023: How Joe Cochran Started A 25 Million Dollar Company Selling Outdoor Products Online

Joe Cochran

My buddy Joe Cochran tells us how he started a 25 million dollar company selling outdoor products online. Joe really knows his stuff especially when it comes to pay per click services.

What’s crazy is that his store stocks well over 15000 products and is capable of processing over 1000 orders per day. Compared to my puny shop, Joe’s store runs on a much larger scale. Stay tuned and check out his story.

What You’ll Learn

  • Why Joe started out selling rubber duckies online
  • How he grew Northline Express to 25 million dollars
  • He he got into the business of shipping fireplaces
  • How he decides what to carry in his store
  • How he convinced vendors to allow him to sell their products
  • When Joe decided to transition to carrying more inventory
  • Why Joe is able to beat the brick and mortar stores with his products
  • Joe’s content medium of choice
  • The key to working with vendors in China
  • Why Joe thinks paid traffic is king

Other Resources And Books

Transcript

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Steve: You’re listening to The My Wife Quit Her Job podcast where I have successful bootstrapped entrepreneurs take us back to the very beginning of their journey and delve deeply into the exact strategies they used early on to gain traction for their businesses. Now, before we begin, I just want to congratulate Ken Schneider for winning this month’s free one on one consultation. For more information on how you could win a free 30 minute business consultation, go to www.mywifequitherjob.com/contest, and if you are interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information. Now onto the show.

Welcome to The My Wife Quit Her Job podcast. We will teach you how to create a business that 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 have Joe Cochran with us on the show. Joe is actually someone who I met virtually via the ecommerce forums at EcommerceFuel.com. So, what’s really interesting about Joe’s story is that in 2003, 2004, Joe joined his dad and started an online store called NorthlineExpress.com which sells fireplace and outdoor products. And what’s really awesome about his business is that in the past decade, his business has grown to doing over eight figures in annual sales. Now, they started this online store in their spare bedroom and basically shipping out of a detached garage and today they’re operating out of a 24,000 square foot facility.

And you know, Joe operates multiple ecommerce sites as well as a wholesale business and just get this; these numbers kind of blow my mind, their store now offers over 15,000 products and is capable of processing over 1,000 orders per day. You know, if you just compare his store to my little tiny store that’s just pretty crazy in terms of scale. So today what we are going to do is we’re going to take a time machine back to the beginning when Joe started. Now, Joe is a great guy and I’m really happy to have him here on the show today so, welcome Joe.

Cochran: Thanks Steve.

Steve: So, you know, for all those who’ve never heard of you, can you just kind of give us a quick background story and just talk about your baby here Northline Express, and how it all started. How did you decide what to sell and how did you come up with the idea?

Cochran: Yeah, so… back in the late 90’s early 2000’s, my dad and I both were working for Fireplace & Hearth, literally the wholesaler and retailer. So they wholesaled spas and fireplace products to a chain of their own retail stores as well as to other brick and mortar retail stores. And I had been working there right out of high school, I did installation and service on fire places and spas and hot tab and things like that, and he had been in the business really since like the 70’s, I think back in the mid-70’s. He owned his own fireplace retail shop in Michigan and it eventually sold out and, you know, and then went to work. So he sold the business and then went to work for the people who he sold to, and eventually became the GM so he was running a lot of the operations for that company and…yeah. So I’d got in so, we essentially knew that business really well but the funny story is that, that’s not where we started sort of, we actually launched this back in 1997 and it was in the car stereo and home audio market.

And it was kind of funny just because my dad had this idea, he wanted to start a website, I was not a computer guy whatsoever. He– he’s really the computer guru. And so he wanted to start a website but he didn’t know where to start, and I was installing car stereos for my friends on the side in high school. I actually had a wholesale account with a distributor where I would buy big sub-woofers and stuff like that and sell them to my buddies and then charge them for installations. So I was doing my own little entrepreneur thing out of the garage and… yes! So he needed an idea I had a whole sale connection, so we started there.

And we shut that site down, made about 10,000 dollars in six months but we ended up shutting it down because there was so much fraud and I think it was just the age group that we were targeting with people trying to burn us with bad credit cards and back then the checks and balances weren’t nearly in place like they are now. And we just– we ended up just shutting it down but few years went by and he started thinking, wow, you I know this other business really well and so it wasn’t, you know, I’d love to say that it was a very calculated, you know, we saw a big opportunity and jumped at it but, I mean essentially it was just something we knew and so we got in.

Steve: I actually remember really being into car stereos back in the day also, I think got all my stuff at Crutchfield.

