Today, I’m thrilled to have Justin Mares on the show. He is the founder of KettleAndFire.com, a company that sells America’s first and only USDA grass-fed bone broth.
I’ve been getting a lot of emails lately from readers asking for more food based business owners on the podcast. And Justin will walk us through the process of selling food online.
What You’ll Learn
- Why Justin decided to sell bone broth.
- How he evaluated his product for profitability.
- Kettle and Fire’s value proposition
- How to create food products when you know nothing about the industry
- What certifications are required to sell food products
- How Justin validated this niche before investing a lot of money
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.
Scope.Sellerlabs.com – If you are selling on Amazon, then Scope from Seller Labs is a must have tool to discover which keywords will make you the most money. Click here and get $50 off the tool.
Kabbage.com – If you run a physical products based business, sometimes you need a short term loan to buy inventory to meet demand, especially during the holiday season. Kabbage helps small business owners access simple and flexible funding right away. Click here and get a $50 Visa gift card upon signup.
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.
But before we begin I want to give a quick shout out to Klaviyo who is a sponsor of the show. I’m always super excited to talk about Klaviyo because they are the email marketing platform that I personally use for my ecommerce store, and I depend on them for over 20% of my revenues. Now you’re probably wondering why Klaviyo and not a different provider. Well Klaviyo is the only email platform out there that is specifically built for ecommerce stores and here is why it’s so powerful.
Klaviyo can track every single customer who has shopped in your store and exactly what they bought which allows you to do many things. So let’s say I want to send an email out to everyone who purchased a red handkerchief in the past, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they purchased, piece of cake, and there is full revenue tracking on every single email.
Now Klaviyo is the most powerful email platform that I have ever used and you can try them for free at mywifequitherjob.com/K-L-A-V-I-Y-O, once again that’s mywifequitherjob.com/K-L-A-V-I-Y-O.
Now I also wanted to give a shout out to my other sponsor, Seller Labs and specifically I want to talk about their awesome Amazon tool, Scope. Now if you know me I get really excited about tools that I like and use, and Scope is a tool that actually increased my Amazon sales on several of my listings by 39% within the first week of use, crazy, right?
Now what is this tool do that could possibly boost my sales so quickly? Well, quite simply Scope tells you what keywords are driving sales on Amazon. So here is what I did, I searched Amazon and I found the bestselling product listings in my niche and then I used Scope to tell me exactly what keywords that bestselling listing was using to generate sales. I then added these keywords to my Amazon listings and my sales picked up immediately.
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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: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Justin Mares on the show. Now Justin is someone who was introduced to me by Sol Orwell who actually will be a future guest on the show. He is the founder of kettleandfire.com, a company that sells America’s first and only USDA grass fed bone broth. Now, I’ve mentioned this before but I’ve been getting a lot of emails lately from listeners asking for more food based business owners on the podcast. And Sol hooked me up with Justin and with that, welcome to the show Justin. How are you doing today, man?
Justin: I’m doing great man, how are you?
Steve: I’m doing great. Justin I had a chance to go through your site and Bone Broth to me at least seems a little bit random. So give us a quick background about how you got into ecommerce, and how you came across bone broth of all the different things that you could sell online.
Justin: Sure. So I’ve been involved in CrossFit and Paleo communities for a couple of years now and so I was into Paleo. I started doing Paleo, honestly shortly before Tim and the Four Hour Body came out. And so after being in that space a lot of people, a lot of friends that I had in the CrossFit were talking about this bone broth thing. Like they were saying it helped with recovery, it helped with certain issues, it helps improve health, all this. And being someone that cares very much about my health, wellness and wellbeing, I decided to look into it, and yet at the same time Bone Broth is a real pain to make, like you have to cook it for 24 plus hours.
Sourcing that is a lot, like the quality of the bones, where you get them from, all that stuff is really, really critically important. And so what I decided to do is like, I can’t buy this stuff. It’s something I wanted to incorporate into my diet and it is highly unlikely that I will incorporate it into my diet if I have to make it every single time.
Justin: Just because I, at the time I was working in technology, I was travelling a lot, I was very busy, and so just didn’t have the time. And so that was kind of at the back of my mind, and then around the same time my brother who I ended up starting the company with, he suffered a really bad knee injury and was like bed ridden for seven weeks after surgery. And so he was looking at foods that could help him with recovery.
