Today I’m really excited to have Dana Jaunzemis back on the show. Dana is someone who I met through Andrew Youderian and she’s actually in a private group that I meet with on a semi monthly basis.
If you don’t remember Dana, I had her on episode 85 of the podcast where we discussed her strategies for acquiring and growing existing businesses.
Well since that interview Dana has acquired yet another company and we’re going to talk about how she’s already doubled its revenues. In addition, she was lucky enough to attend Amazon’s womens conference last month which we discuss in this interview. Enjoy!
What You’ll Learn
- What attracted Dana to her latest acquisition and the multiples involved.
- The specific strategies that she used to grow this company and why it was different from her last company
- Dana’s primary strategy for growing her new business on Amazon
- Why she decided to focus more on Amazon vs her own shop this time around
- Dana’s experience at the Amazon Womens Conference
Other Resources And Books
SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-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. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.
Now before we begin, I want to give a quick shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.
I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.
Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou
Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really excited to have Dana Jauzemis on the show. Now Dana is someone who I met through Andrew Youderian, and she is actually on a private group that I meet with on a semi monthly basis and if you don’t remember Dana I actually had her back on episode 85 of the podcast, where we discussed her strategies for acquiring and growing existing businesses.
Well since that interview Dana has acquired yet another company and we are going to talk about how she has already doubled — I don’t even know if it’s tripled its revenue, Dana you can correctly me later. But she was also lucky enough to attend Amazon’s Women’s Conference a couple of months ago. So I’m pretty eager to hear all about that as well. And with that welcome back to the show Dana, how are you doing today?
Dana: Great, thanks for having me Steve.
Steve: So was it double or triple within a year or two?
Dana: I think we are triple right now.
Steve: That’s crazy, it’s crazy. So let’s talk about that latest acquisition. I know you didn’t really want to reveal the product, because it is in a competitive industry, and so we can just refer to it as just like your widget company.
Steve: When you were shopping for companies and this is kind of like a real life case study of what we talked about in the last episode. What attracted you to this company, and what were the multiples like when you bought it?
Dana: So the seller had it priced really high at a multiple of like four on net profits. But I didn’t let that deter me, I wasn’t going to pay for — but I was — it was a listing with an internet broker which is interesting sometimes if they are with– it was with a local broker. So I think somebody he knew from a club or church or something.
So I figured they just were aggressive on pricing. But it took a lot longer to get it under contract because of that, so my first offer was actually — I made my first offer at a multiple of two which I knew was aggressive on my side on a low side. So obviously my first offer was half of what he was asking, he was not happy. Actually he was kind of mad.
Steve: Yeah, that’s what I was going to say, he’s smart to not even want to deal with you at all?
Dana: Well it did in a sense, they went to counter offer. And I called the broker a few days later and like I haven’t heard from you guys, and he goes, well your offer really didn’t deserve consideration. And I said well I think it did if you would counter offer, and he just said no. So…
Steve: Are the multiples still on the order of like two or three for an ecommerce company?
Dana: Yes somewhere between the two and a half and three and a half depending on — it kind of — it gets a little squarely around the size of the — like a lower value site if it’s — like if a site is only making 100,000 a year. Sometimes the multiple can go a little higher at times, because it’s– well let me say it at 50,000 a year the multiple can go higher because it’s a more affordable site if that makes sense.
So then people are like oh yeah I can buy one for 150 at a multiple of three. Which sometimes those it’s not a value issue, it’s just what people can afford. But once it gets over– if the site is making over a 100, what I have noticed 100,000, 150,000 then the multiples are — they are staying in that– well I don’t know, two and half to three kind of range.
And then they might move again after you get– if a site is making over 500,000 actually then the multiples are going change, over a million it’s definitely going to change. The whole way they value is very different, but for average sites making under 500,000 right now, we are still seeing like that two and a half to three and a half multiple.
Steve: Okay and so how did you get these guys to deal with you again?
Dana: I skipped the broker right. I did something very unusual and contacted the seller directly and said, look I just want to touch base with you again. I want to make another offer, but I want to know what you didn’t like about my offer. So I removed the broker from the middle. I knew I could — I had already met the seller so…
Steve: In person you mean?
Dana: I went and visited him.
Steve: Oh interesting, okay.
Dana: Yeah, I was very interested in the business as soon as it was listed. So I went and visited him and my offer came after the visit.
Steve: I see.
Dana: So I called him and that was actually under the advice of my attorney who did a great job of advising me. And she said you just need to remove the broker from the middle. You need to get the seller to talk to you, not to remove him from the process but just this conversation of how we are going to agree on price. So I actually had a conversation with the seller and really found out what his pain points were so that I could address those points in my next offer. Even though my next offer was still low, but…
Steve: What were those pain points that he had?
Dana: He wanted all cash.
Dana: That was his biggest pain point, but I wasn’t asking for financing, because the other people were offering for price, but they wanted financing.
Steve: Financing on his behalf or?
Dana: Yes, they wanted him to hold like 50% of the value.
Steve: Okay yeah that’s not good okay.
Dana: So it really wasn’t apples to apples, but that’s kind of hard to get somebody to separate in their mind. Well they are willing to pay me let’s say $600,000, but they want me to hold 300 but she is only going to pay me 300.
