Today I’m thrilled to have Trent Dyrsmid on the show. Trent is a serial entrepreneur, husband, and father who owns 3 companies, an Amazon ecommerce business, an SOP software company called Flowster and BrightIdeas.co which is a popular podcast and entrepreneurship publication.
Together, these companies generate millions per year in revenue. I invited him on the show today because we share the common goal of maximizing income without negatively impacting family life. He is a master of systematizing businesses and we’re going to learn his business secrets. Enjoy the show!
What You’ll Learn
- How Trent became an entrepreneur
- How selling Amazon wholesale works
- Where to find products to sell and wholesalers
- The margins for an Amazon wholesale business
- How to scale an Amazon wholesale business
Other Resources And Books
Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
Ahrefs.com – The best all in one SEO tool out there that I personally use to improve my search rankings for my blog and my online store. Click here to win a FREE 3 month membership.
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.
Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and dig deep into what strategies they use to grow their businesses. Now today I have my friend Trent Dyrsmid on the show, and Trent is an expert when it comes to systematizing businesses through SOPs. Today we’re going to talk about how he’s completely outsourced his Amazon wholesale business to various virtual assistants all across the world.
But before we begin, I want to give a quick shout out to Privy who is a sponsor of the show. Privy is the tool that I use to build my email list for both my blog and my online store. And right now I’m using Privy to display a cool wheel of fortune pop up. Basically a user gives their email for a chance to win valuable prices in our store. And customers love the gamification aspect of this. And when I implemented this form email signups increased by 131%.
Now, you can also use Privy to reduce cart abandonment with cart saver pops and abandoned cart email sequence as well at one super low price that is much cheaper than using a full blown email marketing solution. So, bottom line, Privy allows me to turn visitors into email subscribers and recover lost sales. So, head on over to Privy.com/Steve and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ for 15% off. Once again, that’s P-R-I-V-Y.com/Steve.
I also want to give a quick shout out to Klaviyo who is a sponsor of the show. Klaviyo is the tool that I use to build real quality customer relationships with my e-commerce store. And because all my transactions and email correspondence is tracked in Klaviyo, I can easily build meaningful customer relationships by listening, understanding and taking cues from my customers and deliver personalized marketing messages. So for example, with one click of a button, I can easily send a specific and targeted email to all customers with a lifetime value of over $100 who purchased red handkerchiefs in the past year. And it is for this reason why over 10,000 brands have switched over to Klaviyo.
And right now, they have this cool docuseries called Beyond Black Friday where they discuss successful marketing strategies that their customers are using that you can emulate with your business. So, head on over to Klaviyo.com/beyondbf to check it out, once again that’s K-L-A-V-I-Y-O.com/beyondbf, now on to the show.
Intro: 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: All right. Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Trent Dyrsmid on the show. Now, if you don’t know who Trent is, he’s a serial entrepreneur, husband and father with three companies, an Amazon e-commerce business, a software company called Flowster.app which does SOPs, and Brightideas.co which is a popular podcast and entrepreneurship publication which together generate millions of dollars a year in revenue.
And profit magazine named Trent’s first company as one of Canada’s profit 100 fastest growing companies for two years in a row before he sold it for seven figures in 2008. Anyway, the reason Trent and I resonate so well is because we share the common goal of maximizing income without negatively impacting family life or lifestyle. Also, Trent is a master of systematizing businesses, and today we’re going to find out how he does it. And with that, welcome to the show Trent. How are you doing today?
Trent: Very well, Steve, thanks very much for having me on, I’m so thrilled to be here.
Steve: I feel like we’ve been talking like a lot lately.
Trent: Well because we have.
Steve: So Trent, give us a quick background on your business, how you kind of got into entrepreneurship and what your e-commerce business is all about?
Trent: Sure. So, let’s start with how I got into becoming an entrepreneur that dates back quite a few years back to 2001. I had a really high paying job, I was making close to about $200,000 a year back then as a guy in my 20s. But unfortunately, the job was kind of boring, and I wasn’t intellectually stimulated and I know some people might be thinking, well, who cares? You were making a pile of cash. But the funny thing about money is, is after you were making it for a while, it’s not fulfilling in unto itself. And so, I decided that I wanted something more.
And so, I quit that job. I sold my house, I cashed in everything I had, and I put it all into starting a company that ultimately was ranked as one of Canada’s Profit 100 fastest growing companies. And that’s a whole another story for another day. But that’s how I got into becoming an entrepreneur.
