036: How Ryan Moran Created A 7 Figure Ecommerce Business On Amazon In Just 1 Year

You are listening to the My Wife Quit Her Job podcast, where I bring in successful boot strapped business owners to teach us what strategies are working and what strategies are not. Now this isn’t one of those podcasts where we bring on famous entrepreneurs simply to celebrate their success. Instead I have them take us back to the beginning and delve deeply into the exact strategies they used earlier on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consultations every single month. For more information go to www.mywifequitherjob.com/contest and if you are interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.

Now before I begin I just wanted to give a quick shout out to this episodes sponsor 99 designs. Now originally I wasn’t going to take any sponsors at all but 99 designs caught my eye, because I suck at design. And in fact when I first started my online store back in 2007 the design for my website was terrible, and I had absolutely no idea who to turn to. Now fast forward to today 99 designs is a site where you can provide a description of anything that you want designed whether it be a logo, a webpage, a t-shirt, pretty much anything and have dozens of designers compete to deliver you the best design possible. And by best I mean that you get to choose your favorite design among dozens of submissions from a pool of over 315,000 designers.

So if you are design challenged like I am, I highly recommend that you go over to 99designs.com/mywifequit and if you use that link and tell them that Steve from mywifequitherjob.com referred you, your design listing will be bolded, highlighted, given a prominent background and featured before all regular listings so that your request stands out among all the designers. And in fact this special offer is worth 99 dollars. So if you need a logo, website, t-shirt, business card or anything designed go to www.99designs.com/mywifequit. Now onto the show.

Welcome to the my wife quit her job podcast. We will teach you how to create a business that suites your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here’s your host Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today we are going to be talking to Ryan Daniel Moran. Now Ryan initially caught my eye when I saw on his blog the FreedomFastlane.com that he recently started making over 200k per month with his ecommerce business. And what’s cool is that he achieved this fete in just a single year. Now he also runs a couple of other ecommerce businesses that each make around five figures per month as well. One of these businesses is called Zen Active Sports and it sells products for yoga enthusiast, and he also runs a nutrition and supplement company as well. And so given that this guy has actually three successful ecommerce based businesses, I’m actually very eager to hear about his story and how he managed to grow his businesses so successfully in such a short amount of time. So welcome to the show, Ryan how are you doing today man?

Ryan: Hey Steve I’m doing great, thanks so much for having me on.

Steve: Yeah so if you can just give us a brief intro. I don’t know if the audience is actually familiar with you, what do you do? What do you sell? And how exactly do you sell your items?

Ryan: Okay great. So I started as an entrepreneur about eight years ago in 2006 and I was fresh out of high school. I was 18 years old, I had to pay for college somehow, so I was in affiliate marketing for a long time. I started a blog, I started capturing an audience and I really saw that I make good money from that, but I really saw that that wasn’t going to be– it wasn’t wealth generating activity– that was cash flow activity. So I switched over to ecommerce about a year and a half ago because I wanted to build a real business that ran whether I was there or not. I wanted to have something that was real wealth and real cash flow whether I was working at a computer, if I was off Thailand riding scooters around the islands.

Steve: Mm-huh.

Ryan: And so I looked at the opportunities that were available and I saw that ecommerce was that. So a year and a half ago I made a big pivit [phonetic] and I decided to change my existing model over to an ecommerce model and I saw that and– I really believe in business. The fastest way to success is just to look at what channels already exist where buyers are hanging out. So you can cut the profit curve by a tremendous amount if you just go where the buyers are already hanging out and in the 90s and early 2000 that was eBay, if you’re in information products that’s Click bank.

For me who is just starting a new ecommerce business that was Amazon and right now that’s the hot channel and in five years that might be different, but that’s what it was at that time. And so we put our products on Amazon and got really good at that channel and just maximizing that as a channel has been the difference maker between somebody who starts a business and somebody who goes to 200k in a month and 200k a month in a year, because we got really good at that channel, and so that’s where we are now.

My businesses together do about 200k in revenue a month, that doesn’t all go in my pocket– I have partners and employees just like everybody else. But in a year I have a bigger business than I ever had in the six years that I was doing things the previous way that I was doing it. So it was a fantastic switch and you can tell I get really energetic talking about it, and I love this business model.

Steve: So I was just curious, why did you actually transition away from affiliate marketing because that actually caries the same business model, right? You can be anywhere and still be making money.

Ryan: Yeah that’s correct and I believe there’s a really good place for affiliate marketing in anybody’s business. For me you know I never set out to be one of those make money online guys Steve…

Steve: Okay.

Ryan: I didn’t see myself as one of those people, it’s not why I started in the business, that’s not why I was staying in the business and everyone that was in that industry with me, I saw– I had a crystal ball and that was the people that I was around and we all have that. We all can see where you are headed if you just look at the people that you are hanging out with. And the people that I was hanging out with in that world that were not of– they didn’t have the same commitment to making the world a better place that I wanted to have. So the products they were selling weren’t always the best, they were takers rather than givers. They just consumed money rather than created value and I believe in order to be happy and to create wealth, you create value rather than take value, and I just didn’t want to go down that same path and so I decided to make a change.

