Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and dig deep into what strategies they use to grow their businesses. Now today I’ve got a special guest with me on the show Ben Jabbawy who is the founder of Privy. Now, you’ve probably heard me talk about Privy on this podcast before because it’s one of the tools that I use in my ecommerce store. But today, we are going to go into great depth about cart abandonment. And to give you a heads up, there are actually two strategies mentioned in today’s episode that I’m actually not doing with my online store that I will definitely be implementing for the holidays.

But before we begin, I want to give a quick shout out to Privy once again. Privy is the tool that I use to build my email list for both my blog and my online store. And you know what’s funny is after talking to Ben today, it turns out that I’ve only been scratching the surface of what Privy can do. Right now I’m using privy to display a cool Wheel of Fortune pop up. Basically a user gives their email for a chance to win valuable prizes in our store. And customers love the gamification aspect of this and when I implemented this form email signups increased by 131%.

But you can also use Privy to reduce cart abandonment with cart saver pop ups and email as well at one super low price. So bottom line, Privy allows me to turn visitors into email subscribers and recover lost sales via pop up, and email as well. So, head on over to preview.com/Steve and try the tool for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ For 15% off. Once again that’s P-R-I-V-Y.com/Steve.

I also want to give a quick shout out to Klaviyo who is also a sponsor of the show. Always blessed to have Klaviyo as a sponsor because they are the email marketing platform that I personally use for my e-commerce store, and I depend on them for over 30% of my revenues. Now Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here is why it is so powerful.

Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they bought, piece of cake, and there is full revenue tracking on every single email. Now, Klaviyo is the most powerful email platform that I’ve ever used and you could 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 on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to My Wife Quit Her Job Podcast. Today I’m excited to have Ben Jabbawy on the show. Now, Ben is the founder of Privy, the tool that I use to manage all my email capture forms. And I actually randomly met Ben at the Shopify Unite conference several years ago. I think Ed Hallen of Klaviyo introduced the two of us and at the time I had no idea who this guy was and what he did. And likewise, I’m sure he had never heard of the number one hanky vendor on the internet.

Well, we kept in touch and today I’m a loyal user of his tool. And he’s actually been a big help for me for anything email related. And looking back, it was just one of those chance relationships that turned into something more. Anyway, with the holidays right around the corner, Ben and I are going to talk about some advanced cart abandonment strategies. And with that, welcome to show Ben, how you doing today?

Ben: Hey, Steve, I’m doing great. Super excited to be here.

Steve: So we’ve chatted a lot. We got a chance to meet up at the Klaviyo conference a couple months ago, but I actually don’t even know the back-story of Privy, like when did you decide to start this company and why?

Ben: Woo, man. So when did I actually start the company or when did I launch the ecommerce?

Steve: When did you launch the ecommerce product and what were your motivations? Like how did all this stuff get started?

Ben: Yeah. So we launched the product that people know us for in 2016. We had been tinkering with this idea of direct to consumer was going to need a different set of tools, than what B2B marketers were using. B2B was using HubSpot and Marketo and those are great solutions. But if you’re marketing directly to consumers and selling transactionally online, it was just going to require a different set of brands and workflows that are built specifically for those vendors in mind. And at first, we actually we didn’t really start on ecommerce, we were in retail. But in 2016, we really found our footing when we entered the Shopify market.

Steve: So that’s actually when we met right? I think you just launched then when we just met.

Ben: Yeah, you and I met in 2016 at Unite. That’s right.

Steve: Right. Okay, and you probably just — wow, okay, I got you at the early stages, awesome.

Ben: Yeah.

Steve: So Ben, we all know that cart abandonment is a huge problem for ecommerce store owners. Let’s actually start with some stats, I know what the stats are for my store but in your experience with Privy, like what percentage of users have you seen abandon their cart?

Ben: Yeah, so we’re seeing upwards of 60, 70% of carts going abandoned. So you’re spending all that money driving the traffic to the store, getting the word out, you’re getting excited, they’re further down the funnel adding products to the cart, and then seven out of those 10 people will actually abandon the cart before completing purchase. So it’s a huge, huge opportunity.

Steve: And I don’t know if you know the answer to this question, but what are some of the primary reasons for that happening?

Ben: Yeah, so it’s not always price, right, especially it goes down on browsing. Certainly that’s a big part of it. People are just kind of tinkering, but price is definitely the number one reason that we hear, also…

Steve: Is it shipping price or because they should in theory, already know the price when they’re looking at the product and adding it to the cart.

Ben: Yep. So in many cases within price, we hear shipping price or tax like the all in price once that’s calculated and checked out, that is the number one reason that we hear. There’s also a ton of reasons that people leave around, they have questions about the product. So, thinking about guarantees, or reviews or whatever it is, how it actually is going to function, that that drives a ton of abandonment as well. And in some cases, there’s a small percentage that’s actually like the payment isn’t accepted, or errors at check out that cause a portion of abandonment as well.

Steve: Mm-huh. I’m just thinking that if one of these three things that you just named was actually the factor for not checking out, then would an abandonment strategy help because you’re not going to fix some of those things, right?

Ben: Yeah, yeah, I mean, I think, look, part of it is just people get distracted on the web, right? So attention spans are short. And so, I think that’s why you hear so many people placing an emphasis on an abandonment strategy. Certainly price is something you could work on, answering questions is something that you could work on. But yeah, there’s going to be just like in any business, there’s a certain percentage of these abandoned carts that happen that you probably can’t address. But that’s a smaller percentage compared to the ones that are leaving for price or because they have questions etc.

Steve: Yeah, and then I know what my abandoned cart percentage is, it’s roughly 20 something percent, but what are some of the…

Ben: That’s not bad.

Steve: Oh, it’s not bad. I think I read on one of your posts that people are getting 30 to 60 and so that’s why I kind of wanted to ask what those people are doing differently.

Ben: Oh, you mean in terms of recovery?

Steve: Recovery yeah, recovery yeah.

Ben: So you’re saying if you send 20 abandoned cart emails or 100, 20 will actually…

Steve: That’s correct.

Ben: No, that’s pretty good. I mean, we actually are seeing a lot of people that are in the three and 4% in terms of recovery.

Steve: Really?

Ben: Yeah.

Steve: Are you talking about three or 4% off of a single email. I’m talking about across three emails cumulative.

Ben: Oh, okay. So then yeah, I would expect closer to 20 then that seems in line, yeah definitely.

Steve: I think I read one of your articles that people are getting between 30 and 60, though. How do you achieve that? Or maybe it wasn’t one of your posts; maybe it was someone else’s post. I was doing research last night.

Ben: Yeah, that doesn’t sound like it was ours, so that may have come from somewhere else. But you could imagine that if you’re combining a couple of different tactics and I’m happy to talk about them, but if you’re thinking about cart saving pop ups over check out but then look for cart value and the exit signal; I can talk about some of the numbers there. If you’re also sending multiple abandoned cart emails, and then if you’re also doing something like through Shoelace retargeting, you could definitely imagine how the numbers get up above 30%.

Steve: Okay, you just named a bunch of things there. And let’s kind of just start with all the different aspects and kind of break it down to the people listening. It’s harder on a podcast, because they’re just listening and it’s not visual. So let’s just start with the different strategies that you’ve implemented with your clients.

Ben: Sure. Yeah. So first things first, while someone is actually on the checkout in process, you can tie that with this widely used concept of exit intent, right? So if I know that someone’s on the checkout page, and they’re exiting and there’s still value in their cart, then I can actually predict before they ever leave the checkout that they’re about to abandon their cart. And so at Privy, we’ve developed this concept of what we call a cart saving display. It’s exactly what you’d imagine; you can target it just to those people as they’re leaving your checkout process with that money still in the cart, you can design and target a last minute offer.

Steve: What are some metrics that you use to predict that they’re actually going to leave?

Ben: So we’re looking for exit intent. So on desktop, that’s going to be their mouse accelerating towards closing down the browser tab, or moving their mouse to type in a different destination and the URL bar. And on mobile, if you’re thinking about exit intent, it’s either switching between browser tabs on mobile like you can think of just that double click or on the checkout exit intent, we would look for clicking the back button.

Steve: Okay, and so when you detect one of these factors, oh, you’re talking about like a pop up?

Ben: Yeah. Yeah. So you could choose how to display this. But it could be a fly out, it could be a pop up, it could be a spin to win wheel. That’s really up to the merchant. But what you would do is you would use those triggers in your campaign and marry that with a minimum cart value and the fact that they’re still on a URL that contains checkout.

Steve: Interesting and you would you — what are some offers that have worked? Is it usually like some sort of discount offer?

Ben: Yes. So what we see is that a very simple cart saver that targets exactly that people on checkout leaving with either a 5% offer free of shipping offer or maybe 10%, that’s going to help you prevent 10% of carts that would have otherwise gone abandoned before they even leave the site.

Steve: Interesting. I always have a conflict when it comes to just giving coupon codes this way, because you kind of train people, right?

Ben: Yeah.

Steve: So how do you prevent that from happening?

Ben: Yeah. So one of the interesting techniques that a lot of our marketers use is this concept of not just a generic cart saver but a tiered cart saver, right? And so maybe you know your average order value very specifically, right? And maybe if someone has less than average order value, let’s say it was 50 bucks, you know what, you don’t want to train bad behavior. So if they have less than that in their cart, you’re going to let them abandon, but if they have three times average order value, let’s say they had 150 in their cart, then you may want to get a little bit more aggressive and maybe you just target that segment of cart abandonment with a cart saver. So that’s one thing.

The other is just around loading like a fly out that’s asking for, hey, it looks like before you go, did you have any questions about this product? Let us know, we’ll get back to you. You can use a number of different kinds of mechanisms to just try to do everything you can before you let them leave your site. I think that’s like the number one takeaway that shocked us before we launched, the concept of a cart saving display was how comfortable we as merchants are letting everyone leave the site before we try to do anything.

Steve: Let me ask you this question. At least for my store, I know that people in check out they’ll go back and look to see what’s in their cart, and continue shopping. They’ll go to check out but then they might go back and add something extra. Is there a way to just flash this pop up when I know they’re going to leave the site to a different URL versus staying on the site?

Ben: Yeah. So, there’s a number of different kind of triggers you can think about, right. And so maybe exit intent on mobile is treated differently than exit intent on desktop. Certainly it’s something that a lot of our users do anyhow, that is segment different campaigns. So, in terms of this scenario that you’re talking about, there’s no way to necessarily like understand if the back button in this case is going to fire them back to like Facebook, versus back to your site. We don’t really have that level of detection, but that’s an awesome, awesome idea.

Steve: Okay. And so how do people set things up then? You talked about desktop versus Mobile. What are some examples of how you could set it up?

Ben: Yeah. So on desktop, a lot of people like to use our full screen overlay option. So this is a pop up maybe with a background image that literally takes up the entire page, you’ve probably experienced those. And that can be hugely powerful on desktop for a cart saving display. But on mobile, that’s not really anything we would recommend. So maybe on mobile instead of a pop up, you’re using a fly out, that’s kind of just takes the bottom third or the top third of the screen, right? So you may care about the design based on the device.

You may also look for different signals, right? So certainly on desktop, a mouse leaving is a good signal, but maybe on mobile, there’s just a time right? If someone’s on the checkout page with a certain amount of money in their cart for two minutes or a minute, maybe that’s a good signal to load a last minute kind of offer.

Steve: Interesting. Do you know how people mostly set that up with timers exit intent?

Ben: Yeah, so with cart savers, almost all of our users use exit intent for a cart saver looking for that signal, and they marry that with how much money is in the cart. So they may be presenting larger offers to people that have higher values of product in the cart.

Steve: Okay, and what does it exactly mean for exit intent on a desktop, is it when your mouse hovers away from the window or when it clicks the back button or?

