I’ve known Lars Hundley for quite some time and what I like about the guy is that he has a tremendous amount of experience with every aspect of running an ecommerce store.
He’s been running his own business, CleanAirGardening.com for over a decade and he’s extremely open about all of his experiences including both his successes and his failures. In this podcast, he reveals the ecommerce strategies that have worked the best for his store so be sure to check it out!
Also, make sure you check out his post on How I Made A Million Dollars By Reading An Article In The Wall Street Journal
What You’ll Learn
- How Lars got started in the clean air gardening niche
- Why he transitioned from dropshipping to carrying inventory to using a fulfillment house to purchasing a gigantic warehouse facility.
- Which traffic sources convert the best for his store
- Lars’ unique way of handling customer service
- How to create your own product overseas
- How he sells on Amazon.com in conjunction with his own online store
- How he managed to secure an exclusive deal with one of his suppliers
Other Resources And Books
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 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 I’m happy to have Lars Hundley on the show. Now Lars is actually someone who I’ve kind of known for quite a while and he’s been known to look side on me in the shadows of my blog. Anyway Lars runs CleanAirGardening.com. Actually Lars owns a whole bunch of sites but the ones that we are going to be talking about today is CleanAirGardening.com which is a shop that sells lawn and gardening equipment with a spin. Everything he sells is environmentally friendly. Now that’s all fine and good but the real reason I brought Lars in today is because he’s got quite an interesting back story and he’s pretty much done everything when it comes to e-commerce.
He’s imported from overseas, he’s created his own products, he’s drop shipped, he’s sourced domestically, he’s used the fulfillment service, he’s sold on Amazon, you name it and he’s done it before. Now, he’s also started some pretty random businesses over the years. I don’t know if we’ll have time to talk about those, but I’m very curious to learn from this guy so welcome to the show Lars, how are you doing today?
Lars: Hey, thanks for having me I’m excited to be here.
Steve: Yeah so I know you’ve got a whole bunch of websites but can you just give us a quick background story and kind of have the path that you took to arrive at starting CleanAirGardeninig.com.
Lars: Sure, you know I’ve always been super into the internet and in the 90s, I was working actually as a magazine editor and during that job and then I went off to work for an internet company that was building websites for other businesses and I was their PR guy and we were building websites for other businesses and I was looking at them and all these companies were succeeding and I was thinking, man, you know, I wish I could build something for myself and do this because this seems like something to do and it turns out I got fired from that job because I’m not a very good employee. It turns out, so I – I was renting a house at that time and I had to mow my own lawn and I went to like– it was in the rows of home depot one of the big back stores and I was looking for the absolute cheapest lawn mower to mow my own lawn, and I noticed hidden away in the corner, was one of those old fashioned push little mowers, like the kind without a motor.
Steve: Yeah like the ones on the front stands right?
Lars: Yeah and so I was like, I didn’t even realize that they made those things anymore and so I bought one and I took it home and I mowed my lawn with it and it worked, and it worked pretty well. I thought man, nobody even knows about these things and I thought, hey this could be my idea and so I actually– I started searching around and I found– it turns out I was living in Border Colorado, and it turned out there was a guy importing these really nice German made push motor mower that sort of like the [inaudible] [00:04:12] of the push mowers and he was right up in Fort Collins which was only about 45 minutes away and I call them on the phone and I didn’t even have my website yet and I was like, hey you know I was thinking about building a web and the guy was actually positive about it because most people if you called some guy and you didn’t have a website yet, they would like of course treat you like whatever you don’t have any website why would I really want to talk to you.
Steve: But what year was this Lars?
Lars: This was 1998 though.
Steve: Okay long time ago.
Lars: Yeah long time ago. So I literally drove to the guy’s house and I loaded my car full of lawn mowers and I think I had– you could fit about 12 lawn mowers and of all though and wrote the guy a cheque and took them back to my house and kept them in the house and I couldn’t even accept credit cards at that time. I was taking orders over the phone because you know in 1998 it was harder to get a merchant account to sell online and this is before like there was like not even all transactions were secure. People were like doing it where you’d like post a form and they would send you an email you know, all kinds of crazy stuff like that was going on but I didn’t have a merchant account so I just had my phone number which was the cell phone on my webpage that I built with like clearance…
Steve: Clearance Works Yeah, yeah.
Lars: Yeah, one of those. It was like a one page website and people called me on the phone, I would order it and I would ship it COD by UPS and then I would get payment like you know a week and a half later.
Lars: And that was how I sold for the first you know maybe three months and I was making a little bit of money and I was like, wow, you know and then I discovered Yahoo store that you know it was a really easy to build store and they accepted you know secure transactions and then I was able to get a merchant account and then when I turn on the merchant account it really started to take off and I’m more like you, you know you still have your day job right?