I mentioned Bone Broth, he went online to buy some and literally couldn’t find it anywhere, and so it was kind of at that point we had the aha moment of like, well, can we be the only two people in the US that want this product? Probably not, and so we decided to start the company and that eventually became Kettle and Fire.
Steve: You are going to have to excuse my ignorance. So this broth is like different than the cans of like chicken broth and stuff that you get in the grocery store, right?
Justin: Yeah, yeah.
Justin: So I’ll explain the difference. So the big difference is the stuff that you’ll get up in grocery store is often made with like crappy cuts of meat. So these companies will take these really awful cuts of meat. They’ll boil them, flush boil them for two hours or so, add a bunch of spices often a ton of sodium, and make a broth or a stock that they then sell and it has effectively no nutritional benefits.
Justin: When you look on the back of that, like zero to one grams of protein, lots of sodium, nothing good in it whatsoever. Bone broth is different, so a bone broth is made when you take the bones of the animal, in our case we use marrow bones from 100% grass fed, grass finished cattle. We then cook them over a long period of time. So we cook ours for 20 plus hours.
And as you go with those long cook times at low temperature, the bones themselves breaks down, the marrow seeps into the broth, and then you get a lot of the amino acids, proteins and nutrients that truthfully most of us just do not get into our diets out unless we eat organ meats, or brains, or kidney or liver or whatever it is.
And so there are a lot of amino acids in bone broth, collagen, glycine, glucosamine, like they are not present in almost any individual’s natural diet unless you are incorporating organ meats into your diet in some way.
Steve: That’s interesting, okay.
Justin: Yeah, and that breakdown is why bone broth is also high protein and has real nutrient content as opposed to the store bought stuff.
Steve: Because as a kid — so I’m Asian and we actually used to suck the bones, dry their marrow. Is it something similar?
Steve: And my parents always told me that the marrow was like the most nutritious part of the bone, so.
Justin: They were correct.
Steve: So did you have to create the formulation for this broth yourself or it as simple as just boiling these bones and then selling that broth? Is there additional formulations to it?
Justin: Yeah, so it’s actually really difficult to make a product that is good, also goes through our packaging process and consistent is the big piece.
Justin: So we are buying bones that have from all over the country which we are and when you are using ingredients and like a process that can vary a couple of percentage points every time you go through it, it’s actually really difficult to make a formula that is consistent. So we worked with someone that was on Iron Chef. We worked with the Iron Chef Team to help us develop our formula, and then we worked with what’s called a co-parker which is the company that actually makes the product for us to develop the formula and now they manufacture it for us.
Steve: Okay, so let’s take a step back quickly. So you had this idea, how did you kind of evaluate it for profitability? Like did you know upfront that it was going to sell?
Justin: Yeah, so I wrote a blog post about this but basically what I did is I put up a fake website where I — not a fake website but a landing page, and I bought traffic like Bing ads, directed them to the page where I took customer orders and I just saw, okay, if we had this product and I wrote about it like we did is this something that people would buy? Is this something that people would actually purchase, get excited about? I could email them and ask how do you like this, is this something you would buy on repeat basis? Yeah, yeah.
And so I tested that with I think it was $80 worth of ads. We sold something like $500 worth of product with a incredibly poorly done landing page. A super junky check out process and a product that didn’t exist, and for me that was enough to say like wow! That is some really interesting traction, that’s a really strong response with something that doesn’t exist.
And so I refunded everyone their money that they had purchased, and then just started to email friends and kind of saying how would use this? Why do you want it? How did you hear about bone broth? All these questions, and it turns out that it was revalidated enough that we decided like this is a business that we can start and get into and I think do well.
Steve: Just curious, you mentioned Bing ads. Why Bing ads as opposed to like Facebook or Google? It seems like Facebook would be ideal for this, right?
Justin: Yeah, Facebook certainly is but the truth is that when you are testing an idea, I found that Bing worked really well just because it was so cheap that you could actually pay relatively well and get to statistical significance faster because you are buying keywords that you can overbid the competition so that your ad is at the top of different Bing searches.
Justin: You pay less to do that just because it’s much cheaper than average on Facebook.
Steve: So what’s funny about that, that you say that, Bing ads are actually a little bit more expensive than AdWords for us, for our company.
Steve: It just so happens, it converts better. So it ends up breakeven but that’s curious. So your landing page, was it an email opt in form or were you literary just trying to convert the sale right away?