Cochran: Yeah, that was one of the things we realized after we launched our site we were like, wow! We’re competing with these guys and even back in 97 they had a pretty robust website and here we were, just this little kind of pathetic looking yahoo store but we saw the opportunity because we still sold like 10,000 dollars worth of products in six months so…

Steve: Yeah, so [laughs] I remember I used to look forward to getting that catalogue every single month. It was pretty sweet. Yeah.

Cochran: Yeah, oh yeah! I was– I was– you know, you always had to have a lot of stuff around so that people would come to you to ask what you did and then that’s how I would sell them basically.

Steve: So yeah, back to Northline Express, so I’m just trying to think you know, in our store we sell really small items that are easily shipped but I was just looking through your website and for some of the stuff that you guys sell, I can’t imagine how the logistics work in terms of shipping let’s say a fireplace– an outdoor fireplace– and selling that online. Yeah, so, how do you make a customer comfortable with buying that stuff online?

Cochran: Sure, so, if…if– we kind of revisit the start over conversation when we were talking about how we got started. The first products we added to the site were rubber ducks [laughs]. Like rubber ducks that go and then float around on your hot tab. Okay so we figured nobody is going to spend that much money online so we’ll just start with this small item and it’s cheap and we started selling some but, really not much and then we started selling spa chemicals and then we started testing with small fireplace products. All with the idea that people probably aren’t going to spend more than 30 or 40 bucks online. And you know, we just kind of kept pushing that envelope. So every time someone would buy one of our higher end products, we would start adding more higher end products.

Eventually we did get to the point where we were adding wood stoves that sell for 3,000 dollars and selling them you know, and we were probably more shopped than anybody else that– that people were spending that kind of money online, but there is a need for that stuff, it’s hard to find some of these items depending on where you live. So that actually kind of adds to the complications that, typically the people who buy a wood stove online live in a remote area where they can’t get one locally, or the pricing just doesn’t, you know, there’s no benefit, or they don’t have the option they want or the type that they want so they go shopping online and as far as delivery goes, we essentially just ship it out free, I mean it goes…it goes LTL carriers, so a semi truck delivers it and it usually shows up with a lift gate and the driver will lower the freight out of the track on a pallet and a pallet jack and then wheel it up to your garage and that’s it. They leave it there and then it’s the customer’s job to get it into the house from there.

Steve: So you mentioned that you kind of gradually built up your product portfolio, so how did you kind of decide what the next step was in terms of what to carry? How do you decide what to carry in your store basically?

Cochran: Yeah, well, so for the first few years that was really– my role in the company was just adding everything we could get our hands on because back then, most people wouldn’t even sell to us. We didn’t have a retail store so, when we would go to our industry events like the expos and things like that, I mean we would actually like turn our badges around or just hide them under our shirts so people couldn’t see that we were an online retailer. I mean, frankly sometimes we would just lie [laughs] and say that we had a showroom because people just wouldn’t sell to you back then.

And so when we were getting started it was really tough to even find a company who would be willing to wholesale you product as an online retailer only but we built it up. So what we essentially did was took anything we could get our hands on and added it to the site, and so it was pretty funny because back then we didn’t have all the fancy stuff we now so, I would take a catalogue and scan the pages of the catalogue and then I would use like Photoshop and crop out the image and then just use like a paint thing to paint the background in and that was our images for back then.

Steve: So that’s crazy, does that mean that you didn’t actually carry the product then when you listed it on site? How did it work?

Cochran: Yeah, so we would get you know, essentially, we would get a few people to sell to us and so once we were approved as a dealer then we would go to work adding the product on the site and– but no, we didn’t hold the inventory in the beginning, most of it was drop shipped…

Steve: Okay…

Cochran: Some…some of it we did stock, we were shipping; we had a little–a two car garage that we were shipping out of it at first and so we had a couple of hundred items in there, 20 rubber ducks and…seriously.

Steve: [laughs] so you were not joking about the rubber ducks, you…you– rubber ducks was really your first product?

Cochran: Yeah [laughs].

Steve: That’s hilarious.

Cochran: Yeah, yeah so…So yeah I mean, that’s…that’s really what we did and so I would spend all day scanning catalogue pages and cropping out images and writing descriptions and just adding– you know, I got a system down to the point where I was personally adding about a hundred products a week to the website, doing it that way which you know, back then was– I was cranking you know, now it’s like I look back at then I’m like [laughing] yeah.

Steve: So, I’m trying to think– so these vendors that you were working with they had huge catalogues right? So that’s what you mean you were adding products…

Cochran: Yes.

Steve: Oh! Okay. So, how did you– and this is actually a question I often get in my course. How do you get around some of the facts that some of the vendors who require you to have a retail store in order to sell online?