Steve: I do yes.
Lars: Well I kept my day job for the first almost two years I was in business. Until I literary got so busy that I couldn’t do it anymore but the work started sort of pouring in as soon as people could order online and– but that’s where I started with, with just one push lawn mower and then I expanded into other eco-friendly stuff because that’s what I was interested in and things like compost bins and rain barrels to collect rain water for your garden, gardening tools like organic fertilizers and things like that and it just sort of grew from there and I was actually in Inc Magazines in the Inc 5000 puzzle scrolling companies like three times in I think 2009, 2010…
Steve: That’s awesome Lars.
Lars: Yeah it’s been fun.
Steve: So just curious you know back when you had the just one page website how did you get people to learn on that site?
Lars: You know, this was pre Google and the– in fact you know pre Google was a much happier time because there was Auto Vista, there was Hot Box, there was…
Steve: And Yahoo right?
Lars: There was Yahoo and traffic came like from all three sources. It was about one third, one third, one third you know where you got traffic from different places and really you would just appear on the search engines and you know I think I probably did link building back then but not really because nobody even knew that links were valuable other than…
Lars: A direct source of traffic that– you didn’t build links because it made you rank better in the search engines, but you know the search engines source to sort of found you there. I think I got a least at– and this was when it was free to still be listed in Yahoo’s directory. So I was listed in Yahoo’s directory and I got traffic that way and you know people just found me because there really weren’t that many other sites that were selling push lawn mowers. So I think one of the secrets I had a niche product that was hard to find in many places and many cities and so people would search for it online and so that was sort of the natural way that sort of built my business is that I was selling unusual things that were hard to find locally.
Steve: Okay and then how has that kind of evolved over the last, wow, like 15 years I guess more longer than that. Yeah, how do you get your– how do you get people onto your shop now today?
Lars: You know I still depend heavily on organic search.
Lars: Because a lot of my stuff is not super high margin and like I’ll give you an example, rain barrels– rain barrels used to be like a big cash cow for me and then gasoline got super expensive and UPS rates and that extrates [phonetic] they went crazy for oversize products and rain barrels basically like a big barrel of air and so when you measure it, it doesn’t weigh much when you pick it up empty, it’s you know it’s a 25 pound thing, but when you measure it they ship it by the 150 pound rate because it takes so much space in their trucks. And so suddenly and I don’t know that I used to pay you know 25 dollars to ship it can cost you like 95 dollars to ship a rain barrel now and so that category is sort of gotten where it doesn’t make a lot of financial sense to buy a rain barrel online like it did and so that’s not as popular for me anymore.
You know things change overtime but I would say– back to how I get my traffic. Most of it is still organic like a little bit adwords not really much, I’ve got an email list of all my customers that’s probably you know with adding new customers then people always subscribe over time. I think I’ve got maybe 25,000 people on my email list and so…
Steve: Mm-huh, that’s good size.
Lars: And so I’ll send out emails. I use [Inaudible] [00:10:03] contact as my email servers and a little bit of social media you know but frankly my Facebook fun page for Clean Air Gardening I don’t think I’ve posted anything to it in probably more than a year. It has not been– I’ve never found social media to be super useful in that aspect. Although I do have like a Face book page for vegetable gardening, it’s just a generic page for vegetable gardening fan.
Lars: And that one has 207,000 fans and I get huge response from that one, but basically I use it for information purposes. People don’t want to buy things when they are on Facebook, so I use that to sort you know keep people understand and that’s something I sort of do on aside for fun but I’ve not figured out a way to make money with ecommerce using Facebook at all.
Steve: So I’m just curios here, you have all this informational sites I remember you telling me, so do you actually steer people from there to your online store as well?
Lars: Well it’s funny, that has changed recently too, I originally built all those sites a long time ago, it was sort of in the early days of Google, like the early 2000, so a lot of them are more than a decade old and what I thought as an idea was well I’m making information on the site about how to grow tomatoes, how to grow cucumbers, how to grow beans like you know all the popular things, just how to grow vegetables in general. And so I ended up building all these sites about different aspects of gardening and lawn care and that sought of drove in my idea of customer and then I would link back through the Clean Air Gardening and drive traffic to my site that way, and then over time it turned out that certainly those links became valuable with Google you know where certainly that was making my SEO go crazy on Clean Air Gardening and that was ranking for all this stuff, but recently Google– they gave me a penalty for all these sites even though they’ve existed forever, it’s no secret that they were related to Clean Air Gardening, but I had too much anchor text on them or something and Google got mad and they gave me a penalty and I had to remove all the links, and that ended my penalty and so my site has come back in Google thankfully, but so now I’m sort of I have these sites, but I’m afraid to link back to my e-commerce site anymore because I don’t know if I should create the links again and no follow them or if I should not link at all, you know Google is like the one big mystery now about what they are going to punish you for and so I’m sort of…
Steve: I find that really odd because all these sites are completely related to your shop, it’s not that they are just random links, so yeah Google has just changed so much in like the last two or three years to the point where I don’t know, I’m just waiting for that kind of dust to settle a little bit because it seems like random sites are getting penalized left and right. I’m sure you not just linking for the sake of linking, everything you link I imagine is relevant right, to your shop.
