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

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Kurt Elster on the show. Now Kurt was introduced to me by my good friend Nick Lopa who I had back on episode 80 of the podcast. And Kurt runs ethercycle.com, where he helps private label sellers launch their own ecommerce websites. Now specifically he is a Shopify platform expert who helps Shopify users uncover hotspots in their designs to improve their conversion rate.

And incidentally I’m a firm believer that you really need to own your own platform in addition to selling on Amazon, which is why I brought Kurt on the show today to kind of discuss the transition from Amazon to your own branded website. And with that welcome to the Kurt, how are you doing today man?

Kurt: I’m doing great thank you for having me, it’s my honor and pleasure.

Steve: So Kurt how did you kind of get into ecommerce, and why did you decide to start a consultancy and specifically a Shopify based on?

Kurt: Sure I mean so — I mean I have been involved in ecommerce in one way or the other over the last decade. I was selling counterfeit t-shirts on eBay in college. I didn’t know enough to know that there was like intellectual property was a thing, and then from there I was product manager for a drop shipper, and then started my own web design agency. And that was its own business learning curve going from generalist web design back to my roots as ecommerce, and then finally niching down to just the Shopify platform.

So I’m biased, I have got a horse in the game, but I really, really love the Shopify platform, because they do so much to foster a community. There is always someone available be it an expert or other store owner who can help you whenever you have a road blocker problem, plus all the great apps and services that integrate with it.

Steve: So just curious, did you start out supporting a whole bunch of different carts?

Kurt: Yeah we actually — so overtime we narrowed down. Originally we were doing like — no we went from like generalist to doing work for creative agency. So I have worked with huge brands like [inaudible 00:03:15]. But at the same time we were part of the Shopify experts program, and we were getting traction there.

So I said well maybe I foolishly said let’s expand by doing other platforms, but none of them were as satisfying as Shopify. And finally about two years ago I said wait why are we doing anything other than the thing we love. And niche down to just Shopify. So even though like as a service person having a niche is great just as an ecommerce having a niche is great.

Steve: Interesting, so was there demand? I’m just trying to get an idea of like the landscape right now. Was there demand for some of the other platforms, or you did you just choose one just for the sake of niching down?

Kurt: I chose it because we were authentically happy with Shopify. Like every time we finished any project we kind of reflect, and we were a small team at the time. We’ve always been three people, five people now, but we kind of reflect on like what — was that project good or bad, how do we feel about it? And it was Shopify was like 99% of the time we are like wow that just felt easy.

And that was what we were, why we chose to stick with it. But no we had worked with BigCommerce of course, LemonStand, Magento; I think are the other ecommerce platforms we used. And they’re good. Yeah there is really no bad one, they have slightly different features. But again with Shopify I think the huge advantage we are getting is that community.

Steve: Okay and then in terms of open source is that still popular at all just based on your experiences?

Kurt: I don’t think nearly as many people are rolling their own anymore just because you get in into such — no it’s probably — its technical that as soon as you — if I’m on Shopify I worry about ecommerce. Versus if I’m on — if I have got an open source thing, now suddenly I’m in the IT business as well, so I need to worry about like setting up my server and keeping things secure and there is all these new problems that get introduced when you go open source. Not that open source is bad.

Steve: So would you say that you can do everything that you want to with a fully hosted platform that you could probably do with open source even though you own like all the code?

Kurt: At this point through all the extensions and services and apps that are out there, that used to be the critic as well. Oh you are limited, I don’t think it’s the case anymore and especially it’s never been the case design wise.

Steve: Sure, of course.

Kurt: Shopify has always said hey you can access to everything design wise, don’t worry about it. And there was kind of a misunderstanding where people were like, oh you can do responsive, what are you talking about. But no, the limitations seem to have worked themselves out.

Steve: Let me ask you that question in a different way. Is there anything that you wish that Shopify for example could do where you felt that you would need more control?

Kurt: That’s a great question. So one of the — well a couple of common feature request, there is no native wholesale solution for Shopify that maybe other more enterprise focused platforms might have. That often is a common request that tying its people, and there is ways around it. I mean my answer is run two stores and one is a sub domain like wholesale dot whatever .com.

So that’s a common request and for people who have a ton of products Shopify doesn’t necessarily do nested categories the way you might like typically think of an ecommerce set up. It’s all individual collections and that could trip people up.

Steve: Any complains on the check out?

Kurt: Well so the number one issue is in the check out that’s the one template you are not allowed of total control over, you are not allowed to mess with. There is a number of workarounds for it, so you can use translations to change labels to whatever you want. And you now could style it to match your form. But I think it’s a very clean checkout, I think it’s whether they say sort of now, I think its inspired by Amazon because you get transitioned from store into this very clean white easy to use check out. I like it a lot, and with qualified traffic it converts very well.

Steve: Okay, and so it just sounds like in general you can do most of what you want with Shopify with the exemption of maybe some major things that owning the code might actually help.

Kurt: Yeah, once until you are out like extreme some kind of like extreme Enterprise level thing with either like a million products or crazy features like, oh I want to build a market place. And there is still waste too, there is always some clever walk around like it never seizes to surprise me the stuff that people manage to come up with. So even if a feature is not native there is some clever guy out there who can do it.