Justin: Yeah, it was to convert to sale right way. So it was an orange button that you would press to buy. You then would get directed to PayPal where you are asked to PayPal Jwmares@gmail.com $29.
Steve: No way.
Justin: Yeah. So it was incredibly junky.
Steve: Okay, so people are willing to buy that way, it doesn’t even look like a professional store at that point, right?
Steve: Then you are definitely onto something, okay, okay.
Justin: Yes, 100%
Steve: All right. So let’s move on to like the formulation. So you know you want to do this at some point, and it sounds really intimidating to me actually. So where do you start? Did you start contacting the Iron Chef to make the formulation? Like what were your first steps?
Justin: Yes, our first steps were actually that we called about 300 different manufacturing companies in the US to see if they can make this product. And it wasn’t until — this was the 280th or something like that we found someone that could make it. And at that point they were like hey yeah, we can make this, but we’ll need someone to make the formula. We know this guy that can actually help you with it. He was involved with Iron Chef, yadi yada and that’s how we met him. And so, yeah, it was a long process of having a ton of conversations with different companies that like might be able to do this.
Steve: Did you know anything about, like you said you had a co-packer, did you know anything about all that stuff, or the way it will worked when you first started this?
Justin: No, nothing.
Justin: Absolutely nothing.
Steve: So this is just stuff that you picked up after contacting all these different manufacturers?
Justin: Yeah, exactly.
Steve: Okay, all right and so you have someone who is willing to manufacture this and then you create the formulation with the Iron Chef dude. What about certifications? Like can anyone just sell food in the US? Like do I need to get certified? Do I need to go undergo testing and that sort of thing at all?
Justin: Pretty, much anyone can sell food in the US, but you cannot sell into retail and you cannot sell more than, I think the cut off is $100,000 a year unless you get some of these certifications. So there are like farmers market exceptions, there are home kitchen exceptions like big sales. The government doesn’t really want to regulate that stuff, you know what I mean. Like if you are going to make brownies in your kitchen and sell them at your son’s school, it doesn’t really make sense for you to need a permit to do that.
Justin: So if you are doing anything at scale, yes, then you need a permit and then the government is very, very rigorous about saying what you need. And so for us…
Steve: What permits — oh yeah, sorry, go on.
Justin: So for us we fall under USDA because our product is — so bones are considered in many cases a meat product because we are — very rarely are bones completely clean. They’ll often have scraps of tendon or something like that on it, and because of that our product is considered to be more than 3% meat which is kind of the USDA cut off. Which is the US department of agriculture cut off for saying, okay, this is something we are going to regulate and they regulate beef, pork, all that stuff.
And so we fall under their standards and they have a long kind of process where they have to look at the co-parking facility you are working with, that you are sourcing, your formula, they have to approve all of it. They have to approve the language on you packaging, they have to do all of this kind of stuff, and so the regulation can be quite a lot honestly.
Steve: Can you give us an idea of how much it cost to pass all these regulations?
Justin: Yes, so often times if you are working with a co-parker it’s just a matter of sending this stuff to the USDA. It takes time but not really any money.
Steve: Okay. Because when I read your bio you said that you are the first and only USDA bone broth, but then you also said that you require a USD certification to do bone broth. Does that mean like you are the only supplier of bone broth?
Justin: No, no, so we are the only USDA approved like grass fed and shelf stable bone broth. So we use basically 6 million dollars worth of packaging technology to make a bone broth that is shelf stable aka won’t go bad if left unopened without any preservatives, additives, anything like that.
Steve: Okay, so that sounds like a huge value prop there. How did you decided that you needed to that and how did you go about that?
Justin: Yeah, so my background and what I was doing previously, I was pretty much all in online marketing, and so there were two ways we could have gone about it. We could have launched a frozen bone broth relatively quickly. That would have been competitive, it would have been really difficult to just honestly do conversion, do all sorts of stuff, even home sales would have been more difficult because if you are doing frozen you are looking at shipping costs that are 20 to $40 per order.
Justin: And in so many cases that is basically cost per unit. And so for us I was like okay, we want to figure out how to do this shelf stable thing, I think it will be a source of lasting competitive advantage which it turns out it certainly has been. It allowed us to get some recognition opportunities like with ripe market, selling on Amazon, do things that our frozen competitors couldn’t. And it also played and plays really well into my skill set of being able to do online marketing without these crazy prohibitive shipping costs that a lot of our competitors run into.