Lars: Right, I think maybe the issue was it was a little bit too much anchor text because I may have over done that a little bit back in the day when it was– like it was only in the last two to three years that Google has gotten angry about too much anchor text and oh you can’t do– like before it just used to be a regular technique, it didn’t become grey hat or black hat or anything, they just changed their mind and [Inaudible] [00:13:35] on it, but what I have done in the meantime actually I’ve gone through it and I’ve added Google authorship to all those sites and claim them so that you know it’s like to tell Google hey no these are really mine and this is really me and so– but I don’t know it’s frustrating dealing with Google and depending on organic traffic, so that’s been a frustration for me.
Steve: Okay and so, given that Google– you are trying to depend less on Google, how have you made yourself a little more Google proof?
Lars: Well, you know having an email list is great although Google is trying to I think get a piece of that and make sure that, that’s not very valuable anymore too, you know the way they added tabs to Gmail and everybody has a Gmail account, I definitely saw a drop in response rates and open rates after they throw everything over in the promotions tab and that’s been frustrating. It’s like you know because your email list is yours, you know they are your customers, you’re communicating directly with these people and you know there is an unsubscribe mechanism on my newsletter, like all you have to do is click unsubscribe, they don’t want to hear from me anymore. It’s not like I’m sending out spam, I’m sending out a newsletter that theoretically people wanted to see because then why would they not have signed up for it if they didn’t want to hear from me. And so it frustrates me that they are making it hard to reach your own customers with email which is supposedly a neutral service that you know– so I don’t know. I love and hate Google.
Steve: Yeah, so here is a little tip Lars that’s kind of worked for me. If you can get them to somehow reply to one of your emails, that will instantly white list them in their inbox and they won’t be– and your emails won’t show up in the promotion folder anymore. So if you can just somehow ask a question in some of your initial emails and have them respond, that will improve your open rates and prevent that email from getting bucketed so to speak.
Lars: That’s a great idea.
Steve: Okay, so let’s talk about you have all these methods of sourcing your products, right and so can we just kind of talk about that and what’s worked the best for you like you mentioned you manufactured your own product, you drop ship and all that stuff, can you just comment on how all those different models are working for you.
Lars: Yeah you know the way I do things has sort of evolved over the years. I started out working out of my own house and I drop shipped most things to begin with, well actually I bought those lawn mowers in the beginning, and then I drop shipped them for a little bit after that and so drop shipping was my model for awhile and then it became an issue of customer service where people don’t drop ship your order fast enough and then your customers are complaining and they don’t know where the order is and you don’t know where it is either because the manufacture won’t tell you the tracking number.
And so from there I sought of went to– I found a fulfillment service which you know a fulfillment service is basically a warehouse where you ship all your stuff to this warehouse and they store it for you and when you get an order you email them and they put a label on your thing and send it for you and that way if you’re working out of your house or something like that, you don’t have to own a ware house or rent a warehouse or have an employee who is packing orders. They do it all for you and on a small scale that works pretty well up to a certain point, but what happened was I was growing really fast and suddenly I was looking at my bills for my fulfillment service, my warehouse service and I was paying like in the gardening season because gardening is a seasonal business.
So I do most of my business between like March and June is like the peak of when everybody buys everything and I certainly realized I’m getting like 30,000 dollar bills from this fulfillment service and I started thinking man you know with bills like that maybe I should buy a warehouse. And what I ended up doing I purchased a warehouse and that’s where I work now, I work out of a 15,000 square foot warehouse and I keep…
Steve: That’s huge.
Lars: I keep a lot of stuff here in the warehouse. That’s the way it sort of developed is that it sort of naturally developed that way from drop shipping to using fulfillment service to then it became more effective for me to actually have a warehouse and keep it myself. And I still– there are some products like larger products that we sell that it still makes more sense to drop ship them than to ship it to our warehouse and then re-ship it to the customer. So I still do drop ship a few products, but in general we like to ship everything ourselves because we can get everything out usually the same day when an order comes in, and so it provides a little better kind of customer service.
Steve: So can you comment on like just a different– the margin differences between drop shipping and then using a fulfillment service versus shipping stuff out yourself, I don’t know if you can– you don’t have to give exact numbers but just like the relative percentages in terms of profits.