Ben: On desktop, we look at mouse movement and acceleration. And so if your mouse is quickly accelerating to close the browser or to the URL bar at the very top, then those would be the two signals we use based on the mouse location and pace essentially.

Steve: Okay, and so if I were to move my mouse quickly, just outside the window to click on another window, it would not come up then?

Ben: No it shouldn’t.

Steve: Okay. I always wonder if the term exit intent, it seems like a lot of people have different implementations. I was just kind of curious how you guys did it.

Ben: Yeah, I mean there’s a number of different ways to handle that.

Steve: So we had the cart saver, what is another method to recover a cart?

Ben: Yeah. So historically, I think everyone talks about checkout abandonment emails. And so, what that means for those that are new is that like Shopify actually has a free tool that does this inside the Shopify admin. If someone gets far enough along in the checkout process to have included their email address, then if they leave before completing purchase, Shopify lets you send a checkout abandonment email and that is hugely powerful. I think MailChimp says that checkout abandonment emails drive 30 times the revenue of other emails that are sent. And there’s no doubt that that’s hugely powerful.

But the challenge that we’ve seen is a lot of your abandonment that happens on your site actually happens on the cart page with people who have added to cart or on the checkout with people who have added to cart, gone to check out, and have not gotten far enough along in the checkout to include their email address. And so it’s kind of like this dirty little secret of checkout abandonment emails where right now even all the ESPs that piggyback off of the checkout abandonments in Shopify actually aren’t able to recognize a large portion of who is abandoning their cart.

So, even though checkout abandonment emails work very well that can be very effective, Stephen your case it sounds like you’re recovering 20% of carts through that mechanism. That’s awesome. Imagine if you were able to send those same exact emails that are working so well to a larger percentage of the pie that was abandoning their cart.

Steve: Walk me through the process.

Ben: Yeah. So let’s say you’re already using something like Privy to convert first time visitors into email subscribers with a pop up, right? So that’s probably converting about 10% of traffic to your store, or somewhere around there. So some of those people, the moment they register there, they become known entities to your database. And then Privy continues to track those people when they browse and add, and let’s say we’ve done exactly that. We filled out a form in this visit and we added a red t-shirt to cart, but at that point, Privy knows who you are, and your abandonment email system or Shopify does not know who you are, right?

Steve: Right.

Ben: So at that point, if I leave the site with that red t-shirt in my cart, the only system that A, has proper opt in and B, has the ability to identify who that email address is that just left the site would be Privy in that case, right?

Steve: Okay.

Ben: So versus if that same person filled out the form, added to cart, moved to the checkout process and started filling out my email and check out, at that point your normal checkout abandonment system would be able to send that abandoned checkout email.

Steve: So for most people who are doing email capture, there’s really no way to communicate with your shopping cart that you have an address right?

Ben: That’s correct yeah. I mean you could certainly sync the email addresses to Shopify or MailChimp, but that’s not — that’s considered offline data. That’s just an email address. It’s not the email address tied to the visitor behavior.

Steve: Right. And so the piece that I’m missing here is traditionally, the way I’ve used Privy was as an email capture form. But if I’m going to do an abandoned cart with Privy, I would also want knowledge of what’s in the cart, right? Is all that information past as well?

Ben: Yes, yeah. So we know which products are in the cart. We know your previous browsing history, what products you looked at, all of that stuff we are storing alongside your form submissions inside Privy.

Steve: Okay. And so what are some of the rules then, in terms of sending this email and what would you contain in this email? Like, what does the email look like and when do you send it out exactly?

Ben: Yeah. So in the same way that we would recommend for your cart saver it’s thinking about that tiered approach, right? We would recommend something similar here for cart abandonment. So in the Privy cart abandonment solution, probably the first email should be set for an hour after abandonment. And at that point, we actually wouldn’t recommend including a coupon. I would recommend keeping that short and sweet and saying, hey so and so, I’m reaching out from Ben’s t-shirt store and we noticed you left some products in your cart. Did you have any questions about how that red t-shirt fits or the sizing or anything? If you have any questions whatsoever, let me know. If not, here’s a link to complete your checkout.

So just that soft reminder with the offer to kind of answer any lingering questions that they have preventing them from purchase can be hugely impactful. Then you might consider a second email that’s maybe six or 12 hours after abandonment and maybe at that point, there’s some more information about the product. This would be an appropriate time to think about a small coupon if the purchase is still incomplete, and then perhaps like you did in yours Steve, you actually have a third email in your series as well. So definitely keeping it to kind of two to three is where we’ve seen a lot of success for our merchants, and that’s where their kind of recovery rates climb from three to 4% to something much higher than that.

Steve: How do you determine how much time to wait before sending out each email?

Ben: Yeah, I mean, I think it’s kind of for starters; it’s a guessing game, right? We see every merchant just start with that one hour email or a 24 hour email. In my view, waiting 24 hours is a little bit too long just given the way that we engage as consumers on the web. So, definitely starting with one hour for the first not necessarily including an offer in that, and then I think it’s really a question on then the next two. And I would kind of decide on when to send the second and third based on anything else you may be doing like are you using retargeting ads. And if you are, then there’s a chance that that person will see a retargeting ad the same day, so maybe two emails in one day is too much. But if you’re not doing anything to supplement your checkout emails, then one at one hour and the second at six or 12 seems appropriate.

S; I know for mine, I think my third one actually converts higher than my second one. I think I had that set at 48 hours and the second was that at 24 hours. It’s weird. I can’t explain it though.

Ben: Yeah. And this is for the linen store, right?

Steve: That’s correct. Yes.

Ben: Okay, and [inaudible 00:24:58]. So, you have three emails, what is kind of the message of each? And is there an offer in each?

Steve: There is not an offer, I don’t because — after talking to you today, I think what I’m going to do is go back and create a separate abandoned cart that is only for high ticket item purchasers. Like if they have a cart that is over like 100 bucks or so, I’ll probably going to try to give them a coupon and keep my existing one for people with carts that are maybe like below 50 bucks or something like that.

Ben: Yeah.

Steve: But I’m not doing that right now. So what I do is the first one is just like a gentle reminder. The second one says something like, hey, we still have your cart saved for you. And the third one is your cart is going to expire soon.

Ben: Nice, that’s cool.

Steve: And so that’s how I have it set. I’m kind of against coupons in general, but I can see the value in giving that out to someone who’s going to be a big customer because we actually reach out to these big customers later and try to make them long term customers that buy over and over again. Because the larger customers at our store tend to be event planners with a lot of buying power. So that’s just a unique case obviously for our store.

Ben: Yeah but I look, I think like one of the reasons we’ve grown a lot is because people want to bring a level of specificity or relevance or personalization whatever buzzword you want to use to how they display messages on their site. And we feel that that’s exactly what they should be doing in their checkout abandonment emails and cart abandonment emails as well. So, I think your instinct around treating high value ticket abandoners and lower cart value abandoners differently is like that’s where you can start to chip away at each of these segments differently because they kind of are acting very different.

Steve: How do you make sure that your abandoned checkout emails don’t interfere with your just abandoned cart emails?

Ben: Yeah, so we’re actually rolling out integration. So basically, just to clarify how most people in the industry do this, if you use something like MailChimp, what they’ll do is they’ll actually piggyback off of the Shopify checkout abandonment API to understand which draft orders have been abandoned essentially. And if eligible, they’ll help you send that email. So it’s all based off of the Shopify checkout abandonment, and we do the same thing, right. So we’ll basically piggyback off of that and our recommendation is if people are going to adopt the Privy cart abandonment solution is that they just simply turn off that email from Shopify.

Steve: I just wanted to take a moment to tell you about my brand new service that will help you grow your email list for free through group giveaways. This service is called Gobrandwin.com, and we’ve had amazing results so far. In one of our last giveaways, we gathered almost 12,000 emails and grew the email lists of participating ecommerce stores by over 56% overnight. Now, does getting more customers and more emails for free sound interesting to you? Here’s how it works.
If you own your own e-commerce brand, and you have a following, you contribute a gift card from your store valued at $200 or more. We will then assemble gift cards from other participating brands with a similar customer demographic and turn it into one massive sweepstakes giveaway. Now, everyone is going to send this giveaway email to their entire customer base, and drive them to a special landing page on Gobrandwin.com. We will acquire email addresses. Now consumers enter their emails, we send them special offers from your store and select a grand prize winner.

And after the sweepstakes is over, you will receive the full list of entrants and instantly grow your email list. And because my co founder and I have a pretty big network, we will also send the giveaway entry form to related influencers within the same niche and instantly augment any sweepstakes that we run. So bottom line the concept is very simple, we all help each other promote each other’s businesses, get free promotion from bloggers, and share the customer base. Now, if you’re interested in growing your email list, then head on over to Gobrandwin.com. That’s G-O-B-R-A-N-D-W-I-N.com, that’s Gobrandwin.com, and it is 100% free. Now back to the show.

Okay and here’s just something that just popped into my head just now. Is there a way to send special pop ups or emails if I recognize that a certain person with a certain email address is hanging out in our store?

Ben: Yes, definitely possible. How would you want to do that based on how many orders they’ve made or?

Steve: Like if I know that there’s someone who’ve spent a lot of money in the past, and their cart might not meet my threshold right now but I want to give them special treatment.

Ben: Yes. Yeah. So we offer a whole slew of targeting rules, so we call them for displays on your site. And one of those is how many orders they’ve made, or how much money they’ve spent on your site.

Steve: Oh, so you keep track of that?

Ben: Yeah. So, that would be kind of how we recommend it. We don’t let you actually input a user’s email address to target but we do let you run all sorts of advanced targeting rules and pair those together so hitting a very specific segment with a specific message.

Steve: Yeah, I mean, obviously, that’s the better way to do it, right? Otherwise, you have to maintain this email list that you have to manually update.

Ben: Right. We want to take the heavy lifting off of you. So as long as you have an idea of what that message should be, then you can design that in Privy and add the proper targeting rules to hit that audience. Just keep in mind that the more advanced you get on the targeting rules, the smaller the audience becomes that matches all.

Steve: Sure. I mean, obviously these would be very specialized abandoned cart solutions specifically targeting a small subset of people that are maybe high ticket item people similar to what we already discussed right?

Ben: Right. Yeah.

Steve: Can you comment on email abandoned cart versus the cart saver pop up versus Facebook ads and push notifications as a means to recover abandoned carts?

Ben: Yeah. So and it’s good. It’s good, right. Like the holiday season is coming up. One of the things that we’ve seen in general and then I’ll dive into that is that over the holiday season, you should expect about 100% lift in traffic. That was what we saw across all our merchants’ stores last holiday season. So, all that means is if 70% of your carts go abandoned normally, and you’re going to double your traffic over the holiday months, then that 70% is going to reflect a much larger amount of carts that go abandoned.

So, if there’s two things that you can do that are incredibly low cost, one would be to set up a cart saving display, and if you’d like targeted just to the people that have a certain amount of money or higher in their cart, big spenders about to leave. That is incredibly low cost; you don’t need to pay to do that. The second thing is whether it’s just the free checkout abandonment email from Privy — sorry, from Shopify, or a solution like Privy, I absolutely recommend that you have some sort of abandonment email funnel set up before the holiday season.

And lastly, if you do have some budget to spend, I think for the holiday season, I would recommend focusing on driving the traffic to your site from your existing list, and then focusing any sort of paid marketing dollars you have around retargeting on Facebook or Instagram the people that are leaving your site without completing purchase. And a lot of the audience probably doesn’t have huge budgets to drive pay on social and that’s fine. So I would look at that as kind of like a third really important stat if you have some budget.