Cochran: Well, I mean, back then we just told them we had one and it was new enough where some people just took our word for it, you know, and if they showed up, we’d open the garage doors and say, ‘here it is’[laughs]. Busted! I mean we just kind of took chances with it back then that…that a rep wasn’t going to come up to the house. Nowadays a lot of them tell you they want a picture of your store front, they want to see an ad, if it would’ve been that way when we were starting we wouldn’t have been able to do that but for the most part, people just didn’t really check up on that, and so we were able to get around it.

Eventually, when we built our…our warehouse, and our call centre and such, we did build in a little spot that we call our show room. And so that’s how we get around it now, technically we have a show room which has like computer station at it and a couple of products and a counter…

Steve: Okay…

Cochran: Where we can talk to people but you know yeah, back then we just kind of told them we had one and gave them our home address and hoped that they didn’t come up to look. Yeah [laughs]

Steve: That’s hilarious; okay so today it sounds it can be a little bit harder to get around that.

Cochran: Yeah, I think it can be, I mean, I talk to people still today that won’t sell to us because we don’t have a show room; even with what I show them they go like…well yeah but… you know, you don’t really have a show room, you need to do a 10,000 dollar order, and have inventory on display and you have to have five display units and all that kind of stuff which we don’t really mess with.

Steve: I see, and so for those vendors you just kind of skip them.

Cochran: Yeah.

Steve: Okay.

Cochran: Yeah, I mean we learned that– and because we did…we did get busted from a few people back then and it turned into a situation where it was like you know, they didn’t want to work with us, and so it just made the whole relationship bad right off the start anyways. So we kind of learnt at this point in time, I think nowadays really, there’s enough people wholesaling out there that you can find people; if you look hard enough and you know where to look and you’re much better of working with people who want your business than trying to get around it and scam someone into working with you, that’s going to be unhappy if they find out because you do a bunch of work, you add a bunch of products to your site and then you know, they find out you weren’t honest and then they pull the line and now you just did all that work for nothing.

So we don’t really play games any more, the reality is, due to the size of our site, once we started gaining momentum, people were coming to us. And so for the most part, I spend most of my time now turning people away, because they’re not going to– because adding their product won’t really add value to our site.

Steve: Right.

Cochran: I don’t have to go in search of products too much often anymore in our current market now. When we go into a new market obviously we’re starting afresh but that’s the nice thing about gaining momentum and building a site is that once you’re up and running, you’ll find that people will come to you if you can get your site listed in some other directories and such.

Steve: Okay, so you started out drop shipping and then when did you decide to start carrying inventory?

Cochran: Well, we started carrying some inventory right off the bat and for a few vendors that required it, but it wasn’t much so we– I would say when we got started we did a mixture of both, we had some inventory and we were drop shipping, but one of the vendors that we found earlier on was a big drop shipping– they were a big vendor, they had thousands and thousands of products and they were drop shipped, so we really grew the business based on that one vendor because we essentially added their entire catalogue to the site and just drop shipped the majority of it until we saw what volume moved, and then we started bringing in inventory on the heavy movers.

Steve: Okay, and do you build any of your own products?

Cochran: We do, we do some manufacturing in China and then bring it in containers, so we’ve slowly grow– been growing that department and that’s where we started into the wholesale side of things. So we actually developed our own products and then both sell them retail on our site and do some wholesale.

Steve: Okay, so we’ll get into that a little bit at the end but I was just curious, since your space is, in my opinion at least, pretty competitive and since you’ve been handling all the marketing and sales for your company, what were some of your strategies early on at least, to generate sales? So you have this website now what?

Cochran: Yeah so we– for the most part we built the business off of paid traffic, so…

Steve: Okay.

Cochran: We used you now, it wasn’t Google PBC back then, I forget what it is called now but, we used paid traffic right from the get go and pretty much have used that– has the majority of our business driver for traffic and revenue and our business. SEO kind of came later you know, as we grew the site and just gained SEO but I certainly wouldn’t consider myself as an SEO expert. We did most of our stuff with Paid and we still do.

Steve: So, what are some of the Paid avenues? So I imagine you use Google today?

Cochran: Yeah, Google– we use some advertising like the PLA’s through Google as well and then we use Yahoo– Yahoo and Bing for paid ads as well. We don’t really do anything on facebook or much social media stuff, it’s mostly going to be Google and PLAs. I think we do a little bit on Amazon with their end Platform but that’s pretty small.

Steve: Okay, so the majority of your business is just from Pay-Per-Click service, that’s pretty amazing. .

Cochran: Yeah.

Steve: So how does it– how do you– so how does this grow? Do you just keep increasing your budget, are maxing out? How do you manage your– these campaigns, I mean, you have 15,000 products?