Lars: That actually is another reason that I’ve sort of gone away from drop shipping except for very specific circumstances because the issue with drop shipping is that your margins are poor. You might only get a 10% margin or something on some item that you are drop shipping and if you get one returned well that’s wiped out the profits of ten orders. And so drop shipping it works for some people, but it does not really work that well for me anymore and so fulfillment services can work great for a limited number of products, but the issue with fulfillment services is they charge per the amount of square footage you take up in their warehouse, so every month they are charging you by how many square feet that you taking up, and then they also charge you every time they touch something.
So every time an item comes into their warehouse they are charging you an incoming fee, and then every time they ship something out for you they are charging you a fulfillment fee. And so to a certain extent if you are not that big yet it can be cheaper than running a warehouse and having a lease and all that stuff, but then when it gets to a certain tipping point then certainly it becomes less effective and more expensive.
Steve: Just curious, when you were using that fulfillment house, what percentage would you say your revenue was devoted to paying off the inventory guys?
Lars: It was not great, it was not a large amount as a percentage, but I would say like for example, it was costing me about eight to ten dollars per item having shipped out of there. Which, if you’re doing small items that you know they were not really expensive, then that would eat up most of your profit, but what I was shipping out mostly was things like push lawn mowers, which was like a $200 item, so it wasn’t that big of a deal. And then also I was using their negotiated UPS rate, which was a better UPS rate than mine anyway. So that made up a little bit for some of that eight to ten dollars per unit of touching the thing, plus there’s a little bit of expense of storing it, but what I was trying to do was minimize my storage time by just having enough stuff in there for like you know, you get 60 days’ worth of stuff so you don’t end up storing something in there for a year or you’re just paying to have it sit there.
Steve: Yeah I would imagine it’s kind of challenging, because there’s– inevitably there’s going to be stuff that doesn’t sell, right? So if you have to pay each time they have to move something or ship something back to you then it can probably add up I would imagine.
Lars: Yeah, and you know, one of the biggest challenges of a seasonal business like I have, is okay like let’s say lawn mowers, like this blown lawn mower – that’s the German-made push mower that I started out with, it turned out over time that I actually took over and became the US importer of that product and so now I am the US importer and wholesale supplier for everybody else in the country that sells that mower as well. So that’s a seasonal item, right? And it sells between March and June because that’s when everybody buys their lawn mower. Well, if I’m going to sell for example one of my peak years for that mower was something like eight containers. And there’s about 1,000 mowers per container so let’s just say about 8,000 of those lawn mowers. Well, you can imagine what it would cost me, because I had to buy them in advance, and have them all at my warehouse by March, so that I could then sell them through by the end of June. And so it was a huge capital requirement where I would have to borrow a lot of money, because it was literally so much that I couldn’t just do it out of cash flow anymore. Because when you’re on that scale and so you borrow a lot of money, and then sell them all down and then pay off your line of credit at the end of the summer, and then do it all over again.
And the worst part is, that you’re borrowing all this money in January, when nobody is buying any gardening stuff, and you got no cash flow, and it just always gives you a stomach ache to borrow the money, thinking ‘oh no’ you know, but it’s almost like– it’s like being a farmer I guess you know.
Steve: Yeah, yeah.
Lars: So that was– the worst part about being a seasonal business is that you really have to sort of plan all your purchases and be careful, because if you buy something and you buy too much of it and then you got a dud, then what do you do? Because, once it’s not sold during the spring, well you’re stuck with it for a whole another year because it’s sure not going to sell in the winter if it didn’t sell in the spring.
Steve: Right, so but I would imagine that you don’t buy large quantities unless you’re pretty confident it’s going to sell, right I would imagine. Like these mowers – you wouldn’t buy 8000 of them if you didn’t think they were going to sell. So I would imagine you’re a little bit more conservative in your purchases, right?
Lars: Absolutely. Although, when– the exception to that would be though that we’ve also sort of had things manufactured for us, and you sort of have to take a little bit of a chance for that, because there’s minimum order quantities when you have something manufactured, and you don’t know for sure that it’s going to sell, because you’ve never sold it before. And so I have that sort of a risky way to do it, but fortunately I haven’t been stuck with too many duds doing that.
Steve: Let’s talk about the manufacturing process, how did you find someone to manufacture your goods for you?
Lars: What I have manufactured is a compost bin. It’s called the spin bin, and it’s a tumbling compost bin. And the reason why I decided to have one manufactured is because we’d been selling other people’s compost bins, and we actually imported one for a while from Australia, and that product is no longer available to us. And we sort of saw that that was the direction it was going, that we were going to– that it wasn’t going to be available anymore, and so we thought ‘well, maybe we should make our own’ because, I’m interested in composting, and so we sort of sketched it out, and then we found a guy at a local company that’s plastics– his injection molding company, where they make injection molded plastics, and they have a guy on staff that all he does is make card drawings to make your mold for your product.