Dana: So you are really are, but he was adamant about — I mean in one way you could say that those were the same offers as far as what would happen today. He would get the same amount of money.
Steve: Right but it just doesn’t sound as attractive to me at all, right? So okay so how did you rationalize that then?
Dana: Well I had to increase my offer and I knew I would. But I had to — his other sticking point was valuing inventory. So we had to work through that and — those were the two biggest — I mean the financing was the biggest issue. And then in the second round of offers overall it took — he listed it in January, we didn’t close till May. So it took a long time, this was one of the longer ones to get it under contract.
Dana: But mostly because he started out at way too high of a price. And so we had to let the market bring it down to what was reality, what was going to happen.
Steve: But he was getting offers at that price?
Dana: Yeah I think it must have been a little bit less than that. I think it was actually — it wasn’t full price, I know it was 50% financing.
Steve: Okay, and then so what did end up being the multiple if you wouldn’t mind?
Dana: It was three, right at three.
Steve: Right at three, okay.
Dana: I’m pretty sure, yeah.
Steve: And in terms of the actual product, do you usually care? Like was there anything that actually attracted you to the product itself?
Dana: It was definitely the customer base, it’s a B to B model, and that is my favorite for many reasons. But where we are in today’s landscape of ecommerce, I think B to B has some of the best growth ahead of it. So it’s B to B and it’s a high margin kind of product, I’m just a margin, that’s all I look at. So I didn’t want any business– I won’t even look at a business that’s operating on like 30% or 40% gross profit margins.
Steve: What would you say is your minimum, like 50 then?
Dana: 50 is my minimum, and I want something in the mix that’s more like 70.
Steve: Okay and is this business, are they manufacturing their own stuff or is it a wholesale type of business?
Dana: Wholesale, it’s not manufacturing.
Steve: Wholesale okay. And one thing Dana and I were chatting before this and something that was just kind of interesting is that the way you’ve grown this company compared to your last one which was Home Health Testing for those of you who don’t remember the last episode. How has it been different, and why did you take a different strategy with this particular business?
Dana: Well I mean part of the reason is see I bought Home Health Testing either six or seven years ago now? I think it’s about seven years. I mean the ecommerce landscape has just changed tremendously in seven years. I just find an amazing when you look at seven years ago pretty much our whole mentality was to be like Amazon. If Amazon does it you should do it, you should have everything in your store and we are all long tail converts of have it all. And I think that’s an outmoded way of thinking now.
I think Amazon won that game and they are the everything store model. But I think stand alone ecommerce sites now they really need to have a reason to exist outside of Amazon, and they need to do something that Amazon can’t do. And B to B is one area that still has a lot of those components because maybe it’s just that customers buy differently. So this model I could have grown it easily by just using the same method, but I wouldn’t have been able to grow as much.
So what we looked at when I was looking for a business was whereas a business that is doing well because they are doing something that can’t be done as easily on Amazon. But I also looked for one that had an angle to be on Amazon, because we don’t put Home Health Testing on Amazon. So I wanted something that we could experience what it was like to have some items on Amazon, so this one fit that bill. It was a B to B model, decent margins and had some potential for Amazon.
So what we decided after we converted it or took over ownership and got our feet wet on really understanding our product line, and we would have to rebuild the website that it was selling on, because that was…
Steve: Was it a bad website when you got it?
Dana: Oh yeah it was horrible, horrible. It wasn’t even on a cart, it was HTML straight up.
Steve: Oh wow, and they were still doing pretty well despite…
Dana: Yeah, and that’s always — I think that’s a really strong indicator. If somebody is willing to go to that kind of site to purchase, then that’s a strong indicator for future success. If you navigate that well and convert it to up to date cart and user experience, then that’s — I always look at size that way. If somebody is willing to buy on this site, can you imagine if it was better, so that’s what we did.
Steve: Just curious how come you never took Home Health Testing on Amazon?
Dana: Drug testing is a very different market, very, very different. And it’s very competitive and we just — we actually make our unique selling preposition on our site that we value your privacy, and we’ll never contact you again, and we’ll ship it privately. So we go the opposite tact of saying — and again this goes back to how much ecommerce has changed. If you are not going to be on Amazon you need to have a compelling reason to exist. So that’s what we make, that is our compelling reason is people like privacy in drug testing.
Dana: And then we also have business buyers and I think that business buyers like is knowing your inventory, and knowing the age and the expiration date on your inventory. So we provide more information and consistency of inventory for our business customers right now than Amazon does.
Steve: Okay I see. And then if you were to sell on Amazon though, the competition would just be too fierce, and your value add obviously would not be a part of that?
Steve: Right, okay. Whereas with this new company is there heavy competition on Amazon for what you sell?
Dana: Not as much no.
Steve: Not as much okay. And are you continuing to try to grow the B to B side or have you been focusing more on the Amazon side with this business?
Dana: We are growing the B to B just pretty much what’s happening naturally from the site being improved. We are doing online advertising, that was the other thing is previous owner did no advertising at all, so …
Steve: How did he get customers in then?
Dana: The good old fashion organic way.
Steve: SEO you mean?
