327: What It Takes To Make 6 Figures Of Profit In Ecommerce With Steve Chou

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You’re listening to the My Wife Could Her Job podcast, the place where I bring on successful bootstrap business owners and delve deeply into the strategies they use to grow their businesses. Today, I’m going solo to address a specific segment of my podcast audience who are either running stagnant businesses that aren’t growing as fast as they would like, or for listeners who have yet to pull the trigger on entrepreneurship. I’m going to talk about the challenges that my wife and I faced early on and breaking down what it really takes to make six figures in profit.

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which is what most people need to make in order to feel comfortable quitting their day job. But before I begin, I want to thank Postscript for sponsoring this episode. Now, if you run an e-commerce business of any kind, you know how important it is to own your customer contact list. And this is why I’m focusing a significant amount of my efforts on SMS marketing. SMS, or text message marketing, is already a top five revenue source for my e-commerce store, and I couldn’t have done it without Postscript.io, which is my text message provider. Now, why did I choose Postscript?

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It’s because they specialize in ecommerce stores and ecommerce is their primary focus. Not only is it easy to use, but you can quickly segment your audience based on your exact sales data and implement automated flows like an abandoned cart at the push of a button. Not only that, but it’s price well too and with the holiday season rolling around, SMS is the perfect way to engage with your customers. So head on over to postscript.io slash Steve and try it for free. That’s P O S T S C R I P T dot I O slash Steve. I also want to thank Claviyo who’s also a sponsor of the show.

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Now it’s safe to say that most of us have been doing more online shopping lately. And if you’re an ecommerce brand, that means you might be seeing more first-time customers. But once they’ve made that first purchase, how do you keep them coming back? That is what Klaviyo is for. Klaviyo is the ultimate email and SMS marketing platform for ecommerce brands, and they give you the tools to build your contact list, send memorable emails, automate key messages, and more. A lot more. And that’s why over 50,000 ecommerce brands like Chubby’s, Brooklinen, and Living Proof used Klaviyo to build a loyal following.

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Strong customer relationships mean more repeat sales, enthusiastic word of mouth, and less depending on third party ads. So whether you’re launching a new business or taking your brand to the next level, Klaviyo can help you get growing faster and it is free to get started. So visit klaviyo.com slash my wife to create your free account. That’s K-L-A-V-I-Y-O dot com slash my wife. Now onto the show. Welcome to the My Wife, Quitter Job podcast, where we’ll teach you how to create a business that suits your lifestyle.

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so you can spend more time with your family and focus on doing the things that you love. Here’s your host, Steve Chu.

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Welcome to the My Wife Quitter Job podcast. In this episode, I’m going to be talking about overcoming self-doubt in business and what it really takes to make six figures of profit in e-commerce. Now looking back, one of the biggest challenges of starting our e-commerce store was the lack of support. So for example, when we got started in 2007, we had no one to talk to, we had no one to share our experiences with, and we had no one to compare strategies with. And to make things worse, most people doubted that we would ever be able to replace my wife’s six figure income selling handkerchiefs online.

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Now, if most of your friends work full-time day jobs, then most of them will be skeptical of your chances for success. And there will always be a small part of their mind that secretly hopes that you will fail. Now, your friends aren’t bad people for thinking this way. It’s just that human nature causes people to doubt any path that they have not chosen for themselves. Even though I run two seven-figure businesses, I still consistently get three to five emails per week from people who simply do not believe that money can be made in e-commerce

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let alone six figures in profit in a single year. So for example, here’s an email that I received just the other day. Steve, your figures do not add up. There is no way that your wife made a hundred thousand dollars in profit in her first year doing most of the packing by herself. So first of all, making six figures within a year is not uncommon. In fact, it’s not even that impressive anymore. And I have over a hundred podcast guests that have well exceeded this number. Ryan Moran made seven figures in revenue with a profit margin of about 30 % in his first year.

