3 Revelations That Brought Startup Success To This Founder
In the spring of 2014, while hatching his plan to become an entrepreneur, Greg Mercer was confused by the prevailing Silicon Valley mantra, "fail fast." He understood the value of launching and shipping a product, but how could failure be a desired outcome?
Employed as a civil engineer at the time, Mercer wanted to avoid failure at all costs if he were to make the leap to becoming his own boss. He had read the harrowing stats of startup failure, yet remained undeterred.
It turned out to be a fortuitous time for the self-professed data nerd. In his "aha" moment, Mercer realized that he could mitigate the chance of failure, and validate customer demand, by using all the public information that Amazon provided.
Two years and several successful businesses later, Mercer has cracked the code to launching a successful ecommerce and Amazon business. His attention is now focused on building an Amazon product research tool called Jungle Scout, along with a suite of other tools, to help others replicate his success.
Mercer distills his success as an Amazon seller, and software entrepreneur, to three main lessons that he learned along the way:
Quantify & Predict Demand
Using the data that Amazon provides to help customers make purchase decisions, Mercer created his own demand curves to identify products that had existing customer demand with only a few other sellers.
If he could capture a slice of that demand, he figured, it would be enough to constitute a real business. If you have an expertise on gathering and wrangling big data, more is always better. Mercer falls into that category.
With experience comes precision. He has now tightened his predictive algorithm to estimate Amazon sales within a very narrow margin for error. This ability to predict the demand of any product on Amazon is incredibly powerful, if utilized properly.
In fact, Mercer can now quantify how many units he can sell in a given month, and also see how many units a potential competitor is selling. Synthesizing this data, predicting the success of a product he might sell becomes formulaic.
"It's basically pattern recognition. If you are able to find the products or ideas that people are already looking for, and present yourself at the right time and right place, there's a good chance you win the sale. Amazon allows you to do just that."
Mercer has built businesses of every variety using this technology, and when he commercialized his proprietary algorithm to the public, he immediately lowered the barrier of entry for anyone with the yearning to start an online business.
Quantifying the existing demand of a product is a revolutionary idea that can improve the likelihood of success for a broad swath of new entrepreneurs.
Don't Reinvent the Wheel
The second revelation that changed the course of Mercer's life is that he did not need to invent a unique never-before-seen product.
In fact, he realized that what he actually needed to sell is a widget that was already readily available. For the engineer in him, it was hard to quiet the creative streak that yearned to sell something completely unique.
However, the math is simple: is it better to own a small slice of a big pie, or the entirety of no pie? Unsurprisingly, Mercer opted to sell products that others were selling, which could guarantee that he could capture some of the existing demand.
In a case study Mercer is running, he shows the journey of successfully selling an existing widget. In this case, it is bamboo marshmallow sticks, and he has found success in the market, to the tune of nearly $100,000 in sales.
How did he come up with such an obscure product idea? With the help of Jungle Scout, and his pattern recognition, he noted that people purchased a high volume of marshmallow sticks, and there was still room in the market for a new entrant offering an alternative product.
Another entrepreneur took a similar approach. Using an already proven model for online courses like Udemy, Wade Floyd, founder of CoachTube, decided to sell instructional coaching videos from top coaches for football, basketball and baseball, among other sports. He was diving into an untapped market.
The lesson becomes abundantly clear when looking at his sales figures. By aiming to capture just 10% of the demand for a given product, you can build a successful lifestyle-business around one product.
Layer on a few additional products, and you can have a full-fledged business. Why reinvent the wheel?
Fish Where the Fish Are
Mercer and his software have spawned thousands of new Amazon sellers, with more added every day, inspired by his case study and instructive content.
Which led me to wonder, is it already too late to jump on the bandwagon? However, Mercer merely chuckles at the question, as if I just asked if the growing global population will leave me starved for oxygen.
The sheer size of the Amazon platform, and Amazon's own ambitions for global domination, make selling on Amazon a young and ripe opportunity. "Fish where the fish are," he believes.
As Amazon continues to grow its customer base and consumers become more reliant on free 2 day shipping as well as the ease of ecommerce, there is no telling what the ceiling for this company will be.
However, it is certain that the platform is teaming up with purchase-focused people who are ready and willing to purchase a product that meets their needs.
And the numbers verify the dominance of Amazon. Nearly half of all ecommerce purchases last year occurred on the site, and their reach is only expanding.
Mercer's three entrepreneurial lessons have steered him away from the pitfalls of the "Fail fast" mentality.
On the contrary, he has helped thousands of other Amazon entrepreneurs avoid failure by providing the predictive data, education and inspiration to find success.