Steve: Okay, I mean traditionally Facebook retargeting of abandoned carts, the audience size for that is going to be large and I can’t imagine you’re going to be spending a whole lot of money on that. It’s not going to be that expensive, right?

Ben: Exactly, and those are the people that are such high value and so high intent that are literally at the bottom of your funnel, and perhaps if they didn’t leave because of an issue with your product or a question, then at least this is just another way to stay top of mind without having to send six abandoned cart emails let’s say.

Steve: Great, let me ask you this question and it just kind of popped into my mind again. When you’re using the cart saver during checkout, you probably want to deliver the coupon code right away, as opposed to having them leave the site and maybe check their email and then come back?

Ben: Yes, yes, definitely so 100% recommend in any case that you always reveal a coupon code on the site if that’s the point of what this person signing up for. So in a cart saver, if they’re on checkout, and leaving and you load something that says, hey, wait, complete your purchase now, join our email list and we’ll give you free shipping code, then you would want to reveal it right there on the confirmation of the pop up as opposed in an email.

Steve: Actually, now that I think about it, we already had their email because they’re in checkout right. So would you just want to display the coupon period?

Ben: Yeah, so there’s two camps here, and both can be incredibly effective. In some cases, if they’re on checkout, you actually don’t have their email yet, right? So we do see some of our users target a form that reveals the coupon code.

Steve: I see. That makes sense.

Ben: And then we have other users that that say, hey, I want to run the same exact campaign, but I want to target the people whose email addresses I actually already know. And I don’t want to ask for their email again, and I just want to reveal the code. So you can actually do both of those things inside of Privy. And we definitely like the more sophisticated the marketer, the more we see that branching. If we know the email address, obviously just reveal the code and if we don’t, we still want to try to capture the email just in case they still leave.

Steve: So when you reveal this coupon code, can you have it automatically entered?

Ben: Yes, so for Shopify we call it the magic coupon script. So whether it’s a master unique code but the same coupon code is what everyone gets. Or if it’s a unique coupon code, we can have it so that it automatically is entered into checkout, whether that’s on desktop or mobile. There’s huge value in that. We know how frustrating it can be. If you’re on a mobile device, you sign up, you get a coupon code and then you have to like remember this long thing. That’s not a really great experience. So we built the coupon script to do exactly that.

Steve: Nice. If we can move back to just email real quick, what are some subject lines in email copy that have worked the best in terms of conversions?

Ben: Yes. So you’re talking about like general email or…

Steve: I’m talking about abandoned cart emails in particular.

Ben: Yeah, so I think this is where own brand adds a lot of value, right? So if you have like a very human casual tone in your brand, weaving that into the subject lines is a great time to do that. I think with distractions and everything like that, a lot of times, just like a subject around, hey, don’t forget, you have this in your cart. That can actually be more effective than you might imagine, especially when you weave that kind of tone into it that they would expect. I think avoiding the offers in the beginning, in the subject line especially, is just going to help with deliverability and avoiding the promotional inbox. So I think we typically recommend that you stay away from that.

Steve: What about the second email assuming there’s no coupon?

Ben: Assuming there’s no coupon in terms of what we would recommend for subject.

Steve: Yeah.

Ben: So in this case, this might be a good opportunity to educate people, right? So, maybe the subject is still centered around like, you still have product in your cart or your cart is expiring soon, something to that effect. But the body of the email may just be pertinent to include a bit more information about your business. A, they may have forgotten about who you were in the last six or 24 hours and B, certainly they may have forgotten what’s in their cart. So, reminding them of those two things in that second email would be important.

Steve: Okay, so Ben, we’ve actually covered a lot of stuff. I was hoping that what you could do is if someone who’s running a store is actually not doing any of these things today, how would you recommend that they proceed, and what needs to be implemented before Black Friday?

Ben: Yeah, so A, we’re doing a free webinar about cart savers and abandonment over the holiday season. Our goal is to walk away with definitive steps you can take no matter how close to Black Friday. So, I highly recommend checking that out. Second, I would do two simple things. I would turn on a cart saving pop up from Privy that loads based on how much money is in someone’s cart and them being on the checkout experience with the exit intent trigger. I would also flip on…

Steve: So, this is only for checkout – sorry, the cart saver pop up is only for checkout?

Ben: Exactly.

Steve: Okay, got it.

Ben: Yeah, and that should help reduce about 10% of carts before they ever leave, a huge value right there. The second thing I would do is I would — whether it’s the Shopify free checkout abandonment email or the Privy $10 a month abandonment email, I would immediately get at least one email set up with or without an offer.

Steve: Okay. And then the advantage obviously with using a service like Privy is that once you have the email, you can show this send this email for any sort of abandonment whereas the Shopify only solution is there’s only standard checkout right?

Ben: That’s exactly right. Yeah, so we will help you send those abandonment emails to a larger percentage of people that are actually leaving products either in their cart or in checkout.

Steve: And on the cart saver pop up, the mobile should be a smaller portion of the screen real estate whereas do you recommend like the full screen takeover for desktop?

Ben: Yeah, for desktop cart savers we do recommend big involved, so full screen takeovers with messages, wait, before you go, reveal code now if there’s an offer, that has huge value. And for mobile definitely sticking with the fly out ideally positioned on the bottom is going to be best for the mobile experience.

Steve: Okay, that’s it, anything that I’m missing Ben, it seems pretty straightforward. Oh, so do you recommend using the timer in conjunction with the exit intent or just the exit intent?

Ben: I don’t know, the timer is kind of it seems to work really well. But as a consumer it feels a little bit kind of gimmicky. So, I think certainly feel free to experiment with it. But we found in a cart saving experience on the site, you don’t need a timer to really have a massive impact on reducing abandonment.

Steve: Okay. And then, of course, if you want to go the extra mile, you’ll have a separate abandon sequence for high ticket purchasers where you can actually give out a coupon and drastically improve your abandoned recovery rate.

Ben: That’s exactly right. So, if you’re just getting started, just make sure you have these concepts in place. And for those that are more advanced, definitely think about a tiered structure based on the value of someone’s cart that is leaving behind.

Steve: Well, Ben, if anyone has any questions for you about cart abandonment, you already mentioned your webinar. I apologize; I already forgot what it was, if you want to specify that again and where people can reach you online.

Ben: Yeah, so you just head to Privy.com, P-R-I-V-Y.com. We have very clear call to actions on when the webinars are and a checklist for preparing for Black Friday. That’s going to be up through the holiday season.

Steve: Cool. And if anyone needs any help implementing all this stuff, you guys have a support team that’ll help out right?

Ben: Oh, yeah, we have live chat support, we have customer success. We are staffing up quite a bit for the holiday season.

Steve: Cool. Well, I know that I am actually not doing many of the things that we discussed today. And so I’m going to put on my implementation hat and get this stuff done before the holidays for sure. But Ben thanks a lot for coming on the show. It’s really valuable.

Ben: Thanks Steve. Yeah, my pleasure, great to be here.

Steve: All right. Take care.

Hope you enjoyed that episode. Whenever I talk to anyone on this podcast, I always leave with yet another action item for my store. But the tips in today’s podcast are actually simple to implement and I’ll definitely have them ready by Black Friday. For more information about this episode, go to mywifequitherjob.com/episode233.

And once again I want to thank Klaviyo for sponsoring this episode. Klaviyo is my email marketing platform of choice for e-commerce merchants and you can easily put together automated flows like an abandoned cart sequence, a post-purchase flow, a win-back campaign, basically all these sequences that will make you money on autopilot. So, head on over to Mywifequitherjob.com/ K-L-A-V-I-Y-O. Once again that’s Mywifequitherjob.com/ K-L-A-V-I-Y-O.

I also want to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. And I like Privy because it’s so powerful and you can basically trigger custom pop ups for any primer that is tied to your e-commerce store. If you want to give it a try, it is free. So head on over to Privy.com/Steve, once again that’s P-R-I-V-Y.com/Steve.

Now, I talk about how I use all these tools on my blog, and if you’re interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email, and I’ll send you the course right away, thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.mywifequitherjob.com.

Intro: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not in business. Now, this week, I invited my buddy Nathan Resnick of Sourcify to give his expert opinion on the Trump tariffs. We talk about which products are affected and how to best avoid the brunt of the impact.

But before we begin, I want to give a quick shout out to Klaviyo who is a sponsor of the show. And I like Klaviyo because they are the email marketing platform that I personally use for my ecommerce store, and I depend on them for over 30% of my revenues. Now Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here is why it is so powerful.

Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week, 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 sent. Now, Klaviyo is the most powerful email platform that I’ve ever used and you could 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.

I also want to give a shout out to Privy who is also a sponsor of the show. Privy is the tool that I use to build my email list for both my blog and my online store. Now what does Privy do? Well, Privy is an email list growth platform and they manage all of my email capture forms. And I use Privy hand-in-hand with my email marketing provider. Now they’re a bunch of companies out there that will manage email capture forms, but I like privy because they specialize in e-commerce.

Right now I’m using privy to display a cool wheel of fortune pop up. Basically a user gives their email for a chance to win valuable prices in our store. And customers love the gamification aspect of this. And when I implemented this form email signups increased by 131%. So bottom line, Privy allows me to turn visitors into email subscribers, which I then feed to my email provider to close the sale. So head on over to Privy.com/Steve and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ for 15% off. Once again, that’s P-R-I-V-Y.com/Steve. 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’m really excited to have Nathan Resnick back on the show. And if you don’t remember Nathan, he is the founder of Sourcify, which is a company that helps you find manufacturers to produce your products. And prior to that, he owned two e-commerce companies, Yes Man Watches and Cork Supply Co., and recently actually, he spoke at my annual e-commerce conference, the Sellers Summit. Anyway, Nathan has actually been on TV multiple times in the past month to talk about the Trump tariffs. And since he’s an expert on the topic, I thought I’d have him on to discuss his thoughts. And with that, welcome back on the show Nathan, how are you doing today, man?

Nathan: What is up? I’m doing great. Thanks so much for having me.

Steve: So first off, can you just kind of summarize why Trump has issued these tariffs in the first place? And what kind of are his demands from China at the present time?

Nathan: It’s crazy. And I kind of want to start the conversation saying, I’m not political at all. But what I’ll say is, these tariffs are crazy. And I think he is trying to position himself with these tariffs thinking that these products are going to now be produced in America, which there are companies that we work with are rapidly diversifying their supply chain across Asia. And so for him, and I think the US government is just a way for them to make money. Really what Trump doesn’t even realize it and what he said actually, last week is that China is now paying us billions of dollars in tariffs, but really tariffs are paid for by American companies that are importing products from China.

And so it’s really in my mind just a bit ridiculous, but at end of the day tariffs are a way for the US government to make money or to balance out trade. And if you look at the trade between America and China, there’s a huge deficit. We’re importing way more than we are exporting to China.

Steve: I know, but realistically does the US have the infrastructure that China has to produce all these things at low costs?

Nathan: Oh, we don’t. I mean, that’s really the global economy. If you look at it from my more bird’s eye view, there’s a reason products are produced outside of America. And the reason being is it’s just the way that the currencies work. If our dollar equals 6.8 renminbi right now, then you know that our dollar is going to go further there. And really, I almost break it down to the ground floor. When you’re in Guangzhou or Shenzhen, let’s say you’re going to the Canton Fair coming up here in October, and you’re over there and you’re going out to dinner, you’re probably spending almost a fifth or a 10th less on dinner than you would here in America.

And that just shows the way the international economy work is that our dollar goes a lot farther. And you know what; you know the Chinese government is doing? And I’m not exactly sure if I should say this in this way. But they’re actually, they’re putting, they’re making the renminbi at almost their all time low a year low. So right now, the dollar is extremely valuable compared to the renminbi. And so our dollar is going to go a lot further than it would last year, a year before, and the reason being is the Chinese government, they’re trying to enable US corporations to have more buying power in China, even with these tariffs.

