Online and Under Attack

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By: John Farley
Guest Blogger – Cyber Risk Management

Google

Online threats have drawn every business into a cyber war with hackers. The unfortunate reality for every CEO is that a cyber attack can cost them their job, or worse, lead to the downfall of an entire company. The groundbreaking new book, Online And Under Attack , aims to arm corporate leaders with the weapons to fight back. The reader will be equipped with the tools to create and implement a comprehensive cyber risk management program. The multi-faceted approach provides a unique perspective from both the hacker and the victim’s lens. This book provides key insights into the latest hacking techniques, technology defense, privacy law, government initiatives, insurance risk transfer products , best practices in data breach response and predictions into the future of the “Internet of Things”. It can be found here

Retail and dropshipping profits in danger : Amazon.com

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It’s a relatively quiet topic but all retailers are in danger of being victims of Amazon.com. Why? Amazon is the most successful retailer online but what most people don’t realize is that Amazon is out for blood! Amazon’s latest techniques involve shady practices such as figuring out which FBA (Fulfillment By Amazon) products sell successfully. What does this mean? If you use FBA and you are a “top seller”, say you sell 1,000 products by month, it is common knowledge that Amazon could (or more likely, will) reject your product at some point so that they can source your product directly from China and to sell it themselves.Can you say ‘Modern Day Monopoly?”.

Now, you might think that the chances of Amazon stealing your products or ideas is slim if you are a smaller business but the fact is that if you are an entrepreneur or an aggressive salesperson that you could be fighting a losing battle.

I hesitate to identify my products that this has happened to but I will share them when appropriate. For now, you should Google your products and compare them to the price they sell for on Amazon.com and figure out a way to compete.

Here’s how it works, if you are fortunate to have a “hot seller” I’m certain that Amazon either already sells that product at a cheaper price OR they will sell it soon enough. The real problem is that you might be able to compete with Amazon’s price BUT there is little chance that you can compete with Amazons “Free” shipping.

So here’s the deal, Amazon latches onto successful selling products and then has no problem earning $0.50 or $1.00 per sale (who can live off that?) as they put their competitors out of business. Once enough competitors are out of business then they’ll raise their prices to an acceptable profit level as they deem fit.Pretty scary, huh?

Am I the Only One Talking About Outsourcing?

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By: Brendan Fitzpatrick

Google

20 years ago I was concerned for the safety of the Information Technology (IT) industry. Not too long before, the manufacturing industry went overseas to various countries. The IT industry was on the same path but what made it so easy no matter how transparent the process was – was the fact that there was no union to put up a fight. Now, there was never really a chance to unionize the IT industry but at least at one point there were talks or a desire of some groups on Wall Street which at least spawned some conversations of the idea.

The IT movement overseas (ie. outsourcing) has been surprisingly slow compared to other industries, especially considering that it’s all about computers and automation. Int he last 20 year or so I was surprised to see certain industries completely outsourced overseas before at a faster rate than the IT industry. Financial back office and the medical field both come to mind. Someone very close to me (ie. related) worked for a very large financial industry in New York, they managed an entire back office team for a very large retirement fund for a Union. It was well known within the company that they worked for that they had to keep it secret that they were moving their entire team to India. The Union would have pulled it’s multi-billion dollar account on the spot. The person I’m speaking about was responsible for transferring all functions to the team in India which although was a tough process – the kinks worked themselves out over time.

The second thing that comes to mind is in the medical field. Look up ‘zocdoc.com’ on Google and you’ll see that they were expected to be the next billion dollar startup company. The fastest rising startup in a long time – the idea behind them was that you would use your webcam to have a face to fact ‘appointment’ with a doctor overseas an they could write you basic subscriptions. Now, this could be an extremely amazing ‘technology’ it becomes amazingly disturbing the more you think about it.

I won’t even go into the accounting industry which is also being unwillingly outsourced overseas but what I will leave you with is a question and a thought – “is there anything that the American people won’t sell out on?” To answer this question you have to define “American People who drive these industries”. These are primarily the multi-billionaire investors that drive Capitalism.. I’ve always said that “the principles that have built America” (ie. Capitalism) are the very same principles that are tearing it down. Investors are too greedy to make an extra dime instead of re-investing into America.

Why Amazon and Ebay are so Bad for the U.S.