And since selling that company, I’ve pretty much been focused on making my living on the internet, so I could always be location independent, in other words, I can run my business from any place that I choose. And approximately two, two and a half years ago, thanks to a number of my what I call my internet friends, in other words, people who I’d interviewed on my show and developed something of a relationship with a couple of them, a fellow named Spencer and another friend of mine named Country, we’re doing quite well doing Amazon private label. It’s something I knew nothing about, and they were both strongly encouraging me to give it a shot.
So, we were running a digital marketing agency at the time, my wife and I and a team of contractors and it was going quite well. And I said to my wife, I said, you know, I’m going to take a little hiatus and — I’m going to close the tab, it is making that noise, sorry. I’m going to give this Amazon thing a go and see if I can become successful at it because I’d always been in service businesses and I really wanted to try a product business because as a lot of people will know, a product business is much easier to scale up than a service business. So, I was completely and totally not very successful at private label after four or five months due to picking products that were too competitive.
I was making sales, I was doing 25 or 30,000 a month in revenue, but I was having to spend so much money on Pay Per Click and run so many promotions to try and get that sales velocity that I wasn’t making any profit at all. And to be honest with you, I was extremely frustrated. And right around that time, one of our biggest clients at the agency was starting to let us know that when their contract came up, they weren’t going to renew and so I was starting to get pretty stressed to be honest with you. And right, right around then fortunately, I interviewed a fellow on my show named — two guys actually. One guy by the name of Eddie and another guy by the name of Dan [inaudible 00:08:11] and both were doing some version of this Amazon wholesale thing that I knew nothing about.
And when Eddie explained it to me, it wasn’t too terribly appealing, because he’s a single guy with no kids and he spends his life going to trade shows to find his products. So he’s on the road all the time. And I thought, no man, I don’t want to do that. And then when I talked to Dan, and I interviewed him, he did the whole thing without any travel at all. And suddenly I realized, oh, man, that’s what I want to do because wholesale compared to private label is substantially less risk and we can dive into that further if you like.
Steve: Yeah absolutely.
Trent: That’s how I got started. Short Story, within five months, we were doing over 100 grand a month. We did just under 1.1 million in our first year and we’ve never looked back.
Steve: What are your margins on that 1.1 million?
Steve: So we operate on a gross margin of around 20%, which sounds thin but it’s actually enough because you can do a lot of revenue per employee in this model.
Steve: Okay, so let’s start by talking about the wholesale business as compared to private label. So how does the wholesale business work?
Trent: So wholesale is simple, but not easy. Simple, in that you buy products wholesale from US manufacturers, and you resell them on Amazon. And simple because unlike private label where you’re trying to launch a new product and get traction and get reviews and all that, with wholesale, you’re simply using available software tools to look for products that already have an established sales velocity and then you’re trying to buy those products at a price that would allow you to make a margin, so simple, but there’s a lot more to it than that.
Steve: So, I see a couple of immediate disadvantages. I see a whole bunch of other people selling the exact same thing. And I also see you having to fight for the buy box on Amazon. Is that correct?
Trent: In theory, you’re correct but there are ways to mitigate those two risks. So, predominant — when we started, those were big issues for us. And back then our margin was less and the race to the bottom was a big issue for us. And because of changes in our business model, those are no longer issues and those changes are very simple. We look for suppliers who have already restricted the number of authorized sellers of their products on Amazon.
Ideally, we’re the only seller. Almost as ideally, the brand is one seller and we are the other seller and there is no one else. When you get that and we that’s predominantly how we do it, there is no race to the bottom. You know exactly what percentage of the box you’re going to get and your margins are maintained. The only issue can be obviously competitive threats from other brands, that’s just the nature of the beast.
Steve: But private label will experience that as well.
Steve: So how do you go about finding these vendors, then?
Trent: Wow that is the tough part. So, when we started off, and we continue to do this to this day, but of course, we evolve as we grow as every business does. We use basically simple math equations to identify products. So, we’re looking for products that have an estimated profit per month within our parameters. And that’s simply a function of looking at, well, what’s the sales velocity of this product? How many current and sellers are in competition for the buy box? If we were an additional seller, would we get enough share of the buy box to sell enough units at a 20% margin for it to make it worthwhile for us to carry this product?
And then if it is, we’re going to reach out to the brand that owns that product and try to establish a relationship with them. And we grew at 20% per quarter for the first two years doing just that approach, sending a lot of emails and that’s where the whole SOPs thing factored in.
Steve: How do you determine what percentage of the buy box you’re going to get?
Trent: So we look at, let’s say there’s a widget on Amazon and it’s 19.99, and there’s three sellers at 19.99. And if we’re going to be a fourth, we just assume we’re going to get 25% of the buy box.