Cochran: Yeah, so for– like up until around 2012, we managed it all in-house, and my dad and I are really just kind of self taught, figuring it out as we go. In 2012 we did hire an agency to kind of take over and you know, paid dividends I mean they’re definitely experts much more that we are in it so now we work with them but up until then it was just– it was a daily thing. We had an in-house guy that we trained, and we would meet once a week to cover the strategy and just keep working those bids. So it was a huge– a huge job, yeah [Laughs] for one guy but he– he tried.

Steve: So primarily Pay-Per-Click, so how do you compete with like the Brick and Mortar guys and the guys with show rooms? Is it price? Is it you know, what are your value propositions for your business?

Cochran: Well, I mean, we add a lot of content on the website so the reality is that we typically give a lot better information than you are going to get if you go into a Brick and Mortar store and that’s just what we are told. So we knew that in our industry, you know, if you want to go buy a barbecue grill for example, where are you going to go? Unless you’re going to buy something from home depot in which you’re not going to get really good information. Not everybody has a high end barbecue grill outlet that they can go and actually get any information from, or look around or see much option. So in certain categories on our site it’s a matter of having a large selection and having unique things that nobody else really has available in their local area, and then combining that with giving high quality information…

Steve: Okay.

Cochran: and videos and things like that. We have a lot of the common stuff like free shipping and easy returns and– but I consider that stuff these days to be part of the requirement.

Steve: Of course, yeah.

Cochran: I mean that’s just kind of what you need to offer to be in business online. So– and then we do have a call centre. And that’s one of our biggest things is, we’ve got an in house call centre, with really highly trained people. We get emails from people who are impressed with that every day. Really, I get complements from people saying, ‘Wow! I talked to so and so in your call centre and it was so nice to talk to someone who actually knows what they’re talking about– because we sell some complex products so….

Steve: So, how did you handle all that early on though? Like you… [Laughs]

Cochran: It was crazy [laughs] we– everybody was also a customer service rep, so my dad and I both took phone calls, our accountant who you know, our in house person who did our books–she took phone calls, everybody in the business took calls and there was actually one of our– one of the first years that we really started to do some volume in like November, it got so busy that we couldn’t take calls, like none of us had time to take calls. So we actually put some message on our answering machine saying, ‘we’re sorry we’re just too busy we can’t take your phone calls right now, we’ll call you back in January’ [laughs] and we just shut the phones down, you know, so…

Steve: That’s crazy.

Cochran: But the online orders were coming in so hard that it was just you know, impossible to keep up with it all and, looking back we still laugh about it, but that’s how we did it and we just kept adding to the team as we needed more people.

Steve: So walk me through the process, so someone orders online, and then do you have a tie end to your vendor’s database or?

Cochran: Well we have– no, so we don’t do any– there’s no like EDI or anything like that set up with our vendors into our database. It’s pretty much all run on our end so, if we’re drop shipping then we don’t actually know necessarily if the vendor has inventory on our site, so we’ll just post out the time frame that it’s going to ship within, and if it ends up out of stock or back order or something then we just pick up the phone and call the customer and work with him that way.

Steve: Okay.

Cochran: But you know, we stock a lot of products now, we really have pushed more towards the stocking model, so we stock a lot of our big movers anyways, and when we run out we– well we try not to run out but when we do we back order until it comes in.

Steve: Okay. So I guess the customers don’t really exp– they expect that there will be some time of lead time.

Cochran: We post the lead time on every product on the site, and so if it is stocked product, then we’ll probably say one or two business days for shipping for– to leave our warehouse and then if it’s not on stock it’ll have whatever the vendor’s lead time is, and we hope that it’s in stock and if it isn’t, we deal with it then.

Steve: So let’s talk about more of the content that you’re talking about. You said that you started creating videos and reviews of the products that you sell on your site. How is that kind of like formulated into your overall marketing strategy?

Cochran: Well, we found you know just a few years back that shooting videos, basically adding a video to a product page, immediately increased conversions…

Steve: Okay.

Cochran: and so we’re really the type of people– my dad and I are the type of people where we don’t really tend to over think, as a matter of fact we usually just jump in and go nuts with something, and then try to make it better as we go, you know [laughs]…

Steve: Sure.

Cochran: So with video, we shot a couple of videos on some of our best products, the conversion rates immediately jumped, and we immediately bought lighting and another couple of cameras and stated shooting videos like crazy. And so, we have a real simple formula and we basically intro the product, talk about some features and benefits, we try to talk about practical use of the product, and a little bit more on the benefits side of things and features and then we close it out with a pretty light call to action.