Dana: Yeah, but it was actually because the site was old, and it’s less competitive, so he wasn’t doing anything on SEO. It was actually because the site was so old and just HTML, there was no extra code on the site, and it was all about this one area. It was just a very informative site, it had good information on it, but it was, I think it was actually doing well just because– however I will say he had been declining in sales for the last 2 years, and that was the other thing.
They had done their multiple based on a year ago sales, or a year and a half ago sales, so we had a lot of things to deal with, and getting the price right was– you are not, you have this high multiple because you are thinking you are still worth what you would have been worth 2 years ago. Sales were declining, and they were declining because now he had run out of his good luck with SEO, and he hadn’t changed his site in a couple of years, so there was no updates, there was nothing new on the site, so it was losing value in my opinion.
Steve: He must have at least had his tags and everything correct even the index, right, so he wasn’t…
Steve: Okay, and when you moved, I’m just curious which platform did you move to?
Dana: We moved it to AmeriCommerce, because we have another site on AmeriCommerce, and the B to B features for AmeriCommerce are good. They are somewhat better than other carts right out of the box. I don’t know if I was doing it today, I don’t know if that’s what I would do, but for the decision, I’m not upset about the decision yet I think. The next few months will tell if I feel like I need to move. It’s going to be dependent on how much AmeriCommerce actually continues to improve.
Steve: Did it come down to with Shopify and BigCommerce in equation at all when you made that decision?
Dana: Yeah, I evaluated those 3, that was my 3 choices.
Steve: Okay and it just came down to B to B features?
Steve: Can you give me an example of like one B to B feature that it has that Shopify doesn’t for example?
Dana: Shopify might have a lot of these if you keep adding the add-ons, and then you are just escalating the price of the cart, so a lot of the features straight out in AmeriCommerce are the order history that people can go back in to their order and place reorders, and we have a lot of repeat customers, so they can log in and see their orders, and just reorder from that.
We can track accounts receivable in AmeriCommerce, we don’t actually have to use another, we don’t have to export at all to our accounting and do it there, we can do it in AmeriCommerce. Some things like that, nothing huge, and I’m sure that with Shopify you could add those features with that, I’m sure.
Steve: For the reordering, is that– so do you store like credit card tokens so that you can just hit a button?
Steve: Okay, got it.
Dana: And my model for that was I like U-line, I like the way their site works, it’s not fancy but when you are– if you want to look at your previous orders, and just click reorder and say yes, I mean that one, that one, and that one again. I think U-line has a good model for that.
I think a lot of small business owners go back to it because it’s easy, and you get the same thing. That was the model I was looking for is how could we replicate something like that with clearly not having a custom cart. I’m not going to do that, I want to be on a platform, but I wanted it to work that simply.
Steve: I see and you mentioned that you are considering switching in case something doesn’t change. What is that one thing right now?
Dana: Apple Pay.
Steve: Apple Pay, interesting, do you get a lot of customers who want to pay by Apple Pay?
Dana: No, but I think that’s going to be the next big change in e-commerce, and Shopify announces as soon as Apple releases it, they will get it in their stores. I think it’s going to be big, personally I think it will be as big for on mobile as PayPal for a payment. I think it will be bigger than PayPal for a payment option. I might be really wrong, but if they don’t do that I’m going to say that would be almost a nail on the coffin to say we are not going to be future developers of this platform.
Steve: Interesting, I just rejiggered [ph] my PayPal Express recently, and it boosted my mobile conversions in the double digits again.
Dana: Yeah, isn’t it amazing, I mean it’s a really important thing.
Steve: I mean totally, mobile and tablet, like this tab wasn’t affected, but mobile and tablet was pretty huge.
Dana: Yeah. Do you think Apple Pay is going to make a difference?
Steve: Well, I mean if you have to do Apple Pay you got to do Android Pay too, right? I’ve noticed actually in a lot of places in my area, they have started taking Android Pay, and so, you know it’s hard to say like giving more options always helps, like whatever is convenient where they don’t have to enter any information, and right now I think PayPal is the winner in that department.
Then if you get Apple Pay that’s like, I don’t know how many iPhone users are now, but it’s less than android users. You offer all 3 and then your mobile conversions I’m sure will be pretty good.
Dana: Yeah I think so, and I think whatever carts are working hardest on that whole mobile experience is probably, if I was picking right now today, I would look at that as my deciding factor, because it is amazing how much traffic is coming that way.
Steve: You know what’s funny right now is I think Android is actually, I’m getting more sales form Android users now than iPhone users. It wasn’t like that in the past.
Dana: Interesting, I haven’t actually looked at the user, I just always look at the mobile statistics.
Steve: In a way I actually don’t like offering too many payment options too, because it’s confusing, so I’m just hoping one person just comes out ahead so I can only implement one thing. Moving on, okay so we talked about the cart and you mentioned that you took this company on Amazon, and just from chatting with you prior to this interview you’ve a lot of success there.
So I was hoping to just talk about some of your strategies for growing this business on Amazon. Is there anything, well let’s start from the beginning, when you launched a product on Amazon for this business like what are some of the things that you’ve done that have been working?
Dana: I think our biggest thing is when we looked at the competition, and again it is on Amazon, it is definitely a lower competition, it is partly because it is a boring product, almost like …
Steve: Yes, an unsexy boring product that sells well.