Steve: Hmm-mm interesting. Okay. But then, doesn’t the factory kind of get screwed over then?

Nathan: Well, in this case, the factories are really screaming. I’ll tell you, I was in China two weeks ago at our Guangzhou office. And you go to these, even the fabric markets there in Guangzhou and everyone’s screaming, they’re saying, hey, well buy fabric here, but can we send it to Vietnam? Can we send it to the Philippines? Can we send it off to Cambodia? And even at Sourcify, when we work with these companies to produce products across Asia, there’s probably been about a 30 to 40% increase in companies requesting to produce products outside of China, and I’m talking in India, Vietnam, Thailand, the Philippines.

And if you look at larger enterprises, if you look at the Nikes or Adidas of the world, these organizations have already been producing outside of China for a long time. And so really, what’s scary with these tariffs is that in my mind, they’re just starting. Trump just put a 10% tariff on $200 billion of Chinese products last week, and that tariff is going to be increased to 25%, starting January 1, 2019. Now, they’re still actively negotiating and trying to figure out really what’s going on with this trade war.

But if you’re an e-commerce company, and all of a sudden, you have to pay 25% more tariffs, you’re going to want to figure out, how can I avoid that tariff? And I’m happy to dive in the ways that you can avoid the tariff. Some, I will say will be legal, and some are a bit under the table. But I’m not recommending the under the table ways at all.

Steve: So before we get into that, can you just give us a quick update on kind of the current state of the tariffs and what products they are affecting, kind of give us a timeline and how it started out and where we are today?

Nathan: Yeah, a hundred percent. So it started out a few months ago. And really, originally, it was more so targeting industrial and agriculture products, where you’re talking about steel, you’re talking about soybeans, you’re talking about products that will probably not affect your general e-commerce entrepreneur that’s selling consumer products. And then all of a sudden last week, tariffs got put on electronics, cosmetics, clothing, home, and home furnishing products and TVs. I mean, these tariffs now are really actively affecting HTS codes that companies like you and I are importing under. And so it started to all of a sudden have an effect in the e-commerce world. And really, that’s scary.

I mean, if you’re an e-commerce entrepreneur, that’s just starting out running on thinner margins. These tariffs are going to have a direct effect on your business. And really probably the first question that comes to mind right there is, how do I find out, how do I know if these tariffs are affecting my product? And so what I do right now is really ask your freight forward. If you’re importing products, even just at a smaller scale, whether it be a pallet or just one container, so ask your freight forward and say, hey, do I have to pay a higher tariff?

And your freight forwarder should know, right off the bat if your HTS codes that you’re importing under are affected. And really, that’s the first way that you start, you can also definitely go on Google and do some research yourself. But I think at the end of the day, your freight forwarder should have the most knowledge in regards to all your products affected.

Steve: Okay and then what impact would you say the tariffs are going to have on larger businesses like we were talking about CVS earlier, versus smaller businesses?

Nathan: I mean, it’s crazy on the larger scale. They’re hurting; they’re trying to avoid them as fast as they can. I mean, there was this story, it must have been two months ago, where there was this company that was trying to import or it was they were actually exporting, because on the other hand, China has lifted tariffs on products that American companies are trying to sell into China. So it’s back and forth, these trade wars, but there was this company that was exporting soybeans from America to China, they literally missed the cutoff time by 30 minutes. And they started paying $12,000 a day just to have their container ship off the port waiting to figure out what’s going to happen with these tariffs. Because if they have brought those soybeans to port, they would have to pay $6 million in new tariffs just based off these new tariff increases.

And so from a larger scale from these larger enterprises, the effects are huge. And so what these companies are doing are diversifying their supply chains very fast, which means a lot of these production lines in Vietnam or India are a lot of times already booked their capacity for the next year. You really have to dive deep and figure out who is going to be a supplier that still has some capacity for your products outside of China, or you find ways to diversify or get around these tariffs in maybe not the most cleanest way.

Steve: So, what would you say is the short term impact versus the long term impact? Are you already starting to see prices increase?

Nathan: Yeah, I mean, I would say short term impact is that you as a company need to start negotiating right away with your factory to see how can I balance out these increased tariffs, because on the factory side of the table, you’re going to want to try to lower costs there and cut your unit costs on that end. On the consumer side of the table, we as American consumers are going to have to start paying more for these products. I mean, I actually wrote this down as estimated by students at the London School of Economics, that each American citizen is going to have to pay $127 more over the course of the year for average products that they’re buying, whether it be TVs, or clothing, and washing machines. I mean, you’re really going to see a direct effect.

And, at the larger enterprise level, you have toy companies like Hasbro that are saying during their earnings call last week that the company will move production outside of China immediately as fast as they can. And so, not only are you seeing the effect with just families here in America and having to spend more for products, but larger enterprises are having to figure out how they can really diversify their supply chain.

Steve: So, let’s say I needed to — let’s say I wanted to negotiate with my vendor, would you mention the Chinese renminbi against the US dollar? Like, does it all kind of balance out right now, when it’s only like a 10% tariff?

Nathan: Yeah, I would say 10% tariff. It depends how much you’re importing. But yeah, it definitely does balance out in some sense. I would say too, though, from the factory perspective, I know even our supply chain team, they’ve been getting a swap just with inbound requests from factories outside of China saying, hey, we can enable you to produce these products and avoid these China tariffs. And so even on the factory end of the table, you have factories, sales reps that are now hitting us up outside of China more activity using these tariffs as a sales pitch. And I would say inside China, the smarter factories are saying, hey, well, the renminbi is that almost a year low, we’re really trying to balance out our currency here. And so there’s not a huge effect.

I think it also just depends how you pay your supplier. I’ve heard of a lot of e-commerce entrepreneurs having great payment terms with their suppliers, not having to pay right up front, or 70/30, excuse me, 30/70 or maybe having 60 day payment terms. If you can flow some of your cash with production, then you might be able to have less of a direct effect right now with these tariffs.

Steve: So, I mean, is it just a really bad time to import from China?

Nathan: Yeah, I mean, well, especially right now with the holiday season coming in, even the freight lines are crazy, all industry is going nuts trying to ramp up for the holidays. And with these tariffs, it’s really, I think, become a bit of a mess. But I think the smarter companies are planning long term. If you’re a company doing business right now, you probably already got your holiday season planned out. You’ve got your POs in for the holiday season, and are already midway through production. And hopefully, especially if you’re producing in China with the Chinese New Year and the Spring Festival coming up there in February, that you’re going to have production in inventory ready to last yourself throughout that time period. Because otherwise you’ll probably run out of inventory or just probably take a trip to Vietnam or India, or Thailand or something.

Steve: I guess the reason why I’m asking that is I was wondering if you have any predictions on what will happen and whether this will get resolved, whether you should hold out on buying large amounts of inventory until this kind of blows over?

Nathan: That’s a great question. I mean, from what I’ve seen in the media, I’ve talked to reporters at CNN and CNBC, and Forbes. And it’s very interesting because from the news perspective, I mean, this is great press for the newscasters. I mean, they love talking about this, and I honestly think it’s going to become, it’s going to continue to rise. I think Trump really has it in his mind that by putting on these tariffs, he thinks that number one; he thinks that China is paying for these tariffs, which is not true. And number two, he thinks that we’re going to see a shift in production back to America, which I don’t believe is going to happen, just because it’s going to be way too expensive to produce most of these products here in America.

And so I think hopefully, he’ll come to a realization and the government will come to a realization that really what this is causing is just American consumers and companies are paying more for these products. And these companies are now just diversifying their supply chain outside of China, or making some tricks under the table to avoid these tariffs.

Steve: Okay, so let’s talk about that now. What are some ways to avoid these tariffs?

Nathan: Yeah, so we’ll divide by legal versus illegal. And I do not recommend the illegal.

Steve: Start with the illegal stuff first because I’m sure [overlapping 00:15:35].

Nathan: Yeah, I mean, so, right off the bat, you have transshipments. And transshipments are legal and transshipments, what they are, is when you’re sipping a container, let’s say from Guangzhou to Long Beach, and you have to ship the cargo, ship has to stop in Malaysia, or Thailand or whatever maybe. But what a lot of these freight foreigners are offering now is with these transshipments, they’re going to change the country of origin on your products. So they’re literally telling you, do not put those made in China labels on your products, we’ll change the country of origin during the transshipment when we stop over in Thailand, or Malaysia, or whatever may be, so your products are actually on paper imported from China.

And so that’s one way to avoid this. Trans shipments are legal, but the act of actually changing the country of origin on your products is illegal. On the other hand, this is something that’s probably a bit more common in general, with smaller scale e-commerce entrepreneurs, or companies that haven’t necessary gotten the scale, but just lowering the value of the actual Bill of Materials, saying that, instead of buying this product for $10 per unit, you’re buying it for $1 per unit. And so the actual tariffs that can be levied on your products is much lower. So instead of having a total dollar amount of 10,000, you have $1,000. And so, really at the end of the day when tariffs are applied to the import value of your products, the value of the products is much lower than they actually are. And so you kind of slide into the cracks that way.

Steve: Hold on Nathan real quick. I know some of my vendors had done that for me without even me asking.

Nathan: Well, yeah, I mean, it helps them too, because they also have to pay an export tax in China. So it is in some sense win-win, but is it actually legal?

Steve: What is the risk actually, is what, because I feel a little uncomfortable by it. I mean, this happened a lot early on. And so have you known people to get caught by this?

Nathan: Not on a small scale. There’s definitely been some fines at a larger scale, but the border patrol and just the organization that is really balancing out these tariffs and forcing them, they’re not going to have time to deal with companies that are importing $10,000, or even sometimes even $100,000. In the grand scheme of things, it’s not that much. And so, the risk of getting in trouble at that level is extremely low. At a larger level, if you have companies like Bass Pro, one of the biggest toy makers in the world, if they get caught doing this, there’s definitely some questions and media attention that will come their way.

So I would say, as a e-commerce entrepreneur, the risk is very low. And really, the other solution that I want to note on is actually doing fulfillment at or in China, for example. So, if you’re importing products, and they’re under $800 per parcel, you actually are exempt from customs duties all together. And so what we’ve seen actually is number one, a lot of fulfillment companies or a lot of factories start to offer fulfillment options in China. So you’re shipping products direct to consumer from Asian based fulfillment centers, whether they be in Hong Kong or in China, and shipping these products directly to consumers here in America. Your shipping rates are definitely going to be a bit higher; it depends on the shipping method you use.

And also, sometimes I think, just with international logistics, if you’re shipping product, just one by one from overseas, it’s got a higher risk of it getting lost or damaged in the mail. So I don’t know if that’s the best option.

Steve: But is that a realistic option?

Nathan: I mean, there’s companies like actual companies I know top of mind, one called Fulfillment and one called the Floship. They both have facilities in Hong Kong and Shenzhen, I think. And they’re doing D2C fulfillment out of China, and they’ve had success there. There are companies that work that way. I would say, a lot of times, though, you see more kind of drop shipping oriented type of companies shipping through this route, because just the customer experience doesn’t have that high of a level. I think, with today’s world with two day Amazon Prime shipments, consumers expect the product to come fast. And when you’re shipping from a fulfillment company in China, obviously, the products aren’t going to come as fast, probably a week at the fastest. And so it’s something to consider when you think about your customer experience. But at the end of the day is it an option to explore? Yes.

Steve: So in regards to relabeling the boxes to have a different country of origin that sounds kind of risky to me.