Steve: Okay and the ecommerce stores have been a lot more lucrative than your affiliate marketing efforts were.

Ryan: Much more lucrative and I’ll tell you I think part of the reason for that success Steve has been, I really believe that the longer vision of success that you can have, the more successful you will be. If you can look ten years into the future, you’ll be more successful than if you look one year into the future. If you look three months into the future I believe that you’ll sabotage your own success because you’ll be coming at it from such a sense of urgency.

So I had already made a decent amount of money, and I was able to look two years into the future, which is about my maximum threshold at that time and see where did I want this business to be in two years. And I think that made the biggest difference as far as planning that business, because I was okay waiting six months for something magical to happen. I was okay putting off taking a paycheck for a year and being able to look that far into the future I think made a big difference. So I really believe that the longer view of success you can have, the more successful you’ll eventually be.

Steve: Okay and that’s a good point a lot of people who read my blog kind of ask me about affiliate marketing verses ecommerce, and what I kind of tell them is exactly what you said. With an ecommerce store you’re kind of establishing yourself as a real company that will grow over time. Affiliate marketing you can do that too but you’re not really selling your own products, so it’s kind of hard to put your name on that exactly.

Ryan: Yeah that’s right and if I could add one more thing, you can do ecommerce without owning your own product. You can sell other people’s products and that’s just fine. I really believe that to build a wealth building business however you should be having your own unique products in the market place that you’re selling through your own channel. Ecommerce stores are great as a channel and you can sell other people’s products through that and I know people who do that and do just fine. I think if you really want to build a wealthy company then you need to be sourcing your own products and selling those through your channels.

Steve: I completely agree– that path is a little bit more difficult, but it’s totally worth it in the end because no one can take that product away from you.

Ryan: Why do you think it’s more difficult?

Steve: Well you’ve got to get the best prices sometimes that involves importing from Asia. A lot of people are afraid of that process, but it’s something that once you go through it once it’s actually not that intimidating, but initially it’s very intimidating to a lot of people.

Ryan: May I offer you a slightly different perspective?

Steve: Sure.

Ryan: Okay so the way that you mentioned my yoga products company Zen Active Sports.

Steve: Yes.

Ryan: And we looked at getting started with this business. Now the reason I started this company actually is I believe in surrounding yourself with people who complement your skills, and I’m a starter and a big picture guy. I’m not a completer or a detail guy.

Steve: Okay.

Ryan: I had a friend and an old friend who had been in touch with me for a long time and he was the opposite of me, and we always wanted to start a business together. And when I decided to pit it and make a change, I called him up and I was like Sean I’m looking to make a change are you interested in a new direction and he was. And we looked at the opportunities that were available and we just saw this wide open market in yoga. Because a lot of people were going to retail route but not a lot of people were going the online route. Now the opportunity was there for us to do the route that we talked about previously which is selling other people’s products on an ecommerce store. We actually thought that it would be easier to just create our own and to sell it through our own channels.

Now I believe from a work perspective it was easier. From the amount of work that it took to sell it, it was easier for us but from a profit perspective at the start it was more of a challenge. So from a cash flow perspective you don’t come out of the gate making money, whereas if you take somebody else’s product you just sell it as an affiliate or an with a markup you keep that 20 bucks or whatever and it goes into your pocket right away. So the cash flow can be higher but from a ease of work perspective we thought it was way easier to create our own product and this is how the process worked. We simply pulled an audience.

We went to Reddit.com, put up a poll about what you wanted to see in your yoga products. And people said they wanted them to be about three quarters– actually a little less than three quarters of an inch thick, they wanted them to be 72 inches, long and they really liked the idea of them being reversible, meaning there was a different pattern on each side. So depending on the type of yoga you are doing, you could flip it over and have a different experience. And we thought that’s interesting. We got all that information just by polling an audience on Reddit, and then we went over to alibaba.com, which just has thousands and thousands of manufacturers and we said okay who can make this? And we just put it out there and somebody bid on it and it was a good fit. We got samples and then we ordered it, and that was all the work that it came down to.

We didn’t have a website, we didn’t have a social media presence, we didn’t have a large budget, although we had one– we had some budget. We had enough to buy some inventory and that was it. The only difficult process that I would agree was “harder” and I’m using quotations with my hands I know you can’t see them, but what was harder was putting them on a boat that’s in the Pacific Ocean and waiting six weeks for it to arrive in Amazon.

Steve: So I guess you haven’t had any horror stories because we import a lot of our goods from Asia as well and we had quality control issues early on. So we’re importing lots of containers of stuff over to the States, and a lot of times you know initially when you approach your vendor, and this is just kind of a personal story we got good samples, right? But when it came time to order in bulk, we had a very bad mix of good and bad stuff and we had to kind of go back and forth with the vendor in order to clear this up. And it was only after establishing a great relationship with our vendor that we finally got quality stuff sent to us, and I was just wondering if you have those quality control issues with your…

Ryan: We’ve had it on a small basis. So we’ve had the shipment arrive and a few of them have tears in them or a few of them are peeling, and that happens. And to be honest with you, we haven’t found a good solution yet except good communication with our supplier, and making sure that they have all their systems in place and…

Steve: Okay.