Steve: Okay. Okay. And you mentioned before that the way you do it now is you’re basically only competing against the brand owner. So now, do you kind of exclude anything where there’s more than one seller?
Trent: No, we regularly go after brands that have multiple sellers because we strongly believe those brands would be better off to have fewer sellers and oftentimes there’s a gap in their understanding, or they’re just not thinking about it. Because what you have to remember with a brand is that in all likelihood, Amazon is only 10 to 15% of their total sales because they have brick and mortar distribution across the country. And so, that is a much larger portion of their focus. And so, Amazon it’s almost a pain in their ass and there’s a lot of problems that come, typically unauthorized sellers and MAP violations. MAP stands for minimum advertised price.
And when that happens on Amazon, it causes the brand quite a bit of grief because they’re brick and mortar partners. Let’s say for example, a brand is selling their widgets to Walmart. Walmart is 40% of their total revenue, MAP for those widgets is 19.99 and they’re on Amazon for 18.50, do you think Walmart is very happy about that?
Steve: Absolutely not.
Trent: No, they are not. And do you think the brand is stressed about that?
Steve: Absolutely. So, I guess the brand has to make sure, I guess does the brand have a say in that? Can they say, hey, and kick you out?
Trent: Well, if they put the correct policies in place, yes absolutely, they can get Amazon under control. And this is what most brands or many brands don’t understand, or maybe they desire to do it, but they don’t know how to do it. And that is the biggest problem that we end up solving for brands. As an example, right now at a recent trade show that I attended and that is another method of finding brands by the way is go to trade shows. I entered into a discussion with a sunglasses brand, a $200 million a year brand and their number one problem is unauthorized sellers and MAP violations. And they said, man, if you can fix that, if you can help us fix that, we would authorize you to become a seller. And I am reasonably close. I haven’t got the yes yet, but I am reasonably close to getting it and that’s why because we understand how to solve that problem.
Steve: Okay, so let’s back up a little bit. Are you comfortable sharing some of the metrics that you look for in a product?
Steve: Okay. So what is the minimum profit that you would expect, and what are some things that make you attracted to a certain product over another?
Trent: So let’s talk about what we did in the beginning and then we’ll compare that to how we do it now because now we’re a little bit more mature and we have far more resources than we had in the beginning, so we go after bigger elephants now. But in the beginning, we were very happy to carry even just one product from a brand as long as we could make 300 bucks a month or more, or if we carried a couple of products from the same brand, if that one account would make us 400 bucks a month or more. And these are just rules of thumb; you can pick whatever number you would like.
These are not the correct numbers; they’re just the numbers we used. Then we would carry that brand because a small brand like that, I mean, once you have a relationship, all you’re doing is reorders. So, the amount of labor involved is really, really low. And so, if you could get 3, 4, 5, 6 or 10 of those products that are like that, now you’re making three, $4,000 in gross profit each and every month, and that’s a heck of a good start. And so, for anyone who’s listening who obviously still has a full time job, and they’re thinking about doing this part time, that is not an insignificant amount of income and someone could easily manage that on a part time basis. Now, it’s a little bit more work to build it, of course, but there are ways to help reduce labor on that and we can talk about that more later, but in the beginning, that’s what we focused on.
Steve: So just to be clear, you’re actually buying these products also and shipping them into FBA, right?
Steve: Okay. And what is the minimum buy? I would imagine a lot smaller than private label, right?
Trent: Yeah, it is. This is one of it, so one of the things that appealed to me so much about wholesale versus private label is risk of loss. So, when I did private label, MOQs were typically two to $3,000, and if I screwed it up, if I picked the wrong product, it’s quite possible I could lose the lion’s share of that money. In wholesale, that scenario is virtually impossible because you’re buying products that have established sales velocity. So, it’s not a question of are they going to sell? It’s only a question of are they going to sell profitably, or at breakeven, or maybe a small loss. And so, MOQs depends on the brand, I mean, a thousand bucks, I think we put in first orders for 700 bucks. Typically now we’re doing bigger than that. We’ve had initial orders that were 20 grand.
So, it’s all dependent upon the brands that you’re pursuing. The big thing to understand is it’s way less risk and the time to market for private label is measured in months because by the time you think, do all your product research and get samples and talk to factories and put your order in and get it shipped over and create your listing, and get your Photoshop, blah, blah, blah, blah, blah, a long time goes by. With wholesale, you can literally have products in Amazon’s warehouse as soon as a week or two after your first phone call.
Steve: Right. I guess the other disadvantage though also is you don’t own the brand, you don’t own the product and I guess vendors probably come and go periodically, right?
