Can Chen: whenever Amazon sellers want to do a TikTok shop, they find it difficult. They don't know, yeah, what will be the key to open the TikTok shop. Because the mindset of doing Amazon is quite different from the mindset of doing TikTok shop.
Shmuel: Okay. Welcome back to another episode of the Built to Scale podcast. Now here's an interesting fact. Most Amazon sellers who try TikTok shop fail within 30 days. Not because they lack budget, because they're still thinking like Amazon sellers. Today I'm sitting down with Kan Chan, an eight-figure e-commerce operator and founder of Top Tier League, a global community for TikTok shop, Amazon, and AI-driven commerce. Can tells me why TikTok runs on creators, not keywords, and why 70% of shop sales come from affiliate creators. If you're selling on Amazon, thinking about TikTok shop, or trying to figure out where AI fits in your business, this conversation will save you months. Of trial and error. Now, before we get into it, if you're finding value in these episodes, do me a favor, please like, subscribe, and drop a comment. It genuinely helps the show grow. So if you're sitting, relax. If you're at the gym, pick up the pace, because this episode is a real-time look at how fast you have to move when the platform under you starts to shift. I'm your host, Schmuel Hirschberg, and this is the Built to Scale Podcast. Listen up and let's start scaling now. I'm here with Ken Chan. He's an eight-figure e-commerce entrepreneur based in China. He's the founder of Top Tier League, a global community for TikTok shop, Amazon, and AI-driven commerce operators. and today we're gonna dive into TikTok shop. Amazon and how to scale your business. So Ken, it's it's an honor to have you on the Built to Scale podcast.
Can Chen: Yeah, I'm so glad to be here and thanks so much to help me here and I have opportunity to share some experience or tactics for everyone who will be interested in e-commerce, especially like TikTok, Amazon, AI, etc.
Shmuel: Amazing. Amazing. Yeah. And and we and and we met because we recently spoke at the affiliate world conference in Budapest and it was a great event. but I I do have to say I think you're the first of all, the first person that's coming on the Built Scale podcast that's gonna talk about TikTok So so maybe you could just give us a little bit of background about yourself,
Can Chen: Yeah, yeah, great, great. You know, I actually have been a long time Amazon seller. I started selling on Amazon first. It's like more than 10 years. It's a great time. At that time, very few sellers are actually in that space. So if you have a good product and you have some basic skills to get traffic and run the keywords, you actually get very good performance. And now, since 2020, free actually becomes a must-have sector on Amazon. have a little bit focused strips, we explore TikTok. You know, TikTok, like in terms of its users numbers, in terms of the whole interaction trend, it's great. And TikTok launch is Ecoms platform in the US. First is TikTok Shop. So we are actually among the first batch of sellers on TikTok Shop and we did very well. And then we learned the first place how to... like you say, how to scale on TikTok shop and then to get traffic, build a brand, build an audience very well. And then,
Shmuel: And how long how long
Can Chen: know, yeah.
Shmuel: w have you been in the TikTok shop world for?
Can Chen: Yeah, actually it's more than 2.5 years, maybe almost three years. You know, in the US side, it just started since 2003. So yeah, we are among the first batch of sellers on TikTok Shop.
Shmuel: Well, I r I remember when was it, a year ago, two years ago, where TikTok went down for a few days in the US, right?
Can Chen: Yeah, think it's because the US government, Yeah, it was almost banned, yeah, by because the US government, yeah, want TikTok to be isolated from the Chinese, you know, because it's parent company is by then. Yeah, they have some concern of the security things. But now the TikTok US entity, actually, it is a separate entity. And the majority shareholders now become some very big US companies like Oracle, Silverlake, et cetera. yeah, it's a separate operation for the whole US market.
Shmuel: Okay. Let's go back to the world of Amazon. So you've been in that for almost a decade and I think more than a decade. And
Can Chen: Yeah, yeah, all in.
Shmuel: everyone everyone's bought something on Amazon. Or at least I would like to think that everyone's bought something on Amazon. so what type of stuff are you selling?
Can Chen: Yeah, we mostly selling more than one category actually, like home furniture, like car accessories, and also personal care products. You know, back to like 10 years ago, whenever you have a good product, whatever category it is, you know how to drive traffic, you actually get things growing and growing. So it's a good time. Yeah, a few years ago. Maybe not now.
Shmuel: So you so you're pretty much driving the this traffic on Amazon for these products and you don't you don't really you're you're running them as an affiliate or you're running them as a third party reseller.
Can Chen: Yeah, we run it as a private label brand. So we build our own brand.
Shmuel: okay.
Can Chen: yeah, we also, we have some affiliate because we actually try, Amazon have has its own affiliate program. If you registered a affiliate, you know, like a few years ago, can earn more about 8 % of the total sales if you are a affiliate for Amazon. But now the percentage is much lower. So it is not as attractive as before. Before we run to
Shmuel: Okay.
Can Chen: Like we run brands and also we run as a failure account to try to judge traffic.
Shmuel: Yes. So you you were selling you said auto parts, household items, pretty much anything
Can Chen: Yeah.
Shmuel: that the the average Joe needs to buy. And and you are fine so t can you just take me, if you can, like just on what that process is, 'cause 'cause now all of a sudden I I realize you're not running as an affiliate. You're not you're not just buying you know, you're not just selling it as a third party reseller. You're actually it's your store. You're you're you're actually going to Amazon, you're opening up a store on on Amazon for your for your household items and stuff like that. So you have to actually source the items and then you actually have to sell the items, right?
Can Chen: Yes. Yes.
Shmuel: Okay. W did did you find that any any particular niche worked better or was more profitable than others?
Can Chen: Before, you can actually rely on some software to get a lot of research. And then you find a niche that the basic theories, if you notice the trend of some certain keywords, and then you find the product, the number of products, and also the competitive, the quality of the current products are not that competitive, that is your opportunity. So this is what we have been doing for a long time. But now... it becomes more difficult because you can imagine because Amazon has been developed for a long time. So almost in all categories, it becomes much more competitive than before. And even you find a really good ideas. Your competitors who has a better supply chain in this category or he has studied this for a long time, he can easily come up with you because you know, he has some, yeah, early, I want to tell you, he has much more traffic, he has own brand store, he has some solid base of his consumers. So it's not that easy. But still, I mean, if you are a good product manager and you have some sense for some certain category, it's still for Amazon and TikTok, I think both of them are still good platform. It just takes you more efforts than before. Not like five years ago, yeah, even five years ago. You need to invest more of your resources, your money, your energies, et cetera.
Shmuel: So you're always looking at products based on where the market's going. you know, it reminds me of like Wayne Gretzky, the great hockey player, the greatest of all time. at least in my my book, he would always say he he's going where the puck is going. He doesn't go to where the puck is, he's going where the puck is going. And that kind of vision was able to make him the great one. and I guess that's kind of like similar to like Amazon shops and Potentially TikTok shop as well. We'll get to that in a second. But perhaps like, you know, just seeing where the market's going, being able to look at the data, seeing who's searching, what the compet competition looks like, and then acting upon that. so is is that that seemed like a recipe for success five years ago, but nowadays is it is is that possible or or do people need to just you know, kind of double down on on on their niche and and say, you know, I wanna sell, you know, this type of kitchen item on Amazon and I'm gonna go with it. what can you tell us about that?
Can Chen: I think Amazon and TikTok, they are different platforms. So I may talk about it one by one.
Shmuel: Okay.
Can Chen: for Amazon, as I say, first of all, you need a good product, right? And then the difference then before is you need to fully understand the competitive status in your category because Amazon is more about keywords. When people want
Shmuel: Okay.
Can Chen: to buy your products, They have something in their mind. That's the keyword, right? They want to search something exactly in their mind. So you need to have a very detailed study of all the keywords that can be related to your items. And then to analyze the cost, because each keyword is actually just like we run Google Ads, Meta Ads. They have a certain price. They have a certain course to keep your ranking. For example, on the first page or on the second page. So you make very detailed research before you even prepare inventory. Because for Amazon now there is a model called FBA, means that Amazon help you to fulfill the products. But you need to prepare all this inventory inside FBA warehouse. That means you need to do the initial investment even before you
Shmuel: Mm-hmm.
Can Chen: do any marketing. Yeah, you need to do so before everything you should make very detailed study of like why I say how this traffic comes on, what the cost, what would be the base investment, what would be like your competitor want to invest more than you want to like hydrate your listing, et cetera. So this is what Amazon is majority traffic still comes inside Amazon. But
Shmuel: Okay.
Can Chen: yeah, but you need to do a lot of study and It's more based on keywords, based on inbound X.