Ryan: That’s about all we’ve been able to do.

Steve: Okay, so it sounds like you’ve had a pretty smooth experience with importing so far which is great.

Ryan: On the whole yes.

Steve: Okay, and have you actually visited your vendors at all or is it just strictly…

Ryan: We have a– I’ve actually never been to China which kind of disappoints me because I love to travel and I’ve never been to China and what’s wrong with me?

Steve: Actually let’s talk about the yoga mats since you kind of are willing to talk about that in great detail. So how did you actually come up with the idea of even polling someone about yoga?

Ryan: We were looking at opportunities in– well let me back up a bit because I have a supplement company as well and I had started that company first, and I had seen supplements are great from the perspective of the profit margins are high, they’re really easy to white label, and get out there really quickly, and we can talk about that process if you want as well. They’re really easy to get out quickly, but I had a strange suspicion the market was bigger outside of supplements. Because it sounded like there’s a bit of a catch to how much wealth a supplement company could be worth. The cash flow was good, but I wondered about the total wealth potential and I had a suspicion that the market was a lot bigger in something that wasn’t a consumable product.

And I live in Austin Texas and yoga is huge here, and it was just one of those spidey senses where I said I think the market is bigger here, it’s a growing trend, let’s see if we can find some opportunities where we can create profit margins based on what people are ordering. And if you’re doing a business like I just look at what is on a volume perspective, what are people consuming the most and for us that was yoga mats because…

Steve: Okay.

Ryan: People buy when they’re starting. So a lot of people say go after where there’s little competition, I said no I want to go after like the biggest volume. And I’ve stuck with that perspective in my career and it’s treated me well. Where is the most volume, and it’s a lot easier to get the small piece of a big pie and grow from there, than to try and get a big pie or a big piece of a little pie.

Steve: Right.

Ryan: It’s a lot easier, so we decided to just go after the volume and that was yoga mats, and that’s when we just decided okay I have no idea what people will want or what will differentiate us from everyone else. So let’s just ask people who do yoga and that was the idea for the poll.

Steve: So did you actually pre-sell any of these yoga mats before you placed the large order?

Ryan: Yeah that was– well not before we placed the large order no.

Steve: Okay.

Ryan: We did pre-sell it when they were on a boat somewhere, so that we could come out of the gate with sales and we can talk about that if you like because we– I did not want them to arrive at our warehouse and not have sales ready to go.

Steve: Yes.

Ryan: So we did a cool process for that but it was not before we ordered inventory.

Steve: I was just curious– what was the minimum order quality for your first shipment?

Ryan: The minimum order was 100– I think we ordered 250, 200-250.

Steve: Okay, so that’s not a whole lot actually?

Ryan: No it’s not; it was like $4000 worth of inventory.

Steve: So you did that by sea, that’s interesting.

Ryan: Correct, yeah. I envy the people who were able to airlift their product over to the States but the economies of scale just weren’t there for us.

Steve: Okay, okay so let’s talk about this plan where you pre-sold your product…

Ryan: Sure.

Steve: What was the process involved?

Ryan: I believe very strongly in having an audience that you can launch something to. I learned this in my information marketing days where if you have an audience, if you have a channel and I keep using that word, if you have a way to distribute your product out you’ll be way ahead of the competition. So we decided to build up an audience in the easiest and fastest way possible and that was just putting up some– a page on Facebook called I love yoga. We thought let’s get all the yoga people concentrated in one place and we’ll launch to that audience. So we just put up ads to people who listed yoga as one of their interests, sent them to a page called I love yoga, where we had images of people doing yoga, we had memes and videos and inspirational videos that were all about yoga that we knew people would love, and we just got people engaged in this one place.

Now there’s no special magic to Facebook, it was just we wanted to have an audience. You can do that with an email list, you could do that with affiliates, you could do that with any group of people. We just decided to do it on Facebook because we knew it would be really easy to target yoga people on Facebook. So we kept them all in one page called I love yoga, and when it came time for the the mats to be on a boat somewhere, we started just leaking information about what we were so excited about regarding the mats. So we talked about its double side, we talked about how it’s a little bit thicker than the average yoga mat because people complained about mats being too thin. We talked about why we took the extra step to make them environmentally friendly, and we just started leaking them out so the people started to get excited about this.

So when they came ready to go, when they arrived at Amazon we had a list of people who were ready to buy and that made a huge difference as far as momentum, because we came out of the gates with sales and it’s a lot easier to steer something that’s moving and making some cash flow, than it is to get something pushed. It’s like rolling a bolder– its harder to start it than it is to keep it rolling. So when we had those sales come in, and we did a big contest to give away product, to get people excited about it, people were sharing the contest and we got a lot of attention around this yoga mat being released, and it was a very successful way to get that product of the ground.

Steve: So just curious how soon did you start this page before you even decided to place an order for the product?

Ryan: It was about a month– before we placed the order for the product they were almost simultaneous.

Steve: Okay.

Ryan: So we ordered the inventory and then we started building the audience, but it was about four weeks before the product went live that we started the page.