Trent: They do but you own the business and you own those relationships. So, there is a number — I mean probably one of the biggest in the space is Netrush. Netrush does over $100 million a year doing what we do, and they don’t own any other brands. But do you think network is worth a fair amount of money?
Steve: Yeah, I mean, it’s just like a traditional retailer, right? Like Target carries most other people’s brands, they have their own brands but…
Steve: It’s just a traditional wholesale business.
Steve: Cool. So, can we talk about how to land a vendor? So, it sounds like you’re getting exclusive vendors now, so what is your negotiation, how does it look like?
Trent: So, that’s always the goal but you don’t necessarily start there. So, yesterday I was speaking with a brand owner and he’s the sole seller, does about 200,000 a month on his line and he’s a little bit overwhelmed right now. So he’s a small company, he doesn’t have enough boys to do all the work and so some things are falling through the cracks. So there’s the opportunity for us. And so I said to him, I said, look, why don’t we start off with instead of trying to get this guy to sign a contract with me on day one granting me co exclusivity on his entire product line, which is a big decision and would have a long sale cycle, I make it easy. I say, look, let’s just pick a product or two and you let me order enough so that I’ve got inventory to last a couple of months.
We’ll do a test order first just so I can verify all the volumes that our tools are estimating to make sure that we know how much this thing actually sells and then let me place enough orders so that I’ve got inventory for 60 or 90 days and let me show you what we can do. And we’re going to run Pay Per Click campaigns and we’re going to optimize the listing and we’re going to respond to negative product reviews, maybe we’re going to create some bundles, there’s all sorts of things that we can do to help increase market share which is one thing brand owners want to see.
The other thing that we could be doing during that period of time in the case — now, the story I’m telling is not a good example. But another example where there’s multiple sellers, and there’s unauthorized sellers. We can also then over that period of time work to reduce the number of unauthorized sellers and restore MAP pricing. Now, if you do that well on a couple of their products, you’re golden. They’re going to say, hey, obviously, you guys know what the hell you’re doing. This has been a great experience. Now you can present them with a contract. And now you can say, look, I want exclusivity on your entire line of products. And that is a far easier yes to get.
Steve: So to be clear, these brand owners are not selling themselves on Amazon, right? They don’t want to be dealing with the Amazon side of business. And so that’s why they’re soliciting I guess third party sellers?
Trent: They’re not necessarily soliciting. Some are, I remember we won an account a year, a year and a half ago. They were actively looking when they got our email and we won and that was a huge account. So yes, they were soliciting but many times like this particular guy, he’s been solicited before by a number of my competitors, and either I had better timing or I caught him on a good day or I had a better pitch. Because either way, he’s now getting ready to hop on an airplane and come and see us because he’s committed to, or he seems committed to moving forward into a relationship with us.
Steve: Okay. And in terms of finding these vendors, you mentioned going to trade shows, but I would imagine that’s not how you get the bulk of your vendors, is it?
Trent: It can be. As a matter of fact, I just interviewed a guy on my show by the name of Ryan Grant, who’s on episode Number 246, and he does get the bulk of his from trade shows. But here’s the silver bullet of trade shows, you need to have a name to drop. So, I recently attended the Outdoor Retailer show which is a very large show, a lot of big brands there. I did my homework beforehand so I had my shopping list. I knew I had a virtual assistant go through all the exhibitors list, figure out what their Amazon revenue was, stack ranked them in order of the best to the least. And then I figured out which ones were in my sweet spot, and I made sure I went and visited all of those companies.
So, I talked to about 40 different companies over a three day period. The number one question I was asked is who are you working with in our niche now? And that was a new niche for us. So, my answer was, well, no one yet, but this is going to be a niche we want to focus on blah, blah, blah, blah, blah, blah and I’m working on winning. I have out of all of those 40 companies; I’m really only in an active discussion with one or two. Now, once I get the one or two, it would be much, much easier and that’s what Ryan told me. He says once he had a name to drop, so we do actually have a big brand name in the health and nutrition niche. So, we’re going to be now starting to go to shows for that niche and name dropping that company’s name because they are a huge player in that space and everyone will know their name and that’s a lot of social proof.
Steve: What is the brand’s motivation for not selling themselves on Amazon?
Trent: Some of them do it and some don’t. And if they don’t, it’s just because they consider themselves a wholesale company. And oftentimes, they don’t want their retail distribution partners, their brick and mortar partners to see them selling on Amazon because then they’re like, hey dude, you are competing with me, what the hell. Whereas other brands they do, they are a seller themselves. We have relationships like that, where the brand and ourselves are the only two authorized sellers and sometimes what those brands will do like our largest account right now, in the beginning, we split the buy box evenly.