Dana: Yeah all my businesses are very, very boring products, so the competition, nobody really was really making a full listing, they weren’t trying very hard. You know a lot of it was one picture and no details, just really simple listings. So we definitely had been schooled very well by many of my great friends and mentors who were telling me exactly how to do it, and it was just complete titles using every bullet point, writing a full paragraph description, and then use every picture spot.
There was no detail, I mean I was really scraping the bottom of the barrel to figure out what to write, because it’s actually hard to fill it out on boring products, to fill out everything, but we did. We figured out something we could say, you know whether it will be the material it’s made out of, definitely all sizing, colors, anything possible.
Steve: Would you say that the pictures made the biggest difference or [inaudible 00:23:32]?
Dana: I don’t know, you know, I don’t know, how would you know?
Steve: I guess the only way to know would be to just adjust it one by one which you probably didn’t do, right?
Dana: No, we just went at it full force and I think that’s a little bit how I do everything. It’s I’m going to go out full force with everything I know about the platform right now, so I sort out the best knowledge. I have great people advising me, listen to podcasts like yours and others, and just do what everybody says is working now.
Everything that I believe is good for a customer. I think I will take that back, I won’t do everything, like I personally hate all caps in the bullets, I just don’t like it. It’s personal thing, and I don’t think it’s good for the customer, and I think it’s against terms of services, isn’t it?
Steve: I don’t think so.
Dana: I’m not sure, yeah. Anyway I put it through 2 lenses of I go with what everybody who is succeeding is doing now what they say is working, and then I put it through the customer lens of I want to feel good when I look at the listing, that it’s really top notch. That’s how we do it, and we really do not skip any piece of information, we do everything.
Steve: I just want to let you know that tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit? It is the conference that I hold every year that specifically targets e-commerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories, and high level BS, mine is a curriculum based conference where you will leave with practical and actionable strategies specifically for an e-commerce business.
In fact every speaker that I invite is deep in the trenches of their e-commerce business, entrepreneurs who are importing large quantities of physical goods, and not some high level guys who are overseeing their companies at 50,000 feet. The other thing I can also assure you is that the Sellers Summit will be small and intimate.
Last year we cut off ticket sales around 100 people, so this event will sell out quickly. This event caters to sellers of all levels, and if you are a beginner you will leave the Sellers Summit with a product to sell, potential vendors, and a road map for your business. If you are an existing shop owner you will learn proven techniques to take your business to the next level, whether it be through learning advance Amazon selling techniques, SEO, social media, pay per click advertizing, copywriting, email marketing, you name it.
If you are an e-commerce entrepreneur making more than $250,000 per year, we are also offering an exclusive mastermind with other top sellers. The Sellers Summit is going to be held in Fort Lauderdale, Florida from May 18th to May 20th, and for more information you can go to sellerssummit.com, once again sellerssummit.com or just Google it. Now back to the show.
Would you say that your listings are better than all your competitors at this point?
Dana: Of course they are.
Dana: But then the other thing I think that is this is huge, and if you have an e-commerce site, I really feel like your competitive edge on Amazon, if you already have an e-commerce site, because you are going up against a lot of people who are only selling on Amazon, I mean all of us are. The one thing they don’t have, and I consider this like inside or training information, is they don’t actually know in advance how buyers buy, and we know that with an e-commerce site.
If we have one with history, and the site I bought had actually been around for 10 years, so I had a lot of data history. I know how, definitely B to B buyers buy based on our history, so if on Amazon, if there is something selling on there, and it sells in a 3 pack, but I know I sell 100 packs on our e-commerce site all day long, I can put 100 packs on Amazon with confidence that there are buyers for that.
I think that was one of our biggest difference is we had all this sales data from our e-commerce site, and we just used it the same way on Amazon, and that was one area that was probably been our biggest success is we sell larger volume, because we know there is buyers that buy larger volumes, but a lot of the things packaged previously on Amazon were smaller.
Steve: Interesting, so have you found that the competitors have started copying that model then?
Dana: Yeah, definitely.
Steve: Okay, and when you launched presumably you had less feedbacks, and that sort of thing from the other guys, did you end up doing any giveaways or anything in the beginning?
Dana: I think we did 2, and I stopped.
Steve: Two units?
Dana: Two yeah, and I stopped, and I said you know because we were making sales, so we did our model was pretty much, get the listings up, quality listings, turn on automatic ads, and wait until we get enough feedback that it gets better, and just we would use Feedback Genius to get the feedback, and it was really coming in slow, but in my mind I just said, don’t worry about that. We have enough work to do to get our listings up, to get them all written.
So let’s just focus on that, and we are going to let feedback take care of itself on these products. It has, and now, that’s why we are actually, I think we are seeing growth right now, we’ve only have been on for 8 months, so is that now our feedback is catching up with, you know we’ve got enough, and the sales volume is there.
Amazon is seeing good conversion rates, now seeing really enough feedback on each product that there is consistency, but we didn’t solicit any additional feedback other than if they bought it, they got the one email.
Steve: How much stock do you actually keep in Amazon’s warehouse?
Dana: Number of units or?
Steve: Not units, I guess months or whatever, in terms of time.
Dana: Oh time, we’ve been pushing that up, so we were only keeping 3 weeks, and we are trying to get all of our best sellers up to 8 weeks.