Steve: So you probably didn’t have a background in this packaging technology before you started, right?
Steve: So how do you start like in developing this packaging?
Justin: Yeah so you basically, I mean we found a co-parker that was willing to work with us and at that point they just decided to say like here is how you can go about this. Like here is how you would work with the packaging. Here is kind of the individuals that I would talk on the co-parkers side, and we got walked through this whole process and with a lot of their help figured out how we could it.
Steve: I guess what I’m trying to ask is why haven’t other people who sell frozen things go with this type of packaging? There must be some reason why, right?
Justin: Yeah, so there are a couple. So one, if you do frozen – yeah so all [inaudible 00:17:07]. So if you do frozen, you can launch today. You can start selling on the farmers market, you can start selling online. You can deal with the USDA stuff after you have a real business. It’s you can literally make bone broth in your kitchen, sell it by the jar and you have business tomorrow. A lot of people do that.
Justin: With what we’re doing, we had to get USDA approval right up the gate. We had to line up sourcing right up the gate. We have to create our formula, do all product development, all of this stuff before we could sell a single unit of product. So that takes a really long time. And the second thing is a lot of people moving into entrepreneurship especially if it’s your first company especially in food, a lot of people are kind of don’t have a lot of capital to put to work right away.
And so our first production run I wired, it was like 120k to our co-parker, and you know I did it with my money. Fortunately I was in a position to do that, but many people don’t want to start a business with 140k upfront expense.
Justin: And just hope that works, and so it’s a little prohibitive on that side as well if you are just looking to start a company.
Steve: But you did mention that if you are making under a 100k, I can’t remember the exact number. I think I heard under 100k you could just start selling right way, right?
Steve: So why did you have to go so large in the beginning and get USDA certification? Couldn’t you just have started selling?
Justin: Got it, yeah, yeah. Sorry, so I’m so used to this stuff at this point, that’s an excellent question. Yeah, so the reason is that the companies that we are working with will not work with you if you are a tiny customer.
Justin: And so that is why. So our minimum run size or our first run size, they would go no lower than 30,000 units. And so, that 30,000 units cost us over 100K, and so we just had to pay that to get started.
Steve: Okay. Whereas if you are just like a Mom and Pop you are just boiling in your own kitchen, it’s not a big deal.
Justin: Yeah, exactly.
Steve: Okay, so now we have 120k worth of bone broth, I imagine there is quality control issues, how do you manage that?
Justin: Yeah, so a lot of that is over at the co-parkers side. There is also USDA regulations that the co-parker has to follow in order to receive USDA approval.
Justin: And so a lot of that is kind of taken care of throughout the USDA approval process. Like they have systems in place that help with quality control and we just kind of follow those systems.
Steve: Is the co-parker the same person who is actually boiling the bones?
Justin: Yeah, that is the same person.
Steve: Okay, okay and they just take a cut of whatever comes in?
Justin: No, so we pay them a certain price to manufacture the product. They tell us how much it will cost and then we pay them that, they give us however many thousand units and then we resell those units.
Steve: Okay. So you are not worried about them like knocking off your idea or anything? They are just in it…
Justin: No, not at all.
Justin: I mean they have five to ten million dollar worth of equipment that they need to make productive and like maybe there is a risk that we become their biggest customer and they want to move into the space or whatever, but I think it’s highly unlikely. The skill set for running a successful co-packing operation is entirely different than building a brand and selling a consumer product in retail, online all that.
Justin: And most of these guys just say like if you have five million dollars worth of machines you can often get a couple of customers, and if you have 100% lie time utilization which is like full utilization of the machines you own, you could be pulling a couple of million dollars a year on that business, and that is a pretty darn healthy business and a good business to be in.
Steve: Okay. So kind of along these lines before we move on to the marketing, you took 120k bet in the beginning just from selling a couple of hundred dollars worth of units. So I just want to know what your mentality was. Why didn’t you try to create some of this stuff yourself first in small batches and actually sell the physical product to get people’s opinions before you put down that money?
Justin: Yeah because I didn’t really think that it would matter. Like the product that I would have had to make myself in small batches would have been entirely different than the product that we would actually end up selling. And so because if I was making in small batches I would have to freeze it, I would then have to ship it via dry ice. Like I would have to encounter all the problems that we wanted to solve by going shelf stable.