Nathan: Yeah, it definitely is. I mean, it’s not something that I am recommending by any means. But it’s a way that some companies are avoiding these tariffs. And I think that the end of the day, you got to sometimes explore all options. But I would say the best way to avoid these tariffs is to explore other options to produce in other countries. And I know, for example, we have companies that we work with right now that sell into large retailers like Wal-Mart and Target that are producing in India and Pakistan, and finding way better rates producing in those countries than China, because the labor rates, it’s crazy right now in China, with the growth of the economy and the infrastructure there, labor costs have definitely gone up.

And when you think of a product like arrow [ph], or clothing, or even any bag, like the main cost outside of the actual raw material is actually the labor. So when you’re having to spend let’s say half an hour to produce a bag or something, that’s labor cost. And so if you go to India or Pakistan, where the labor costs are even less, you’re going to be able to have better production rates. And so that’s something that I’d really look into. There are some great factories outside of China.

And, it’s crazy, like when I look at China, when I was first over there 10 years ago, and look at it today, 10 years ago, you go to a factory and they’re picking you up in a pretty rundown car, there’s not all these nicely paved roads and there’s not all this crazy traffic. And now you go to these factories, you getting picked up in Range Rovers and Mercedes Benz and you’re thinking to yourself, they must have made some money on some of the margins with their production runs.

Steve: So given that, like let’s for like the little guy, how would you find suppliers in countries outside of China? Like, there’s no Alibaba for like Pakistan or Vietnam?

Nathan: Yeah, it stems from network I think 100%. And even here at Sourcify, it stems from our network, when we go into these other countries. And I’ve done trips this year alone to Vietnam, Thailand, and the Philippines, and have one plan for India later this year. And it’s a different ecosystem. Number one, when I go to China, China is a great country, don’t get me wrong, but am I going there to enjoy the environment, no. When I was in the Philippines, I mean, we’re looking at this factory in the south in the city called Zamboanga and the beach was right across from the factory. I was like, wow, this is actually great environment, I wouldn’t mind hanging out here for a few days. Whereas, when we’re in a factory in China outside of Guangzhou or wherever may be, it’s not always the nicest area.

And so, I would say for a smaller buyer, like there’s definitely some different trade shows, you can exploit, there’s the gifts and premium show in India. I think it’s later this month, I think it actually coincides with the Canton Fair. I can double check, and I’ll send you the dates on that later. But, I mean, there’s definitely some other trade shows in other countries. And what I would do too, is you actually can Google some of the trade organizations that they have in these countries. There’s free economic zones, there’s the Clark free economic zone in the Philippines, there’s the Zamboanga free economic zone in the Philippines.

These organizations are actively looking to boost local trade. And it’s amazing, because these free economic zones; they have no import or export taxes for companies that are set up in these zone so a lot of factories go there. And there’s no taxes or very little taxes for these companies in these free economic zones. And so, if you’re working with a factory that’s in a free Economic Zone, you could literally be importing product into that free economic zone for free and exporting that finished product for free back to your home country. And there’s been talks I know with the Philippines and America to get into some sort of free trade agreement. And NAFTA, the North American Free Trade Agreement just got resigned, which is awesome. So, you could explore options to produce in Mexico. And down just south of the border in San Diego, you have the Economic Development Council of Baja and the tier one or region there.

Steve: So I know that when I go to like the Canton Fair, I know it’s actually worth my time, because the trade show is just so large. But these ones that you mentioned, I think you mentioned one in India, is it a much smaller scale? Like, how can you be a lot more efficient with your time and finding these factories that are outside of China?

Nathan: Yeah, I mean, I would say it stems from network. So, feel free to ping me up to try to introduce you to some people outside of China. I would say, for any e-commerce entrepreneur going to some of these smaller shows, it’s probably not going to be worth your time. I mean, I think the beauty of the Canton Fair is that you have so many different factories at your fingertips there. But what you could explore is there’s some trade shows here in America. I was at a magic sourcing trade show and the sourcing direct show at ASD market week in Las Vegas.

And those aren’t big shows from a sourcing perspective, especially compared to the Canton Fair, but they actually diversify the amount of suppliers that they had there. There was a lot of booths there from Turkey, from India, from Vietnam, from Korea, it was pretty cool. I mean, honestly, and a flight to Vegas is usually pretty cheap. So it was pretty cool. I mean, that’s something that I would definitely recommend. I’ll send you the dates on when those trade shows are.

Steve: Okay. Yeah, it sounds good. What about from an online perspective, though? Like, is there like some sort of directory or some central location where I can get access to a lot more of these factors that are outside of China?

Nathan: None that comes to mind. And that’s probably a pretty big, good business opportunity right there, it’s creating some sort of international Alibaba. I mean, I think Alibaba does have some facilities and factories that are outside of China. And when you search, I mean, when you search Alibaba, you can specify the country, so you could try to just specify countries that are obviously not China and see what comes up. But as far as my knowledge, there is no go to online directory that’s focused outside of China.

Steve: Okay. And is that something that you guys do though?

Nathan: We definitely do diversify company supply chains at more of an enterprise level. At a smaller scale, I would recommend like the factory confirm Chrome extension that we have, I’ll send you the link for that. It’s pretty cool tool that enables you to analyze factories in real time. But I’m happy to help. For me, I’m a former e-commerce entrepreneur myself, and now just focus on the supply chain side of the business. And that’s what I love.

Steve: I wanted to take a quick moment to tell you about a brand new service that I just like launched that will help you grow your email list for free. First off, my business is called Gobrandwin.com, and it’s a service that helps e-commerce sellers build their email list through group giveaways. And in fact, in our most recent giveaway, we managed to increase the email list size of the brands who participated by 40%. That’s right, we generated over 11,000 email subscribers, and the average list size of the companies participating in the giveaway was just 25,000.

So if that makes you excited, here’s how the service works. If you own your own e-commerce brand, and you have a following, you must first contribute a gift card toward your products valued at $200 or more. And this is the prize for the sweepstakes. We will assemble gift cards from other participating brands with a similar customer demographic into one gigantic sweepstakes giveaway. All participating brands will send our co branded giveaway email to their entire customer base, driving them to a special landing page on Gobrandwin.com. We will acquire email addresses and Facebook pixel data. We will also send the giveaway entry forms to related influencers in our blogger database. And between my co founder Toni and I, we have access to almost 1000 bloggers in our database.

Consumers will enter in their email addresses; we’ll send them special offers from your company, and select a grand prize winner. And after the sweepstakes is over, you will receive the entire list of entrants and instantly grow your audience. So bottom line, the concept is very simple. And it is absolutely free. We will help each other promote each other’s businesses, get free promotion from bloggers, and share the email addresses. So if you’re interested in growing your email list, then head on over to Gobrandwin.com, that’s G-O-B-R-A-N-D-W-I-N.com. And once again, it is 100% free. Now back to the show.

Can you kind of describe generally I guess, what the infrastructure is like for China compared to some of the other third world countries like Pakistan, Indonesia?

Nathan: Yeah, 100%. I mean, I’ll describe the Philippines right off the bat, because I was just there last month. And it’s a lot different when you think of the infrastructure. And I would look at it from almost the freight forwarding world where in China you have FOB in Ningbo, you have Guangzhou, Hong Kong, you have all these different major ports along the coast and you can ship containers very readily out of these ports. When you look at the Philippines, pretty much every factory is shipping FOB Manila. And so what that means is that they’re transporting and they’re taking responsibility for your product because it’s FOB terms that they’re taking responsibility for your product to get it to Manila to get it to that container ship or whoever your freight forwarder there that’s picking up the container in Manila and putting it on the cargo ship or air freighting it back to your warehouse.

But there’s just not nearly as many ports that are shipping on FOB terms internationally in the Philippines or India or Thailand compared to China. And so from a logistical point perspective if you think about it from a factory side of the table, these factories are oftentimes spread out pretty far from these main ports and so they’re having to handle the transportation costs to get your product to wherever you have those FOB terms from. And I think also the other hand to if you ever get terms on DDP rates, then you’re going to have — it’s going to be harder. I remember in India most the production quotes that we get are all FOB or x works because DDP out of India, just with freight is a lot more complicated to calculate than out of China.

Steve: Can you kind of comment on the prices of some of these countries compared to try to China?

Nathan: Yeah, I mean, it’s pretty incredible. Really, especially for the cut and saw industry, like, let’s say you’re producing any sort of fashion item or bag or any kind of cut and saw oriented product, just because the labor rates outside of China, and India or Pakistan is much less. We’re talking about like t-shirts like a nice shirt that is literally you have like $2 and 20 cents for DDP like duty to the repaid delivered t-shirt that’s got a print on it and that’s got pretty good fabric. And so some of the rates are incredible but that’s at a much larger scale. I mean, that’s a really company that’s spending close to $10 million on production. And so their rates and the margins that these factories are making are much lower.

But even then, if you can try to fit your production run in with a factory that is producing for a larger buyer, and sees the growth of your product and really likes your brand, and there’s not too much that separates the production line that they’re doing for this larger enterprise and you’re small e-commerce company, there could be great synergies to explore. And I think that’s really like the — it’s like a double edged sword. Like, it’s great that the supply chain world is so relationship based. But on the other hand, you have very little transparency. If I asked you right now, what’s the name of your factory? Like, I wouldn’t expect you to tell me, it’s just like, not that – it’s not a question that you ask other e-commerce entrepreneurs, because that’s like a trade secret, that’s a trade secret of your business.

And so I think that’s like kind of the craziness of the supply chain world in the e-commerce arena, is that like, if you see a company that’s crushing it, and they’re selling socks, and you also want to start selling socks, well, you can’t just go up to that company say, hey, who’s your factory? I also want to start selling socks. They’d be like, well, why would we tell you and they’ll probably actually try to pitch themselves as a middleman that will produce socks for you.

Steve: So, would you say in these other third world countries, that they tend to work with larger guys, like are there opportunities for some of the smaller people, or even the people that are just starting out to look there?

Nathan: There is, I mean, it’s definitely smaller facilities. I would say, from a larger level, most of the facilities that we know, that we’re connected with are bigger, but there’s definitely a lot of growth in smaller facilities there. And I think the beauty of it too, is as a e-commerce entrepreneur that’s growing and looking to extend your product categories, it’s not going to make sense for you to go work with a factory that has 10,000 employees. If they can produce a million units a month, and you’re producing 10,000 units, it’s not going to make sense for them, or for you to work together. I mean, you’re going to be the smallest fish in their pond. And it’s very unlikely that they’re going to spend that much time or give you that much attention.

And so for you, especially if you’re starting out, or just kind of starting to see some growth, it’s going to make much more sense to work with a smaller midsize factory that you can start taking up maybe 20 or 30% of their capacity with rather than just getting a percent capacity here, 5% there. I mean, really, I think the key to finding a good factory for e-commerce Company is finding one that they can grow with, finding one that they can really scale with and build a relationship with.

Steve: I guess what I’m trying to get at is, what are the big disadvantages of going outside of China?

Nathan: I mean, the disadvantages are I would say just the visibility. You have really, in China, the infrastructure is very strong, you have a lot of options, there’s a lot of material sources there with different fabric markets or raw material sources. And outside of China, it’s just not as developed. You’re going to places where sometimes they don’t have good internet access; sometimes they don’t have access even to running water. I mean, it’s really sometimes a bit crazy. And you look at some photos or some of the infrastructure in countries like India or Bangladesh, I mean, there’s flooding, there’s even it was crazy, like when I was in China two weeks ago, that typhoon hit, and I was flying out of LA, and my plane was delayed three hours because the typhoon was supposed to basically hit Guangzhou and we were supposed to land.

And so you have especially outside of China, I think you are more prone to face more natural oriented disasters and more production problems. Whereas, in China, and especially if you’re working with a facility that has more inspection certificates, it’s more likely to be stable, it’s going to be a stable production environment. So you add more risks to the table. But that’s not to say you should be scared. I mean, I think it’s really important right now, especially with these tariffs in place that you are motivated and excited to explore other production opportunities.