And after a while, I pitch to them and I said, why don’t you guys just step out of the buy box and we’ll do some extra stuff for you with this extra profit that we’re going to make? And they said, sure. So let’s say the product was at 20 bucks. They raised their buy box or their price to $26, they get now no percent of the buy box because the Amazon algorithm is never going to rotate them in when I’m at 20 and they’re at 26. And essentially, we would get 100% or we got 100% of the buy box as a result of that.
Steve: That’s interesting. I’m just wondering why they would want other people selling if they’re selling as well. Like, what’s the motivation there?
Trent: So, there’s a couple of things. One is if a brand has 100% of the buy box and they split it with us, it actually only reduces their net profit by 10%. And the reason that is because the other half of the buy box we’re still buying those products wholesale from them and we’re paying Amazon fees that that they would be paying on that other half of the buy box and we operate on a 20% gross margin. So, 20% down with half the buy box equals 10% is all it costs them, so why would they do it? Number one is mitigation of risk. If they are the sole seller and for whatever reason their account were to get suspended, or they were to run out of inventory or if anything happens to the BSR and their products.
Steve: I see. Okay.
Trent: And so, that’s reason. That’s one of the reasons. The other one is that we have a higher level of expertise on the Amazon platform than they do; we have more resources than they do. And we say to them, we’re going to help you to do things that are going to take sales to a higher level than they are at now. And so that’s another way of adding value.
Steve: I just wanted to take a moment to tell you about a free resource that I offer on my website that you may not be aware of. If you are interested in starting your own online store, I put together a comprehensive six day mini course on how to get started in e-commerce that you should all check out. It contains both video and text based tutorials that go over the entire process of finding products to sell all the way to getting your first sales online. Now this course is free and can be obtained at Mywifequitherjob.com/free. Just sign up right there on the front page via email and I’ll send you the course right away, once again that’s Mywifequitherjob.com/free. Now back to the show.
Okay, so Trent, one of the reasons why I’m having you on is because you’ve completely automated this Amazon business through SOPs which are standard operating procedures. So, this is kind of why I asked you about the trade show thing early on, do you actually have your employees go to trade shows on your behalf?
Trent: So I did, so we had an employee that I hired who was in charge of sourcing that he left recently, so I’m temporarily wearing the hat until I find a replacement for that individual. I’m actually now in a more active role in the business which is why I went to that trade show but he had gone to the ones previous. So this individual, he was the one sending all the emails, dealing with all the replies, talking to the brands, looking at price lists, sending them the contracts to getting them signed. I had no for over about a year I had absolutely no day to day role in the company whatsoever because of our SOPs and because of the team. And like I said, because of his absence now, I’m temporarily back in, but only until I find a suitable replacement.
Steve: Okay, so can we talk about your SOP process, how these are created, how everything works?
Trent: Yeah. So that was the big differentiator for us. People ask me, gosh man, how did you get to 100 grand a month in just five months? And I said, well, I sent how many emails, it was thousands of emails to prospective brands. And that sounds simple to do but when you break it down, there’s actually a boatload of work in sending that many emails because you’ve got to find competitive sellers, that takes labor. You’ve got to extract their storefront into spreadsheets, that’s more labor. You then have to run math on every single one of the products that are in those spreadsheets, more labor, then you have to for the ones that pass your filters, you have to identify well, which company, who is the right person at that company? What’s their email address? And you got to get all that data into HubSpot, and then you got to send out an email.
That is a lot of work. And so, when I started off because I’ve always been a big believer in creating documented systems, before I started to do any of the labor and like roll up my sleeves and do work, I instead I sat down and I designed a system for all of those steps that I just described. And then I document that system. And then I hired a number of virtual assistants from the Philippines at three bucks an hour and I simply had them do all of that grunt work so that with essentially no labor of mine, and a small amount of labor from one of my employees, I was able to send out two to 300 emails a week, that’s two to 300 leads, new product leads each and every week, week after week after week.
And all I had to deal with and this was before I hired anyone else and I was the guy in charge of sourcing, all I had to deal with was the replies. We’d send those two or 300 emails, I’d get a lot of replies and then I’d be replying back and forth and moving those conversations forward and filling out account applications and getting price lists and negotiating on prices and ultimately issuing a purchase order. And without the SOPs, I never could have done that volume of emails.
Steve: So, are those processes of replying, are those outsourced as well?
Trent: No, the replies, we didn’t outsource that because now you’re in a conversation, now we have processes that guide me and guide my team in that, but it’s not outsourced to a virtual assistant.
Steve: So, all this outreach and that sort of thing, is it all rote meaning like there’s no creativity that’s involved in drafting one of these emails?