Shmuel: Yeah, and what what type of investment are we talking about in terms of getting on Amazon to be relevant? Are we talking about like, you know, tens of dollars, hundreds of dollars, thousands of dollars?
Can Chen: From my understanding, especially I know a lot of sellers in the US, US-based, also in China-based or other parts. Now I think it's safe that you at least have 50k US dollar as your initial investment.
Shmuel: Per month.
Can Chen: you can pay for your inventory, for inventory
Shmuel: Okay.
Can Chen: first. And then additional advertising is based on what I say, based on your study of your research of your category. It varies a lot. For example, if you are in a category like fashion, like electronic items, the advertising cost can be huge because, know, like just headphone, right? Everyone wants to compete for the keyword of headphones or wireless headphones. So the keyword cost can be very, very expensive. But the sales volume can be huge. that's why I mean the advertising costs vary a lot based on different products.
Shmuel: Yeah, and I want to go back to that $50,000 investment. So you're saying $50,000 to put on the side, and that's gonna be your initial investment in buying product and getting you on Amazon and starting to roll out some ads. Is that right?
Can Chen: Yeah, basically it's more on the cost of your initial inventory, your product cost, your certification, your trademark.
Shmuel: Yeah.
Can Chen: Yeah, yeah, this is a basic preparation.
Shmuel: So
Can Chen: Yeah.
Shmuel: yeah, what what what I want to get at is, you know, the real scale numbers. Like what's so what does that breakdown look like? Are we talking about you probably need to get, you know, to make a to make a good run at this? If you have a fifty thousand dollar investment and that's your budget, are we talking about you you can buy twenty five thousand dollars worth of product and then have twenty five thousand dollars to play with in advertising? Or are you talking about like you you know, ten thousand dollars worth of product and You have you need forty thousand dollars to push that out to make profit. And obviously your ROAS is going to be a lot different, you know, based on those scenarios. So maybe maybe you could talk a little bit, you know, open o open the dashboard a little bit of of of what you're seeing.
Can Chen: Yeah, I would say, for example, if you are in a very competitive category, I would say for your initial investment, you may prepare almost the same money in your investment of X and the same investment of your category or your inventory. Because
Shmuel: Okay.
Can Chen: at the beginning, your product, you have no review. Your product, you don't have any review in your listing, right? And you don't have any... initial like brand awareness of your product. So actually you need to invest a lot in the beginning of X.
Shmuel: For sure.
Can Chen: Drive traffic to increase your brand awareness and then to encourage people to try a product and lead review. Amazon has its own review program called Wine. That for new product to be applying for consumers then they can leave their views on this. So you get your initial reviews. So all this
Shmuel: Okay.
Can Chen: like their investment. I would say if you the egg course at the beginning is almost the same as your product cost, etc. And then when you get more reviews, when you get more randomness, yeah, this part can be become little and little. And like in our financial report, now you can say, egg course is about 10 % of the total revenue. For example, you sell 100,000 US dollar in revenue. Your air cost is usually about 10,000 US dollar. Yeah, when I mean, when you go.
Shmuel: Okay. Okay. So so if I'm getting the numbers right, you basically need to four X your your ad ad cost, right? To to two X your your investment. Because if you're investing fifty thousand dollars and you're put you know, investing twenty-five thousand dollars into product, twenty-five thousand dollars into ad, you're down fifty thousand. If you wanna turn a two X on that, you gotta take that twenty-five thousand dollar investment in ads and turn a four X on that.
Can Chen: Yeah, yeah, almost like that. And if you want to develop more products, that's another scenario. Yeah, because people don't, when they sell one product, get it successfully, they are tending to launch more products.
Shmuel: Yeah, for sure, for sure. And the hundred thousand dollar question here, of course, is is that doable?
Can Chen: It's still doable, but it requires more researchers than before. Because now, in Amazon, there are a lot more fees than you can imagine.
Shmuel: Mm-hmm.
Can Chen: there is a long-term storage fee. If your products stay in every warehouse for a longer time, they charge you And if your products stay in the warehouse for too long time, you may need to do the liquidation. So that's why I say, yeah, you need to do a lot more research because Amazon just
Shmuel: Yeah, for sure.
Can Chen: want you to sell fast. If you're not sell fast,
Shmuel: You want to be selling like hotcakes.
Can Chen: Yeah, yeah, yeah. Yeah.
Shmuel: Awesome. So so then going over into TikTok, because you said that they were different, but you also said before we got on the call and and we were chatting a little bit, you said that most people think TikTok shop is is hard, right? But you disagree. what why is that? What why do you think it's I mean, mi is is it easy? Is it somewhere in between? But
Can Chen: Yeah. You know, a lot of sellers, especially when they're already into the Amazon space, they want to expand the business to the TikTok shop. You know, just want to expand one more channel because it looks like the channels are more diversified and it's safer. Safer and also extend their product reach. but whenever Amazon sellers want to do a TikTok shop, they find it difficult. They don't know, yeah, what will be the key to open the TikTok shop. Because the mindset of doing Amazon is quite different from the mindset of doing TikTok shop. Amazon
Shmuel: Okay. C can you unpack that?
Can Chen: as I just say, it's quite keyword focused, right? All the buyers, they buy things based on what they have in their mind. So all these things becomes a keyword. So it's a keyword driven e-commerce model. But TikTok, I'm not sure you scroll. Yeah, you watch TikTok. Do you do that every day or from time to time do you watch TikTok using a TikTok app?
Shmuel: I I per I personally don't. I'm more of an Instagram type of person.
Can Chen: Okay, yeah, but yeah, it is quite similar. TikTok is like a discovery channel. You scroll the content
Shmuel: Okay.
Can Chen: and find something interesting and you click it and probably you buy it. So it's not you have already something in your mind already to search keyword. It's more a discovery channel for brands.
Shmuel: And in terms of buying, TikTok shop makes it super easy because your your payment details are all in there. So it's pretty much like a one click or one tap purchase.
Can Chen: Yes, everything inside the app. You don't have to jump out of app and it makes the shopping actually more efficient. You see something interesting and then you click, you finish the purchase and after three days you get the product. So it's just like as natural as Amazon. So in terms of the difference, if you run a TikTok shop, you don't quite rely on keywords. You don't quite rely on X, although it can still play an important part. But the most important factor is actually we call creators. In Instagram, we call influencers. In TikTok, they call them creators because TikTok actually build a very sophisticated systems for all these creators to help sellers to sell things. When the creators post a video that based on their experience, based on a product demo, based on something they like, they can actually add a shopping car icon on the video. So when a consumer purchase something by clicking the shopping cart, the seller get the sales and then the creator actually get a commission. So that's why it drives creators to post a lot of video to help sellers sell the products. And seller...
Shmuel: Okay. So the creators are are like the affiliates basically.
Can Chen: Yes, so they call affiliate creators in TikTok shop. And because
Shmuel: Okay.
Can Chen: that way, sellers, if you want to succeed in TikTok shop, you need to do a lot of outreach. Some sellers I know, get like, they do 100 outreach per day to connect with all these creators and send samples to them to ask them to do the creation, video creation for them. Many creators are actually willing to do that because they When they do this video, they have content to post. They get their awareness. They get their followers. And most importantly, they actually get sales and make very good commission. Some creators, they can easily earn six figures per month based on the product they sell.
Shmuel: And if they're making that money, I would imagine the actual store owners are making money on top of that.
Can Chen: Definitely, definitely. Now, they will set commissions based on their profit structure or based on the promotion period. For example, they like supplement, that's a product with high margin, right? They can provide creators with about 20 % to 30 % of commission. I can see some of them even provide 40%. And for example, if your product now is under under promotion period, some seller will also offer some extra in commission rate or extra bonus to creators who promote the product well. So that's what I mean. You set different commission rate for different products and for different stage of the products. So this is how TikTok shop creators can do it. And in terms of the total revenue that generated by creators across the whole TikTok shop. sellers, can see that at least 70 % currently, 70 % of the total revenues of all TikTok sales actually related to creators.
Shmuel: Okay. Cool. And what what what what would you say is easier to go from Amazon to TikTok or TikTok to Amazon?
Can Chen: That depends on the brand, but we can see now more and more Amazon sellers, they try to extend their brands to TikTok. Because TikTok is not just a platform for sales. When you have a lot of creators that working with you, you can get your brand awareness every day. All this organic traffic. then many consumers actually they will, even they don't directly purchase on TikTok shop. Not all the consumers, they have the habits to... to do the purchase on TikTok. But they will search a keyword on Google or on Amazon and then finalize that the purchase will be finished on your DTC brand site or on Amazon. So it's a good way to get organic traffic. Yeah, to get it probably easier.