Mostly, they make their own stuff, but they allowed us to, you know, to pay by the hour and use this guy to make help make our card drawing. And so he made our card drawing, and then they helped us from there. This was a local company here in Dallas, and then they helped us get our mold manufactured because the biggest expense when you’re getting a plastic product manufactured is making the mold, because the mold is made out of solid steel. And since this was a compost bin, it’s huge like, the parts of it are huge, so it requires a giant hunk of steel. It’s like it’s heavier than a car, our mold.
Steve: Really? Wow, okay.
Lars: And it ended up costing– the mold is actually two molds, because there’s one mold for the lid, and one mold for the piece that turns into four pieces that are assembled together that make the composter. And it was something like $80,000 to make the mold for this compost bin, but we felt– at the time we were selling so many composters that I was sure about the design because, you know, we designed it, and I felt confident that it was going to work, but it was a big risk, because it was a lot of money. We took it, and then we actually– the mold we ended up getting made in China, because there’s tool makers in China that will make your mold. They take the card drawing that the guy– the local guy made, and they make that giant hunk of steel that then based on the card drawing, that’s going to make– punch out each part of your compost bin, and then they ship the mold to us in the United States in a container, and then we have that mold at the manufacturer here in Dallas and then we get it manufactured here locally, because it turns out getting things made out of plastic– injection-molded plastic is pretty much a commodity. It’s based sort of a lot on the price of the oil because plastic is like a petroleum-based product or something like that, and so it doesn’t matter if a machine is stamping them out here or it’s stamping them out in China, it’s about the same cost, and we really wanted to get it made here in the USA– that was important to us to do if we could, and we were able to.
And so we get that product molded here in the USA, and then it’s molded– it’s a place about 15 miles from here. They make them, and then they send a truckload of them over to our warehouse at a time, and then we store them here and then as the orders come in, we ship them out from here.
Steve: So how did you find the mold guys in China? Just curious.
Lars: Well, we were lucky on that, because, since we were working with this injection molding company, they had already done business with this company, and so they knew that they were legitimate. And because, when you start just looking around on Alibaba or something like that, it’s tough if you don’t know if you’ve got somebody reputable. But they had worked with them in the past, and they had made good molds and– because we did have it priced out to have the mold made here in the USA, but it was like incredibly more expensive. And the mold turned out great, there was no problem with it, so it was– they were good.
Steve: So in a way just listening to what you’ve told me, you kind of already knew that these were going to sell, it was a pretty safe bet, right? Some guy– some other one of your companies is going in the direction of not selling their compost bins, and you know they’ll sell like hot cakes, so by designing something using the principles that you know since you compost all the time, it was a really safe bet I think – at least that’s what it sounds like to me.
Lars: Yeah, I wouldn’t have taken a risk that big for just a completely unknown product that I didn’t know how well it was selling, and you know we forecast out how long it would take us to pay off the mold, and our forecast turned out to be fairly accurate too. And so, it was a calculated risk.
Steve: Okay. So I wanted to talk a little bit about marketing. So I know you’ve tried a bunch of different things in that regard. So if you could just comment and I’m just going to pick a couple of things here; you mentioned you hired a publicist in the past, you’ve been in magazines, you’ve had your own catalogue, you’ve been on TV and radio. What has kind of worked the best for you and what has not worked for you?
Lars: Well, you know, originally I thought the reason that you wanted to have me on the show is because you did like a request on this ecommerce forum asking for people, like the mistakes they’ve made, and then everybody chimed in the mistakes that they’ve made and my answer had so many mistakes that you couldn’t even include me in your blog post because there were so many mistakes that it would have just hogged the whole blog post. And so I figured maybe the reason you wanted me on your podcast was because it was going to be a podcast about how ‘look you can make this many mistakes, and be this big of a moron, and still remain in business for 15 years.’ I figured that was the real reason that you wanted me to be on the podcast.
I’ve done all kind of ways to market, and what I started out with you know my background is in journalism, and I have a master’s degree in international journalism, and I was a magazine editor before I sort of moved on to the internet. And so when I first started out, I was writing all my own product descriptions, because I was a writer, and I was doing my own PR, and I was just doing, you know, a little bit of basic PR and sending out a few press releases. I got picked up some places and some pretty big ones. I got– Inc. magazine wrote about me once when I was still working out of my house, and they did like an article about me, and then I was…
Steve: How did you get that? You put out press releases using a press-release service, or?
