he was in Thailand – a fully-fledged Internet entrepreneur! From speaking to others who knew him well, I had gathered that Curnow’s income was well into the six figures. Pretty impressive for someone whose peers were still slaving away at college, racking up obscene amounts of debt.
To help me to understand how Curnow made his money, I asked him to start from the beginning and to give me a full FBA-101.
“It’s pretty simple really”, he began. “FBA is just selling products on Amazon. A lot of people don’t realize that Amazon is not actually behind every listing they show. Many items come from independent, third-party sellers.”
“People like you?”
“Exactly”, he confirmed. “It wasn’t always this way. Back when they were just an online book store, Amazon created each listing themselves. But as they expanded into more and more categories, they realized that third-party sellers would be better at spotting profitable niches than Amazon’s own internal team. So they opened up their platform to people like me. It meant that Amazon changed from being a pure Internet retailer, and also became a marketplace where buyers and sellers could meet – with Amazon taking a cut of every transaction. These days, more than half of the units sold on Amazon are from third party sellers.”
“So, what do you have to do to get started?”, I inquired.
“As an FBA seller, my job is to source the products and get them to an Amazon fulfillment center. ‘Fulfillment centers’ are these crazy-massive warehouses which Amazon has built all over the world – like their central delivery depots. They are where Amazon products sit, waiting to be purchased and then shipped to the customer. Once the goods are there, Amazon handles the rest… the payments, the shipping, and processing returns. Basically, I provide the products, while Amazon provides the storefront and delivery logistics. Buyers love it, because they get free shipping under Amazon Prime. And it’s a good deal for sellers like me too, because Amazon deals with handling the actual goods, meaning that I don’t have to. And even more importantly, Amazon also brings the eyeballs to my products.”
“Eyeballs? What do you mean?”
“Well, say you wanted to start your own e-commerce store – without involving Amazon at all. So you make your own website and offer products for sale. Great. But it isn’t as though droves of people are suddenly going to visit your new online shop and shower you with money. At first, your website is going to have exactly zero visitors. And believe me, it’s damn hard work getting people to come! I tried making my own site once, and it totally sucked. I spent months of effort building it. When it was done, it looked pretty and it all worked great. There was just one problem: nobody came! I was like this five-star restaurant in the middle of nowhere. It doesn’t matter how good your products are, if they aren’t where customers can see them.”
Curnow continued, “But by selling on Amazon, I get to skip all of that. Millions of buyers are already there, and typing things into Amazon’s search box. Nail-clippers, USB cables, office furniture… anything you can think of. So as an FBA seller, I get to access and sell to Amazon’s incredibly huge audience – instead of having to go to all the effort of building my own traffic to my own website.”
“How did you figure out what to sell? There must be thousands of things being offered on Amazon.”
Curnow nodded. “Not thousands of products – millions. Choosing the right product to sell is indeed a big part of the battle. The key is finding products with high search volume and low competition. Easier said than done. But once you find a product worth going after, you place an order with a manufacturer and create your listing.”
“OK, and where do you go to place these orders?”
“Well, in most cases, the factories are in China”.
China! I instantly pictured this skinny kid in his loose-fitting clothing arriving to the doorstep of some factory in the Chinese industrial heartland, not speaking a word of Mandarin, asking to buy a few hundred widgets. It was a totally incongruous image. couldn’t resist asking Curnow, “And… what do the Chinese factory managers make of you? Do they take you seriously? I mean, you don’t exactly look like someone who they deal with every day.”
Curnow shrugged. “You’d be surprised. I guess that someone like me would have been a novelty once, but not anymore. Many of the Chinese factories now hire English-speaking representatives especially to deal with Westerners like me who want to place FBA orders.”
My next question seemed like the obvious one. “And what do you sell?” But at this, Curnow instantly recoiled. Without knowing it, I had just committed a major faux pas.
Recovering, Curnow shook his head and scolded me, “Well, Obviously, I’m not going to tell you! That’s the first rule of FBA – never reveal your niche. Doing so would just invite more competition.”
How silly of me. “Sorry – I didn’t realize. So, what are the other rules of FBA?”
Curnow warily looked me over for a moment, apparently trying to deduce whether I was playing dumb in order to try to steal his niche, or if I really was as clueless as I appeared. Eventually, he continued.
“Well, let’s talk about getting visibility for your products inside of Amazon. Because there are lots of others listing similar products. In my niche, for example, there were 43 other sellers last time I checked. So, how does Amazon decide which ones to show to people first? Supermarkets know that products placed at eye-level will sell better, yes? So, what’s the online equivalent? What is the valuable real estate when people search on Amazon for something? You tell me.”
I considered the question, and replied “I guess it would be like Google. The ideal place to be would be the first result.”