Shmuel: So what's what's the let's say let's take the Amazon owner who's looking to expand? He wants to get into another, another field, another mountaintop, as I like to always talk about, how we have different acquisition mountains, right? And they want to go over tick to TikTok, right? The the path up that hill, it's not based on keywords and stuff like that. It's it's a different, it's a different skill set, it's a different mindset. So what
Can Chen: Yeah, yeah, very different.
Shmuel: what is your you know, your your your expert tip for someone's first thirty days when they're moving from Amazon to TikTok shop.
Can Chen: Yes, as I say, 70 % of the total sales are related to creators. So first of all, they should study how they get well. They can succeed then their competitors to get more conversion from their creators. Actually, there are now in the market, there are already a lot of tools that you can use to do massive outreach in the short time. are not a problem. You can easily to get contact with all these creators. The one suggestion I may give to new sellers who want to understand is when even if you master all these tools, you need to have something in your mind that how to convince all these creators to work better with you. You know, when they work with wholehearted, yeah, they work with passion, they want to do your product in a more creative way, you can actually get more sales. So you need, this is something different. In Amazon, you only study keywords, that's everything. But in TikTok, you need to understand the mindset of your partners, the creators, Actually, they are your partners. You need to understand the mindset of them and try to convince them to help you more.
Shmuel: Interesting. Very interesting. So it's it's it's very much becomes a re a relationship game.
Can Chen: Yeah, kind of that. So some very big sellers, actually they will organize parties for their high performing creators. One big sellers in supplement called Goli, they organize a very big party. They invite all their top performing brands to host like an Oscar style party, yeah, to send out a lot of prizes. Yeah, to this hyper-request.
Shmuel: For their top for their top creators.
Can Chen: Yeah, yeah, yeah, yeah. They even have some contests. Like if you are the top creators and pass some certain criteria, you can earn like Lamborghini. Like the top price is one million in cash. Yes, this is how they try, yeah, the creators to work more. Yeah, yeah.
Shmuel: That's that's amazing. That's amazing. And and I want to shift a little bit over to AI. I know you guys are doing some great work in top tier league with AI. Maybe you could just tell us
Can Chen: Yeah.
Shmuel: a little bit how AI's changed your day-to-day probably like ev even in even within the last six months. I'm I imagine you've taken a lot of big strides. So w how how has AI shaped your your marketing plan?
Can Chen: A lot, a lot. can tell, yeah, every day we are using this, but I want to, yeah, make it short. It's like, maybe two or three parts. One is we use AI to streamline all our, management in mostly in Amazon and also in TTC. Now before everything for, for example, as I, I, I shared before it in Amazon, you need people to look. very closely to all the ad management because it costs a lot. It's a big spanning part of your whole business. Now we use AI to actually replacing like almost 95 % of all this human work. It can help to make the bigs lower, yeah, to catch a very good position of certain keywords, especially in ranking in page one. And also we use AI to identify the traffic opportunity, yeah, and then to get all this good traffic, yeah, in a lower price as well. So this is what we use already use very strongly in Amazon. We even build our own system. Yeah. If any like a figure sellers like this system, I can also share it. And also we use it for DTC as well to run meta Google, to, manage all this X in one platforms and mainly driven by tick top. sorry, made driven by AI, because we use AI to learn the behavior based on the Shopify data. Because all Shopify data actually they can have the attribution and all these things can be studied with AI. So this is how we use AI to manage X. Also, because like some very good model by like, you know, like GPT Image Tool and like Gemini, we use AI to generate content. Now, yeah, in a database, including live video and images, the quality is so good. Yeah, I...
Shmuel: You you you built an an AI image generator, right?
Can Chen: Long before, yes, we had one, but now we fully rely on GBT. It took place on our own service.
Shmuel: Okay. So what what what what was what was the story behind that?
Can Chen: You know, like three years ago, it's just like, Chessivity was not that strong at that time. We actually built our own AI image service. But, you know, all these AI models of these giants are becoming so good. We have to stop our own business. Yeah, this power business. We actually, we were taken place by all these giants. This is how... all this major AI business is doing to other like smaller softwares. Yeah, it's painful, but yeah, we learned the lesson.
Shmuel: Yeah, I w I wanted to ask you, how difficult was that to pull the plug on your own business?
Can Chen: Yeah, it's hard, but when you see they are your competitors, it's so strong and your service is not just as competitive. Yeah, to compare with them, you had to do that. And we just reassigned the team to do other things. As I say, we reassigned them to work closely more on Amazon X because it's closer and it more relies on our experience in this vertical part. Like TadgVT, they are not running Amazon X every day. So still, the S-VTs are not strong enough in this vertical parts. But now we
Shmuel: Okay.
Can Chen: can show this. Yeah. So this, we can still, yeah, it mess on this part. But like image generation, it's just something that, yeah, everyone doing it, it's very, just a more common area. In this more common area,
Shmuel: Yeah, for sure.
Can Chen: you just can't compare with the all these big models.
Shmuel: So how how long did it take you to actually make that decision? You know, from the point when you realize, hey, there's a problem here. Chat GPT, Gemini are they're just blowing us out of the water until you kind of said like, Yeah, that's it. Like we're we're stopping. We're pulling the plug on this. How long did that take?
Can Chen: I think it's about one or two months when we see everyone began to talk about that their service is so good. Yeah, and then we are seeing we can compete because in terms of user, in terms of price, everything. So it's hard, but we make it quick. It's the way that we can make the logs to be controllable. If not, yeah, the logs will keep growing.
Shmuel: Yeah, for sure. For sure. So so it took you one to two months to actually pull the plug on this to really kind of like swallow that pill and say, all right, we're we can't compete. How long did it take you to basically re re recoup your di your, you know, your losses to kind of, you know, basically get ahead of where you were going to be because you pulled that plug, right? So if you, you know. for one to two months you should have pulled the plug right. So you were a little bit behind the eight ball for for for for a month or two. But then like, you know, if in terms of your graph, how long did it take you to really start scaling up again?
Can Chen: Yeah, you know, because we are a team that have all these members, we have been working for a long time together. So when we can everyone sit down and then we talk about some latest stuff that we are facing. And then we realized that we can go on this way. We couldn't make it. Yeah, we couldn't make it. So actually when we stopped, when we think we need to stop there, actually we also had the idea that we need to do something else. And definitely saying we can do something else because we have been working for a long time and we already make some success in the e-commerce field. And of course we still have, for this project, we actually reserve a fund for our original earnings. So this fund can pay. us for the company, for this new company and for the regular operation. So when we stopped, we actually still use this fund to change the direction a little bit. Yeah,
Shmuel: Okay.
Can Chen: more our S program. We didn't have like some angel investment, but all this part of fund comes from our e-commerce, how to say that kind of e-commerce success because we have been in this area for a long time and we get or we didn't spend all the profit. So we keep the profit and then use it to fund our upcoming project.
Shmuel: So th this this fund was basically carved out when you closed down your AI business. Is that right?
Can Chen: close the AI image business. then we, yeah. And then we shifted
Shmuel: Yeah, yeah. And
Can Chen: to the X app. We still use, we're still on AI, but we just don't make image anymore. We shifted to, yeah.
Shmuel: So so what's what's the what what what's the AI business now?
Can Chen: Amazon X, Amazon X platform. Yeah, it's for AI and what we are using and also some I think a seller's already using it.
Shmuel: So basically buying things on Amazon via X.
Can Chen: Yes, you can imagine like before every Amazon sellers you need like, for example, if a figure seller especially if they, the X scale can very, they spend a lot of money every year. So first they need at least five to six person to run this X. Second, for example, for a 10 million US dollar Amazon business, they usually spend like 1 million. in Amazon X every year. So our system actually helps them to cut costs in two parts. One, to streamline all the Amazon X process and to identify the traffic opportunity and also cut bids for keywords. So their one million spending can actually save money. Like to say 10%, it becomes like 900K per year. So this is one part of saving. And second part, you don't have to rely on so many such a big act team. So before you need five or six team members, now you only need two to three. So we say cost in these two ways to help them.
Shmuel: So you're running your am all your Amazon ads through your proprietary
Can Chen: Yeah, in this AI
Shmuel: AI platform.
Can Chen: system.
Shmuel: And and when did you launch this? How long how long has this been running for now?
Can Chen: Yeah, we have been launching since almost two years. Yeah.
Shmuel: Two years. Wow. So what would what would you what would you tell a founder who's considering, you know, building something proprietary for AI right now? I mean, the the you know, there's so many different directions that you can go in. So so there's so many different use cases for it. But what I'm sure there's some, you know, hard, hard and fast rules for someone who has that experience like yourself, who's who's entered the game and built stuff and has some failures, but also some successes. What can you tell us?