Steve: Okay, and in terms of getting additional product to your warehouse, like what’s your lead times usually?
Dana: Getting it into our warehouse before we send it to Amazon?
Steve: Like to making more step — yeah essentially yeah.
Dana: Two weeks is about all.
Steve: Okay so your turn around times are pretty quick, so…
Dana: Yes, very fast yeah.
Steve: Okay so why would you justify eight weeks worth of inventory when you can get stuff into — is it just because FBA is just taking a lot longer now?
Dana: Well going into the holiday, so our goal was to get it up to eight weeks, because we are heading into the holiday season.
Dana: So but what we noticed was we only started with our best sellers. And I don’t have a correlation for this, but we only had three weeks supply and we pushed it — every time we pushed it more supply in, we kept selling more. Like our sales were going up kind of dramatically on the items that we thought we were stocking ahead, but actually the sales were kind of keeping up with it.
So every time we thought we would have four or six weeks in, then we would look at the numbers and we are like what the heck, we are back to three and four weeks, but it was sales velocity. So I’m kind of testing that without being overly analytical about it, and asking some people and different people were telling me that they’ve experienced around eight weeks is a good amount to keep in.
Steve: Okay I heard from Jeff Cohen, he is on the podcast that the more inventory you have, that’s like a signal to Amazon that they can push the sales a little more and not go out of stock, I was just curious. It sounds like you’ve kind of been experiencing that?
Dana: Yeah, we experienced it without me hearing that. So I had never heard that from anyone, we were just truly doing it to get ahead of the holidays, both for our workflow in-house, and because of FBA might slow down later. So we were just trying to be proactive, and then realized that we were getting huge sales bumps in the items that we were doing that on. So now of course I want to do it on everything, but…
Steve: Correct, are you selling as a vendor at all?
Dana: We did for a little bit, yes.
Steve: Okay, why did you stop?
Dana: Partly because I didn’t know — I didn’t set the case pack right, and their orders were coming too frequent and they were too small. So if I go back in — I will probably go back and do it again. But I was getting these like eight different orders a week from Amazon from like three of this, two of that, one of that and it was really annoying. But I realize now, I asked somebody why that was happening, and they said well you didn’t set the case pack. Other than that…
Steve: Can you describe that — sorry what’s a case pack?
Dana: I think instead of allowing them to order one at a time, say that they come 10 in a case or 12 in a case.
Steve: Oh got it okay.
Dana: So then they wouldn’t order that way.
Steve: I see, is it worth the hustle in general though? Your feeling with vendor, being a vendor?
Dana: I think so.
Dana: Yeah, it takes a little bit off your plate; you are not worried about that listing. I wouldn’t do it with the listing I was super serious about. I just — I personally would want that control over the listing.
Steve: Okay and in terms of like the new ad features that you get for being a vendor, has that been worth it?
Dana: They are worth it is you don’t get a lot clicks on it, but they are definitely — the conversion rate on those ads is excellent. But you just — people have the same– those really look like ads I think on Amazon. So people have the same kind of ad blindness, they don’t get near as many clicks.
Steve: I see, okay so just regular…
Dana: In my category. I doubt that’s the same for everyone, but that’s how it is in my category.
Steve: Okay and in terms of this new business, since it’s kind of on the more boring side, I would imagine like social media channels aren’t as big of a deal?
Dana: Right, I don’t — yeah I’m not a big social media. So I think I’ll actually look at businesses that don’t need that kind of attention, but you are right. You could actually do really well on Pinterest with it, I just haven’t so…
Steve: Okay, and so in terms of the time that you are spending right now, in terms of percentages, what percentage would you say you are spending on Amazon versus just the site itself growing the B to B sales?
Dana: Definitively the majority of my time is focused on Amazon so…
Dana: As far as growth time I would say I’m 80% Amazon, and only 20% looking at our own site. I do know what needs to be done on my own site, I have already done the analysis. I know the direction it needs to go, but every time I think I’m going to work on it, I kind of get excited about something on Amazon, I go that direction.
Steve: Because the sales are just coming in a lot faster, right?
Dana: Yeah, and it’s interesting and some of it is just because it’s new to me. So it just makes it more exciting than doing the old hut stuff of writing good quality content on our site and doing videos and things like that.
Steve: Okay and then so you don’t have any qualms about just continuing to go all in on Amazon versus spending a little bit more time on your own property?
Dana: Right now I do not, and the reason is because my B to B site, the ecommerce site is well established, and we have high repeat customers. And I do feel like the transition we made there is probably something to be said for kind of digesting the amount of changes we made in the last year on the site, because we re-platformed it. We changed how we shipped, we changed all the pricing, we changed a lot in the first four months. So it’s probably good that I have something else to work on, and I just couldn’t let the repeat customers get used to everything as it is now.
Steve: Did the site have a negative effect at all? Like did you get complaints from people who were just been long established?
Dana: No, no.
Dana: No it was horrible; I don’t still even know why they were ordering.
Dana: No I’m sure, and we didn’t get any like loving notes either — nobody said oh this is great, thanks so much for finally doing something, it’s just– but I know they are happier, I know. It was because our site was doing the same thing weirdly, and this is what I just said about using your insider knowledge on your site is our site was putting things in three packs and odd numbers of things, but people were ordering like 57, three packs.