I mean, our videos are pretty simple, we don’t go high editing or anything like that, we just shoot them– try to shoot them one shot, you know, one take, one shot and edit the front end and the tail end and get up there, but that’s where we spend most of our time in content because video is– ultimately it’s the most leverageable type of content I can find so far. So we can shoot a video, have it transcribed, turn it into a blog post, upload the video on multiple video sites with YouTube and Vimeo and things like that, and so we’ve just been able to take that one piece of content and turn it into multiple pieces of content and it’s actually easier for us to produce a video than it is to try to sit down and write a blog post. So I would much rather jump in front of the camera and give a five minute video on a product than try to sit down and type that all up. So that’s you know, that’s kind of our content method of choice…

Steve: Okay.

Cochran: Just because it’s pretty fast for us and it’s leverageable.

Steve: So, do you hey– do you get a lot of customers from YouTube? Do you find or…?

Cochran: We get a pretty fair amount of traffic…

Steve: Okay.

Cochran: from YouTube. Yeah, I mean I– we watch the actual sales, and so through Google analytics we’ve got a funnel set up so if they come in from YouTube we track that, if they specifically come from You Tube and buy, but it’s not a real exciting number, it’s not a huge number for us but I think what happens is, by having those videos embedded on our pages, the conversion rates easily justify the effort.

Steve: Sure. Absolutely. So, what sort of lifts were you seeing with– once you started adding video?

Cochran: It’s really been all over the board, based on the product but I mean, we’ve seen some products have you now, double– instantly double conversion rate on a product just by having a video added to the description so– we’ve also seen it where it doesn’t seem to make much of an impact and that could be video or the video or the content in the video didn’t really hit the hot buttons so it’s– we do a lot of testing with it but so far there’s not one thing that I could say is right or wrong because we get so much sporadic data from it…

Steve: Sure…sure.

Cochran: and the only thing that I’ve really been able to realize is that in almost every situation, we get at least a small bump from video so…

Steve: Now that makes sense, I mean, what you’re selling is kind of complicated and for me at least if I was shopping for a barbecue grill like your example earlier, I would definitely want someone explaining that to me because–actually recently, when shopping for one, a year ago and I had no idea, there was like a bajillion barbecue grills out there. So it totally makes sense.

Cochran: Yeah…yeah, and that’s really not even the more complex products, you know, when you start getting into fireplaces, and things like that you end up with tones of technical questions and installation questions and all kinds of stuff so between building learning centers and all that kind of stuff, I mean we try to go as deep into that information as we can.

Steve: Okay, so outside of Pay per Click, where does the rest of your traffic come from and so, where does most of your other business come from outside of PPC?

Cochran: Well, I could say we’ve got– you know, we get some traffic from You Tube, we don’t get much from facebook, and I wouldn’t say that we spend much time on it, we’re not real focused on social media–yet–we see the value in it and the potential but we’re just not, we haven’t quite developed a strategy for it yet or how we’re going to deal with it, but I would say that between paid traffic and the SEO traffic that we get, that’s really the bulk I mean, we don’t really have much coming in from other sources.

Steve: Okay, are you doing anything special on the SEO front?

Cochran: Not besides the video marketing, we optimize our videos and we just really put most of our eggs in that basket right now.

Steve: And what about in terms of email marketing? Do you have a strategy there that…?

Cochran: Yeah, yeah, so we have, you know, we have an opt in when you land on the site there’s a pop up that will offer a coupon if you opt in, and so we build a little– we’re always list building with that, and then we do have other segmented lists on certain areas of the site. So if you land on say areas of wood stoves you might find there’s a list that you can opt into if you want more information about wood stoves specifically, but generally once you opt in you’re going to get a welcome series which just kind of introduces the company, what we’re about and why you should buy from us and some of our policies and then, yeah, we go right into marketing after that.

I’ve talked to other people about what we do and we’ve looked at it and some people would say we go too heavy with the marketing and we should add more value and add more content because we hammer people, I mean, we pretty much send out a minimum of one email per week and it’s almost a 100% focused on marketing. It’s– you know we’re pitching product constantly.

Steve: Okay, obviously it’s working for you so…

Cochran: But yeah, I mean we do that because we measure the results, and the return is there so that’s why we do it and some people get upset and unsubscribe. But we are focused on the people who are buyers that want that kind of information and the ones who don’t, then they can unsubscribe and that works too. So, it’s– that’s just our strategy with it and yeah, we use email marketing, you know, we send like I said about one email per week…

Steve: Uh-huh.

Cochran: and then usually when holidays come around we’ll send out multiple emails for each holiday as well.

Steve: Okay, and so I was just curious, you said you had a pop up, how has that performed? I’ve always been a bit weary of including a pop up on you know, pages where I have actual product. What are your experiences with your pop up?