Can Chen: Yeah, I think now with AI, it's easier to build than ever before. Yeah, have, when you have a cloud code, you have a code that you can build everything. Yeah. I mean, very easy. So you can see there are so many apps now every day or released by different parties because the process for building things becomes much easier. there, another thing is, yeah, your service can be easier to be copied. than ever before, not just by your competitors, also by the platform. Like if Calco knows something that you run very well and in a certain vertical area, they can just make it as a skill, right? They can just make it as a skill and then your service can just become part of the service inside Calco. So something good, something bad. As far as yeah, for my... practice right now, I think you need to do something still with strong human expertise.
Shmuel: Okay.
Can Chen: Yeah, something that's still getting updated every day or it requires a lot of human judgment. Because if you just run something purely on AI, as I say, it just easily becomes part of the skills inside Cloud Codec. you can make it as a profitable service. So this is one thing I want to mention. The other part is, if any of you are interested in physics plus AI, this is another big field as I can imagine. Because like robot, you know, in one of my events, actually in my humanoid robotic, yeah, to dance with us. Yeah, you can consider right now all this robots, they're just at the beginning of a new era. So if anyone, yeah, you have something that can connect with physical items with AI, I do think that can be a very huge area that you can explore. And just in the very near future, think, all these things can have such huge potential.
Shmuel: And and in terms of let's say going back to TikTok versus Amazon, what do what would you say is easier in terms in terms of getting started today?
Can Chen: That still depends on your skill set. If you are very familiar with content. TikTok shop is still something good because you can use pure content to get organic traffic. And Amazon, everything is paid traffic. It's based on keyword. So if you are good at content, you have a good sense of social media, you can start with TikTok. But for example, you don't want to make something very complicated. are a number guy. You're good at running ads. You're good at steady keywords. Amazon is a good one. But both of them, require good products. If you are making some product, they are crap products. Even if you sell something, they will get return. Yeah, you will get very bad review. So you can make it sustainable. So yeah, that's why I say, whatever you want to choose, it depends on skill set or your teammates skill set. Yeah, you put them together.
Shmuel: And w and w where do you see the market going in the next, let's say, twelve to twenty-four months with TikTok and Amazon ads?
Can Chen: In Amazon, can see it's still the trend, even the platform. mean, they're still trying to earn more money from sellers. It sounds strange, but it's like that way because Amazon's growth for its own traffic growth. Now it becomes a little bit flat. But as a public company, Amazon needs to grow their profit and they need to release a very beautiful financial report every quarter to its investors. So they need to earn money. If you study the financial report of Amazon, you will find that the ad income of Amazon growth almost 20 % in every quarter. It's crazy. So how this ad income comes from? They come from sellers. So you can imagine in Amazon, even in the future 12, 24 months, you need to find a smarter way to make your ad cost lower. If not, you can't make money because Amazon is trying to take more income from you than before. So this Amazon.
Shmuel: Mm-hmm.
Can Chen: Yeah, TikTok, I don't say it's easier, but if you know how to, as I say, build strong relationship with a long list of creators and you know how content can get traffic. It's a very good platform to build your brand awareness and sales at the same time.
Shmuel: Okay. Yes. So Amazon being a publicly traded company, they're always going to going to have to have that like, you know, twenty percent quarter over quarter growth. And because of that, do you see like their CPMs, the cost for for advertising, that will that will go up and come down a bit? Or is that just only gonna, you know, get more expensive?
Can Chen: Yeah, as my discussion with a lot of sellers, the average expanding as a percentage of the revenue, which is the tech cost. The tech cost is much higher in the recent two years than before. So I can see this trend, yeah, just go this way. That's why I say, so yeah, I'm running.
Shmuel: Yeah, because if if it gets too if it gets too expensive, people are not going to be able to afford. it's going to cut into their margins and in turn they'll leave the platform and it will cut into Amazon's margins again. That's why that's why I think perhaps that the cost for advertising can go up and also down, you know, i through through its cycles. But TikTok is a little bit different, right?
Can Chen: Yeah, it's different. It's more content driven and is, yeah, we're still.
Shmuel: Okay. Well, I'm ta I'm talking about just the the the the cost for advertising. Not not not how you go about it, but in just in terms of the you know, your CPMs and stuff. You know, are those prices going up constantly? What what are you seeing on the ground there?
Can Chen: Yeah, at least per my understanding of Amazon, even they don't go up, but still it reflects. I don't see the trend, the cost, the CPM, like the X-Bending, the tech cost in Amazon will go down. I don't see this trend, at least for now. Yeah, sellers are still compete with each other to get better position. When they want to get better position, yeah, they need to run more X. So yeah, this is a trend I'm seeing. Tick-tock, yeah, in terms of, you know, the total CPM is still stable for now, at least for now. Yeah.
Shmuel: Okay, cool. Very nice. Yeah, so where are we like in the grand scheme of things in terms of in terms of like advertising on on these platforms?
Can Chen: Yeah, the advertising cost is going high and the whole market, especially on these platforms, Amazon is the major platform of the global e-commerce. It becomes more competitive than before and advertising is going higher. So that's why I say it's not the golden age. I say, but if I still a good product manager and you still good at learning and learn and know how to leverage AI. Like I say, to streamline your advertising process, to streamline your product study process and to learn customer reviews quicker, you can still build a good business faster than before. I just want to make one example. Before, when you have a product listing, there will be like thousands of customer reviews. When you need to it, it takes you a long time to read one by one and do a summary and do everything. But now with AI, you just use one click and they analyze for you in a lot of different angles. So it saves you a lot of energy, time and costs. So this is what I say. It might not be the golden age in terms of competition, in terms of... the ad course, but it can also be the golden age. If you can learn the advanced tools like AI to everything, like to improve efficiency, to help you to save human
Shmuel: Mm-hmm.
Can Chen: course, et cetera. Yeah, it's a new game. It's a different game.
Shmuel: Well, yeah, we're all learning it and things have just changed so much. But definitely AI's dramatically lowered the learning curve for a lot of things. Let me ask you a quick question as we as we just come, you know, to the end of this episode. What's the one piece of conventional advice that you hear all the time and and you just roll your eyes and be like, you know, that that's garbage. I w I wouldn't recommend you do that. Focus on this.
Can Chen: Sorry, I didn't have this one right now. But I just want to say, yeah, people will have a lot of suggestion to you. Yeah, you ask a lot of advisors and they might give a lot of suggestion based on what they learn. But I want to say, especially now, because AI is actually changing a lot in all angles. So I mean, before you... Yeah, you're taking any suggestions, even from some very experienced or senior people, you can consider to chat with AI and use AI to identify if they are right or wrong. Because a lot of rules, games, experience, they might become ineffective now because of the new games happening. Yeah, mainly driven by AI. Yeah.
Shmuel: Yep. Yeah. And I'm curious, what's your AI tool of choice these days?
Can Chen: A regular like Kodesk, Cloud Code, and some Chinese like DeepSeek as well. I mainly use this AI and as I say, I review our own AI system for AIX, especially for Amazon, TikTok, and MetaGoogle.
Shmuel: Awesome. Amazing. Well, this has really been an eye-opening conversation and I just want to thank you so much for coming on. Let me just ask you as we close out, where can people find you and learn more about top tier league?
Can Chen: Yeah, thanks so much, Samir, to have me here. And I really, really feel good to share with so many audience here. Whenever you want to find me, can just log in, LinkedIn. My name is Ken Chan, C-A-N space, C-H-A-N, LinkedIn, Facebook, the same name. Or just type like top tier, T-O-P-T-I-E-R, leak, L-E-A-G-U-E.com. Yeah, you can find me there. And then we have more. Sharing,
Shmuel: Amazing. Amazing. We'll and we'll be sure to put all of those links in the show notes. So feel free to reach out to Ken. and once again, Ken, thank you so much for coming on the Build to Scale podcast and and sharing so much about Amazon and TikTok shops and and where where where the AI world is going in general. It's it's been it's been a really, really enlightening conversation with you. So thank you so much.
Can Chen: Thank you so much. It's my honor and very good to see everyone here.
Shmuel Herschberg: Thanks for listening to the Built to Scale podcast. If you enjoyed this episode, make sure to subscribe to the podcast so you never miss a conversation about what it really takes to build and scale in today's market. For more information about Built to Scale and how we help companies grow, visit builttoscale.co. If you have suggestions for future guests or topics, send us a note at podcast at builttoscale.co. We'd love to hear from you. Until next time. This is your host, Shmuel Hershberg, and remember to keep building, keep testing, and keep scaling.