Trent: Correct, it’s pure carpet bombing.
Trent: Now, that’s not the only way that someone should source but it worked extremely effectively for us. And so, it is one of several arrows in your quiver that you should use. And the reason that’s important is I’ll use this brand, they’re no longer with us, they were with us for only a year, a year and a half. They were a supplement company and they got one of our many emails. I mean this is how we landed all of our brands, and if you’re not sending a lot of emails, you’re not giving yourself the opportunity to find a brand that has already decided they’re looking for a third party seller.
Steve: Can you kind of describe your carpet bombing process, like what are your filters like on how you do research and how you decide who to carpet bomb I guess?
Trent: It’s kind of what I described before. We would find all these existing sellers who met certain criteria.
Steve: Are there SOPs for that as well?
Trent: Yeah there’s SOPs for everything. In my office, the going joke is you can’t even fart unless there’s an SOP for it, so everything is defined. So, one virtual assistant would be in charge of making a list of sellers, competitive sellers, other third party sellers because our thinking was simple, if they can carry the product, so can we. And if they’re making money, so can we. So, we started with that, then there was another SOP for extracting their products using a tool called price checker too into a spreadsheet. So for a given third party seller, they might have 100 products, they might have 3,000 products; we’re going to dump all those products into a spreadsheet.
And there’s another SOP for that spreadsheet. And there’s a spreadsheet template that would cause excuse me math to be done on each and every row automatically since we paste everything in to calculate our estimated profit per product. And the labor, there would be a VA would have to manually go and see for each product how many sellers were in contention for the buy box because there was no really great way to automate that one little bit, but for three bucks an hour, I don’t really care. I’m happy to pay for it.
And so, then that spreadsheet would give us a list of leads. We then figure out who the contact was for each one of those leads and a VA is doing that via LinkedIn and something called Snovio which helps us to find email addresses and then we import them into HubSpot. And then we use another tool called GMass and we send these hundreds of emails out. And that’s how it goes.
Steve: What is your hit rate like? I’m just kind of curious.
Trent: Low, less than 2%.
Steve: Less than 2%. Okay, but it’s worth it right. Once you land one of those, that could be like a six figure account.
Trent: Hell yeah, absolutely.
Steve: How many people do you have running this business?
Trent: So, right now there are three but they’re not all. So my wife works around 25 hours a week. She’s the COO. We have another fellow who is in charge of inventory management and reorders which my wife used to do. And then we have another woman who splits her time about half between my information products business, the Bright Ideas business and the Amazon business. So, I guess you could say if you consider on an FTE basis, it’s run by about two full time people. And then to make it grow, you need another one which right now temporarily is me, but the goal is to hire another person because you always have to be looking for new brands because you’re going to have attrition. So if you don’t, if you’re not putting food in, obviously shrink. So to run it two, to make it grow three.
Steve: So, can you kind of describe the — so what you’re describing sounds great, but it also sounds a little bit overwhelming. So, what is your process for getting these SOPs created? How do you even deploy these SOPs properly? It sounds like in my mind, you might have like this bundle of SOPs but how do you kind of coordinate what everyone is doing?
Trent: It’s not actually as complicated as you think. So, the old expression, how do you eat an elephant one bite at a time? So, when I started there was no SOPs. So, I sat down and I thought, well, what are the steps to do find a competitive seller, and I simply created a Google document. They don’t live there anymore. They’re not in Google anymore. We’ll get to that in a minute. But in the beginning, I just created the Google document. It says, do this and then I’d have a screenshot with big red arrows, and then do this and have a screenshot with more big red arrows and that’s one SOP. And then you just keep adding more and more and more and more SOPs.
Now, of course, now we’re at, I don’t know, 70 or 80 SOPs, and we’ve got people on a team, Google Docs isn’t cutting it anymore. So we actually built our own software called Flowster, you can find it at Flowster.app, and that is SOP software. And the reason that you need software is as you have more and more SOPs that are kind of in progress and because each SOP is kind of like a mini project, right? Every time you’re doing a competitor extraction, that’s a mini project, you’re just doing it over and over and over and over again.
And we don’t have SOPs just for product sourcing; we have them for PPC campaign management. We have them for shipping and receiving. We have them for purchasing. We have them for inventory management. We have them for listing optimization. We have them for HR, we have them for Amazon account health, and we have them for everything. So, the benefit of having them in software is now each SOP can be kind of like Trello. You can assign members to it, you can give it a due date, you can give it multiple due dates, because if an SOP has like 15 steps, maybe there’s different due dates for the different steps, you can assign those steps to different people. And the software is then sending alerts to everyone saying, hey, you’ve been assigned to this task, the due date is this, click here to begin? It’s what brings cohesion to having what would otherwise be just this huge, fragmented pile of SOP spaghetti.