Justin: And so for me like it would prove that you could sell frozen bone broth, but that wouldn’t necessarily be that interesting to me because that’s not what I wanted to do anyway. And because this stuff has a two year shelf life, I just looked at the ads that I had bought in the test and looked at a couple of other things around velocity, and realized that worst case scenario I would probably get my money back inside of like 14 months even if things didn’t work out just from buying Bing ads and driving people to our website.
Steve: Okay, I guess that makes sense because the value prop completely changes too, right if you are selling frozen products?
Justin: Yeah, exactly.
Justin: It’s an entirely different product.
Steve: Right, right, okay. So let’s talk about marketing. All right, so you have the stuff, you have it all packaged, how did you first get the word out and how did you sell your first units?
Justin: Yeah, so that was an interesting challenge. So moving to a space that I sort of knew but didn’t really know about broth consumer, we were selling our first few units. I had two ways. So we bought AdWords and Bing ads, we tested different value props on the landing pages and that accounted for a decent number of sales up front.
We then started to do a lot of outreach when it comes to influencers, and so that was stuff like just emailing people samples, running promotions, trying to do something different like co-promotional offers and yeah, that was kind of the big way that we got some traction in the early days. We had a bunch of people like Melissa Hartwig from Whole30 that were really excited by what we’re doing, because we were the first ones out there that were convenient, shelf stable and had a product that frankly was good.
Steve: Right, how did you reach out to her? Were you friends at the time or did you, was it a cold outreach email?
Justin: Yeah, all this was cold outreach.
Steve: So can you just kind of give me an idea of what you wrote in that email to get them excited?
Justin: Yeah, I mean it was pretty easy. It was just describing like here is this product that we made, here is why we made it. Two senses about the founding story, about to send you some, what is the best address? And that’s a pretty easy way to start a conversation with people. It’s like can I send you a free product that I know you have a high probability of liking.
Steve: Okay and they said yes, and then after that they wanted to feature you or did you ask for any of this stuff or did they just naturally…
Justin: Yeah they definitely asked.
Steve: Okay, okay and so how — so that first person that you mentioned, how did they feature you in the beginning?
Justin: So they did Instagram, blog post, email last like a combination of all those.
Steve: Okay, wow! So they must have really liked the product. So the product essentially sold itself?
Justin: Yeah, I mean it definitely works well.
Steve: Okay and I did want to talk about your Bing and AdWord ads, I would imagine does bone broth, does that cost a lot per click?
Justin: Now it does, it didn’t at the time.
Steve: Okay. I was thinking to myself wow! That sounds like a really expensive keyword. How much do you — like what was your return on ad spend in the beginning when you first started running it?
Justin: Like when we were testing it or when we actually had a product?
Steve: When you actually had the product.
Justin: We were around three to 400%.
Steve: Three to 400%, okay. And you were just biding on grass fed bone broth and people were actually searching for this?
Justin: Yeah, pretty much all bone broth related terms. Some other amino acids related terms.
Justin: So yeah, and I’m not AdWords savant, so by no means was that like incredibly well optimized campaign.
Steve: Okay, I’m just curious why you started out with those types of ad platforms as opposed to Facebook or a different platform.
Justin: Well, I mean the demand is there already. I think Facebook works incredibly well for interests and for really specific targeting. At the time we didn’t really know who our customer was and we were trying to figure that out.
Steve: I see.
Justin: And so rather than spend, and you know Facebook is more expensive and so rather than spending a ton on Facebook ads to figure that out, we just decided to focus on people that were already searching for what we had to offer and in a space that was highly non-competitive at the time.
Steve: Okay, did you have a subscription model in the beginning or did that come later?
Justin: We did, just from day one.
Steve: Oh, okay so can we talk about how you steer people towards subscriptions versus one time purchases?
Justin: Yeah so we do give them a discount and that is the biggest thing is someone will sign up for a subscription as opposed to an overall purchase because it’s about 25% cheaper.
Steve: Okay and did you have any idea like how long to make these subscriptions? Like does a typical bone broth consumer like to buy like three months in advance, or like how did you structure all these things in the beginnings?
Justin: Yes so we did monthly just pretty much out of the gate, and we are still figuring out and starting to be slightly more data driven around our subscription program to figure out what works and what doesn’t.
Steve: So with these influencers, were they driving people straight to like a special landing page or just the site?