“Bingo! After doing a search on Amazon, people tend to click on the first result they see. Maybe the second or third one. But practically nobody goes beyond that. If you’re on the second or third page of Amazon, you’re nowhere.”
“So what makes a product rank highly?”
“Well, Amazon cannot rank their products manually. There are too many products – even for a huge company like them. And there are even more possible search terms that people might type into the search box. So, all the rankings are done using an algorithm. Amazon doesn’t reveal exactly how that algorithm works, but there’s enough money at stake that people run tests to figure it out. There are many factors at play – the way the sales copy is worded, the quality of the photos, the headlines… but there is one factor which trumps them all.”
“And what is that?”
“Yeah – you know, those little product ratings out of five stars. More than anything else, customer reviews are the thing that determine a product’s ranking. Part of it is the average score – so, all else equal, a product with an average of 4.5 stars would rank better than a product with an average of 4.0 stars. But the quantity of reviews matters too. So, that 4.0 star average might actually rank more highly if it had 100 reviews, versus a 4.5 star product with just a couple of reviews. So, the aim is to get lots of reviews – preferably five-stars of course – but the really important thing is the sheer number of them.”
Fascinating. Amazon is effectively using buyer feedback to do the ranking for them. Products which buyers rated highly, and which were popular, would be ranked more highly in the search results.
“How do you get those reviews?”
At this question, Curnow cracked a knowing smile. “That’s the right question to be asking. There are lots of ways.”
“Well, reviews can come from real customers. That’s what Amazon officially says sellers should do. And it’s true that a few of your customers will take the time to login to Amazon after their purchase has arrived and leave a review about their experience – but the vast majority won’t.”
Made sense. I always just delete all those e-mails from Amazon asking me to review the products I had bought. Sounds like most other people do the same.
Curnow continued, “The thing is, organic reviews aren’t going to cut it if your product is newly listed, because a new listing starts with zero reviews. Meanwhile, the competition occupying the valuable top positions in the search results have lots of reviews. Remember, your product isn’t going to sell if it’s not on the first page – it’s practically invisible. And if it isn’t selling, it’s not going to get reviews. So it will be stuck in obscurity forever. Unless, that is, you can get reviews in other ways.”
“The easiest is to ask friends and family for reviews. You get them to order your product using their account, leave a review, and you refund them through PayPal. But pretty soon, you will run out of friends and family to beg for reviews from. You can’t just keep continuously annoying them – especially if you have got lots of products you need reviews for. So then you get into the wonderful world of Review Clubs.”
“What’s a Review Club?”
“Same thing – you send your product out in exchange for a review, except that these are strangers. Check on Facebook – there are dozens of groups like these. People sign up, buy my product, Amazon sends it to them, and all they have to do is leave a review. Then I refund them. It’s a basic trade: I send them free stuff, they send me a review.”
“That must get pretty expensive.”
“It does. But once you have enough reviews and your product is ranking #1, it’s totally worth it. The money just rolls in.”
I frowned. I wanted to get this straight. “You’re buying the reviews?”.
I had to take a moment to process all of this. Curnow took a long sip of espresso and waited for me to probe further. When, after a long pause, I still said nothing, he offered: “Don’t believe everything you read on the Internet”.
Finally, I blurted out: “Isn’t there an ethical problem with going out there and getting fake reviews?”
Curnow shrugged. “If you want to be an Amazon seller, you gotta get reviews. It’s what the algorithm values. There’s really no way around it. And everyone else is doing it.”
“But customers trust those reviews. Why doesn’t Amazon crack down on it?”
“Actually, Amazon doesn’t really care too much. The only thing they come down hard on is anyone selling shitty merchandise. That is the kind of thing erodes the trust that shoppers have in Amazon. But that’s not what I’m doing. I’m not selling junk. The products I sell are more or less the same quality as the next guy’s. And it doesn’t matter to Amazon if I’m selling more, or if my competition is selling more. Either way, shoppers are happy and Amazon gets to take their cut.”
I was stunned. “Why doesn’t Amazon have anyone checking the reviews? Like, to see which reviews are fake, and which ones are real?”
“How can they? There are tens of millions of products listed on Amazon. They can’t have humans checking each and every review manually. And even if they did, it isn’t really possible to tell a review which has come from a Review Club from a genuine one from a real customer. The person at the Review Club is actually getting the product, so they can write quite specific things about it. Sure, they are putting a positive slant on it… but there’s no way for Amazon or anyone else to know that.”
Wow. I just had one last question.
“So – if I understand correctly – the main thing involved in being an FBA seller is sourcing reviews – by any means necessary. You’re contacting people and constantly searching for the reviews that will help your products rank. That kind of sounds like a pain in the ass”.
“It definitely is”, Curnow agreed. “But it sure beats working in an office.”