Steve: What about the other way around? Are the Chinese tariffs on US products, is that going to affect anything?

Nathan: Yeah, I mean, it’s affecting companies that are exporting to China and China selling into China. Are many e-commerce entrepreneurs doing that right now? Not necessarily. Is that a huge opportunity? Yes. I mean, I know a lot of companies that have done pretty well in China, but it takes investment. You either got to go set up your own store on TMall or Taobao or find a distributor or really try to figure it out how to hit a molder niche in the Chinese market. And I think it’s much easier said than done. If you don’t have experience selling into China and don’t know how those consumers interact with your product, it’s going to be pretty challenging.

I mean, I always find it surprising when companies ask about selling into China or other Asian countries because the market is so big and seemingly so untapped, but if you’re struggling to sell products to consumers that you know so well here in America, it’s very questionable to me how you think you can do so much better selling products in China, if you don’t know that market at all.

Steve: Okay, I mean, we’ve been talking a lot about Philippines, Vietnam, Pakistan, but what are your thoughts on sourcing in the US at this point?

Nathan: I mean, sourcing the US is an option that should be explored. I think that the costs are definitely going to be higher; the experience can be hit or miss. You definitely have a lot of US facilities that are going to give you sometimes even a worse experience than you would get producing abroad, but I think at the end of the day, it comes down to cost and your margin. And if you’re spending 30% more to produce your products here in America, and your brand doesn’t revolve around that made in America aesthetic, it’s probably not going to make sense for you as an e-commerce entrepreneur because if you’re spending 30% more to produce these products than your competitors, well then you can’t have that cost per acquisition that these other companies can take in because their margin is 30% higher than yours.

Steve: I guess with the 25% tariffs coming down, that might even things out a little bit.

Nathan: Yeah, but I mean, well, here’s what I would say though too, is in the e-commerce world, I would say, outside of your brand, really what it comes down to is your margin. If I know that I can produce my products for let’s say, even 10% less than you can, then I can go spend 10% more to acquire a customer while staying profitable. Whereas, you can’t spend that 10% more because you’re spending 10% more to produce your product than I am.

Steve: Where are some places that you would go to find US manufacturers?

Nathan: There’s sites like Thomasnet, there’s Makers Row is American based manufacturing marketplace that it’s pretty cool. Those are the two main sites that come to mind, Makers Row and Thomasnet. And that’s definitely some options that I would look into. I mean, I think there’s definitely opportunity to potentially produce in America, but I would first explore outside of China and other countries in Asia.

Steve: Okay, so Nathan to kind of conclude this little talk that we’re having here, where do you see things going looking one year out just your own personal predictions?

Nathan: Yeah, I mean, one year out, I would say companies that are smart are going to diversify their supply chain outside of China. I think China in general has gotten more expensive. I mean, when we started exploring production outside of China almost two years ago for some of the companies we work with, there was so much just amazement, because it’s really ripe with opportunity. When I look outside of China, when I look at countries like India, or the Philippines or Thailand, it almost reminds me of China 10 years ago, when companies were really starting to scale up there, and the infrastructure was just starting to grow.

So I assume, and I think that companies are going to continue to transition production outside of China. I don’t, I honestly don’t think there’s going to be a huge shift of production back into America. And I do think these tariffs are going to affect a lot of consumers, a lot of American companies, and even Chinese factories.

Steve: Can you real quick comment on these other countries outside of China, and what kind of their specialties are? So you mentioned like cut and saw, and was that the Philippines or Pakistan? Do these countries have some sort of specialty?

Nathan: Yeah, so Pakistan, India can be great for leather, a lot of cut and saw fabrics, basically any textiles or bags, sometimes hats, shoes, you can produce across India, Pakistan, Vietnam, Thailand, and the Philippines. I would say more electronic oriented products; it’s going to be very hard to diversify your products outside of China. That area around Shenzhen, it’s just so good for producing electronics that I don’t really know anywhere else in the world that has that capability like that. But for other products, sun glasses I think are mostly in China, and even kind of all those little types of gadgets, those kind of small price products, it’s all done around Yiwu and it’s going to be pretty hard to diversify those outside of China. But there definitely are some hidden gems out there. And I really encourage people to look for production opportunities outside of China.

Steve: So it sounds like the primary opportunities outside of China are in the textile space.

Nathan: Yeah, textile, handbags, bags, backpacks, all that.

Steve: Okay. And if you sell electronics, China is probably going to be the place to be. What about plastics?

Nathan: Plastics, you can do some like injection molding in Vietnam, in India. China is definitely still really good for plastics, but there are opportunities to explore outside of China.

Steve: Okay, cool. Nathan, this is a very enlightening talk. Where can people find you if they have questions for you besides on TV and MSN?

Nathan: Yeah, I mean, they can find me on LinkedIn or Twitter, Nathan Resnick, and feel free to check out Sourcify. We’re the fastest growing B2B manufacturing platform that helps hundreds of companies produce products around the world. And I really appreciate you having me on today.

Steve: Cool. Thanks for coming on.

Hope you enjoyed that episode. And even if you don’t currently sell online, these latest rounds of tariffs will actually affect everyone. And if you do sell online, you better have an alternate sourcing plan going forward. For more information about this episode, go to mywifequitherjob.com/episode229.

And once again, I want to thank Privy.com for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. And I like Privy because it’s so powerful and you can basically trigger custom pop-ups for any primer that is closely tied to your store. If you want to give it a try, it is free. So, head on over to Privy.com/Steve, once again, that’s P-R-I-V-Y.com/Steve.

I also want to thank Klaviyo which is my email marketing platform of choice for e-commerce merchants. You can easily put together automated flows like an abandoned cart sequence, a post-purchase flow, a win-back campaign, basically all these sequences that will make you money on autopilot. So, head on over to mywifequitherjob.com/K-L-A-V-I-Y-O, once again, that’s mywifequitherjob.com/K-L-A-V-I-Y-O.

Now I talk about how I use these tools on my blog, and if you’re interested in starting your own e-commerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast where we’re giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.Mywifequitherjob.com.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today, I’m thrilled to have a very special guest on the show, Shirley Tan. Now, Shirley is someone who I met at Traffic and Conversions. And I actually don’t remember exactly how we met, but we hit it off immediately because a long time ago, she founded American bridal, which was a company on my radar screen back in the day because I’m in the wedding industry.

Anyway, she since sold that company, taken some time off. And now she’s back in full force with a brand new product called the Posture Keeper. And recently, she launched a Kickstarter for this product and had it completely funded in just 18 hours. And today, we’re going to kind of learn her process for manufacturing her product from scratch, by the way, and launching such a successful campaign. And with that, welcome to show Shirley, how you doing today?

Shirley: Hi Steve. I’m so excited to be on your podcast.

Steve: So how did we meet actually? It was at T&C for sure.

Shirley: I believe it was. I think it was at Traffic and Conversion probably three to four years ago.

Steve: I think we just started talking, right?

Shirley: I think, well, what it is, is I recognized you from your podcast, and being a follower of yours online. So I was like, hey, there is Steve standing right there. I just got to muster up the courage to go say hi.

Steve: Yes. Unfortunately, I’m not very intimidating.

Shirley: Yeah, yeah, I approached you. So I introduced myself.

Steve: So Shirley, give us the quick background story. I’m actually curious why you sold American Bridal years ago. And then what happened when you took your time off, and why did you come back and decide to release this brand new product?

Shirley: So let’s see. So, I created American Bridal back in the 1990s, I’m showing my age here. And from a mail order catalog, we went online when the internet got in that if you so to speak, right, so 1997, right around there. And so that’s when I — I was already in the wedding business for a while. And we sold products to our showroom in our wholesale/ retail business. And when the opportunity in 2009 to sell the business, we had grown it to nearly year over year, about 7 million with actual revenue of six and a half. We decided to — I decided too that I wanted to take it bigger; I want the American Bridal to be become bigger. And I felt that theknot.com who is the premier wedding company, even to this day is the vehicle to get there. They can help me grow it.

Steve: Okay.

Shirley: So, that didn’t happen exactly that way. As they say, when you have plans, God has ideas, other ideas, right. And so they bought it from me, I worked there for a whole year. And after I left and two, three years later, they decided to have a different strategy. So, not only did they not continue American Bridal but they revamped their whole e-commerce to move it all strictly drop ship. So, they went from being a fulfillment house in Redding, California, with over 150 people to just a skeleton crew of people who just add products into their platform and then just do everything drop ship. So, I don’t have like direct information since I’ve left, this is just my me guessing.

Steve: Sure. So you sold because you thought that your business was kind of plateauing at that time, or?

Shirley: Well, so we have actually grown to six and a half million and the prior year to that was probably 6 million, and the prior year to that was four and a half million, something like that. So, I didn’t necessarily think it was plateauing, but I knew that to compete, I didn’t have the financial capital to get it to the next level.

Steve: I see, because it was an inventory based business.

Shirley: Inventory based business is they had a big warehouse out in Redding, California. Their operational cost was much more efficient and scalable, right. So for that reason, I thought that they would be a good partner to do that.

Steve: Okay. And then after you sold the business, you took some time off, and then what made you kind of get back into the game?

Shirley: It was a way to stay married. So let’s see. So it’s a double edged sword, right? When you have too much time on your hand, you can get yourself into trouble. And then when you have too busy, you can get your — you don’t have balance of life. So, after I took some time off, I renovated — I have a non compete, so I had to like be a good girl and don’t do anything that would make them mad at me. And then after that — so during that time, I did some renovation to our house. We’ve been wanting to do that for a really long time. So I used to work in a retail hardware store, I have experience in home reno, I love home renos. And so that’s what I did. And so why did I go back?

Steve: And tell us about the product along the way, like what it does, and how you came up the idea.

Shirley: So, I went to — so during this time when I was working for the Knot and working, I started thinking about consulting. So, I did some consulting for a while. And during this phase of my life, I was already having a lot of chronic pain challenges. And I work for myself now, a little bit more flexible schedule. So, a lot of my days would consist of going to the doctor, getting tests, then taking pain medication, going to physical therapy, you just like, you name it, I did it, right. And it was through all of this frustration that I created my own prototype. I never really set out to be an inventor, I’ve always been more like, hey, I’ll buy and sell products that are already proven right. So I never thought of myself as an inventor. I’m an accidental inventor, if you will.

And so through that challenge that I had years ago, I made my own mock up, a prototype that through a backpack basically, that I wrapped around my chair, and I used it in the way that I use Posture Keeper now, which is to hold me up so that I don’t slouch, so that I don’t lean forward, which is my biggest crime in my poor posture behavior, which is I sit at the edge of my seat, I lean forward and I’m leaning into the computer because well, I want to see the computer bigger, better or [inaudible 00:07:35]. I don’t even know that I’m doing it. I think that’s what it is, is most people that do this hunching over, they don’t realize they’re doing it until they’re hours into the behavior.

Steve: Yeah, so just for the benefit of the listeners, Shirley has developed what she calls the posture keeper, which allows you to sit up straight in your chair, so that you don’t have problems later on with your neck and your back.

Shirley: That’s a great description, I couldn’t have said it better myself.

Steve: Just trying to set the scene here. And what I really like about Shirley’s story is she’s not an inventor. She’s never created anything. And yet, she managed to manufacturer this product from complete scratch. And it’s got a bunch of pieces and it’s pretty unique. And so, I kind of wanted to get your story on that, and how you got started with just the manufacturing phase. Can you just walk me through it, because I know there’s a lot of people out there who want to manufacture their own stuff, but it’s kind of intimidating when you first get started.