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By: Brendan Fitzpatrick

Google

Simply explained:

  • Manufacturers reside in China, India and beyond
  • Historically, manufacturers would wholesale to U.S. retailers who would then retail those products to consumers
  • As the internet grows, China, India and the likes are implanting their countrymen in the U.S. as “preferred sellers” who undercut American retailers or “sellers” (as called by Amazon and eBay)

The implanted “preferred sellers” in the U.S. are relatives, employees and in some cases simply “acquaintances” of the manufacturers – it’s a full blown monopoly. Herein lies the problem, those acquaintances get true wholesale prices and are able to sell at the narrowest profit margins (via Amazon and Ebay) while American retailers who sell the same products have to sell at a lower margin (ie. lose $billions in sales) because they’re paying more for the same products. The margin of difference is the control point on eBay and Amazon which catapults the “preferred resellers” (of the Manufacturer) to “Top Seller” status on these sites (BTW, Top Seller status spells success which snowballs over and over as the more they sell, the cheaper it is to ship more products in bulk).

Here’s a real life example, search for ‘watchbox’ on Amazon.com and see if you can find this product or similar:

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This is a nice watchbox made in China. Now, before getting into the quality, shipping expenses (from China, to Amazon etc.) and Amazon service charges take a look at the price of this item, $6.17. This is not Alibaba.com or Aliexpress.com, this is direct to Consumer via Amazon. There is no way an American retailer is selling this product, this is purely a direct transaction from Manufacturer (via “preferred reseller”) to Consumer. The question becomes, is it even possible to prevent China from selling the bulk of it’s exports directly (or indirectly via “preferred reseller) to Consumers and how will that impact retailers in the U.S.? I do believe U.S. retailers are now on the path of being outsourced, the same as manufacturing jobs as well as with technology (India) and other markets.

Pretend you wanted to source the product above in bulk and retail it directly in the U.S., go to Alibaba.com (this is a direct Manufacturer to Retailer site) and see how much you can find the same product for.. 90% of the results will cost you $10 or more.. This is the evidence that proves this article. When Amazon (reseller price) is selling individual products cheaper than bulk pricing on Alibaba.com (wholesale price) it is proof that China, India and the like are creating a monopoly and cutting out the American retailer!

How does the American retailer compete directly with manufacturers from China when eBay and Amazon are in play? I don’t think it’s possible. How can an import tax solve this problem? It cannot when resellers and “preferred resellers” aka “implanted resellers” are being taxed the same. The only thing that the American retail market can hope for is to bring back manufacturing to the U.S. and the one thing China better be aware of is that Automation will wipe them out at some point.

 

China owns U.S. Retail

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By: Brendan Fitzpatrick

Google

We’ll keep this one quick. All I can say is that if you’re looking to sell a “box of rocks”, all you have to do is check on aliexpress.com and or alibaba.com and you’ll find it for say $1.99 as an example.. After shipping to the U.S. (assuming you buy 200 boxes as an example) it will cost you approximately $2.49 per box.

 

Here lies the problem, typically a retailer or reseller would sell that box for $5.00 and earn 100% profit (ie. 2x purchase price). Unfortunately, nowadays – China has satellite connections throughout the U.S. and their hooks are buried in the likes of Amazon.com and Ebay.com. What does this mean for us?

Well, here is the sad reality.. As a retailer I search Aliexpress.com, Alibaba.com and several other online sites (all brokers for Chinese, Indian as well as other manufacturers) for that “box of rocks” and that box that I wanted to sell in America now wholesales for $4.00 a box on Amazon. (try it for yourself with any product)
What does this mean?  At the moment I’ve only seen this problem with China which is why the title of this article is what is is (subject to change). It really means that the U.S.A. is being penetrated by immigrants that are receiving really cheap products from different countries which enable them to monopolize Amazon and all U.S. Retail companies because it enables a direct connection from foreign manufacturer to local consumer! Let’s pay attention to how the current Administration will handle this issue.

 

I’m done giving Facebook money for Ads

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By: Brendan Fitzpatrick

Google

Well well well.. I’ve briefly touched on this topic in the past but my recent experiences have driven me to post at least an update with perhaps a new or different perspective. As mentioned in a previous article, paying close to $1 per click (or visit) is pretty much what it comes down to on most mainstream ocial Media sites. Given the fact that a very small percentage of click through traffic actually turn into a sale, well – what does that man to you? Let’s dig deeper!