Cochran: Well, before we had the pop up we had the typical you know, sign up for our newsletter box hidden somewhere at the bottom of our website, and we would get like four or five opt-ins a day maybe. And we lure traffic so I mean, we drive a lot of paid traffic to this site and so for four or five opt-ins a day was like basically nothing.

Steve: Right.

Cochran: And when we started posting– when we started testing the pop up, we immediately went to 40 or 50 opt-ins a day.

Steve: Wow, okay.

Cochran: Yeah, so it was an immediate kick and to my surprise, other metrics actually improved like bounce rate actually went down, which is because I think people were looking at the opt-in and looking at that offer and staying at the site a little bit more.

Steve: Huh, okay.

Cochran: So some other metrics actually improved with it as well which we actually tested it multiple times. We added the pop up and then we pulled it, and then we added it again and we pulled it again because we actually had a lot of conflict in our own business as well, our own employees telling us, ‘oh God! I hate that pop up’ you got [inaudible] [00:32:43].

Steve: Yeah, yeah!

Cochran: And so, we just let the numbers talk and speak for themselves and we finally realized that, yeah, we can add about 600 people per month to our list, and that’s after we talk about unsubscribe so for us, it was a no brainer. It is– you know, our strategy is to offer discount which can be looked at as a giveaway and also here people are already to your site they’re already interested and now you’re offering them a discount, that might confuse them or whatever but we’ve tested it for us, and it’s worked well across the board and to be honest, the funny thing is, as many opt-ins as we get not too many people actually use the coupon. And so we constantly–our whole marketing department– we just crack up because people will opt into the list, buy something that we’re specifically offering at 10% off discount on, and they won’t use a coupon.

Steve: Joe, I’ve had the exact same experience and in fact during check out on every single page I had a coupon code at the top and a lot of people just did not use the coupon code.

Cochran: Yeah.

Steve: It makes absolutely no sense but, yeah it’s funny to hear that someone else has had that experience too. So let’s switch gears a little bit and you know, I don’t want to take up too much of your time but I did want to talk a little bit about your wholesale business, and I just wanted your take on kind of the differences in running a wholesale versus retail.

Cochran: Yeah, we’re not great at it, so it’s not a big part of our business. We started offering wholesale because we got a lot of installers wanting to buy wholesale from us, and for a long time we just told them, ‘no, we don’t do wholesale’ and eventually it was just like, men! We’re turning away– let’s say you got landscapers who are building out a custom you know, outdoor kitchen, and they’re wanting to buy the grill, and the customer already knows what they want and they can’t get you know, they don’t have a wholesale account so a lot of these guys go online to buy stuff but we weren’t offering the wholesale account.

So we were just basically blocking people out and we decided we would start the wholesale business to gain those customers and so we eventually worked it, and now most of them still don’t buy. So we have a few brick and mortar stores that buy products from us through the wholesale network and it’s specifically the products that we get manufactured now, but it’s not a big part of our business, and so as far as running that side of it, I mean, we do some of it but we almost treat it more like the same as our retail. We don’t really spend a bunch of time on it.

Steve: Okay, what is the margin difference, just curious between retail and wholesale, typically?

Cochran: It’s– it depends, I mean, you know, that’s the beauty of importing is that, when you
are manufacturing your own products and importing them in and you know, you can get some pretty huge margins, I mean, 60% margins aren’t unheard of…

Steve: Okay.

Cochran: and 40, 50% depending on how you’re buying, so at the wholesale level we’ll be able to do as much as 20 or 30% margin.

Steve: Okay, that’s pretty good.

Cochran: Yeah, and for other areas it’s only 10%. I mean it really is product by product, and I’m sure you’ve seen this too you know, it’s just a product by product.

Steve: Absolutely.

Cochran: Product line by product line, you’re making 60% on this product, and 20 on the next and they’re in the exact same category you know.

Steve: Yeah.

Cochran: But it’s just– it’s price points and so it really depends. Margin is so all over the board, there’s really no rule of thumb that I can really throw out there for it.

Steve: Where do you have your stuff manufactured for the stuff that you do create yourself?

Cochran: It’s– we have a mix of both US manufacturers and China manufacturers.

Steve: Okay.

Cochran: Yeah, so.

Steve: Any comments on why you’ve mixed the two or?

Cochran: Well, just some– I mean, essentially some products are made better in the US, and some are made better in China as far as the value that you’re going to be able to deliver. So typically when we decide to manufacture something, we look at what the price point is going to be for volume because essentially to manufacture it, you’ve got to move volume too, to make that work. So you know, we’re looking– if the price point has to be in a certain range, and we can’t hit that range in the US, then we’ll go to China and we can almost always get to where we need to be with price point there.