Lars: No, I was actually– I was putting it in the mail and sending them out myself. And so, I was sort of taking a real specific approach to it since my background was in journalism. I sort of knew what editors wanted to see when they see a press release, and so I’d sort of approached it that way, and I was getting good results. And so– in fact the Inc. magazine thing, the way I got that was somebody– it’s so long ago, it’s more than 10 years ago, and somebody let me know that Inc. Magazine was doing a thing about people working out of their house, or something like that, and so I sent an email to the writer, because they were looking for people, and I pitched them and they went for it and that’s how I got included in the article. And once I was in Inc. Magazine, that led to a lot of other coverage because the way it works with the media is, a lot of them are just reading other media, and they see like if you appear in the New York Times, then suddenly the other Dallas Morning News, it’s like ‘Hey, well this guy is from Dallas, let’s write about him too.’ And sort of press coverage leads to more press coverage a lot, and so– and also at the time, eco friendly stuff was really hot, like right now it’s not as hot, but you know like that was when Al Gore’s movie came out and you know…
Lars: Everybody was interested in that, and so it was a really pitch, and so I was picking up a lot of coverage but it was funny because after that I thought well, I’ve had really good luck with this, I’m going to use a PR service. And I’m just going to hire somebody to do it, because then they’ll spend all their time doing it, and I’ll get even more coverage. But it was a total failure. It turned out that, you know the personal touch that I was doing it and also the aspect that I as the business owner was reaching out myself, I think was a lot more effective at getting coverage than some PR person doing it for you. And so I spent a ton of money on that, doing it for a year, and got like no return, it was a complete failure and I regret– I wish I had that money back.
Steve: Okay. What about television and radio, you said you’ve been on some television spots. Were they– did they work out for you? And how did you get those spots?
Lars: Well, a lot of those sort of landed in my lap, like for example you know I had some products on the Today Show and also on Good Morning America. And what happened was that some– one of the show’s segment producers was looking for– they were going to do a segment on like eco-friendly stuff for your yard. And so they were lining up a bunch of different products for the guy to talk about, and basically, they found me with some kind of a search-engine search, and they were like ‘Hey’ you know and we talked and I suggested a product and they were like, ‘Okay, great. Send it to us.’ And so I overnighted a product and it ended up on the Today Show and then I got a bunch of traffic that day. It didn’t really convert really well into sales, but it was great because after that, it’s a lot of awareness you know– you were on the Today Show?
Steve: Yeah, I had the– we got a lot of sales from that, that’s why I was curious what your experience was.
Lars: Mine was a segment where they had products from probably– it’s probably seven different products, that were all in a category, and mine was– it was a compost bin actually, for the Today Show, and I think I probably sold maybe 20 compost bins or something over a period of two days after that, so it was not like a– but it was a big price point item, and it wasn’t– that wasn’t my specific audience. And so no, the TV shows have not been huge for me.
And then radio, I’ve done– in fact, there’s a radio show that’s relatively famous here in Texas, it’s called the Neil Sperry gardening show. And this guy has been doing that show for decades. He’s an older guy– this is actually a radio advertizing story and not a radio PR story, but I decided, ‘Ah, I know what I’ll do is I’ll sponsor Neil Sperry and then I can sell much stuff to Texas gardeners and it’ll be great.’ And so, this was in the early 2000’s, and what I realized after spending a lot of money sponsoring his show for six weeks, is that only old people listen to the Neil Sperry gardening show.
Lars: And none of them buy anything on the internet, and the only time people listen to radio mostly is when they are in their car or something where they’re nowhere near their computer anyway. And so I think I got zero sales from sponsoring the Neil Sperry show and it was– that was one of my biggest marketing failures. So I sort of learnt my lesson on, you don’t want to just start spending money on advertizing and writing big checks, because you never know if it’s going to work. It’s better to test small.
Steve: So what has worked the best for you? Just curious.
Lars: You know, I would say adwords has worked well you know it’s measurable although adwords has not worked so well for me in the gardening niche because it’s a relatively low margin business and I’ve got high shipping costs so it’s a little bit difficult. But adword has worked for me doing PR personally for myself has worked for me as far as marketing. Having my own my own email list has been effective for me to drive sales. Those have been pretty successful methods for me.
Steve: So Lars I was actually trying to lead you to the next topic which is Amazon. I know you have strong opinions on Amazon and you do sell some of your products on there. So how do you kind of – how do you kind of sell on the Amazon versus on your own site? How do you kind of incorporate all that stuff together?