Steve: I see okay.
Dana: And so one of the big changes we made when we restructured the site is to get everything on a base ten so you can order a ten pack, 100 pack or a 1000 pack. And so I think that was a little hair confusing for some customers, but we’ve gotten past it now so — and the site’s growing on its own. It’s up about 25% to 28% this year, so it’s doing good.
Steve: Is that the result of the redesign?
Dana: Well I think online advertising too.
Steve: Okay oh right. He wasn’t doing any ads?
Dana: Yeah we are doing shopping ads.
Dana: And they are not huge, but they are nice, they are doing a good job.
Steve: Are you doing regular AdWords as well?
Dana: Yeah, we don’t get a lot through that. We are doing a little bit yes, but mostly it’s the shopping ads that are bringing in some nice repeat B to B customers.
Steve: Okay, and then once you have one of these B to B customers they just hit the re-order button after that?
Dana: Right exactly.
Steve: Okay nice. Let’s switch gears a little bit and talk about this Amazon’s Women’s Conference that you had the opportunity to go to. Pretty amazing I think there is only 200 women there, right?
Steve: And you were one of the lucky ones?
Dana: I was.
Steve: So can we talk a little bit about some of the key takeaways that you got from that conference, because I understand there was a lot of Amazon people — Amazon developers and people in charge of a lot of the features there, right?
Dana: Right, so all of the speakers other than one panel of sellers, all the speakers were Amazon employees. So it wasn’t a tactical conference, it was more just an insight into the people and the attitude behind the marketplace. The developers that developed seller central and the seller’s app, anybody that’s doing anything that’s forward facing to the sellers on the marketplace, or the speakers pretty much.
Dana: And then upper level management in the marketplace. So the VP of the marketplace and things like that. So it was really an insight into how Amazon sees the marketplace. And I think my hugest takeaway was just a new respect for how Amazon values the marketplace sellers, and their desire to help us succeed, and I did give you…
Steve: Okay I mean that’s not any evident right now and what they’ve done the last couple of weeks even.
Dana: It is evident or it’s not?
Steve: It’s evident.
Dana: Okay yeah.
Dana: But sometimes if you only interact in seller communities or forums, you hear a lot of fear and negativity about Amazon, and it’s sometimes hard when you are — since I’m new on it this year to hear a lot of negativity, and a lot of people saying, I’m not going to do business on there, or I have taken everything off of their — and the bad things that can happen.
It was really refreshing to actually just put that down from a seller perspective and hear from the people who are managing the marketplace. And they really are working hard, and making it incredibly useful for sellers and to make it — I mean obviously their end result is the customer, so their prime customers are who is they want to have the big wins, but they know that the market place is part of that.
Since they want to be the everything store, and they want to have every item available in the world, you know a catalogue of everything, they know they need the market place to do that in addition to the other things they do.
Steve: Specifically what are some of the things that they have planned specifically to help sellers?
Dana: Some of the big things they announced, and they said the biggest one that actually got a round of applause when they said it is that there would be brand central coming out instead of a more robust brand registry, and that once you have proved who you are, that you will be able to lock your brand, so other people couldn’t come on the listings, and that will be huge as we all know.
Steve: That’s already started happening actually in the last couple of weeks.
Dana: Right and right now is just for the big brands.
Steve: Correct some of the little guys too actually from what I have heard.
Dana: Oh okay, I didn’t realize that, so I don’t know how that’s going to shake out, they didn’t mention that, but I know on the big brands it’s, I mean you are paying a gating fee is what I’ve read, is that what you’ve heard as well?
Dana: Yeah, so I don’t know if it is always, if we are going to pay to lock that, and or not, or if it’s just going to be later become something that once you prove it you can lock it.
Steve: Are they doing anything about people just copying and listing on a different skew and listing it as far as you know?
Dana: They didn’t mention anything.
Steve: Okay, but in terms …
Dana: They said that brand owners were the fastest growing population of sellers, and that they were trying to develop tools to help them, and make it a better selling experience.
Steve: One thing I did want to ask you since we are in this topic is that you mentioned earlier that you sell wholesale, but does that imply that you are using your wholesalers brand, or you are putting your own brand on your products?
Dana: We are putting our own brand, because we assemble kits in a sense.
Steve: I see.
Dana: It is not a one off, we don’t buy it as it is and send it straight into Amazon, we actually combine it with something else where the buyers buy.
Steve: Is the wholesaler selling its own products on Amazon as well?
Dana: They are.
Steve: They are, so you are competing against the wholesaler?
Dana: I am.
Steve: Interesting, and they are just not doing as good of a job?
Dana: Right, so again it goes back to that understanding the customer, and I’m possibly going after a different type of customer than they are based on the knowledge of what we know works on our website. I think that’s where a lot of people, they are looking– if you look at Amazon as a standalone place and you try to do your market research there, and you don’t use other information, you are really limiting your success or your ability to succeed.
Since so many of your listeners are e-commerce stores, I mean really look at it through the lens of why are people buying on your site today, and truthfully you know they would rather buy on Amazon, the user experience. Even the best of sites, yours is probably exceptional Steve, but mine is not, my user experience on my site is not.
Steve: Well someone trashed my site at summer tree which resulted in me having to safe face and redesign it.