Justin: They — it’s a good question. So at the first they were doing just the site and then we started setting up special landing pages.
Steve: Okay and then how do these special landing pages look? I’m just kind of curious how it would be different from your landing page, because your landing page actually expresses your value proposition really well.
Justin: Thank you.
Steve: I took a look at it before this interview.
Justin: Thank you yeah; it was just longer form stuff, so talking a little bit more about the benefits, the founding story, giving a special offer, all that kind of stuff.
Steve: Okay, and so when someone lands on your site, do you do any sort of giveaways or anything or do you just go for the sale right away?
Justin: Yeah, we usually just go for the sale.
Justin: I mean we have email capture where people can enter their email and get a discount and stuff like that but you know.
Steve: Okay. So today like what is your main drive? I mean you mentioned earlier that you are that you are a seven figure business in just 18 months. So what are your primary drivers of traffic and sales?
Justin: Yes, we have a lot of organic traffic. We do a good bit of wholesale as well, and then as of May this year we will be in every whole food in the country so.
Steve: Wow! Okay, let’s talk about that because I heard it’s pretty hard to get into whole foods.
Justin: Yeah, it can be. I mean we fortunately had unique products. We got into two regions as kind of a test, and after the test, I mean they performed well enough in there, in the space that they gave us that our numbers were really strong, and they approved us for a national roll out. And so it was pretty not easy, but our numbers made a very clear case that we should be in as many whole food stores as they can put as in, and that, when you can say that you guys are losing money by not having us in your stores, that makes it a lot easier.
Steve: I just want 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’re interested in starting your own online store, I put together a comprehensive six day mini course on how to get started in ecommerce that you should all check out. It contains both a 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.
But not everyone can just apply to whole foods like right off the bat, right? Did you have to work your way up there, or did you just apply right away pretty much?
Justin: Yeah, we applied and we got in within six months of the company’s existence.
Steve: Oh my goodness, okay.
Steve: Okay, that is unusual, okay.
Justin: Anyone can apply, they just don’t accept, they don’t accept everyone because a lot of people have products that they don’t, they aren’t necessarily differentiated or on trend or something that whole foods is necessarily looking at. And so I think if you have a product or you can tell a story better than what’s currently in whole foods, you can actually get into whole foods quite easily, like they are always looking for new stuff. That’s kind of the only advantage they have over any of the other big grocers.
Steve: What does the application process look like, just curious?
Justin: So we just filled out a bunch of stuff and said, here is the company sourcing practices, financial stability health, ability to make as much product as they needed, and submitted some samples and that was kind of that.
Steve: Really, okay and then are you ready to talk about the margins and the financials when going with whole foods.
Justin: Yeah, I mean they generally look for a 30 to 40% margin, and so you are selling them wholesale at something that allows them to get to that.
Steve: Okay, and in terms of volumes, like what do they expect?
Justin: It’s still dependent on the category and the product that you have; it’s going to be totally different.
Steve: Okay, but for yours for example.
Justin: Yeah, for us they want to see a certain dollar amount per store per week that we will sell in terms of our products.
Steve: Okay, I mean do they come to you and say, hey, we need this amount of volume? Can you actually deliver?
Justin: No, you just kind of — because there is no way that you would know that if you are not in retail. Like they will know that better than you, but they will say like here is how this category moves on average. So an average product will move call it 20 units per store per week. That’s kind of the bench mark. If you are above you are going to be great, if you are below that like it will be a low performing product and we are going to look to get you out of there within the next like six or 12 months.
Steve: I see, do you — can you comment on some of the performance metrics? I imagine they tested your product in a couple of stores first, right?
Justin: Yes, they put us in a couple of regions first, and then moved it up as they saw a good performance, yeah.
Steve: What is considered good performance, I’m just curious?
Justin: Well, so this is what I’m saying it’s so dependent on the category that for a — I don’t know, for a serial product’s good performance might be like $20 per store per week whereas for a kombucha or a juice, a good performance would be $200 per store per week.
Steve: Okay, Okay.
Justin: And that’s because it just is reflective of how much, how often and the price point of these different products.
Steve: And your products get classified under meat or?
Justin: We get classified; we are in the broth and stock section.
Steve: Broth and stock section, okay, okay.
Steve: And so you are performing better than average I guess in that category, and then they just want to do a national roll out after that point.
Justin: Yeah, exactly.
Steve: Okay. How does the — how do you return an expired product when you are selling to like a food store.