Lars: Amazon is sort of my ultimate frenemy [phonetic] and I feel like you know I’m an Amazon prime member and I’ll be honest I look on Amazon when I’m going to buy stuff and I hate myself for it, because you know as a competitor to Amazon you know I detest Amazon, but as a consumer I enjoy buying from them and I like prime because you think oh there is a prime thing, I know I’m going to get it in two days. I don’t have to think about it and I order it. But I also use Amazon as a sales champ and so specifically I don’t have all my products listed on Amazon. I list a few things and I use Amazon in a specific way.
Like with some products you know just products that I sell as an ecommerce retailer I don’t sell that on the retailer, I don’t sell that on the Amazon because you are competing for the buy button with all these other ecommerce retailers or you are competing with– for the buy button with Amazon itself and you know so your margins just quickly evaporate because you know you’ve got a product say that it cost you 75 dollars and somebody is selling it for 100 dollars on Amazon well then that means they are paying 15% to Amazon for the privilege of selling it there and they still have to ship it.
And so what did all your profit go? You know like you’ve sold something but you haven’t made any money. But so the way we use Amazon is we use it to liquidate data inventory because– so like if we bought a product and it hasn’t sold for us and it has been sitting here at the warehouse, then we can sell it cheap and we can usually recoup either make a tiny profit on it or only lose a little bit of money and we get it out our ware house as opposed to having just stand inventory that’s just – it’s just cash that’s tied up in the inventory that doesn’t sell at all that you know that fills up your warehouse and it’s not going to sell.
And so that’s one way that we sort of use Amazons is to give out our dead inventory but also one way that you can use Amazon profitably is if you have a product that you have an exclusive on, and for example that brown push lawn mower whether you as importer of that product and so we import it and for a while we were selling to Amazon at whole sale and they would buy and they would say okay we want to place some order for 100 lawn mowers and then you put them on palettes and Amazon as the truck come pick up and it goes to the Amazon warehouse and then Amazon will sell it indirectly.
But then we realized that well it’s more profitable for us to not sell to Amazon, but instead to sell on Amazon and you can either sell on Amazon using fulfilled by Amazon where you’re packing it up and shipping it to Amazon and then whenever Amazon or whenever you get an order on Amazon, Amazon is shipping out the order for you and they charge you a fulfillment cost and storage cost you know so you can control your profits by sort of calculating in advance what your fulfillment costs are going to be.
And the advantage to that is that then it will appear as an Amazon prime item and so people that like to get their items overnight or in two days all the Amazon prime members love to buy stuff that’s marked time and so that’s a good reason to use fulfilled by Amazon. But then we also sell stuff on Amazon where we’re shipping it from our own warehouse and so you will get the buy button for a thing and then if you are– if you spend a lot of time on Amazon you could see that some stuff is sold directly from– you are buying it from Amazon and some of it you are buying it from an Amazon seller and that’s– I am an Amazon seller.
So I’m doing that weird combination of selling wholesale to Amazon, selling on Amazon, selling fulfill by Amazon and we sort of calculate out with all our products so which one makes the most financial sense for it’s going to maximize the number of sales versus the amount of profit and all that, then we sort of tweak it that way. And the safest thing with Amazon is to have an exclusive product because then you are not just constantly competing to get the buy button by lowering your price, and lowering your price, and lowering your price because that is a race to the bottom because your cash cow product is somebody else’s loss later or somebody else’s clearance item.
And it’s really frustrating to see a product that’s been profitable for year for years suddenly become unprofitable because now it’s going on Amazon. You look at the price on Amazon and let’s say your whole sale cost and you think well how is somebody possibly making money on that? But– and you don’t know and you can’t figure it out and it must be because they are just liquidating because I liquidate products on Amazon I guess some probably punishing some poor guy that’s trying to sell at full price someplace else.
Steve: Right, so just curious, how did you get that exclusive deal? Is that just a pure relationship thing that you build over the years with that company?
Lars: Yeah, the way it happened actually it was overtime I became the biggest blown dealer and what happened was that the old US importer did something that made blown mad. They started to manufacture their own lawn mower and blown got angry about that and cut them off and so that became my opportunity because it turns out also that I was a German major as undergraduate and so I speak German.
So I immediately got on the phone and called them, and sent them faxes and said hey you know I don’t know if you guys know or not but I’m your biggest blown dealer in the US and I have been all along and I would like to go ahead and take over this importing thing if its available and they were like well yeah, it turns out it is available. And so I had borrowed some money and I knew approximately what I could sell just knowing my own sales and knowing that I was the biggest dealer. And so I placed an order and got into it that way, so that one sort of fell into my lap. And one of my other products that I imported also sort of fell into my lap the same way while I was buying it from a guy and then he sort of ran into financial problems and didn’t pay the supplier he had imported the thing and so they wouldn’t sell to him anymore.