Shmuel: Okay. Welcome back to another episode of the Built to Scale podcast. Now here's an interesting fact. Most Amazon sellers who try TikTok shop fail within 30 days. Not because they lack budget, because they're still thinking like Amazon sellers. Today I'm sitting down with Kan Chan, an eight-figure e-commerce operator and founder of Top Tier League, a global community for TikTok shop, Amazon, and AI-driven commerce. Can tells me why TikTok runs on creators, not keywords, and why 70% of shop sales come from affiliate creators. If you're selling on Amazon, thinking about TikTok shop, or trying to figure out where AI fits in your business, this conversation will save you months. Of trial and error. Now, before we get into it, if you're finding value in these episodes, do me a favor, please like, subscribe, and drop a comment. It genuinely helps the show grow. So if you're sitting, relax. If you're at the gym, pick up the pace, because this episode is a real-time look at how fast you have to move when the platform under you starts to shift. I'm your host, Schmuel Hirschberg, and this is the Built to Scale Podcast. Listen up and let's start scaling now. I'm here with Ken Chan. He's an eight-figure e-commerce entrepreneur based in China. He's the founder of Top Tier League, a global community for TikTok shop, Amazon, and AI-driven commerce operators. and today we're gonna dive into TikTok shop. Amazon and how to scale your business. So Ken, it's it's an honor to have you on the Built to Scale podcast.
Can Chen: Yeah, I'm so glad to be here and thanks so much to help me here and I have opportunity to share some experience or tactics for everyone who will be interested in e-commerce, especially like TikTok, Amazon, AI, etc.
Shmuel: Amazing. Amazing. Yeah. And and we and and we met because we recently spoke at the affiliate world conference in Budapest and it was a great event. but I I do have to say I think you're the first of all, the first person that's coming on the Built Scale podcast that's gonna talk about TikTok So so maybe you could just give us a little bit of background about yourself,
Can Chen: Yeah, yeah, great, great. You know, I actually have been a long time Amazon seller. I started selling on Amazon first. It's like more than 10 years. It's a great time. At that time, very few sellers are actually in that space. So if you have a good product and you have some basic skills to get traffic and run the keywords, you actually get very good performance. And now, since 2020, free actually becomes a must-have sector on Amazon. have a little bit focused strips, we explore TikTok. You know, TikTok, like in terms of its users numbers, in terms of the whole interaction trend, it's great. And TikTok launch is Ecoms platform in the US. First is TikTok Shop. So we are actually among the first batch of sellers on TikTok Shop and we did very well. And then we learned the first place how to... like you say, how to scale on TikTok shop and then to get traffic, build a brand, build an audience very well. And then,
Shmuel: And how long how long
Can Chen: know, yeah.
Shmuel: w have you been in the TikTok shop world for?
Can Chen: Yeah, actually it's more than 2.5 years, maybe almost three years. You know, in the US side, it just started since 2003. So yeah, we are among the first batch of sellers on TikTok Shop.
Shmuel: Well, I r I remember when was it, a year ago, two years ago, where TikTok went down for a few days in the US, right?
Can Chen: Yeah, think it's because the US government, Yeah, it was almost banned, yeah, by because the US government, yeah, want TikTok to be isolated from the Chinese, you know, because it's parent company is by then. Yeah, they have some concern of the security things. But now the TikTok US entity, actually, it is a separate entity. And the majority shareholders now become some very big US companies like Oracle, Silverlake, et cetera. yeah, it's a separate operation for the whole US market.
Shmuel: Okay. Let's go back to the world of Amazon. So you've been in that for almost a decade and I think more than a decade. And
Can Chen: Yeah, yeah, all in.
Shmuel: everyone everyone's bought something on Amazon. Or at least I would like to think that everyone's bought something on Amazon. so what type of stuff are you selling?
Can Chen: Yeah, we mostly selling more than one category actually, like home furniture, like car accessories, and also personal care products. You know, back to like 10 years ago, whenever you have a good product, whatever category it is, you know how to drive traffic, you actually get things growing and growing. So it's a good time. Yeah, a few years ago. Maybe not now.
Shmuel: So you so you're pretty much driving the this traffic on Amazon for these products and you don't you don't really you're you're running them as an affiliate or you're running them as a third party reseller.
Can Chen: Yeah, we run it as a private label brand. So we build our own brand.
Shmuel: okay.
Can Chen: yeah, we also, we have some affiliate because we actually try, Amazon have has its own affiliate program. If you registered a affiliate, you know, like a few years ago, can earn more about 8 % of the total sales if you are a affiliate for Amazon. But now the percentage is much lower. So it is not as attractive as before. Before we run to
Shmuel: Okay.
Can Chen: Like we run brands and also we run as a failure account to try to judge traffic.
Shmuel: Yes. So you you were selling you said auto parts, household items, pretty much anything
Can Chen: Yeah.
Shmuel: that the the average Joe needs to buy. And and you are fine so t can you just take me, if you can, like just on what that process is, 'cause 'cause now all of a sudden I I realize you're not running as an affiliate. You're not you're not just buying you know, you're not just selling it as a third party reseller. You're actually it's your store. You're you're you're actually going to Amazon, you're opening up a store on on Amazon for your for your household items and stuff like that. So you have to actually source the items and then you actually have to sell the items, right?
Can Chen: Yes. Yes.
Shmuel: Okay. W did did you find that any any particular niche worked better or was more profitable than others?
Can Chen: Before, you can actually rely on some software to get a lot of research. And then you find a niche that the basic theories, if you notice the trend of some certain keywords, and then you find the product, the number of products, and also the competitive, the quality of the current products are not that competitive, that is your opportunity. So this is what we have been doing for a long time. But now... it becomes more difficult because you can imagine because Amazon has been developed for a long time. So almost in all categories, it becomes much more competitive than before. And even you find a really good ideas. Your competitors who has a better supply chain in this category or he has studied this for a long time, he can easily come up with you because you know, he has some, yeah, early, I want to tell you, he has much more traffic, he has own brand store, he has some solid base of his consumers. So it's not that easy. But still, I mean, if you are a good product manager and you have some sense for some certain category, it's still for Amazon and TikTok, I think both of them are still good platform. It just takes you more efforts than before. Not like five years ago, yeah, even five years ago. You need to invest more of your resources, your money, your energies, et cetera.
Shmuel: So you're always looking at products based on where the market's going. you know, it reminds me of like Wayne Gretzky, the great hockey player, the greatest of all time. at least in my my book, he would always say he he's going where the puck is going. He doesn't go to where the puck is, he's going where the puck is going. And that kind of vision was able to make him the great one. and I guess that's kind of like similar to like Amazon shops and Potentially TikTok shop as well. We'll get to that in a second. But perhaps like, you know, just seeing where the market's going, being able to look at the data, seeing who's searching, what the compet competition looks like, and then acting upon that. so is is that that seemed like a recipe for success five years ago, but nowadays is it is is that possible or or do people need to just you know, kind of double down on on on their niche and and say, you know, I wanna sell, you know, this type of kitchen item on Amazon and I'm gonna go with it. what can you tell us about that?
Can Chen: I think Amazon and TikTok, they are different platforms. So I may talk about it one by one.
Shmuel: Okay.
Can Chen: for Amazon, as I say, first of all, you need a good product, right? And then the difference then before is you need to fully understand the competitive status in your category because Amazon is more about keywords. When people want
Shmuel: Okay.
Can Chen: to buy your products, They have something in their mind. That's the keyword, right? They want to search something exactly in their mind. So you need to have a very detailed study of all the keywords that can be related to your items. And then to analyze the cost, because each keyword is actually just like we run Google Ads, Meta Ads. They have a certain price. They have a certain course to keep your ranking. For example, on the first page or on the second page. So you make very detailed research before you even prepare inventory. Because for Amazon now there is a model called FBA, means that Amazon help you to fulfill the products. But you need to prepare all this inventory inside FBA warehouse. That means you need to do the initial investment even before you
Shmuel: Mm-hmm.
Can Chen: do any marketing. Yeah, you need to do so before everything you should make very detailed study of like why I say how this traffic comes on, what the cost, what would be the base investment, what would be like your competitor want to invest more than you want to like hydrate your listing, et cetera. So this is what Amazon is majority traffic still comes inside Amazon. But
Shmuel: Okay.
Can Chen: yeah, but you need to do a lot of study and It's more based on keywords, based on inbound X.
Shmuel: Yeah, and what what type of investment are we talking about in terms of getting on Amazon to be relevant? Are we talking about like, you know, tens of dollars, hundreds of dollars, thousands of dollars?