Steve: Okay and so you started this page and you bought Facebook ads that actually drove it to that page for likes– is that how?

Ryan: That’s exactly it. So we sent Facebook traffic to the Facebook page and kept the conversation there because again we didn’t have a website, we were– I was treating this company as though it needed to be boot strapped even though my former businesses have done just fine. I was treating it like a boot strapped business.

Steve: Okay.

Ryan: I was working with a new partner, we had never done business together. So we were kind of still getting to know how each one worked. And so we decided to keep it really simple and do a Facebook campaign to a Facebook page, and build the audience there and launch directly on Facebook with– again with no existing list, no website, no nothing. We just said “what’s the fastest route to get some of these sales,” and we went straight towards that.

Steve: Okay, were you collecting emails on your Facebook page by any chance?

Ryan: We weren’t, if I were to go back and do it again, I would definitely make that change though.

Steve: Okay, and so when it came time for after you– your goods were on its way over with a boat, right? Then you just started posting just on this page, right? Which was distributed to all the people that had liked the page– is that accurate?

Ryan: I didn’t follow that say that again Steve.

Steve: So once it came time for you to start mentioning your product, you just started posting on this page right?

Ryan: That’s correct, yeah.

Steve: Okay, so you started gathering interest in your product but at that time they couldn’t buy, right?

Ryan: Right.

Steve: You know by the time the product came some people might have forgotten about it, right?

Ryan: Well we did it– so we made a first announcement of the product weeks before it was ready.

Steve: Okay.

Ryan: And we could kind of tell when it was going to arrive on our warehouse. So we knew when to time the real push for the product. So we started leaking content about the product, meaning we were still doing inspirational videos and images and all those stuff that people love to share and consume about yoga, while we would mix in the fact that we were about to release and launch a yoga mat. And if you go to Facebook.com/zenactivesports although it’s an old post, they are still up, you can scroll through and find them.

Steve: Okay, cool.

Ryan: But…

Steve: I’ll put that in the show notes.

Ryan: But if you– what we did is we just leaked certain features about the product that we liked leading up to it, and then we announced the contest. Once the product hit the shelves– once it hit our ware house, then we just decided to do a contest of win a free yoga mat. We had a bunch that we could give away and we held this contest in order to get that audience really engaged so they were interested and now they’re really engaged with this contest, and that’s when we started taking sales.

Steve: Okay and how many fans did you have at the time right at launch?

Ryan: When we launched I think it was 5 or 6000, so not many at all.

Steve: Wow! So okay that’s actually a decent amount of investment from a Facebook ad perspective, right? And how many how much did you pay per fan do you remember?

Ryan: It was maybe 13, 14 cents.

Steve: Okay, that’s not bad at all actually.

Ryan: Yeah, a few hundred bucks– maybe less than a thousand dollars to get that audience.

Steve: Okay, and once you got– you mentioned you shipped things to your ware house. Were you stocking these goods or were you using Amazon fulfill buy program?

Ryan: We now use a combination, but when we started it was completely Amazon fulfillment program.

Steve: Okay.

Ryan: So, again I– we were looking right at the profit, where is the fastest route to profit and if you’re starting an ecommerce business or any kind of business I would advise you to ask yourself that question, what is the quickest way to start cash flow coming in and then we’ll adjust later? And for us that was just utilizing the channel of Amazon and the fulfillment of Amazon, because then we could focus on nothing but sales. So what was the simplest route we could take for us to be able to focus only on sales, and from a mental clarity perspective that was a huge plus for us was using Amazon fulfillment, and we could focus completely on building the audience and getting things ready for sale. And so I would always recommend that anyone starting a business ask themselves, what is the simplest and the quickest way to profit because no one ever went broke making a profit.

Steve: So just curious you mentioned that you do a hybrid model; can you explain why you do that?

Ryan: Yeah, so we have– Amazon has those little pain in the rear, which is that if you have an oversized item then you can only hold a certain amount in their inventory and as a result we can only hold that limited supply at our inventory, because our yoga mat is a little bit larger than the average yoga mat. So we’ve qualified for being an oversized item. So we now have our product shipped to a US based warehouse and then we take them in chunks over to the Amazon warehouse. So when we need 500 mats, we order up from our existing warehouse, zip them over to Amazon.

Steve: Okay and can you mention which service you use for this US warehouse?

Ryan: I have no idea– did I mention before that I’m not a detail guy.

Steve: Okay.

Ryan: People laugh at me because they’ll often ask me details about how we did a certain thing and I go let me call Sean and I’ll tell you. So what I’m really good at is setting a strategic direction and my partner would admit that he’s miserable at that. And what I’m– what he’s really good at is figuring out the detail of where inventory is and what the estimated time for its delivery date is, and if you ask me to do that I would rather rip off my pinky toe. So one thing that I’ve learned through this process where I made a change about a year and a half ago is if you’re thinking about starting a business and you’re thinking, maybe I should get a partner the worst partners in the world are people who are just like you. The best partners in the world are people who complement your skills perfectly. We took a Kolbe test Kolbe.com and actually looked at our profile– how do we get things done to see if there was a good fit and it was a perfect fit and it’s been a perfect relationship. But never partner with people who are just like you, if you’re doing the same things and have the same responsibilities, one of you is unnecessary.