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Nemo Chu did something similar and one of the students in my class, Toni Anderson made 190 K in her first seven months selling jewelry online. Now making six figures per year with an e-commerce store may sound insurmountable at first, but let’s break down this number and take a look at it from a different perspective. A typical online store that sells other people’s products makes roughly a 50 % margin. So in order to make a hundred K you have to generate 200 K in revenue.

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Now a typical Amazon seller makes a 33 % margin after all the Amazon fees and product costs. So in order to make a hundred K in profit on Amazon, you need to generate 300 K in revenue. But for our online store back in 2007, we imported all of our stuff from Asia and our margins were anywhere from 75 to 95%. So for us to make a hundred K in profit, we needed to generate between 105,000 and 133,000. But for the sake of simplicity, let’s just assume 125 K in revenue.

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was required for us to make 100K in profit. Now note, back in the day, we ran everything from our garage and pretty much had zero overhead. We charged really high shipping rates as well, so we actually made money on shipping. Now, if you do the math, 125K divided by 365 days per year equals $342 per day. Now our average order size was around $50, so that meant we only needed seven orders per day to make $125,000 for the year. Just seven orders per day.

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It doesn’t sound like a whole lot when you think about it that way, does it? Now, according to that reader’s email above, it is physically impossible to pack seven orders per day while working a full-time day job. But what do you think? Now, is it grueling work to have to pack orders for several hours after you’re already tired from working a long day of work? Absolutely. But is it impossible? Hardly. So first off, my wife was not alone. We packed orders together and we were a team. I got off work at around 6 PM.

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ate dinner and then helped her pack until late at night. And here’s another little known fact about our business. I was actually in charge of doing all the sewing and embroidery for the first year. Now, why was this my job? It’s because even though sewing was one of my wife’s favorite hobbies, she actually hated doing it for the money. So rather than give up a potential cash cow that generated 95 % margins, I took the helm and operated the machines. Now I would come home from my 50 to 55 hour work week designing microprocessors

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and then I would sew for several hours until all of our personalized orders were fulfilled. But realistically speaking, packing and shipping seven orders per day was not a big deal at all. And if you are determined, you can do it. Now here’s the thing. Back when my wife and I first started, there was no Amazon. There were very few, any, 3PLs and 3PL is a third party logistics firm, which is basically a fulfillment house for your goods. Now for more information, you can actually check out my post in the show notes on why you need a fulfillment center and my top 3PL picks.

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In any case, as a result, my wife and I were forced to pack and ship all of our orders by ourselves. We had to carry inventory, which meant that we needed to dedicate space in our house to store our goods. Now today, that is obviously not the case. Thanks to Amazon FBA, you can actually ship all of your goods directly to Amazon’s warehouse and have them do the shipping and fulfillment for you. They will also handle all of your customer service. So you don’t need to pick up the phone. You don’t need a physical address for your company and you don’t need to handle returns.

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And thanks to the rising popularity of e-commerce, there are also many 3PL companies that will handle all of your shipping and handling needs if you decide not to go the Amazon route. Also back in 2007, I only had a couple of choices from my website. I could either download an open source shopping cart and run my own server, or I could develop my own homegrown solution. There weren’t any good fully hosted shopping cart platforms at the time. And you actually had to invest a significant sum of money to get your website designed if you didn’t have any design skills.

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but today you can sign up for a service like Shopify or big commerce and have a website up within a day. If you want a little bit more control, there are a plethora of open source options like open card, WooCommerce and press the shop. Putting up your own website has never been easier and it’s very affordable too. Now, once you have a product to sell, the next logical step is to drive traffic to your listings and complete the sale. However, most people struggle with this step and it’s true.

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driving traffic to your own branded website is difficult and requires some amount of skill.

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If you sell on Amazon or run any online business for that matter, the most important aspect of your long-term success will be your brand. And this is why I work with Steven Weigler and his team from Emerge Council to protect my brand over at Bumblebee Linens. Now what’s unique about Emerge Council is that Steve focuses his legal practice on e-commerce and provides strategic and legal representation to entrepreneurs to protect their IP. So for example, if you’ve ever been ripped off or knocked off on Amazon, then Steve can help you fight back and protect yourself.

