Author John Rossman: Five Non-Intuitive Things You Need To Know To Run A Very Successful Amazon Business

Run your business as a series of businesses, with each product having its own Profit & Loss statement — it’s critical to understand your fully-calculated unit economics for each product, including costs related to returns/write-offs, in-bound shipping.

As a part of my interview series about “Five non-intuitive things you need to know to run a very successful Amazon business, I had the pleasure of interviewing John Rossman.

John Rossman, a former Amazon executive who launched and scaled the Marketplace business, which now accounts for more than 50 percent of all units sold at Amazon.com. He is also the author of the new book Think Like Amazon: 50 ½ Ideas to Become a Digital Leader.

Thank you so much for doing this with us! Can you share with us the “backstory” about your time at Amazon, and your role as the former Director of Merchant Integration?

Part of my story is my interview process that took place in 2002. A former Arthur Andersen colleague, Jason Child, was at Amazon in the finance organization. Jason thought that I should interview with Amazon to help lead a “big bet” they were considering, which was to add third party sellers at Amazon and use this program to rapidly expand into new product categories. At the time, the vast majority of Amazon’s business was books, music and video. The Marketplace business was the third iteration at trying to rapidly increase selection by adding third party sellers. The hiring process was over 20 interviews over a couple months. In some ways, this process helped to finalize my strategy and when I started, I already had great command of a plan.

How does this position you as an authority when it comes to selling on Amazon.com?

I designed and launched the business of selling on Amazon in 2002. Although a lot has changed since then, a lot hasn’t. We formed many of the current principles, especially around the demanding customer experience and keeping “customer promise,” which still differentiate Amazon. I stay current in the Marketplace business through both Amazon relationships and vendors and advisors to sellers.

Ok. Let’s jump to the core of our discussion. You are a seasoned Amazon expert. Can you share with our readers non-intuitive, insider tips, in order to be as successful as possible on Amazon?

My tips are pretty fundamental, but my experience is that the fundamentals are where most sellers lose their way.

1. Leverage all the features which FBA has to offer. Having your product be “Prime Eligible” is key to the Amazon customer.
2. In-stock matters. Ensure that your in-stock percentage is 100 percent, having to cancel an order due to out-of-stock is a really poor customer experience and will damage your reputation.
3. AMS, Amazon’s advertising platform, is key to driving traffic. Put ads not only on competitive products, but on products which your product would pair well with.
4. Don’t get too emotionally tied to the products you carry — be prepared to switch out your active catalog on a regular basis. Due to changing Amazon competition on each product you carry, it’s quite common for sellers to switch out 25 to 50 percent of their catalogs each year.
5. Run your business as a series of businesses, with each product having its own Profit & Loss statement — it’s critical to understand your fully-calculated unit economics for each product, including costs related to returns/write-offs, in-bound shipping.
6. Understand your sales tax obligations and potential by retaining proper expertise and technology. Unpaid sales tax has become one of the single largest liabilities for most Amazon sellers.

Amazon sellers have a reputation for being great guerilla marketers. Did you ever see third party vendors or sellers use any particularly clever marketing tactics that larger companies would benefit from adopting?

Getting celebrity and expert placement and blog mentions, and then leveraging social media to capitalize on it is the holy grail of marketing. Finding ways of getting social exposure for your products is critical.

Do you have a favorite “Life Lesson Quote”? Can you share how that is relevant to you in your life and career?

“Simplicity is the ultimate sophistication.” — Leonardo da Vinci

It is really hard to make products and content high quality and getting to the bare essence to fit your customer or audience. In my new book, Think Like Amazon: 50 ½ Ideas to Become a Digital User, I start one of the chapters with this quote because the chapter is about writing out ideas to their bare basic essence before you start a new project. This discipline will help you think through the idea, execute so much better, and be able to bring others along.

Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why?

One of my interests is in helping executives and leadership teams create change and lead through turbulent times. Michael Porter, a professor in strategy at Harvard, would be a great lunch and I’d like to get his insights on helping companies transition to digital models.

Thank you so much for these great insights. This was very enlightening!