Steve: Okay, yeah that’s great advice. I work with my wife and we kind of have complementing skill sets for our business.

Ryan: That’s great.

Steve: So let’s talk about Amazon– the process of getting an arm there now…

Ryan: Sure

Steve: And actually getting some buzz. You mentioned that you drove Facebook traffic to your Amazon listing. How else– were there any other things that you did to improve sales of your Amazon listing?

Ryan: Well we treated Amazon like a channel and I mentioned that word before channel and what I mean by that is where do buyers already hang out, where they already spending money on whatever product or service that you are delivering. And every channel is a little bit different in the sense of how do you get maximum exposure in that channel. And so we just looked at Amazon what is the differentiating factor between people who are lost in obscurity and people who do really-really well, and we discovered it was two things; one it was what you showed up for certain keywords, and number two was reviews.

Steve: Okay.

Ryan: And we did a bunch of research in the Amazon’s algorithm and broke it down as detailed as we possibly could be which drove me crazy, and what me big thinker came in and focused on one thing– came in and realized was that if we focused on one specific thing that we drove home, it would pull up everything else and that one thing was reviews.

Steve: Okay.

Ryan: That’s actually what kicked off the idea to do this launch and this giveaway and this contest was I realized that there was a chicken egg issue, that Amazon’s algorithm needs reviews, it needs sales, but it’s hard to get sales about reviews, but it’s also hard to get– shoot which one did I say first. It’s hard to get one before the other– there’s was chicken egg issue here.

Steve: Right.

Ryan: So I said okay let’s be really aggressive with our review getting process, let’s go in the red if we have to in order to give product away in order to collect a certain amount of reviews, and let’s get really good at that one thing and that will pull up everything else. So we just got really laser focused on collecting reviews which we did by treating our customers amazingly well, by managing negative reviews like they were the life blood of our business, because they are– negative reviews can kill you, and we just– that gave us the idea for the contest of giving away our product in order to collect reviews because we figured that would elevate sales, that would pull sales with it, and that theory turned out to be correct, because once we had 30-50 positive reviews about our product, then other people started buying it and it was a snowball. And when you’re starting out that snowball is hugely important, because every sale is an opportunity for a review and every review brings in two more sales. So you collect those reviews as aggressively as possible because that is what is going to drive your sales. So we just looked at the algorithm, we looked at what drives sales and we got laser focused on reviews because we saw that was the driver behind those two things, and we focused in on that and that gave us the idea for the contest.

Steve: Okay, so does that imply that you gave away between 30 and 50 mats in the beginning?

Ryan: We gave away at least 50 because we knew not 100% of them are going to leave reviews, some of them are going to be jerks and take a free product and not leave a review. I think we gave away about 70 mats– I’m totally estimating but it was 70-80 mats.

Steve: Cool, so and then you kind of just asked them to leave a review but it definitely wasn’t mandatory, right?

Ryan: Well, we can’t show up at their house with a baseball bat and break their windows if they don’t leave a review…

Steve: Sure.

Ryan: And Steve if I could I would, but no we called them– we had a customer service call person call them, we put an auto responder sequence which you can do with Amazon some plug ins that’ll attach to your Amazon account, we just got aggressive with our follow up process.

Steve: Okay and then how did you kind of manage the negative reviews– you mentioned that earlier?

Ryan: Yeah so negative reviews on Amazon will kill you, I don’t know what it’s like on other channels because Amazon I’m mostly focused on, but they’ll just destroy you on Amazon. Just for example last night I was buying a gift for my girlfriend, she has cats that wake her up in the middle of the night when they’re hungry and I was like “sweetie we should get you some automatic cat feeders.” Last night I’m on Amazon and I’m reading– what I’m I doing? I’m a buyer and I’m reading reviews of every cat feeder on the market, and I looked at four and I decided not to buy three of them, because of the negative reviews that were on there and I think we all do that on Amazon, we look for what we are going to buy, we hit the one star reviews and we read those first. So we decided let’s get as few of those as possible by just having amazing customer service. If one of our customer service reps calls them and says “hey how has your experience been– is everything all right?” And they’re like “eh it’s okay.” If it’s less than really good, they’re refunded on the spot. If they leave a negative review or anything less than like a three or four star review, they’re refunded on the spot.

Steve: Okay.

Ryan: We’ll do whatever– we are very aggressive in the sense of we will do whatever it takes to make sure the customer is insanely happy, because in this world of transparency you have to and that’s a really really good thing, because the people who aren’t putting awesome products out there or doing something to make sure their customers are really happy are going to fail and we know that and so we do everything possible. We are very aggressive in customer happiness and let’s be real if somebody is not happy with your product, they’re probably not a fit for your company anyway, they’re not going to become a raving fan of your company. So let’s make it as clean and safe a parting as possible. So we just got really-really obsessed with customer happiness and that’s how we manage our reviews.