Shirley: And it is, especially when you didn’t set out to go do it, right. So I’ve always bought, I’ve been to the Canton Fair several times, I’ve always seen how you could just say, oh, that’s an existing product, maybe I’ll make it bigger, make it smaller, change this material, this and that. So, I’ve always been able to do that when I’ve seen something and improve upon it, private labeling.

Steve: Yeah, exactly.

Shirley: And I’ve done that. I imported in that context, but I’ve never invented something from zero and go, how do I do that? And so, I actually had — the posture keeper I have today is like my third version of it if we were counting. And I actually initially came — the first idea of posture keeper came from straps. It was just going to be like very similar to the posture correctors of today that’s selling well in the marketplace. So I go some version of that tied to the chair, but it was too complicated, too many moving parts. It was too — when you just look at it, it was like a big gigantic mess. And so I threw that out the door after four months doing that.

Steve: So I’m sorry, you created your own?

Shirley: So I created — the first initial posture keeper was made mostly out of straps.

Steve: Did you make that yourself like you sewed it yourself or?

Shirley: Yeah, so that’s another story for that as well. I had to — I don’t know how to sew, I didn’t know how to sew and I can only basically stroll straight lines even today. And I had to cancel some pieces and I had to learn how to operate a sewing machine with this.

Steve: So your very first prototype is something that you put together. Did you have a pattern made or did you literally just sew some straps together and create your first…

Shirley: I literally sew some straps together and…

Female: I don’t know what you mean by…

Shirley: I’m sorry about that.

Steve: It’s okay, I’ll cut it up.

Shirley: Yeah, I’m sorry. I’m going to turn off the phone. So I literally, I put a bunch of straps together. I bought some wedding material, some buckles and parts and components and started making some things together.

Steve: How did that turn into something that you can actually manufacture, though?

Shirley: So after three versions of this, I was able to come up with the version that I have now, which is well, you have to put together basically. You have to try all these different pieces. So for example, the lumbar support is a product that currently exists in the marketplace. It’s a memory foam pillow shaping the lumbar, but what the issue was with what’s in the marketplace is most of the lumbar are too thick. They’re over five inches thick. And so my challenge with that is that it pushes you off the chair that you have in a typical office chair because it’s so thick. So, I felt that people would not be happy with that if I’m not able to reduce it.

So, there’s this image of me cutting the phone with an — I tried different ways. I manually cut it with a utility knife, so the final way to properly shave off the lumbar pillow was to use a kitchen knife.

Steve: Okay, so basically, from what it sounds like you manufactured all your first three pieces by hand. You kind of taught yourself how to sew and all that stuff. I’m just curious like how do you actually take that to a manufacturer? Have you found a manufacturer yet for this? I assume you have, right?

Shirley: Yeah, and that’s the first thing I did first. I wasn’t comfortable with launching the Kickstarter without having that piece nailed down. That was critical for me, because I needed to make sure that the factory can deliver on what I show.

Steve: Okay, how did you find your factory?

Shirley: The factory guy was actually introduced to me by Kevin Harrington, who was one of the original Shark Tank.

Steve: Oh nice, okay.

Shirley: Yeah, so I was very comfortable in meeting him. Kevin introduced me to him. I met him, I saw his process. We went to China and I saw how the factory was going to — how it’s run. It’s not a little small cottage industry that some uncle has put together, and it’s a real bonafide factory that they have standards.

Steve: Were you worried about them taking your idea and stealing it?

Shirley: Ordinarily, I would be but because I met this factory through the connection of Kevin Harrington and I just knew that at some point you have to trust. And I knew that they weren’t going to do that.

Steve: So did you take a pattern to them, or did you just hand them your prototype and say, hey, can you make this?

Shirley: Yeah, that’s basically what I did.

Steve: Okay. So the factory just had this ability to I guess undo your work and find what all the pieces were and did you have to pay for that upfront or?

Shirley: No. And that was the other thing too, when you work with a factory and they see your vision and they’re in it more than just [inaudible 00:14:17]. Normally you would have to, you would have to pay for a sample, you would have to pay for all the different versions and minimum and all that stuff. But because I came into this under, I basically borrowing from Kevin Harrington’s his credibility, his relationship. So, I came into this really fortunately that this gentleman Ken made it very easy for me to just work with him and work with his factory.

Steve: Okay, and then we talked a little bit about this prior to the interview, but you decided to patent your product. And I guess that had nothing to do with people copying you in Asia and more for just protecting the rights in the US, right? Or can you just walk me through like the pros and cons of patenting?

Shirley: So Kevin Harrington when I first showed him the idea, he encouraged me to pursue it. So, he showed me some other products, he goes your product is better than this other product, and you should file a provisional patent immediately before you show this product to anyone else because I’ve never seen anything like it. And I think you have something near if you do it right. So I said, okay. And so, once I did that, and once you’ve talked to Kevin Harrington, you can’t go back, right.

Steve: That’s true.

Shirley: Oh, well I flicked that on you, right. So, I don’t know, it’s just me, maybe it’s just me. But once I went down that path, I decided that okay; I’m going to trust that this is happening for a reason, right. And really because I also believe that it has helped me so much that you could help other people. So the process of the patent was after I filed the provisional patent, you have one year to do something about it. So, that initial filing the provisional patent basically locks in the idea that you’re pursuing this concept, okay, so that’s all that does. And I haven’t even officially come up with a name yet I believe. I think I just — I don’t think I had a name yet, I can’t remember exactly. But I filled the provisional patent under my name…

Steve: How much did that cost you by the way to file that provisional patent?

Shirley: I can’t remember but it was probably 1,500 or 2200.

Steve: So not that much.

Shirley: Not that much, enough that I would be willing to take a risk to do it. And then once I was nearing my provisional patent, I think that was April or something like that, then I decide — so I had much closer, right. I had all this year to come up with a final design, what I call the final design, come very close to it, right. And so, that’s when I filed the utility patent because now when you submit that, you actually have to have drawings, you have to describe how the components work, what part does what.

Steve: What happens after a year if you don’t do anything with the provisional patent, it just disappears?

Shirley: I’m not quite sure. I think you might have to start over again, or you can’t use that and if there was a gap, somebody might say that there was a lapse, and therefore that maybe they can come in, in the middle. I’m not exactly sure and I wasn’t going to try to find out.

Steve: Sure, of course it’s not that important. I was just kind of curious.

Shirley: I’ve been in it, right. So not just the provisional patent costs, but I’ve spent this whole year working on the prototype, so I wasn’t going to walk away from it.

Steve: So it’s funny. So this prototype, you essentially manufactured it yourself, and then you brought it to the factory. And so was there an initial investment on your part at all outside of like the patent I guess?

Shirley: Yeah. So I had to have 30 of them made. Once we finally agreed on all the measurements and the bill of material that it takes to get this product produced, I had to bring in my own 30 pieces to — actually how many have been made, 30, 30 plus five. So I have like 35 pieces that I initially brought in to try with friends and family and to get it out to the media.

Steve: Did you kick those 30 pieces yourself? Like, it’s weird that the factory was willing to just make 30 pieces for you. Or did you hand make 30 pieces?

Shirley: No, the factory made 30 pieces for me.

Steve: Okay, so how did you negotiate that?

Shirley: Again, it was the relationship…

Steve: With Kevin okay.

Shirley: With Kevin’s factory guy.

Steve: Got it. Okay. So he knew that you were serious. And so that’s why he was just willing to do that for you. Okay.

Shirley: And really he believed in the product. It was very interesting story because he let his wife try it. And his wife goes, I want this. I’ve never met his wife, but his wife is on my side. So, that helped a lot, I’m sure.

Steve: Why only 30 pieces then in your first run? That doesn’t seem like that many.

Shirley: Because the foam had to be manually done. They had to hand — like I said, the readymade foam for the memory foam, you cannot just buy it off the shelf. So they had to cut it to my specification. And therefore they had to do by hand. So like, just like my first two that I did, I did it by hand; they had to do that 35 pieces by hand.

Steve: Okay. And then in terms of the price of these first 30 pieces, I imagine it’s a lot more expensive?

Shirley: No, there are fair. It was the price that they would have charged me. It cost me more to bring it air freight. The air freight killed me, not killed me but…

Steve: Yeah, comparatively percentage wise yeah.

Shirley: Yeah, it was ridiculous. I was just like, oh my god.

Steve: So you didn’t basically have — like the factory you kind of already got from Kevin and it was kind of pre vetted and you only trusted them. So, all those issues went aside and then they believed in your product so they were willing to do a small production run.

Shirley: Yes.

Steve: Let me ask you this question. Like if you didn’t have Kevin, like did you try to do this on your own before you met Kevin?

Shirley: No.

Steve: No. Okay.

Shirley: No. But I would have done exactly the same process, right. I think my hurdle would just be a little bit more challenging unless I get lucky. Which is you find the right factory; they’re willing to do it for you. A lot of it is accommodation. I think I don’t think I’m that special, right, that I just happened to get lucky in this one. But I hear a lot of good stories about factory willing to accommodate the importer or the customer in the right circumstances.

Steve: How essential do you think it was that you actually went to the factory and met with the guy? Do you think you could have accomplished all this stuff remotely?

Shirley: Maybe, maybe. I mean, I met with this guy, I met his people. He picked me up at the hotel, with my factory guy. So, we had meals together, it’s a lot of relationship, right? They think I’m funny because I’m Chinese, I look Chinese, but I can’t speak the language. So they just think I’m kind of funny, kind of like what kind of a Chinese person are you?

Steve: Yeah, that happens to me all the time too.

Shirley: And to find that you don’t speak Chinese.

Steve: Actually, what happened to me was I tried to speak Chinese to them. And then they replied back in English.

Shirley: I feel you, brother, I know what you mean.

Steve: So what would you say were some of your main challenges just on the manufacturing point, before we kind of moved on to the Kickstarter?

Shirley: I think it’s still the communication. There’s a lot of details, I’m a stickler for detail. I still drive, even though Ken is — my friend Ken, the factory guy is now leading all of this. And he keeps telling me, don’t worry Shirley, I got it because I am that kind of personality. I worry about everything. And therefore, I need to make sure I double check, triple check everything. So that’s just, it’s just my own anx [ph].

Steve: And in terms of like the kitting, there’s a lot of pieces in your thing. Are they in charge of sourcing all the little pieces and assembling it all together?

Shirley: Yes.

Steve: And everything is just kind of available in China like all the parts and everything.

Shirley: Yes, but things takes time, right? So my advice to people who are listening and wanting to do something like this where you have, the factory don’t make everything, they have to source the components. So it’s about availability, it’s about timing; it is also about how resourceful they are. So, I mean everything is made in China anyway. But it’s still a challenge of procuring the number of units that you want to get it done. And a lot of how much the factory end up pricing a product depends on the pricing that they can get if they have to buy components from places that they don’t really make.

Steve: Right, okay.

Shirley: So keep that in mind as a factor. And just because they quote you this first price doesn’t mean that it will always be that way. As the volume goes up, they can go back to their component supplier to say, hey, our volume just went up; we are now buying 20,000 of these pieces. How much is it?

Steve: Right. So Shirley, you got these 30 pieces. Why did you decide to do a Kickstarter versus selling an Amazon?

Shirley: So, I really had for long, I struggled with that same question for a really long time, at least a couple of months and one, because with Amazon I’m familiar how to do it, right? I sold off stuff on Amazon, I know how to – there’s a lot of resources on that. I’m part of different groups and I have a lot of resources to help figure that out. With Kickstarter, I’ve never done it. I only have a handful of friends that have ever done Kickstarter. And so, I wasn’t even sure how to go about it.