Steve: Right. No, that makes sense. Actually one question I have as I’m thinking about those right now is when you’re having people look for products, sometimes there’s some gut feeling there. Like, it’s not always about the raw numbers, because I’m thinking about when I’m looking for products to sell, there’s always some amount of intuition involved. And how do you kind of document that?
Trent: So, we don’t really worry about documenting intuition and I’ll explain why. So, let’s say that we send 300 emails in a week. And the product sourcing agent, which is currently me, but I’ll be replaced by one or two plays, they will be trained over time to have the intuition. So they’re looking at, all these emails go out; boom, and then they’re getting replies. And when they get a reply, that’s when they start doing a deeper dive, do I really want to, let’s say a brand replies and they say, well, we don’t want any more Amazon sellers, which is a very common reply. Okay, so now is the product sourcing agent with the intuition, I’m going to look at that brand and I’m going to look for some key attributes.
I’m going to look at, well how much does the brand do in total? Are their sales up year over year? How are their sales over the last quarter? How’s their distribution among their products? What does their product listings look like? And for the main keywords, where do they rank in the search results? Well how much market share do they have relative to their competitors? Do I think there is room for us to help this brand make improvements? And does this brand carry the type of products that we think are really great products and that we’d love to have a relationship with? What’s their social media presence look like?
But there’s other things that the intuition part of it factors in and then that would then allow the product sourcing agent to make a decision of how aggressively or not they’re going to pursue that brand to try and get them to change their mind from a no we don’t want any more Amazon sellers into a yes. And that is where the skill comes in. So, this really large brand that we have, the one that’s got the great name in the fitness niche that is exactly what happened. I picked up the phone and I called them and no, I don’t want any more Amazon sellers. And I started asking the usual questions that I asked. He gave me the answers that I was expecting. I explained to him how we could solve the problems that he was having. And by the 18 minute mark of the phone call, he said, you are approved.
Steve: Nice. I would imagine that’s a lot to do with your skill as a negotiator. What happens when you’re just first starting out and you got nothing?
Trent: So when you’re first starting out and you got nothing, you go for the low hanging fruit. You’re going to pursue like we did smaller brands. Much of the transaction, much of the conversation is going to happen over email. Like we landed plenty of brands in the beginning, I shouldn’t say brands, products; we landed plenty of products in the beginning. We didn’t have exclusivity back then, we would just buy the product if the numbers made sense without ever talking to any human being on the phone. Everything was done over email. The purchase order was sent and we made money on the product.
What happened over time though is you’ll outgrow that as you get bigger and as you get more working capital and your appetite for relationships with brands will trump your desire to just add more products because if you have too many products, it can become difficult to manage because you’re going to have races to the bottom. So those products are going to churn. If you’ve promised brands to do things, but you have too many, it can become overwhelming. Maybe you don’t have enough margin to hire enough people. It’s a great way to get started and that’s how I got to 100 grand a month focusing on products. But now we don’t focus on products. Now we focus on brands.
Steve: What is your process for looking at your portfolio and eliminating the products over time?
Trent: Pretty simple. So again, you have to first of all decide whether you’re product focused or brand focused because if I’m brand focused, and let’s say a given brand has two dozen products and they want me to carry them all, and the 80/20 rule will probably apply. And if 20% of them are making 80% of money and that’s a good healthy account for me; I’ll still keep stock of the ones that aren’t selling, because that was part of the commitment to have the relationship with the brand.
Steve: Okay. And by just keeping them in stock, you’re just keeping them in the warehouse. They might not sell, but you’re just keeping them in there and you’re paying long term storage fees potentially?
Trent: Potentially. But I mean, let’s define how many I’ve got in stock. If they’ve got a product they want me to carry, and it’s not selling very well, I’m not going to own 400 of them. I might own 12.
Steve: Right, that makes sense. That makes sense. And in terms of — I imagine you have like a minimum profit level before you stop carrying a certain product, right?
Trent: Yeah, again, it depends if you are product focused or brand focused. If you’re product focused, I wouldn’t carry a product that makes me less than probably 200 bucks a month because there’s still a small amount of labor in looking at it and doing the reorder and carrying the inventory and 200 bucks a month is not a lot of money. But if you’re brand focused, it’s all about just how much money is this brand making us in total? And that’s always what we look at when we make a decision of whether to continue or not.
Steve: How did you make the transition from product focused to brand focused, did something happen?