Justin: Yeah so I don’t really know because we have a shelf stable product to be honest, and so we’ve never had issues with expired products or anything like that. Returns are totally up to the retailer.
Justin: Like that’s a retail level decision.
Steve: Okay, so because your product is a two — did you say a two year shelf life?
Steve: Okay, so people tend to consume it within that period, so you don’t — okay, so this all comes in to the pack, like the packaging is actually a very important part of your value prop.
Steve: Okay. All right, so you have whole foods, has that happened yet?
Justin: No, that’s happening in May.
Steve: Oh man, that’s exciting.
Justin: Thank you.
Steve: Okay, so does that — how does, is that going to be like the bulk of your revenue once that starts happening?
Justin: Probably not. The bulk will still probably be ecom.
Steve: Interesting, okay so let’s talk about ecom then. So you are making money through ads and influencer marketing. Is that where the majority of sales are coming or you are doing other channels as well?
Justin: Yeah, definitely. Most of it is coming through ads and then some organic and just kind of some brand recognition as well.
Steve: Okay and in terms of the influencers is that like a consistent amount of traffic, or does it tend to be like a very big bust once like the post or the Instagram thing comes out, so…
Justin: Definitely bust which is why we are investing in content and SEO pretty heavily because that’s a lot more steady.
Steve: Okay and so in terms of like your SEO strategy, are you targeting a specific audience. Like do you know who your audience is now at this point?
Justin: Oh we do, yeah.
Steve: Okay and what’s your content strategy like?
Justin: Yeah so if you look at our blog which we are still working. We just made our first content a couple of weeks ago, but we are still working on to refining it, but it’s just a lot doing really in-depth long proven content around topics people care about that are also related to bone broth. And so nothing crazy, we are not like content marketing geniuses over here. We are just still in kind of the basics and it seems to be working so far.
Steve: And does email, like I imagine you are gathering emails and then emailing out these posts. I’m just curious like what your strategy is for getting people to continue the subscriptions, and what your infrastructure looks like.
Justin: Yeah so we use Klaviyo. We have a third party logistics provider that does all our fulfillment and then yeah, and in terms of keeping people retained like a lot of people were making their own broth in their home before finding out about Kettle and Fire. And so, we just kind of replaced that habit to save them some time, and many people are still with us you know, a year plus later.
Steve: Okay, and then you mentioned you are on Klaviyo. So are you using all of these standard campaigns, bending card, win backs?
Justin: Yup, exactly.
Steve: Okay. What does your pre purchase sequence look like, and how do you get people to actually sign on?
Justin: What do you mean by pre-purchase sequence?
Steve: So when you gather an email like you already have some sort of drip sequence, right?
Steve: I’m just curious, what is your lead magnet to get them to sign on, and how do you kind of structure the campaign to actually get them to actually buy the product? So first of all are you only collecting emails on your blog, or you are doing that on the main store as well?
Justin: We are doing it on the main store as well. Main store is 10% off and then on the blog it’s bone and broth recipe book.
Steve: I see.
Justin: And then we just kind of do a drip sequence around like here is how, here are the benefits, here are why kind of buy your special, why we’re unique, all of that.
Steve: Okay and so this is the first couple of emails and then do you give any hard sell or anything or is it just — does the product sell itself? Because it’s the only…
Justin: Yeah, so we don’t do any hard sales, and that is for a couple of reasons. Like I don’t — one thing I’m very conscious of is I don’t want to over sell this product, I don’t want to kill this base, like you see some people like doctor X is over selling like a bone broth protein supplement he has. And I think that that just leads to people not trusting the product and not trusting the benefits in general which is not a great thing.
And so I’m very, very conscious of that and I think that as long as our offer stays strong, and as long as we are the best option out there I think I am, I feel very comfortable that if you are going to want, if you are going to drink bone broth like we are the best option that you have. And so then the question is how do you get someone to drink bone broth, and that then leads back to more of the educational piece, and so that is where we tend to go instead of like hard sales and stuff like that.
Steve: Okay, are you trying to actively build a community around your products?
Justin: Yeah, so we are working on this. Like we are working on Facebook groups, we are working on all kinds of stuff, but we are still working on it. It’s certainly not something that’s…
Steve: No, no, no worries I mean you guys are only 18 months old and kicking butt it sounds like.
Justin: Yeah, exactly, so we still have a lot to do.