Can Chen: From my understanding, especially I know a lot of sellers in the US, US-based, also in China-based or other parts. Now I think it's safe that you at least have 50k US dollar as your initial investment.
Shmuel: Per month.
Can Chen: you can pay for your inventory, for inventory
Shmuel: Okay.
Can Chen: first. And then additional advertising is based on what I say, based on your study of your research of your category. It varies a lot. For example, if you are in a category like fashion, like electronic items, the advertising cost can be huge because, know, like just headphone, right? Everyone wants to compete for the keyword of headphones or wireless headphones. So the keyword cost can be very, very expensive. But the sales volume can be huge. that's why I mean the advertising costs vary a lot based on different products.
Shmuel: Yeah, and I want to go back to that $50,000 investment. So you're saying $50,000 to put on the side, and that's gonna be your initial investment in buying product and getting you on Amazon and starting to roll out some ads. Is that right?
Can Chen: Yeah, basically it's more on the cost of your initial inventory, your product cost, your certification, your trademark.
Shmuel: Yeah.
Can Chen: Yeah, yeah, this is a basic preparation.
Shmuel: So
Can Chen: Yeah.
Shmuel: yeah, what what what I want to get at is, you know, the real scale numbers. Like what's so what does that breakdown look like? Are we talking about you probably need to get, you know, to make a to make a good run at this? If you have a fifty thousand dollar investment and that's your budget, are we talking about you you can buy twenty five thousand dollars worth of product and then have twenty five thousand dollars to play with in advertising? Or are you talking about like you you know, ten thousand dollars worth of product and You have you need forty thousand dollars to push that out to make profit. And obviously your ROAS is going to be a lot different, you know, based on those scenarios. So maybe maybe you could talk a little bit, you know, open o open the dashboard a little bit of of of what you're seeing.
Can Chen: Yeah, I would say, for example, if you are in a very competitive category, I would say for your initial investment, you may prepare almost the same money in your investment of X and the same investment of your category or your inventory. Because
Shmuel: Okay.
Can Chen: at the beginning, your product, you have no review. Your product, you don't have any review in your listing, right? And you don't have any... initial like brand awareness of your product. So actually you need to invest a lot in the beginning of X.
Shmuel: For sure.
Can Chen: Drive traffic to increase your brand awareness and then to encourage people to try a product and lead review. Amazon has its own review program called Wine. That for new product to be applying for consumers then they can leave their views on this. So you get your initial reviews. So all this
Shmuel: Okay.
Can Chen: like their investment. I would say if you the egg course at the beginning is almost the same as your product cost, etc. And then when you get more reviews, when you get more randomness, yeah, this part can be become little and little. And like in our financial report, now you can say, egg course is about 10 % of the total revenue. For example, you sell 100,000 US dollar in revenue. Your air cost is usually about 10,000 US dollar. Yeah, when I mean, when you go.
Shmuel: Okay. Okay. So so if I'm getting the numbers right, you basically need to four X your your ad ad cost, right? To to two X your your investment. Because if you're investing fifty thousand dollars and you're put you know, investing twenty-five thousand dollars into product, twenty-five thousand dollars into ad, you're down fifty thousand. If you wanna turn a two X on that, you gotta take that twenty-five thousand dollar investment in ads and turn a four X on that.
Can Chen: Yeah, yeah, almost like that. And if you want to develop more products, that's another scenario. Yeah, because people don't, when they sell one product, get it successfully, they are tending to launch more products.
Shmuel: Yeah, for sure, for sure. And the hundred thousand dollar question here, of course, is is that doable?
Can Chen: It's still doable, but it requires more researchers than before. Because now, in Amazon, there are a lot more fees than you can imagine.
Shmuel: Mm-hmm.
Can Chen: there is a long-term storage fee. If your products stay in every warehouse for a longer time, they charge you And if your products stay in the warehouse for too long time, you may need to do the liquidation. So that's why I say, yeah, you need to do a lot more research because Amazon just
Shmuel: Yeah, for sure.
Can Chen: want you to sell fast. If you're not sell fast,
Shmuel: You want to be selling like hotcakes.
Can Chen: Yeah, yeah, yeah. Yeah.
Shmuel: Awesome. So so then going over into TikTok, because you said that they were different, but you also said before we got on the call and and we were chatting a little bit, you said that most people think TikTok shop is is hard, right? But you disagree. what why is that? What why do you think it's I mean, mi is is it easy? Is it somewhere in between? But
Can Chen: Yeah. You know, a lot of sellers, especially when they're already into the Amazon space, they want to expand the business to the TikTok shop. You know, just want to expand one more channel because it looks like the channels are more diversified and it's safer. Safer and also extend their product reach. but whenever Amazon sellers want to do a TikTok shop, they find it difficult. They don't know, yeah, what will be the key to open the TikTok shop. Because the mindset of doing Amazon is quite different from the mindset of doing TikTok shop. Amazon
Shmuel: Okay. C can you unpack that?
Can Chen: as I just say, it's quite keyword focused, right? All the buyers, they buy things based on what they have in their mind. So all these things becomes a keyword. So it's a keyword driven e-commerce model. But TikTok, I'm not sure you scroll. Yeah, you watch TikTok. Do you do that every day or from time to time do you watch TikTok using a TikTok app?
Shmuel: I I per I personally don't. I'm more of an Instagram type of person.
Can Chen: Okay, yeah, but yeah, it is quite similar. TikTok is like a discovery channel. You scroll the content
Shmuel: Okay.
Can Chen: and find something interesting and you click it and probably you buy it. So it's not you have already something in your mind already to search keyword. It's more a discovery channel for brands.
Shmuel: And in terms of buying, TikTok shop makes it super easy because your your payment details are all in there. So it's pretty much like a one click or one tap purchase.
Can Chen: Yes, everything inside the app. You don't have to jump out of app and it makes the shopping actually more efficient. You see something interesting and then you click, you finish the purchase and after three days you get the product. So it's just like as natural as Amazon. So in terms of the difference, if you run a TikTok shop, you don't quite rely on keywords. You don't quite rely on X, although it can still play an important part. But the most important factor is actually we call creators. In Instagram, we call influencers. In TikTok, they call them creators because TikTok actually build a very sophisticated systems for all these creators to help sellers to sell things. When the creators post a video that based on their experience, based on a product demo, based on something they like, they can actually add a shopping car icon on the video. So when a consumer purchase something by clicking the shopping cart, the seller get the sales and then the creator actually get a commission. So that's why it drives creators to post a lot of video to help sellers sell the products. And seller...
Shmuel: Okay. So the creators are are like the affiliates basically.
Can Chen: Yes, so they call affiliate creators in TikTok shop. And because
Shmuel: Okay.
Can Chen: that way, sellers, if you want to succeed in TikTok shop, you need to do a lot of outreach. Some sellers I know, get like, they do 100 outreach per day to connect with all these creators and send samples to them to ask them to do the creation, video creation for them. Many creators are actually willing to do that because they When they do this video, they have content to post. They get their awareness. They get their followers. And most importantly, they actually get sales and make very good commission. Some creators, they can easily earn six figures per month based on the product they sell.
Shmuel: And if they're making that money, I would imagine the actual store owners are making money on top of that.
Can Chen: Definitely, definitely. Now, they will set commissions based on their profit structure or based on the promotion period. For example, they like supplement, that's a product with high margin, right? They can provide creators with about 20 % to 30 % of commission. I can see some of them even provide 40%. And for example, if your product now is under under promotion period, some seller will also offer some extra in commission rate or extra bonus to creators who promote the product well. So that's what I mean. You set different commission rate for different products and for different stage of the products. So this is how TikTok shop creators can do it. And in terms of the total revenue that generated by creators across the whole TikTok shop. sellers, can see that at least 70 % currently, 70 % of the total revenues of all TikTok sales actually related to creators.
Shmuel: Okay. Cool. And what what what what would you say is easier to go from Amazon to TikTok or TikTok to Amazon?
Can Chen: That depends on the brand, but we can see now more and more Amazon sellers, they try to extend their brands to TikTok. Because TikTok is not just a platform for sales. When you have a lot of creators that working with you, you can get your brand awareness every day. All this organic traffic. then many consumers actually they will, even they don't directly purchase on TikTok shop. Not all the consumers, they have the habits to... to do the purchase on TikTok. But they will search a keyword on Google or on Amazon and then finalize that the purchase will be finished on your DTC brand site or on Amazon. So it's a good way to get organic traffic. Yeah, to get it probably easier.