However, if we can’t hit the range, then what we find is that we can deliver a lot of value in the product if we can get it made in the US just because people will buy simply because it’s made in the US. You know, we are focused, I mean, 99% of our business is US based.

Steve: Okay, right that makes sense.

Cochran: Yeah, so our customers definitely find value in that, and we’ll make sales just because we put a made in the USA symbol on it. So that’s why we have that mix, but it’s more price point for me. I mean if I’m trying to hit a specific price point in a category with this product, then I’ll start usually domestically, and then start moving out from there if we have to.

Steve: Okay, I imagine the headaches are a lot, they’re increased when you go overseas, at least that has been my experience. Do you actually…

Cochran: Automatically yeah.

Steve: Do you actually go over there or is it…?

Cochran: I’ve never been, no.

Steve: Okay.

Cochran: We have a guy on the ground there that we work with…

Steve: Okay.

Cochran: And actually we find it that’s just– it’s easier anyways than trying to break through the communication barriers and everything like that, then going over there. I have, I know people that go over there and if we were doing a lot, if we had a bigger business in the– especially in the wholesale side where we doing 100 container a year or something, then we’d probably have to go over there to check quality control and stuff but…

Steve: Okay.

Cochran: We’re small enough where we can rely on our partners to handle that kind of thing.

Steve: How did you find your partner?

Cochran: Through Alibaba.

Steve: Okay.

Cochran: Yeah. We started there and just– we ended up doing a couple of small buys through one manufacturer and then they kind of had a middle man that we were working with that found this manufacturer for us, and we started asking him for other information and help and we’ve been working with him ever since. It’s been great, I mean he– I’m sure we pay a little bit more to go through him but if I need a product I can take a picture and send it to him and he’ll go outsource it for me, figure it all out, doesn’t charge me anything for all of the leg work to find the manufacturer, and get it all figured out and then essentially he’ll help me with all the export and everything so, works pretty good.

Steve: That’s awesome.

Cochran: Yeah.

Steve: That’s awesome, cool.

Cochran: I think we locked out. I’ve heard some bad stories too on Alibaba and stuff and I’ve actually had a couple of bad experiences there but ultimately, we– I think here’s the key which is; focus on building the relationship. I mean, that’s whether you’re talking with the manufacturer or a middle man like we are; build a relationship. They’re you now, they’ve– we’ve been treated really well with everybody we’ve worked with because we focused on that relationship portion of it, not just hammer, hammer, and hammer for the best price you know.

Steve: Yeah, I mean, I’ve had the same experience in fact we should share our horror stories and success stories some time. [Laughs]

Cochran: Sure.

Steve: So, any advice that you would give to new entrepreneurs out there who want to create an ecommerce store of their own today?

Cochran: Yeah, I’m in love with ecommerce, I mean, I absolutely think it’s one of the best start up opportunities for any age group. If you’ve got the entrepreneurial spirit, and you don’t have a lot of start up money, I think opportunity is an awesome opportunity to grow a business.

And I think the biggest piece of advice would be to– if you want to get into it, commit to it, like for two or three years, not just two or three weeks, or two or three months. I think that’s the biggest mistake that the opportunity seekers have in any of the online spaces. So a lot of people who listen to your podcast probably follow information marketers and things like that, I do too and I love most of the stuffs that I see but you know, if you spend every other week or month reading the newest, latest way to make a buck online, you’ll never get there.

So if you feel like ecommerce is going to be for you, then unsubscribe from all that other stuff and listen to guys like Steve who know their stuff and you know, I read your blog every week. I mean, when you come up with a new blog post, I’m on there reading it because as somebody in the business, I want to be up on ecommerce. I don’t spend a lot of time listening to the newest way to make money with Facebook, or the newest way to make a dollar with selling information products or any of that stuff. I focus in one area and we’ve done that for a long time and so…

Steve: Yeah.

Cochran: The key is just staying focused, don’t look at it as a fast way to make a buck, it’s a business and if you look at it that way and think about it that way, then you’ll be a lot further along.

Steve: That’s great advice and in fact, you know, a lot of times it takes some time for a business to develop. Often times it takes more than a year for you to start getting traction. I don’t know how long it took for you guys to start seeing traction, if you can think back.

Cochran: We went from very small to you know, multimillion dollar business within the first couple of years but the first year it was like nothing.

Steve: Right.

Cochran: You know, so the first year was like, ‘men! Is this really going to work?’ And then the second year maybe we did like a million dollars…

Steve: Uh-huh.

Cochran: in sales and then the third four or five million. So I mean, it grew very fast once it started growing and the reality is for us, and I’m a huge proponent of paid traffic. It wasn’t until we figured out paid traffic that we were able to really scale. And so I don’t want to get up on my soap box and start hammering SEO and why I hate it, but I’ll say that if you want a truly scalable ecommerce business then you need to learn paid traffic because I can go out there and get into a new market. I mean, this is what’s cool about it now.