Dana: Great, but Steve now it is exceptional, yours is exceptional, but just from– let’s just take prime as just this simple, the free 2 day shipping. It is hard for any of us as site owners to compete with that. If you think about your customer from the point of view that they would actually rather complete this transaction on Amazon, and that’s what I think about.
That’s how I looked at Amazon, and I was just, all I was trying to do is replicate the experience of buying on our site as far as what they got onto Amazon. But if I looked at Amazon by itself I wouldn’t see the same products or quantities being sold on Amazon, so I guess I could have taken away from that or I will fail, oh there is no market for this because I can’t, you know when I open Jungle Scout there is no product that matches that. That doesn’t mean it won’t work, because you already have proof it worked on your site.
Steve: Actually it’s funny for our site, and for our products too, we’ve listed some stuff that has had no traction whatsoever on Amazon meaning no one else is selling it, but when we started listing them they were selling. Yeah you are right, just because no one is selling doesn’t necessarily mean it is not going to work.
Dana: No, and especially if you know it is selling on your site. I mean that’s just priceless data to have.
Steve: Have any of the products that you have listed for this new site, has anyone just copied you or your packaging, and have driven the prices down overtime, or you are still on that honeymoon period?
Dana: No, I’m still on the honeymoon period, there are some copies, but we haven’t slid all the way to the bottom yet.
Steve: Okay, any other key takeaways from the conference that are just worth noting for people?
Dana: The B to B side, so Amazon business is truly Amazon’s big push, so they have related it this way. They said there are 3 pillars inside Amazon as far as how they make money; the marketplace sellers, AWS, and their web services, and prime customers. That is what they consider their 3 pillars. They think number 4 will be Amazon business, and they see the B to B market, their number they used is 10 times larger than the B to C market.
That’s accurate if you bring anything else outside of you know from like internet retailer has now B to B division of internet retailer, and they said the same thing, so it’s a much larger market. One thing they said and I found this interesting is the millenials, their prime users, there is 2 times as many millenials as prime users, which makes sense because of that media side of prime. But they are saying when we look at the business marketplace, those saying millenials are now buyers for the government and buyers for big companies.
They are the workforce; the millenials are now the largest workforce I think as well. They want the same buying experience as their prime account. They don’t even understand why if you are a business buyer and you have to go to [inaudible 00:47:19] to get hardware and Office Depot to get your office supplies, and then some other site to get something else because those are your B to B buying accounts, or say Uline.
They don’t want to do that, and they want to go to Amazon, and order at one place and get it in 2 days. Amazon sees the growth of where you can go with B to B, and obviously they tried a couple of years ago, but I think they came back from Amazon supply and they regrouped, and they are going to change, they are going to totally disrupt B to B buying I think. They currently have 400,000 business buyers registered. They are actively feet on the ground going– Amazon is going to trade shows, and doing sales in government institutions, hospitals, universities.
I’ve read recently they said one of their business users has 100,000 users in their account because what they designed on the back end of Amazon business was the ability to have these multi level accounts with structure that allows people to approve other people’s orders. So if you got a maintenance personnel in the field ordering supplies, gets approved by somebody in acquisitions or a PO number gets attached to it.
They are going to majorly change, and if you think about it, if you sell anything, and it doesn’t have to be a pure business product. For some reason at the conference they used the example of a lingerie company, and they were getting these business orders.
Dana: Yeah, they said, I mean businesses buy gifts, businesses buy everything. So to be registered on Amazon business is you really should be, so right now they said that there is only 37,000 sellers registered on Amazon business.
Steve: I recently registered as a result of you telling me to, and how can I tell if anything has happened, and what are some other things that I could be doing with this business account that I just signed up for?
Dana: You can see it in your reports, but right now we are still seeing, and I talked to one other people on Amazon business about this, and they said they are still seeing a ton of small businesses are still using their prime account. So you won’t see B to B necessarily, but they did break it out in the reports just in the last 2 months maybe, but when you go into any of the reports on Amazon sellers central, you will see an extra column for B to B. It will tell you number of units.
Dana: It’s right next, they’ve added a column for B to B on units and volumes of everything, so you can see it, and I think right now ours is only running 3%, but it’s going to change. So some of the things they talked about having coming once, right now you can upload different prices for business buyers, which is great.
Steve: Okay, I see.
Dana: Those prices will show up in search results if someone has logged in as a business account, so your regular customers won’t see it, but if they log in as a business they could see a different price. You can include a quantity discount schedule, so buy one of these at this, but if you buy 5 the price goes to this, if you buy 10 the price goes to this.
Steve: You know what’s interesting about this business account is I signed up for, and I accidentally signed up as a business buyer, and it was just completely free, I didn’t have to do anything. So I’m just curious like even a regular user, why don’t they just sign up as a business and start ripping some of the discounts that some of these businesses …
Dana: I think you have to put your tax payer or ID on it when you sign up as a business.
Steve: Sure yeah, but you can also include your social for that, right, so interesting.
Dana: Well if you think about though on the single unit level, Amazon is really competitive. We’re already at a competitive price point for one. I mean I think most people are, you are not going to see huge discounts, all you are going to see it on Amazon business is if you need a 100 or 50. If you buy 1 filing cabinet, if you want to buy that as a consumer with your prime account, there is probably not much room for that vendor to go down in price. We are already pretty, everybody is competitive on price.