Steve: So it looks, okay so we have wholesale, we’ve got influencer marketing and we’ve got just ads, any other channels that I’m missing?
Justin: No, those are the big ones.
Steve: Okay and do you anticipate moving forward? Like I’m just curious what direction you are going to scale this. Is it going to be primarily to the wholesale channels? Are you pursuing more wholesale channels? Like where are you spending your efforts right now?
Justin: Yeah, so a lot of it is wholesale. I mean getting ready for the whole foods launch is a really big thing for us right now.
Steve: And what is involved in that? I mean I would imagine just huge volumes, right?
Justin: Yeah, definitely volumes and it’s also you know a lot of stuff is involved in terms of getting the products ready and making sure we can do production.
Steve: Does your co-parker — are you going to grow out of your existing co-parker at some point?
Justin: Sorry, could you say that again, Steve.
Steve: Are you going to grow out of your existing co-parker at some point?
Justin: At some point yeah. It will take us a little bit though. They have a lot of capacity but yeah, definitely at some point we will have to rethink our production.
Steve: And at some point does it make sense to like do it yourself? Like I’m just kind of curious what the economies look like of using a co-parker versus doing it yourself.
Justin: Yeah, it certainly might, I mean that said though being a new food brand, a new food startup is all about growth. Like that’s what the category leaders are looking for and that’s kind of big CPG companies are looking for. And if we were to build our own facility, we’ll probably be on the order of three to seven million dollars, and if we can plough that back into growth, that might be a better investment for us, but that’s something we have to consider.
Steve: Everything is bootstrapped for you guys, right?
Justin: Yeah, so we were bootstrapped and profitable until November where we raised a small round.
Steve: Oh okay, what were the, what is the rationale for that? Was it just for inventory purchases?
Justin: Partially inventory, partially to have good people just behind us who know the space better than I do, because it’s my first time in it, and also just to have a little more, a little less pressure on cash flow, so we could like hire forward and not need 30 day payback periods for new hires, but instead like three to six months.
Steve: Okay and how many people do you guys actually have to run this operation?
Justin: We have nine now.
Steve: Oh wow! Okay.
Steve: And the bulk of that do you have like a full time engineer on staff or?
Justin: No we don’t.
Steve: No, okay so everyone is pretty much marketing and product and sales.
Justin: Yeah, marketing product, customer support, yup.
Steve: Okay. Cool man, hey Justin we’ve been chatting for quite a while. Where can people find out more about bone broth? Where can they pick up your products? Where can they find you online?
Justin: Yeah, so check us out kettleandfire.com. You can enter your email, get a coupon, all that good stuff but we also, we talk about this all the time in the blog. This is something I obviously care about a lot, and so yeah so kettleandfire.com is the best way to find us.
Steve: And for the people listening actually can you just give like a summary of what the nutritional benefits of bone broth are?
Justin: Sure yeah, so at a high level bone broth is full of a ton of nutrients and amino acids that you don’t often get in your diet otherwise. And so you know collagen, glucosamine, glutamine, glycine, all of these amino acids and proteins that form most of the body’s connected tissues and lead to skin health, digestive health and the like, they are all highly, highly present and concentrated in bone broth.
Steve: And how quickly can you see the effects? I’m just curious like yeah.
Justin: That’s a good question. So we find that people that drink it call it three to five times a week already are in 48 ounces will start seeing effects after two to three weeks.
Steve: Interesting, in their joints, and then your brother it helped in your brother’s recovery from his knee problem as well, right?
Justin: Yeah definitely. I mean we have some crazy stories from customers that are pretty cool about like no knee pain; 115 year old customer says she doesn’t use the cane anymore which is pretty crazy.
Steve: Wow, okay so all these stories can be found on the Kettle and Fire website.
Justin: So not now, we are working on a page that talks about these stories a little bit better.
Justin: So it’s definitely something we are working on.
Steve: All right, well, there you have it. Kettleandfire.com guys, go check it out. The first USDA grass fed bone broth. Justin thanks a lot for coming to the show man, really appreciate your time.
Justin: Yeah, thank you so much Steve, I appreciate you having me on.
Steve: All right take care.
Justin: Take care.
Steve: Hope you enjoyed that episode. Justin’s story is pretty amazing and I really admire the guy for taking on that extra risk of selling food products online. For more information about this episode, go to mywifequitherjob/episode177.
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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.