And I realized he was not admitting to anybody why he couldn’t get it and I couldn’t figure out what the problem was, and I realized what had happened and they said oh yeah we’re not selling to that guy anymore, we are looking for an importer and so I started importing that one too. So it’s sort of been an opportunistic kind of thing. And then other products once I got the opportunity with my first two, then you sort of know what to look for and once you’ve had experience with it, then it’s easier to sort of talk somebody into it if you find a product sort of overseas. Because I have also been to trade shows overseas like there is a big gardening show in Germany and I went over there, I met with people looking for people– looking for cool European things to import, and you can meet people at trade shows and its sort of work out exclusives that way is another thing you can do.
Steve: Okay, interesting. So one thing I kind of ask everyone is you know if you were to start all over again, what path would you have taken? Let’s say you wanted to go into this gardening niche again, how would you– what advice would you give to someone who is just starting out?
Lars: You know, my advice is almost to do exactly the opposite of what I do because I have got a shiny object syndrome where I’m constantly doing different stuff and all my efforts are diffused. I’m doing a little bit of this, a little bit of that and hop from this to that and maybe it’s just because I’m way too ADD. But I feel like if you are going to go into anything the idea is, if you are going to get the most success is to find one product or one product category and just really focus on it and be the person that knows the most about that product line or wherever it is that you are interested in and focus on one thing and don’t try to do everything at once. And maybe only focus on one traffic source. Don’t try to like oh I’m going to do my email, I’m going to build an email list and build a social media following and do all that. You diffuse all your efforts and then you are only selling two things a week and it never takes off.
Focus I think would be the thing that I would do differently and really I guess sort of that’s what I did. I started out by chance, I had one product which was one push miller and that’s all I was doing and I think maybe that was why I succeeded and it sort of built from there. And I would say isn’t that sort of what you have done too? I mean you started out with one thing and then you ended up with a blog teaching other people and now you’ve got a podcast and you sort of– you didn’t do that all at once, you started with one thing at a time. Didn’t you?
Steve: Yeah absolutely, in fact we only stated out with one product category just like you did and we just graduated and have expanded over time. That’s great advice Lars. We’ve already been talking for about 50 minutes, so thanks a lot for your time. If anyone has any questions for you, is there a place where they can reach you?
Steve: Or you are unreachable [Laughter].
Lars: Well, I’m kind of unreachable, but Clean Air Gardening is my website and my email address is just email@example.com.
Steve: Actually one last question, you have this interesting concept of how you do customer support. You want to just comment on that and just talk about the tradeoffs that you’ve experienced before we go?
Lars: Well I [laughs].
Steve: You don’t have to if you don’t want to, I can cut this whole segment out.
Lars: Well no like I detest talking on the phone and so for the longest time we were answering the phone all time, but I will tell you we have all our phones go straight to voicemail now and we just return phone calls because you could spend all day talking on the phone and I call it reverse show-rooming where people will go to home depot and they can’t get any help about– you know they’ve got a question about a compost bin and there is like a guy with an orange vest who doesn’t know anything about it because there is 200,000 products in there. So they call us on the phone and they want to talk about compost bins for 30 minutes and they go ‘okay where can I buy this locally’ and we get reverse show roomed all the time. And so I finally decided you know I hate talking on the phone and so now we return promising voicemails and we just don’t answer the phone and it’s like ring through the voicemail, we just call people back.
Steve: And as far as you know it hasn’t really affected your top line at all as far as you can tell.
Lars: Well you know my theory is, you can’t call Amazon on the phone and place an order, so you can’t call me on the phone and place an order either. And I hope that it hasn’t affected my top line, but I’m willing to give a little bit of top line away in order to have a little bit happier life in exchange, because it’s something that’s completely unenjoyable to me to talk on the telephone and so I have minimized that.
Steve: Yeah and it was tough getting you on the podcast too Lars, let me tell you [chuckle].
Lars: It’s true, the first time we traded emails you said something about having a conversation and I immediately shyed away because I just don’t like– I’m better by email than I am in real life.
Steve: So Lars where can I buy your compost bins locally speaking of which– [Laughter]. All right man well thanks a lot for being on the show Lars, I really appreciate you coming on, I think this is great.
Lars: All right thanks for inviting me.
Steve: All right, take care, bye.
Here is why I admire Lars; first of all he is a really down to earth, and a humble guy even though he runs many successful E-commerce stores. Clean Air Gardening is just one of many businesses that he started and owns. The other thing I like about Lars is that the guy is an open book and very open about all his successes and failures. He’s pretty much tried everything and he’s willing to share his experiences. For more information about this episode go to mywifequiteherjob.com/episode29 and if you enjoyed listening to this episode, please go to iTunes and leave me a review. When you write me a review, it not only make me feel proud but it helps keep this podcast up in the ranks so other people can use this information to find the show easily, and get awesome business advice from my guests.
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