Trent: Well, we got to the point where we had cash flow credibility resources and a team. And so, now we could more credibly pursue relationships with bigger brands. And we’re literally at that inflection point right now where I did some analysis of Netrush and a few of the other really fast growing third party sellers that are doing 100 million, 80 million, whatever and I said like, okay, I want to be as big as those guys, what are they doing? And they were carrying much larger brands than us, so we made a decision to place our focus more on now going after bigger brands.
And in order to do that, you better have some credibility. And we have that credibility now, because we’ve got that one really great big brand name, plus we’ve got all of our store reviews, plus we’ve got our revenue and our team and we own our building and blah, blah, blah, blah, blah. But we didn’t have that in the beginning.
Steve: So, what is your pitch now to larger brands, and has that differed from the beginning when you were just pitching individual products?
Trent: The pitch is pretty much the same. You still need to demonstrate to a brand that you’re going to help them solve problems, and that you’re going to bring value to the table. So, it’s not the pitch that changed, we just pointed the gun at bigger targets.
Steve: Okay. But I would imagine you have a set, you have set things that you say that are very convincing, right?
Trent: Yes, the number one pain by far is identifying and ultimately removing unauthorized sellers, especially those that are violating MAP, that’s the biggest problem. There are other problems, but they’re a small problem relative to that one. And then the other thing that’s not so much a problem is just a benefit is and will help you to increase market share, because maybe we can run Pay Per Click campaigns more effectively than you can because we have higher levels of expertise and dedicated people and we pay for expensive software than you do. So, if we can get more market share by doing that, or maybe we’re going to create like one of our this big brand, we create bundles of several of their products that drive entirely new sources of revenue for them and they love that.
Steve: And how do you go about removing these violators of MAP to get these people kicked off?
Trent: Yeah, that’s more of a trade secret because it took us a long time to learn, and there are ways to do it.
Steve: Okay, there’s nothing you can share that’s low hanging fruit?
Steve: Okay that’s your secret sauce. Well Trent, your secret sauce is also SOPs. I want to give you an opportunity to just kind of talk about what you have to offer and where people can find you online.
Trent: So, what I have to offer, I spoke at a conference on wholesale a year and change ago and I didn’t have anything for sale to help other Amazon sellers at that point in time. And I talked about all my SOPs much like we’ve done today. And a lot of people came to the mics afterwards and said, man, oh man; I don’t want to have to recreate what you built, would you just sell it to me? And so, we decided to take our SOPs and we did turn them into a product called WEBS which stands for Wholesale E-commerce Business Systems. And WEBS are available for sale currently twice per year, and the next time they’re going to be available is actually October 22, so the interview is relatively timely. If people would like to be able to learn more, all they need to do is come to Brightideas.co, become an email subscriber and you will definitely be marketed to, these SOPs will be offered to you.
You can attend the live webinar, you can learn all about them. You can read the FAQ, you can watch the videos. All that stuff kind of starts happening, I think the webinar is October 17th and then the cart will be open for one week. And if someone believes that they’re a good decision for themselves, they can buy them during that week and if they choose not to, then they’ll have to wait for the next time.
Steve: And Trent also has a podcast called Brightideas.co of which I was a guest not too long ago. And Trent is actually going to be speaking at the Sellers Summit next year in May.
Trent: I will indeed.
Steve: So, Trent thanks a lot for coming on the show. I really appreciate your time.
Trent: Thank you very much for having me on Steve, it’s a pleasure.
Steve: Take care.
Hope you enjoyed that episode. Now, I actually had the chance to meet Trent for the first time at the Ecommerce Fuel Live event in New Orleans and we hung out for most of the weekend. And in addition, Trent will also be speaking at the Sellers Summit in May. For more information about this episode, go to mywifequitherjob.com/episode247.
And once again, I want to thank Klaviyo for sponsoring this episode. Klaviyo is my email marketing platform of choice for developing real quality customer relationships. And right now they just released a cool docuseries called Beyond Black Friday where you can learn successful e-commerce marketing strategies from real companies using their platform. Now, the docuseries is free and you could check it out at Klaviyo.com/beyondbf, once again that’s K-L-A-V-I-Y-O.com/beyondbf.
I also want to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. And I like Privy because it’s so powerful and you can basically trigger custom pop-ups for any primer that is closely tied to your ecommerce store. If you want to give it a try, it is free. So, head on over to Privy.com/Steve, once again, that’s P-R-I-V-Y.com/Steve.
Now, I talk about how I use these tools on my blog, and if you’re interested in starting your own e-commerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.
Outro: Thanks for listening to the My Wife Quit Her Job Podcast where we’re giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.Mywifequitherjob.com.