Steve: Yeah you know what’s hilarious is that we manage customer service the same way. Anytime someone complains about anything, we just let them keep the product and we also give them a full refund. And that immediately disarms them, especially when they call us really angry, as soon as we mention that you just keep the product we’ll give you a full refund, they instantly become nice and sometimes they become raving fans and…

Ryan: Yeah.

Steve: Start telling their friends about this customer service so…

Ryan: Yeah we’ve had, we had one star reviews turn into five star reviews, because we’ve gone as far as somebody who complains because their mat has a rip in it, okay refunded and a new one is sent to them for free and that’s a one star review that turns into a “Holy Moses, you just knocked my socks off with amazing service,” and that person will defend us to their grave as an awesome company. And that’s actually one of the fastest ways to get really good fans is turn upset people into really happy people.

Steve: Yeah absolutely, so just curious so when you’re selling on Amazon you don’t really have a very strong brand presence, right? You’re essentially competing for this buy box, so in terms of reputation you’re just kind of depending on the reviews that you’re getting, right?

Ryan: Okay, so there’s a little bit of confusion about the buy box.

Steve: Okay.

Ryan: And the buy box is just for products that have multiple people selling the same product.

Steve: Okay.

Ryan: If you’re selling your own product and you’re not selling it as a wholesale supplier to a bunch of different stores, then you own that buy box. Nobody can come in and steal that buy box from you unless they’re poaching your listing, which means that they’re– you’re selling your product for 30 bucks and they’re trying to sell it for 50, and they’re going to buy it from you and dropship to somebody else. But the buy box is only for people who have multiple sellers for the same product. If you have you own unique product then you have no competition from a buy box, you own the buy box because you own the product, you’re the only distributor for that product. Does that make sense Steve?

Steve: It does yeah, so the reason why I asked is maybe there is a little bit of confusion. I thought you imported existing yoga mats from overseas, but these are uniquely designed ones from scratch– is that what you’re saying?

Ryan: So, so what I– what we do– sorry I got to back up here a bit Steve. Our yoga mats were indeed unique that’s true, but originally our plan was to just white label something that was existing. So when we went out to that process and were looking at sources like Alibaba, and we were looking at what suppliers already had in stock, we weren’t all that excited about what they had in stock. So then we decided to make our own unique version, but the process was exactly the same. My supplement business– when I started we looked at a market and we- we looked at what is the market buying? Where is their volume? And we went out and found a supplier and just white labeled something exactly how it is. The only difference was it was a different company selling the exact same product, but since it has a different brand on it, it’s not a buy box competition. It’s our specific product and that is what’s ranking on Amazon and there’s no one else selling that brand, so it has its own buy box.

Steve: Okay.

Ryan: Then we went back and we created our own formula and we have by far the best supplements in the market, that’s hands down the best, and so yes we have our own unique formulas now. But when we started, we were just white labeling something, putting our own label on it and now was its own unique product even though there’s other products that are exactly the same like it. Again that’s not the case now, but when we started the fastest way to cash flow was white labeling something that was existing getting it to Amazon, it has its own unique label…

Steve: Okay.

Ryan: And now it’s unique and you get your own buy box.

Steve: Okay that clears things up because I actually looked on yoga mats on Amazon before this interview and there’s a ton of people selling yoga mats and they all look the same. And so that’s kind of why I was kind of asking you the question of how you make your products stand out. And it sounds like based on gathering a high number of reviews, it makes your product more visible and then people are more likely to see it, click on it, read the reviews and then buy from you.

Ryan: That’s exactly the case, it really comes down to where you rank on Amazon for certain keywords. And Amazon is kind of like Google in the sense of nobody quite knows their mysterious algorithm, but you have some good guesses and the biggest one is conversion rate.

Steve: Okay.

Ryan: Is when somebody sees your listing do they buy, do they see you in the listing, click on you and buy. What’s the biggest determining fact for that? Reviews. What makes people interested in clicking on a product? Reviews. What is the biggest thing that converts them into buyers? Reviews. So that’s why we focus so heavily on reviews because we knew that conversions played a factor in that listing process in the Amazon SEO if you want to call it that. And that exposure really comes from where you rank for those key words, and reviews drive that.

Steve: Okay. So how long did it take before your business actually started gaining some traction because it sounds like you gave away almost a third of your initial inventory, right?

Ryan: Yeah, yeah wow I didn’t even realize that, thank you wow.

Steve: And I know from experience that it can take months and months for something to come over from overseas, right?

Ryan: That’s correct and I can say I’m envious of the people who can airlift things over, I am envious of people who have US based manufacturers. Our economies of scale weren’t there for either of those things, they were all shipped by sea and as a result there are certain setbacks that can happen. Again this is one of those thing why you have to have a long term view of success in order to really be successful, and I would say that it took us– we took our first order on black Friday of 2013. It probably took– its only been probably until this past month that we feel like we have all our systems really dialed in or in the clear as far as what we owe verses what’s on a boat somewhere. I’d say it took at least six months with all our setbacks in order to get everything really dialed in, and feel like we are in the clear now, we are now producing profit on a regular basis.

Steve: Okay.

Ryan: Yeah in other businesses, it’s been a little bit shorter because if you have– like in supplements you have to have a US base supplier because if you order from China you’ll end up with supplements to ground a baby in it.