Steve: Yeah, so I’m just curious for you, are you listing it at the same price for single unit quantities?
Dana: No we are doing discounts.
Steve: You are doing discounts, just even, okay, interesting.
Dana: I think what we are going to see if you– and it has been a little more time logged in as a business account just to see what the experience is like. I think we are going to see some huge, huge advances on that level, and there is already a lot of features on the business side, you know from POs Amazon has a lending where they will set up finance accounts for the big customers so they can do purchase orders, so I think …
Steve: Yeah, that’s going to be huge.
Dana: There is a lot behind it, and then they also have credentials so you should look at the credentials and see what you qualify for. I think there is over 18 different quality and diversity credentials on the business side as the seller, so like we are a woman known small business, and we are also a small business, so for any government or university institution has to meet their diversity goals. If they have to buy every government, federal government contract is supposed to spend 5% with either small businesses or under different credentials.
Amazon prime or Amazon businesses, you are giving them the ability to see those credentials, and they are working on getting it to– so if I was say buying for Boeing Corporation, and I knew I needed to hit my 5% diversity goal, I could actually on Amazon business say, “Show me, I need to buy file cabinets, show me people who are women owned small business or small businesses so I can hit my diversity criteria.”
Steve: Right and you also get to go to the Amazon’s women’s conference because you are a woman too.
Dana: Exactly, so you would want to put that on there, but the credentialing is going to be huge because it is a nightmare for them to find credential businesses and they have to go through– some don’t go often the ways they do it now. So can you imagine that — and then they are going to get a report from Amazon at the end of the month or at the end of the quarter, end of the year to show how much they spend with small business sellers. It’s probably huge, that’s huge.
Steve: Because breaking with the government is a pain, right?
Steve: Dana, so going forward where are you going to be spending most of your time growing on your business this new one?
Dana: We are going to continue on Amazon, I don’t see that stopping, and we will continue doing what we can on our site. So I have one area that needs a lot of work, one category on our site. So I hope to get to that in the short term.
Steve: Okay in terms, so just mainly more skews?
Dana: On Amazon or on our site?
Steve: On Amazon.
Dana: More skews on Amazon, but less skews on our site actually.
Dana: I’m a gross margin hawk. So the area that we’ve identified on our site that we think has the most potential is just from looking at gross margins. So we are looking at what’s already selling the best with the best margins. And there is a handful of items all in the same category. I think if I develop that category a little stronger with a lot more information, that we are going to have a big win and we won’t have to increase sales that much on the site, because we are going to be increasing margins more rapidly.
Steve: And then on the flipside you are going to be removing skews that aren’t selling that well, and are you going to be listing those on Amazon?
Dana: No, if we list it we are going to keep them in both places. I do think there are some brand awareness that we are gaining on Amazon.
Steve: Interesting okay.
Dana: So no if — well I won’t have something on Amazon that’s not on our site. And it’s — at that point there is no problem because we have the inventory, so that doesn’t bother me.
Dana: But if I don’t consider it worthy on our site and we are not selling it on Amazon, then it’ll go away from those places.
Steve: Okay, cool.
Dana: Or if it has a pain in the ass kind of factor to it, then it might go away in both places.
Steve: Like kitting like extensive kitting requirements or something like that?
Dana: Yeah or customers don’t understand it, and it just requires too much customer support, it doesn’t work well. So we use a lot of the same Amazon principles on our site. If it causes too much friction and we can’t overcome that friction by making our instructions better or labeling the product, then we might not keep the product.
Steve: Okay and you guys are pretty lean too right; you just have like a handful of people?
Steve: Right like three or four or something like that?
Dana: Yeah, it’s five or six now but yeah, but yeah we’re lean.
Steve: Dana we’ve already been chatting for quite a while, and I want to be respectful of your time. Where can people find you if they have any questions for just either on the buy side or the Amazon side, or some of the things that you are working on?
Dana: My blog that I never ever write on is 44ideas.net.
Steve: Wait to advertize that.
Dana: You’ll see like a year or two year old article on there, but I do that is my email, so 44ideas.net, you can find me there. And same place on Twitter and those kinds of things.
Steve: Cool, well Dana thanks for coming on the show, I learned a lot especially about the new Amazon stuff that’s coming along. And basically your thought process in how you grow your business is that you acquire, it’s been great.
Dana: It’s been fun, thanks for having me, thanks for all you do. I can’t tell you how much I’ve learned from the people you talk to, and you as well. I mean just that you bring the conversations out so people can hear these all tidbits, so thank you.
Steve: Thanks Dana, all right take care.
Dana: All right.
Steve: Hope you found that episode useful. What’s interesting about Dana’s story is that she has taken on completely different tactics to grow her various ecommerce acquisitions, which just goes to show that there is never one single cookie cutter strategy. You got to look at your business objectively, and figure out what needs to improve.
For more information about this episode, go to mywifequitherjob.com/episode135. Once again I want to thank sitelock.com for sponsoring this episode. If you own your own hosted online store, or any website for that matter that handles monetary transactions, you should give SiteLock a look. They can also help your site with site speed issues as well. Did you know that ecommerce sites that take longer than 5 seconds to load often shed customers?
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Outro: 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.