It’s now that we’ve had this experience, we can literally pick what market we want to move into, and be in business and going and selling hundreds of thousands of dollars in product in months because we understand paid traffic and we understand the math behind making that work and we’re willing to test and stick with it and keep putting money towards it until we make it work now. So I think that’ll be the biggest thing– is stay focused and if you can learn paid traffic it’s a much more scalable Model than trying to figure out SEO, and hoping that the Google gods are going to be kind.

Steve: That makes a whole lot of sense and in fact, with all the recent updates in the past couple of years, people who have depended on SEO have really been hammered whereas the PPC guys, you know, it’s much more steady. You have more control, so I totally agree with you there Joe.

Cochran: Even our business got hammered on PPC around SEO with the updates, I mean, we don’t really do much for SEO and we still got hammered. We see that our organic traffic is probably less than half as it was just a few years ago, and the revenue is even less than half of the revenue just a few years ago but because we don’t really focus on it, I mean, it was a hit, but it certainly didn’t put us out of business whereas yeah I have friends with large seven figure websites that practically went out of business because their whole focus was SEO and now all over sudden they’re looking into paid traffic and starting to learn it but, you know, I love SEO, I love free traffic and I’ll take it any day I can get it but when it comes to scaling your business I think the paid traffic is just so much more reliable and consistent, that, that’s where we spend the bulk of our time because of that reason.

Steve: Okay, so I didn’t want to take up too much of your time. Are there any online services that you recommend for your business that you just can’t live without?

Cochran: I don’t know who your audience is, I mean, some of our services are probably going to be larger than what somebody starting out would use. We use like Rackspace and we use Magento for our websites.

Steve: Okay, [inaudible][00:46:36] edition?

Cochran: Magento enterprise.

Steve: Oh! Enterprise, okay.

Cochran: Yeah and most of our email stuff and all that is not where we started, so I like you know if you’re getting started, I like as many of the free services as you can get, some mail chimp and some things like that are…

Steve: Okay.

Cochran: are great for getting started. I love Shopify and Bigcommerce, we’ve actually run site samples for those as well, and really our big site is what we run on Magento but if I was starting a new site today, I wouldn’t start there.

Steve: Okay.

Cochran: I’ll start somewhere where it’s a little easier and a little less expensive to get moving and try to stay small in your expenses for as long as possible.

Steve: That’s great advice Joe . So, thanks for coming on the show, for all those who want to be able to get in touch with you and maybe ask you some questions, do you just want to give the audience an overview of all of your sites and where they can find you.

Cochran: Yeah, so, I do have a site with just my name and it’s Joe, my middle initial is R like Robert, my last name is Cochran which is C-o-c-h-r-a-n.com and I do offer some consulting for other ecommerce entrepreneurs there, but other than that, our main site is NorthlineExpress.com. You won’t be able to email me directly through that site though, that goes in through our customer service department so, that would be it. I don’t have any– I don’t usually give out too much direct contacts though.

Steve: No, that’s fine. So I’ll point them over to JoeRCochran.com. So if they’re interested in consulting I imagine there’s a form on their way they can get a hold of you, right?
Cochran: Yeah, absolutely and it’s a really kind of lame site with like just you know simple opt in on it basically so…

Steve: I hope so, okay.

Cochran: Not so many detail, does have my middle initial so it’s JoeRCochran.com.

Steve: Okay, yeah. I’ll go ahead and put those– all those links on the show notes so…

Cochran: Okay.

Steve: So people can easily click and find you.

Cochran: Cool.

Steve: All right well, thanks a lot Joe, thanks a lot for your time.

Cochran: All right, thank you.

Steve: All right, take care.

Cochran: Have fun. Bye, bye.

Steve: What I admire about Joe is his hustle, even though he was denied by some of his early vendors, he kept at it and found ways to succeed. It’s also a great example of how someone can start out with little or no capital by drop shipping their goods and then gradually transition over to carrying inventory. For more information about this episode, go to MyWifeQuitHerJob.com/episode23, and also if you enjoyed listening to this podcast, please go to iTunes and leave me a review.

When you write me a review, it not only makes me feel proud but it helps keep this podcast up in the ranks so other people can use this information, find the show more easily and get awesome business advice from my guests. It’s also the best way to support the show and please tell your friends because the greatest compliment you can give me is to provide a referral to someone else either in person or to share it on the web. And as an added incentive, I’m also giving away free business consultations to one lucky winner every single month. For more information; go to MyWifeQuitHerJob.com/contest, and if you’re interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information. Thanks for listening.

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.

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