Steve: Yes.

Ryan: And that’s happened before by the way that’s not just a funny story, it happened.

Steve: Yeah I’ve heard the stories especially in baby formula with some harmful chemical– I can’t remember, but yeah I know what you are saying.

Ryan: Yeah, so I mean actual ground up baby. There was an article that came up that they were– anyway it’s disgusting, but our supplements are– you have to have a US based and since we have a US based supplier and we were just white labeling, the process is a lot faster. You can just ship something in three days, Amazon processes it, everyone’s happy. With ordering from China, it’s a longer process, you can have six weeks of a down time where things are just sitting in the Pacific Ocean. So our process is a little bit longer– we were okay with that because we had a long term vision of success.

Steve: Yeah that’s actually really short, six weeks is short.

Ryan: Really?

Steve: Our lead times are in order of three to four months and then there is transit time.

Ryan: Oh my.

Steve: So every time we order something, we order a crapload and then it just comes and I’m just– I was a little surprised that your minimum order quantity for a custom made product was only in the order of 200 units.

Ryan: You know, do you use Alibaba.com?

Steve: We have yes in the past.

Ryan: We just found that it was– we got people competing against each other, so we– and the biggest thing for us was communication, who’s going to be honest with us? And who’s going to communicate with us regularly? And that was a big determining factor of who we went with was a person who was very quick in their response time, and just keeping that communication line open has been very helpful as far as cutting down lead time, getting things shipped quickly, and getting things to our warehouse.

Steve: Okay. And I heard you mentioned mistakes in that first six months. Would you care to talk about any of the mistakes that you experienced?

Ryan: There’s things that I would do differently, you know I believe– sorry you are conflicting with my language here, because I like to say that there’s not mistakes, there’s just actions that didn’t work.

Steve: Yeah, actually I mean the same thing. We’re talking about the same thing, what is your…

Ryan: I know you do, it’s conflicting with my personal development beliefs here Steve. So I’d say if we had gone back and built a list from the beginning, we’d probably be a lot better off.

Steve: Okay.

Ryan: Meaning a list that we really controlled wasn’t just on Facebook we’d be a lot better off, but again we were just looking towards what is the fastest route to making sales and profit. So I don’t know that I would do it all that differently in that time period, but if we had a list now that we could email, would we be better off today, yeah probably. If we could have started with a product that wasn’t oversized, if I could’ve tweaked the product a bit so we had the same benefits but it wasn’t oversized, that would’ve saved a whole lot of headaches for us as far as inventory management. But at the same time people loved that it’s a bigger yoga mat than what’s average, so was that a mistake, I don’t know.

I think the biggest thing has just been learning how to manage our inventory flow, and we’ve made lots of mistakes as far as when do we order? How much do we order? How quickly do we order? Do we create a second product? These are all things that I would do differently if I would go back, but at the same time it would be hard for me to advice somebody to do it differently because it’s going to be different for every business, and we had no idea what the lead time was going to be in that time period. So one thing that I wish I had done differently that I do advice people to do is, I suggest ordering as much inventory as a one time as you are comfortable doing. The more that you are able to do I think the better off, because inventory for us importing from China has always been something that held us back, always something that delayed our experience. So the more that you can order at one time, I think the better.

Steve: Yes absolutely I would completely agree with that and often times you get a better cut on price too when you order more.

Ryan: That’s absolutely true, yeah.

Steve: So just curious, do you ever plan on creating your own stand alone website for this or are you going to use Amazon for now?

Ryan: We have it now ZenActiveSports.com, we don’t do a whole lot of activity there, we sell some things through a funnel but almost everything comes on Amazon. We really keep the websites for our branding perspective, so when somebody goes and Google’s our company they can see that we are real people.

Steve: I see, because I would imagine that Amazon takes away almost a third of your revenues, right?

Ryan: Well they do, but they match that by sending all of the buyers.

Steve: Right.

Ryan: So…

Steve: Sure.

Ryan: I mean if we were to pay an affiliate, we pay them 50%, right? On a digital product anyway or even if it was just 20% that would eat into our profits a decent amount. So we actually end up paying Amazon less than we pay an affiliate or less than we pay in paper clip traffic to drive into our website to make the sale. So it ends up– I mean the fees look high, but the same time if we were to compare it to any other customer acquisition strategy, it’s very favorable to go with Amazon.

Steve: Okay. Yeah where I was going with it you kind of touched on I was wondering if you actually tried to drive paper clip traffic over to your existing website to see kind of how the profits align compared to Amazon.

Ryan: Yeah that we have not tried just because again we focus really hard on maximizing a channel, and that was Amazon and playing that game so that we have that cash flow to invest in other places.

Steve: Okay, yeah fair enough. So I know a lot of my listeners out there would probably like to try your model, so what advice would you give this people. And you’ve already given a lot of great pieces of advice already, but for someone just starting out what sort of advice would you give if they want to follow your yoga mat model?

Ryan: I would say look at where there is the most volume because that is where the most opportunity is.

Steve: Okay.