Let’s assume that 3 percent of the click through traffic (which may be a high assumption depending on the topic of interest) actually buys something. Well then, a little reverse engineering will tell you that it costs you $100 to make 3 sales. This in turn means that you better be making $33.33 profit per sale just to break even. As you can see (or calculate), mainstream advertising on the Internet is not for every product!

As I’ve always said, if you want to remove all risks with this equation – just sell mortgages because even if it costs $100 for a click on average (which I don’t think is even possible) – if you even made 1 sale per 100 clicks ($10,000 per 100 clicks) you would make a fortune (multiply the loan amount approximately by 2 to estimate your profit margins).

Let’s get back to reality.. I’m not here to tell you which business opportunities work – I’m here to point you in the right direction based on your business to understand if Facebook Ads will work for you. I could be wrong but based on my experience and many discussions with other Advertisers, unless your profit margins are above $100 per sale then you really, REALLY need to proceed with Internet Ads with Extreme Caution!

We’re currently working on an article which discusses “What are the Best options for Website Advertising” which you may find surprising, with all of the non-technical recommended solutions! We’ll post the update here for those that are interested.

Running an online business with my kids

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By: Brendan Fitzpatrick

Google

As a Dad of 4 young girls (yes, 4 girls!, that’s 5 in the house with Mom!) it amazes me to watch them grow up in this electronic age. Surely watching any kid grow up in any generation is equally amazing, just different. I’m constantly comparing them to the way I grew up. I’m 46 now but I have to say that I started programming since the age of 10 so I tend to view myself as someone with more experience than most my age (as my kids run circles around me with their iPhones and Social Media posts which is just weird to me :).

With the exception of a relatively short period of time (1998-2007) computers have been my life. After High school (which I graduated in 1998) I decided to pursue an Electrical Engineering degree. 20/20 vision of history tells me that I probably would have done much better if I pursued a Computer Science degree, none the less I finally got my Masters in Computer Engineering and I was fairly successful on Wall Street which I don’t think I would have had a shot without my degrees. I still feel that by chance I could have been “more successful” if I stuck with computers during the birth of the internet. And by “more successful” I don’t mean money, successful to me mean being happy and having a fruitful family life.

With my experiences I’m constantly looking at my daughters lives to see if there is a “better path” for them or maybe I’m just being a paranoid Dad who wants the best for my girls.My oldest is just 10 years old so I recognize how crucial this period in their life is. In general, all of my kids are “connected” to the internet and after several minor issues (random posts of images, random people “friending” them on their Social Media)  it struck me like a bat in the head, I need to educate my girls on social media to ensure that they grow up as responsible teens and eventually adults so that they don’t “ruin their careers” or draw unfavorable attention to themselves via social media.

I’ve had online storefronts for 10+ years now that have been fairly successful (extra cash for the weekends at best), as a result I recently realized an opportunity that I thought could put my daughters on the right track. Being in the “Anniversary Gift” industry for some time now I decided to pick a category that would be interesting to them. If I could find an “interesting” category or product then I could use that to keep them motivated and eventually educate them on every level of social media. I quickly determined that “Bracelets” might be the answer.

To shorten an already long story, we opened TheBraceletShoppe.com late 2016. I made sure that my 4 girls weighed in on the domain name and that they would all pick the products to be made available on the site, and Yes, this includes my 4 year old! Don’t worry, we have a voting process that ensures each product has a majority vote between us to ensure that the quality is good. I also made sure that they were actively involved every step of the way, I made them enter product SKU’s, prices, brochure pages and comments in a spreadsheet (how many 10 year olds and younger do you know that have managed a spreadsheet?). It hasn’t been easy but I’m able to constantly motivate them to find new products and post social media by informing them that they can have any new bracelet that they find as long as they put the effort in to managing the process.

My kids are slowly being introduced to the concepts of procuring products, sales, shipping, spreadsheets, communications, entrepreneurship, marketing, advertising and more while putting the concept of “Social Media” into perspective. More importantly, I get to do this with them on a daily basis! I couldn’t ask for a better life experience and Yes, I have thought about offering this to other parents as a Parent/Kid activity “Class” but we’ll see how this works out over the coming months first.

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