Shmuel: So what's what's the let's say let's take the Amazon owner who's looking to expand? He wants to get into another, another field, another mountaintop, as I like to always talk about, how we have different acquisition mountains, right? And they want to go over tick to TikTok, right? The the path up that hill, it's not based on keywords and stuff like that. It's it's a different, it's a different skill set, it's a different mindset. So what
Can Chen: Yeah, yeah, very different.
Shmuel: what is your you know, your your your expert tip for someone's first thirty days when they're moving from Amazon to TikTok shop.
Can Chen: Yes, as I say, 70 % of the total sales are related to creators. So first of all, they should study how they get well. They can succeed then their competitors to get more conversion from their creators. Actually, there are now in the market, there are already a lot of tools that you can use to do massive outreach in the short time. are not a problem. You can easily to get contact with all these creators. The one suggestion I may give to new sellers who want to understand is when even if you master all these tools, you need to have something in your mind that how to convince all these creators to work better with you. You know, when they work with wholehearted, yeah, they work with passion, they want to do your product in a more creative way, you can actually get more sales. So you need, this is something different. In Amazon, you only study keywords, that's everything. But in TikTok, you need to understand the mindset of your partners, the creators, Actually, they are your partners. You need to understand the mindset of them and try to convince them to help you more.
Shmuel: Interesting. Very interesting. So it's it's it's very much becomes a re a relationship game.
Can Chen: Yeah, kind of that. So some very big sellers, actually they will organize parties for their high performing creators. One big sellers in supplement called Goli, they organize a very big party. They invite all their top performing brands to host like an Oscar style party, yeah, to send out a lot of prizes. Yeah, to this hyper-request.
Shmuel: For their top for their top creators.
Can Chen: Yeah, yeah, yeah, yeah. They even have some contests. Like if you are the top creators and pass some certain criteria, you can earn like Lamborghini. Like the top price is one million in cash. Yes, this is how they try, yeah, the creators to work more. Yeah, yeah.
Shmuel: That's that's amazing. That's amazing. And and I want to shift a little bit over to AI. I know you guys are doing some great work in top tier league with AI. Maybe you could just tell us
Can Chen: Yeah.
Shmuel: a little bit how AI's changed your day-to-day probably like ev even in even within the last six months. I'm I imagine you've taken a lot of big strides. So w how how has AI shaped your your marketing plan?
Can Chen: A lot, a lot. can tell, yeah, every day we are using this, but I want to, yeah, make it short. It's like, maybe two or three parts. One is we use AI to streamline all our, management in mostly in Amazon and also in TTC. Now before everything for, for example, as I, I, I shared before it in Amazon, you need people to look. very closely to all the ad management because it costs a lot. It's a big spanning part of your whole business. Now we use AI to actually replacing like almost 95 % of all this human work. It can help to make the bigs lower, yeah, to catch a very good position of certain keywords, especially in ranking in page one. And also we use AI to identify the traffic opportunity, yeah, and then to get all this good traffic, yeah, in a lower price as well. So this is what we use already use very strongly in Amazon. We even build our own system. Yeah. If any like a figure sellers like this system, I can also share it. And also we use it for DTC as well to run meta Google, to, manage all this X in one platforms and mainly driven by tick top. sorry, made driven by AI, because we use AI to learn the behavior based on the Shopify data. Because all Shopify data actually they can have the attribution and all these things can be studied with AI. So this is how we use AI to manage X. Also, because like some very good model by like, you know, like GPT Image Tool and like Gemini, we use AI to generate content. Now, yeah, in a database, including live video and images, the quality is so good. Yeah, I...
Shmuel: You you you built an an AI image generator, right?
Can Chen: Long before, yes, we had one, but now we fully rely on GBT. It took place on our own service.
Shmuel: Okay. So what what what what was what was the story behind that?
Can Chen: You know, like three years ago, it's just like, Chessivity was not that strong at that time. We actually built our own AI image service. But, you know, all these AI models of these giants are becoming so good. We have to stop our own business. Yeah, this power business. We actually, we were taken place by all these giants. This is how... all this major AI business is doing to other like smaller softwares. Yeah, it's painful, but yeah, we learned the lesson.
Shmuel: Yeah, I w I wanted to ask you, how difficult was that to pull the plug on your own business?
Can Chen: Yeah, it's hard, but when you see they are your competitors, it's so strong and your service is not just as competitive. Yeah, to compare with them, you had to do that. And we just reassigned the team to do other things. As I say, we reassigned them to work closely more on Amazon X because it's closer and it more relies on our experience in this vertical part. Like TadgVT, they are not running Amazon X every day. So still, the S-VTs are not strong enough in this vertical parts. But now we
Shmuel: Okay.
Can Chen: can show this. Yeah. So this, we can still, yeah, it mess on this part. But like image generation, it's just something that, yeah, everyone doing it, it's very, just a more common area. In this more common area,
Shmuel: Yeah, for sure.
Can Chen: you just can't compare with the all these big models.
Shmuel: So how how long did it take you to actually make that decision? You know, from the point when you realize, hey, there's a problem here. Chat GPT, Gemini are they're just blowing us out of the water until you kind of said like, Yeah, that's it. Like we're we're stopping. We're pulling the plug on this. How long did that take?
Can Chen: I think it's about one or two months when we see everyone began to talk about that their service is so good. Yeah, and then we are seeing we can compete because in terms of user, in terms of price, everything. So it's hard, but we make it quick. It's the way that we can make the logs to be controllable. If not, yeah, the logs will keep growing.
Shmuel: Yeah, for sure. For sure. So so it took you one to two months to actually pull the plug on this to really kind of like swallow that pill and say, all right, we're we can't compete. How long did it take you to basically re re recoup your di your, you know, your losses to kind of, you know, basically get ahead of where you were going to be because you pulled that plug, right? So if you, you know. for one to two months you should have pulled the plug right. So you were a little bit behind the eight ball for for for for a month or two. But then like, you know, if in terms of your graph, how long did it take you to really start scaling up again?
Can Chen: Yeah, you know, because we are a team that have all these members, we have been working for a long time together. So when we can everyone sit down and then we talk about some latest stuff that we are facing. And then we realized that we can go on this way. We couldn't make it. Yeah, we couldn't make it. So actually when we stopped, when we think we need to stop there, actually we also had the idea that we need to do something else. And definitely saying we can do something else because we have been working for a long time and we already make some success in the e-commerce field. And of course we still have, for this project, we actually reserve a fund for our original earnings. So this fund can pay. us for the company, for this new company and for the regular operation. So when we stopped, we actually still use this fund to change the direction a little bit. Yeah,
Shmuel: Okay.
Can Chen: more our S program. We didn't have like some angel investment, but all this part of fund comes from our e-commerce, how to say that kind of e-commerce success because we have been in this area for a long time and we get or we didn't spend all the profit. So we keep the profit and then use it to fund our upcoming project.
Shmuel: So th this this fund was basically carved out when you closed down your AI business. Is that right?
Can Chen: close the AI image business. then we, yeah. And then we shifted
Shmuel: Yeah, yeah. And
Can Chen: to the X app. We still use, we're still on AI, but we just don't make image anymore. We shifted to, yeah.
Shmuel: So so what's what's the what what what's the AI business now?
Can Chen: Amazon X, Amazon X platform. Yeah, it's for AI and what we are using and also some I think a seller's already using it.
Shmuel: So basically buying things on Amazon via X.
Can Chen: Yes, you can imagine like before every Amazon sellers you need like, for example, if a figure seller especially if they, the X scale can very, they spend a lot of money every year. So first they need at least five to six person to run this X. Second, for example, for a 10 million US dollar Amazon business, they usually spend like 1 million. in Amazon X every year. So our system actually helps them to cut costs in two parts. One, to streamline all the Amazon X process and to identify the traffic opportunity and also cut bids for keywords. So their one million spending can actually save money. Like to say 10%, it becomes like 900K per year. So this is one part of saving. And second part, you don't have to rely on so many such a big act team. So before you need five or six team members, now you only need two to three. So we say cost in these two ways to help them.
Shmuel: So you're running your am all your Amazon ads through your proprietary
Can Chen: Yeah, in this AI
Shmuel: AI platform.
Can Chen: system.
Shmuel: And and when did you launch this? How long how long has this been running for now?
Can Chen: Yeah, we have been launching since almost two years. Yeah.
Shmuel: Two years. Wow. So what would what would you what would you tell a founder who's considering, you know, building something proprietary for AI right now? I mean, the the you know, there's so many different directions that you can go in. So so there's so many different use cases for it. But what I'm sure there's some, you know, hard, hard and fast rules for someone who has that experience like yourself, who's who's entered the game and built stuff and has some failures, but also some successes. What can you tell us?