But I think the reason that pushed me over in making that decision of doing a Kickstarter is one, I wanted to see if I could do it. That’s probably a big chunk of it. And then too, I really believe that for something that is not a ‘me too’ product that you need that push, you need that early adopter community that will come in and say, I’ve never seen this before. I really like the product; I want to support the creator and that community to give you that social proof. And also, it removes my risk, right? If this community of people who I don’t know is willing to come in and give me their pre order, they’re willing to give me their money, trust me to create it. That gives me that proof that my product has greater potential to be adopted by the masses.

Steve: I guess your product is a little unique in that aspect. Like, people probably aren’t searching for posture keepers on Amazon, right? Do people actually search for these types of products?

Shirley: Posture correctors, posture trainers it’s like actually a good category. There’s a lot of skews now coming up under that space.

Steve: I see. So conceivably, you could have listed this on Amazon because there is search volume for these keywords.

Shirley: Conceivably, I could have done it that way. I just thought that the Kickstarter community is so cool and that again, if I could get these early adopters to give me that social proof. And also, remember, I’m still in the pre order stage, right? So I don’t have to risk inventory right now if I didn’t meet my campaign goals. And so, whereas with Amazon, I would have to tell the factory guy says, yeah, you need to give me 3,000 units before for the rest of it. Now, hey, I’ve been nice to you all this time. Now, this is official, right? And he has to not give me a small team to make it but now he has to run it through his regular production. So that changes things.

Steve: Okay. So would you recommend that everyone do a Kickstarter then prior to just taking the risk up front with all the inventory on Amazon?

Shirley: I think it depends on your stomach for capacity to ride the wave, I guess. I mean, Kickstarter can be — the biggest challenge I had was — is building the email list. I have to admit, it’s a big struggle.

Steve: Okay. I mean the reason why I’m asking you this question is because I kind of know how Kickstarter works. And it’s not like you list something on Kickstarter and it magically generates money. You have to promote your own Kickstarter, right?

Shirley: That’s right. That’s right, just like you would have to promote your Amazon listing, right. It’s not any different from that.

Steve: I guess the differences though, is that Amazon has this huge built in marketplace. Kickstarter kind of does too, but you kind of need to jumpstart it before you get to leverage any of that traffic, right?

Shirley: That’s true, before the organic algorithm kicks in for your product to rank.

Steve: So you said that you didn’t really have a huge email list and it was a problem. So, did you have an email list prior to your Kickstarter?

Shirley: No, no. My email list consisted of friends and family and people who I’ve done business with in the past.

Steve: Okay, so how did you meet your goal in 18 hours? Like what was your process?

Shirley: I cultivated that email list like you wouldn’t believe. So I just like I just went after, you have to work with what you have, and that’s all I had at the end of the day. And we had actually some smaller number of email list that we’ve been doing for pre launch, our pre launch campaign.

Steve: How did you do your pre launch campaign, how did that work?

Shirley: With Facebook advertising.

Steve: Okay, it was that successful. And how much were you paying per lead? Like, do you remember?

Shirley: Yeah, it was pretty high. So, in the early stages, it was probably about 5, $7. And I think we got it down to about $3 or so. Still pretty high is what people tell me.

Steve: Per lead, right. And did you separate out those people when the Kickstarter came on board?

Shirley: They’re definitely not different bucket lists in our email.

Steve: Okay. And were they profitable, like the ads ultimately?

Shirley: I think some of those people; I mean they’re targeted ads, right? So those people did sign up. I couldn’t tell you at this very moment, because we’re still in the middle of all this. I couldn’t tell you how many of it came from that list, because some of these people bought under a different name. Sometimes you can’t tell from the email some people sign up.

Steve: So you developed a pre launch list via Facebook ads, do you know how big that list was approximately?

Shirley: Yeah, it was just slightly under – let’s see, probably was slightly under 350ish or so.

Steve: Okay, yeah so not that many.

Shirley: It’s very small from what people tell me.

Steve: So you took that list and then you pointed that at Kickstarter, what am I missing? What about the other like how did you generate so much money so quickly?

Shirley: So a lot of it came through from the friends and family lists and the people who I have done business with in the past. So on that email list, I had I believe probably 3,000 or so.

Steve: Oh, wow. Okay. And these are just colleagues that you’ve worked with?

Shirley: People — if you are on my Gmail and I emailed you, and you emailed me, you’re on my list.

Steve: Okay and these are just like personal contacts that you’ve had.

Shirley: Over the years. I mean like you, I know a lot of people through conferences and just being in the business for so long. And a lot of those people supported the campaign. I’m really humbled and grateful and just — and they came through. I didn’t even set out to complete the fully funded within the first 24, the first day, if you want to say. But during the afternoon, about five o’clock when I saw the number at seven, I was saying, hey, wait a minute; we could do this, right. So really, I just like just reached out to all those people, even after I already emailed them, like okay, come on, you guys. You guys, we can do this. So, really supportive group of people that really want to help me out.

Steve: Did you get any momentum from raising all that money so early, like did Kickstarter end up featuring your product?

Shirley: So I shortly learned, I was shooting for — it’s called stock pick, right, or campaigns we love or something like that. And I shortly learned that they don’t do campaigns we love if your product is somewhere what they might feel that it’s close to being a medical product. So, even though my product is not really medical, but they feel like it might be borderline and therefore if it’s borderline then they just kind of push you over to that category. So, I was bummed to hear about that, of course I didn’t know that before I got in. So, not that it would really change anything, but it definitely would have boosted my campaign, more visibility, right.

Steve: I guess what I’m trying to get at is did Kickstarter actually help you raise the money in any way?

Shirley: I think so. I think so, a lot of it is ranking, so you rank on different categories, like product design. And so that initial push that they give you, they give you the benefit of the doubt, if you want to call it that. And then they ended — until new projects come on, if you’re able to hold the momentum, then you don’t get pushed down, or even as new products are coming in and they’re popular too, there’s a lot of good products. So you have to be able to hold that momentum.

Steve: So now that you’ve met your goal, and I guess your Kickstarter has as of this recording of 22 days left, after that initial push what is your strategy to kind of make even more sales?

Shirley: So, one of the things that we’ve done is sign up with an agency to drive momentum, they have their own list of super backers that they have access to cross marketing campaigns. So cross promotional campaigns, so I’m counting on them to do what they’re really good at, right. So, I really come to respect that the agencies can really add a lot of their value to the campaign because they just done so much of it, right. And initially, I thought I could cobble it all together and work pieces because I’ve done, I alluded to doing construction earlier in our call. And so I I’m used to being the general contractor. I’m a really good project manager and organized in that way.

And so, I thought I could cobble it together by being the general contractor. But now I realize that when you don’t have a big list, you don’t have a community which other people do, right, they start off with a big community, and then they leverage that community to drive the traffic. When I don’t have those pieces, you’re going to have to use something else if you want to get closer to a higher number. And that’s what I’m hoping for.

Steve: Okay. And I know the agencies take quite a bit cut, and so if it doesn’t end up being that profitable, are you just doing it for the emails at this point?

Shirley: I’m doing it for the emails and also still my outlook on this is that can I get this product in more people’s hands, because if I could get in people’s hands and they use it, then post Kickstarter life that there’ll be other people going, yes, I missed the Kickstarter but I want one. And I don’t care. I don’t care if I don’t get it for the early bird price.

Steve: Okay. No, that makes sense. And then by the way, I’m going to post the link to Shirley’s Kickstarter underneath this podcast and it’s very well done. And I noticed that you actually got some doctors to endorse it. How did you get them to endorse it? And what was your outreach, like what was your outreach plan outside of your friends and family?

Shirley: So, I actually developed this product with help of a chiropractor and I’ve been showing him the product. I’m not a science person right, I don’t have a medical background, but it was through all my challenges that he just basically said you need to sit upright. And if you stopped leaning forward, your nerves won’t be pinching; you won’t have all these problems or less of it. So, that’s really what precipitated this product, this backpack invention years ago. And so when I was started making this product, so I said to him, why don’t people just use the backpack like I did, right? He goes well, because you’re going to incorporate a lumbar support system that the backpack don’t give you right and it has to be comfortable, it has to be you can get in and out of it easily.

So, if you just attach your backpack to your chair, some of it will fall off. I mean, it is not hooked up properly; some chairs are tall so not a lot of backpacks would work. Those were my challenges that I had to overcome when I was bringing my design because you can’t just wrap a backpack around the chair. If you’re a six foot tall person, you can’t do it because it wouldn’t sit on you properly and it wouldn’t be comfortable, you would just never use it. So because I happen to be small, the backpack prototype worked for me but I had to design it so that it works for all people of different shapes and sizes. And that was the biggest challenge is designing it that way. Where’s originally the backpack was behind the chair and came forward because that was the…

Steve: In terms of proving to people that it works though, how did you accomplish that?

Shirley: I think when people see it and they — so people go, yeah, I always get skeptical which is actually fine. I like that because when they actually use it, they go oh my god. So intellectually they understand, but when they sit in it they go, oh my god, this is amazing. It really will not let me lean forward. So people get it instantly especially after they’ve tried it on. So, I hope that the videos and the campaign images and through the imagery we were able to accomplish that, but people are smart, they can see it.

Steve: So what is the future? So once the Kickstarter is over what is your plan?

Shirley: So, we’re going to deliver, we’re already working with the factory to get all the materials together where we have to estimate how many pieces we’ll get made. And so we’re preparing all of that, we’ll deliver on all the Kickstarter pledges first, then after that we’re going to set up shop on – we’ll turn our Shopify store into a shopping cart, and then I’ll probably sell on Amazon.

Steve: Okay. And then in terms of Amazon, I guess, is most of your efforts — I guess what is your plan? Is it to focus more on Amazon, your own shop, or is that TBD?

Shirley: We’re going to do both; we’re going to do both. I think we — I mean you cannot be in e-commerce without being on Amazon these days. But at the same time, I think what we could do is maybe — so as an example, there’s other colors, right? There’s other colors, there’s other personalization that we can do to the product that we can offer on our Shopify store and on Amazon we could just offer let’s say, the black right, a black available everywhere. And that will be the one that we will sell most of.

But other people want — some people want other colors, they want other personalization. So, we have to think through those pieces of how we want to differentiate so we don’t compete with our Amazon business if you will, and still be able to build up this other our other ancillary related products.

Steve: Cool. Yeah, well Shirley, definitely going to post the link to the Kickstarter beneath this podcast on the show notes. And if any of you guys have posture problems, or anything, I encourage you to check it out. And Shirley, where can people find you online?

Shirley: They can find me on LinkedIn, I’m Shirley Tan. They can find me on Facebook, Twitter, I’m everywhere, Instagram, so I’m everywhere.

Steve: Cool.

Shirley: [inaudible 00:41:24].

Steve: Well Shirley, I appreciate you coming on the show and teaching us how you manufactured your product from scratch and launched a successful Kickstarter. I mean, from my gather from this interview, a lot of it is just hustle. And you created your own prototypes. You found the factory and then just through networking, you had contacts and then from there you decided to launch a Kickstarter and the Kickstarter is just very thorough, it’s actually very well done. It’s one of the best I guess Kickstarter campaigns that I’ve seen, just very thorough. It’s like this endless long form sales page.

Shirley: Yes. And I really, I spent weeks and weeks on this and going back and forth, how detailed, too much detail, back and forth. In the end, I didn’t want to — I wanted people to see all the benefits of having improved posture and correcting that behavior that you can correct the behavior with the right device.

Steve: Yeah, no, absolutely. I mean, if even if you guys aren’t interested in the product, you should go check it out just to see how thorough the Kickstarter page is. Anyway Shirley thanks a lot for coming on the show. Really appreciate your time.

Shirley: Thank you Steve. Thank you so much.

Steve: Take care.