Ryan: And then I would– if you’re going overseas, go to Alibaba, put up a job and look at the bids that you get and then order as much inventory as you feel comfortable doing, where there are still profit margins available, and focus really heavily on reviews and customer happiness. If you do those things, and you have a product that people actually want, you can’t do anything but succeed.

Steve: Great advice Ryan. Just curious looking back, what inventory number would you have been comfortable with with your yoga mats in the initial order?

Ryan: I would’ve been comfortable with 500 was the most that we could do with an oversized item. So I would’ve gone right for 500.

Steve: And how did you determine that number. Was it just based on feedback from the Facebook fan page, how do you determine this number?

Ryan: For us that was just a process of analyzing how long do we think it’s going to take to sell these and are we okay waiting to get that money back. And since I wasn’t in any hurry to make a profit, I wanted to build the business, I would’ve just gone for the maximum that Amazon will let me do and with an oversized item that was 500 units.

Steve: Okay, but you knew that these were going to sell right? At the back of your mind based on the research that you had done.

Ryan: Yeah totally especially with us focusing on reviews, we knew that eventually they would sell. I mean worst case scenario is that they would sell slowly.

Steve: Okay yeah. So Ryan you’ve actually given out a lot of good personal development tid bits as well, and so I’m just curious what has influenced you, have there been any books or people or speakers that have kind of really influenced your way of thinking?

Ryan: Yeah I mean what got me on the self development train was going through a really really hard time. So a couple of years ago I went through a really really difficult painful time in my life but I love Jim Rhone, I love Tony Robins, I would recommend– if you’re at home and you’re cooking or cleaning, put on Jim Rhone. Just the idea of continually growing yourself is something that really attracts me. I don’t how people succeed without focusing on developing themselves, I’m not sure how they do that, I’m not sure if that’s possible. So, yeah I’m definitely a Jim Rhone, Tony Robins nerd.

Steve: Okay, sounds good and are there any online services that you use to help your business with selling on Amazon or running your own sites that you can’t live without?

Ryan: Yeah, I get them confused– its either stitch labs or cellar labs. I always get them confused because those two companies, but there’s a service we use that integrates with our Amazon store to grab all of our customer data so that we can follow up with them.

Steve: Okay.

Ryan: And also we are able to make notes. It’s basically a CRM for our Amazon purchases…

Steve: Right.

Ryan: Our Amazon customers and I think that’s cellar labs.

Steve: Cellar labs okay, I’ll put that in the show notes.

Ryan: Cool.

Steve: So Ryan, we’ve been talking for quite a while. Where can people find you online if they have questions?

Ryan: I don’t have an– I have a podcast called freedom fast lane. It’s really-really quickly running up the iTunes store. I don’t have like any– I’ve taken a break from having any products or anything, so I have literally nothing to sell you, I wish I did. My website is FreedomFastlane.com. I keep a really awesome newsletter there and I have a podcast over on iTunes, it’s called freedom fast lane.

Steve: Awesome, hey Ryan thanks a lot for coming on, you shared a lot of great tips and I wish you all the best of success, and I will definitely go and leave your podcast a review as soon as I’m done here.

Ryan: All right, thanks so much Steve.

Steve: All right man thanks a lot Ryan.

I hope you enjoyed that episode. I think it’s pretty darn amazing to be able to generate seven figure revenue in just one year. It just goes to show that Amazon is a pretty amazing market place if you have your own branded products and we’re actually in the process of getting our products listed on Amazon as well, and I’ll keep you posted on our progress. For more information about this episode go to mywifequitherjob.com/episode36 and once again I just want to thank 99 designs for sponsoring this episode. I know a lot of you listening are waiting on the sidelines trying to get the courage to start your own online business, and I also know a lot you out there run your own business already and know that your designs could be better. Designing a website is not that intimidating anymore thanks to 99 designs, where you can get over 300,000 designers to compete for you design.

All you got to do is to list your design on their site and within 48 hours you will get dozens of deigns submissions to choose from and from there you can ask for slight tweaks and changes until you are 100% satisfied with the results. And the best part is that the price is very reasonable and there is 100% satisfaction guarantee. So go to www.99designs.com/mywifequit and get your logo, website, t-shirt, business cards or basically anything you need designed right now. And by using the 99designs.com/mywifequit link, and telling them that Steve from mywifequitherjob.com referred you, your design listing will be bolded, highlighted, given a prominent background, and featured before all regular listing so that your request stands out among all of the other designers. So if you need a logo, website, t-shirt or anything designed, go to 99designs.com/mywifequit.

And then finally, if you enjoyed listening to this podcast, please go to iTunes and leave me a review. When you write me a review it not only make me proud, but it also helps keep this podcast up in the ranks so that other people can use this information, find the show and get awesome business advice. It’s also the best way to support the show and please tell your friends because the greatest complement that you can give me is to provide a referral to someone else either in person or to share it on the web. And as an added incentive, I’m always giving away free business consultations to one lucky winner every single month. For more information about this contest, go to mywifequitherjob.com/contest.

And if you are interested in starting you own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to mywifequitherjob.com for more information and thanks for listening.

Thanks for listening to the my wife quit her job podcast where we are giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.mywifequitherjob.com.