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Now, first and foremost, protecting our IP starts with a solid trademark and Emerge Council provides attorney-advised strategic trademark prosecution, both in the United States and abroad for a very low price. And furthermore, the students in my course have used Steve for copyrighting their designs, policing against counterfeits and knockoffs, agreements with co-founders and employees, website and social media policies, privacy policies, vendor agreements, brand registry, you name it. So if you need IP protection services, go to EmergeCouncil.com and get a free consult.

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And if you tell Steve that I sent you, you’ll get a hundred dollar discount. That’s E-M-E-R-G-E-C-O-U-N-S-E-L.com. Now back to the show. Now that is why I actually recommend all beginners dip their toes in the e-commerce waters by selling on Amazon. Amazon has such an enormous built-in marketplace that any well-researched product you throw up will probably sell, especially during the holidays. Now, when I personally launched my first couple of products on Amazon, I literally made $3,000 in that first month.

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doing absolutely nothing. My products had zero reviews. I didn’t do any giveaways. The products just sort organically all by themselves. And our sales have continued to increase month after month to the point now where Amazon is actually generating meaningful revenue. Anyway, here’s my recommended flow. If you want to get started in e-commerce, so start off by selling on Amazon and take advantage of Amazon’s vast marketplace to test the demand and viability of your products. And then only after you start making some decent money on Amazon,

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put up your own branded website after you are generating consistent sales. And then continue to sell your products on as many different marketplaces as possible while focusing most of your efforts on your own website. Remember, if six figures is your end goal, then it helps to break down your problem into smaller pieces. Now, for my wife and I, we knew that we only needed six or seven orders per day to reach our goal. But if we thought about it in terms of making $100,000 in profit, we might’ve gotten discouraged early on when business was very slow.

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So bottom line, when it comes to selling online, you don’t have to swing for the fences and start the next Google, Target or Walmart online. If all you want to do is replace your day job income, your goal is well within your reach. Now, hopefully I’ve shown you that replacing your day job income is not a huge undertaking when you break things down. And the key to success is not paying attention to the skeptics and the doubters. So bottom line, people who cannot relate with what you are doing will not necessarily support you.

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and people who do not understand what you are trying to do are not good sources for advice. The best way to get real advice and support is from other like-minded entrepreneurs. So instead of relying on your friends and your family, join an entrepreneurship community or attend a conference and start meeting new people. So if you’ve made it this far, I want to let you know that I actually offer a free six-day mini course on e-commerce. You can go over to mywifequitterjob.com slash free to check it out and it is completely free. And I also run an annual e-commerce event called the Seller Summit.

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which can be located over at seller summit.com.

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Hope you enjoy that episode. Now because I’m much further along in my business today, sometimes I forget about how hard it was in the very beginning. So I hope that you got a glimpse of what it was like when I got started and that you have the motivation to press through the obstacles ahead. For more information about this episode, go to mywebquitterjob.com slash episode 327. And once again, I want to thank Clavio, which is my email marketing platform of choice for e-commerce merchants. You can easily put together automated flows like an abandoned cart sequence, a post purchase flow, a win back campaign.

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Basically all these sequences that will make you money on autopilot. So head on over to mywifequitterjob.com slash KLAVIYO. Once again, that’s mywifequitterjob.com slash KLAVIYO. I also want to thank Postscript, which is my SMS marketing platform of choice for e-commerce. With a few clicks of a button, you can easily segment and send targeted text messages to your client base. SMS is the next big own marketing platform and you can sign up for free over at postscript.io slash Steve.

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That’s P-O-S-T-S-E-R-I-P-T dot I-O slash Steve. Now I talk about how I use these tools on my blog and if you were interested in starting your own eCommerce store, head on over to mywifequitterjob.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.

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