Can Chen: Yeah, I think now with AI, it's easier to build than ever before. Yeah, have, when you have a cloud code, you have a code that you can build everything. Yeah. I mean, very easy. So you can see there are so many apps now every day or released by different parties because the process for building things becomes much easier. there, another thing is, yeah, your service can be easier to be copied. than ever before, not just by your competitors, also by the platform. Like if Calco knows something that you run very well and in a certain vertical area, they can just make it as a skill, right? They can just make it as a skill and then your service can just become part of the service inside Calco. So something good, something bad. As far as yeah, for my... practice right now, I think you need to do something still with strong human expertise.
Shmuel: Okay.
Can Chen: Yeah, something that's still getting updated every day or it requires a lot of human judgment. Because if you just run something purely on AI, as I say, it just easily becomes part of the skills inside Cloud Codec. you can make it as a profitable service. So this is one thing I want to mention. The other part is, if any of you are interested in physics plus AI, this is another big field as I can imagine. Because like robot, you know, in one of my events, actually in my humanoid robotic, yeah, to dance with us. Yeah, you can consider right now all this robots, they're just at the beginning of a new era. So if anyone, yeah, you have something that can connect with physical items with AI, I do think that can be a very huge area that you can explore. And just in the very near future, think, all these things can have such huge potential.
Shmuel: And and in terms of let's say going back to TikTok versus Amazon, what do what would you say is easier in terms in terms of getting started today?
Can Chen: That still depends on your skill set. If you are very familiar with content. TikTok shop is still something good because you can use pure content to get organic traffic. And Amazon, everything is paid traffic. It's based on keyword. So if you are good at content, you have a good sense of social media, you can start with TikTok. But for example, you don't want to make something very complicated. are a number guy. You're good at running ads. You're good at steady keywords. Amazon is a good one. But both of them, require good products. If you are making some product, they are crap products. Even if you sell something, they will get return. Yeah, you will get very bad review. So you can make it sustainable. So yeah, that's why I say, whatever you want to choose, it depends on skill set or your teammates skill set. Yeah, you put them together.
Shmuel: And w and w where do you see the market going in the next, let's say, twelve to twenty-four months with TikTok and Amazon ads?
Can Chen: In Amazon, can see it's still the trend, even the platform. mean, they're still trying to earn more money from sellers. It sounds strange, but it's like that way because Amazon's growth for its own traffic growth. Now it becomes a little bit flat. But as a public company, Amazon needs to grow their profit and they need to release a very beautiful financial report every quarter to its investors. So they need to earn money. If you study the financial report of Amazon, you will find that the ad income of Amazon growth almost 20 % in every quarter. It's crazy. So how this ad income comes from? They come from sellers. So you can imagine in Amazon, even in the future 12, 24 months, you need to find a smarter way to make your ad cost lower. If not, you can't make money because Amazon is trying to take more income from you than before. So this Amazon.
Shmuel: Mm-hmm.
Can Chen: Yeah, TikTok, I don't say it's easier, but if you know how to, as I say, build strong relationship with a long list of creators and you know how content can get traffic. It's a very good platform to build your brand awareness and sales at the same time.
Shmuel: Okay. Yes. So Amazon being a publicly traded company, they're always going to going to have to have that like, you know, twenty percent quarter over quarter growth. And because of that, do you see like their CPMs, the cost for for advertising, that will that will go up and come down a bit? Or is that just only gonna, you know, get more expensive?
Can Chen: Yeah, as my discussion with a lot of sellers, the average expanding as a percentage of the revenue, which is the tech cost. The tech cost is much higher in the recent two years than before. So I can see this trend, yeah, just go this way. That's why I say, so yeah, I'm running.
Shmuel: Yeah, because if if it gets too if it gets too expensive, people are not going to be able to afford. it's going to cut into their margins and in turn they'll leave the platform and it will cut into Amazon's margins again. That's why that's why I think perhaps that the cost for advertising can go up and also down, you know, i through through its cycles. But TikTok is a little bit different, right?
Can Chen: Yeah, it's different. It's more content driven and is, yeah, we're still.
Shmuel: Okay. Well, I'm ta I'm talking about just the the the the cost for advertising. Not not not how you go about it, but in just in terms of the you know, your CPMs and stuff. You know, are those prices going up constantly? What what are you seeing on the ground there?
Can Chen: Yeah, at least per my understanding of Amazon, even they don't go up, but still it reflects. I don't see the trend, the cost, the CPM, like the X-Bending, the tech cost in Amazon will go down. I don't see this trend, at least for now. Yeah, sellers are still compete with each other to get better position. When they want to get better position, yeah, they need to run more X. So yeah, this is a trend I'm seeing. Tick-tock, yeah, in terms of, you know, the total CPM is still stable for now, at least for now. Yeah.
Shmuel: Okay, cool. Very nice. Yeah, so where are we like in the grand scheme of things in terms of in terms of like advertising on on these platforms?
Can Chen: Yeah, the advertising cost is going high and the whole market, especially on these platforms, Amazon is the major platform of the global e-commerce. It becomes more competitive than before and advertising is going higher. So that's why I say it's not the golden age. I say, but if I still a good product manager and you still good at learning and learn and know how to leverage AI. Like I say, to streamline your advertising process, to streamline your product study process and to learn customer reviews quicker, you can still build a good business faster than before. I just want to make one example. Before, when you have a product listing, there will be like thousands of customer reviews. When you need to it, it takes you a long time to read one by one and do a summary and do everything. But now with AI, you just use one click and they analyze for you in a lot of different angles. So it saves you a lot of energy, time and costs. So this is what I say. It might not be the golden age in terms of competition, in terms of... the ad course, but it can also be the golden age. If you can learn the advanced tools like AI to everything, like to improve efficiency, to help you to save human
Shmuel: Mm-hmm.
Can Chen: course, et cetera. Yeah, it's a new game. It's a different game.
Shmuel: Well, yeah, we're all learning it and things have just changed so much. But definitely AI's dramatically lowered the learning curve for a lot of things. Let me ask you a quick question as we as we just come, you know, to the end of this episode. What's the one piece of conventional advice that you hear all the time and and you just roll your eyes and be like, you know, that that's garbage. I w I wouldn't recommend you do that. Focus on this.
Can Chen: Sorry, I didn't have this one right now. But I just want to say, yeah, people will have a lot of suggestion to you. Yeah, you ask a lot of advisors and they might give a lot of suggestion based on what they learn. But I want to say, especially now, because AI is actually changing a lot in all angles. So I mean, before you... Yeah, you're taking any suggestions, even from some very experienced or senior people, you can consider to chat with AI and use AI to identify if they are right or wrong. Because a lot of rules, games, experience, they might become ineffective now because of the new games happening. Yeah, mainly driven by AI. Yeah.
Shmuel: Yep. Yeah. And I'm curious, what's your AI tool of choice these days?
Can Chen: A regular like Kodesk, Cloud Code, and some Chinese like DeepSeek as well. I mainly use this AI and as I say, I review our own AI system for AIX, especially for Amazon, TikTok, and MetaGoogle.
Shmuel: Awesome. Amazing. Well, this has really been an eye-opening conversation and I just want to thank you so much for coming on. Let me just ask you as we close out, where can people find you and learn more about top tier league?
Can Chen: Yeah, thanks so much, Samir, to have me here. And I really, really feel good to share with so many audience here. Whenever you want to find me, can just log in, LinkedIn. My name is Ken Chan, C-A-N space, C-H-A-N, LinkedIn, Facebook, the same name. Or just type like top tier, T-O-P-T-I-E-R, leak, L-E-A-G-U-E.com. Yeah, you can find me there. And then we have more. Sharing,
Shmuel: Amazing. Amazing. We'll and we'll be sure to put all of those links in the show notes. So feel free to reach out to Ken. and once again, Ken, thank you so much for coming on the Build to Scale podcast and and sharing so much about Amazon and TikTok shops and and where where where the AI world is going in general. It's it's been it's been a really, really enlightening conversation with you. So thank you so much.
Can Chen: Thank you so much. It's my honor and very good to see everyone here.
Shmuel Herschberg: Thanks for listening to the Built to Scale podcast. If you enjoyed this episode, make sure to subscribe to the podcast so you never miss a conversation about what it really takes to build and scale in today's market. For more information about Built to Scale and how we help companies grow, visit builttoscale.co. If you have suggestions for future guests or topics, send us a note at podcast at builttoscale.co. We'd love to hear from you. Until next time. This is your host, Shmuel Hershberg, and remember to keep building, keep testing, and keep scaling.