Steve: Okay, and so what I was going to today Kurt was a lot of people are selling on Amazon right now. And it’s really easy to kind of get addicted to Amazon because the money just comes and you don’t have to worry about anything. But in the long run you really need to have your own platform, so from the perspective of an Amazon seller who only sells on Amazon I would like you to kind of walk me through the process. Like let’s say I came to you as a pure Amazon seller, how would you kind of guide to the right way to design my ecommerce store?

Kurt: Sure, well and so if we back up the — I get a lot of people who are — they have established businesses on Amazon. And Amazon is great because it’s a market place, they are delivering the traffic to you. But you don’t own the customers and you are at the whim of Amazon, so when people come to me and they are on Amazon and they want to move to Shopify. Often I’ll say, “Well what’s the impetus for this, why do you want to do it?”

It’s something like well I want to own my own audience, I want to build this relationship and I can’t do it with Amazon. And I have got this single point of failure, like for some reason you upset the Amazon gods. Now you’ve got this single point of failure, this single channel versus if you are on multiple channels Shopify being one of them, you are much more in control and you don’t — like it’s diversification.

Steve: Sure, sure.

Kurt: So I think that’s the reason most people want to make that switch. And it’s not that they want to switch, they run both concurrently, and it works well. But probably the biggest thing that people run into is when they switch to Shopify or rather add that as a channel to their business, is they are not used to getting traffic. Like that’s never had to — with Amazon you are paying this big percentage to them, but they are delivering the traffic to your door. Versus Shopify is like okay now you are on your own, and that’s a hard transition for a lot of people.

Steve: Plus you have to worry about conversion optimization, getting the website looking trustworthy, and all those things as well.

Kurt: Yeah, and I think, probably the biggest problem you run into with setting up an Amazon store on Shopify is that they don’t have that collateral that adds that trust, that adds that confidence, because it’s very much like I have optimized my product title. Amazon people always have great photos, I’ve got a good product description, and I can pick it from some reviews.

Beyond that there is rarely content marketing that’s come along with it for me to use. There is rarely an about page. There is all these other trust indicator pieces of a business that when you are coming purely from Amazon are often missing.

Steve: Let’s start from the beginning then. Let’s say I’m coming to you for the first time, what are some of the thing that you will kind of walk me through, or questions that you might ask me?

Kurt: Number one is I want to know who your audience is. What kind of people are buying your product? Who is it for and why are they buying it? An Amazon seller may or may not know this, but what is fantastic about Amazon are the reviews. I will go through, like when I see a product that has got 1300 reviews, I get excited, because I will start going through those reviews. First thing I could do is I get a great sense of who’s buying it, why they are buying it, because on the reviews they reveal it.

You now know the pain and the problem that you are solving in people’s lives which automatically … I want to start with; my first step is what’s your positioning, so it’s who you sell, like what are you selling to who and why? Ideally is there a unique selling proposition there, some kind of competitive advantage. Often what the Amazon seller tells me is different than what the reviews tell me. I have discovered like people don’t necessarily know what they don’t know, so going through those reviews is enlightening.

Steve: Can you give me an example of when they will be a disconnect there?

Kurt: Sure, I will use, well this isn’t the best example because they work purely on Amazon, but I have a client who sells replacement rubber straps for Rolex watch bands. We thought it was people who wanted to customize their watch, they have got a fancy, “I spend $8,000 on a watch, why not have like 6 straps, and then I can change it out depending on my mood.”

That was our thinking and that makes sense, and then when we started asking people, and we started going … They started selling on Amazon, and I started looking through the reviews. We discovered it was actually a little bit of the opposite. People, yeah they wanted to custom like customize their watch sounded cool, but what really was going on was they spent $8,000 on a watch, and they wanted to wear it all the time without scratching it up. They were saying things like, “Now I can …”

One review was really enlightening, it was a launch, she was, “Yeah, my husband bought me a Rolex, I wear it to work, I’m a nurse, and I have to run my watch through an auto-clave and I got sick of scratching up or messing up the bracelet, so I just use my evers [ph] band.”

It was this incredible thing where it’s like, “Oh my gosh, you have a literal blue collar worker using the straps so they can wear this watch every single day.” That wildly changed how we saw the product. We took the language from those reviews, and then suddenly like you get an SEO benefit and these better selling propositions when you use the language your customers are using in those reviews.

Steve: Interesting, I would imagine there were some people who wanted it just for the fashion as well, right? How did you decide to do that versus people who didn’t want to damage their watch? Did you have two separate pages addressing both audiences, or did you focus on the protective aspects?
Kurt: That’s a good question, and no because the reviews were so overwhelmingly saying things like. “Yeah, now I can go swimming, now I can ride my bike with my Rolex.” It was always about doing some, usually some kind of active sport.

Steve: Okay.

Kurt: We ended up like reshooting customer action photos to include, and reusing that language and saying, “You are protecting your investment.” And using this entirely different language we hadn’t even thought of that was revealed once we had those reviews coming in and we were able to read that.

Steve: I see, let’s say you didn’t have access to these reviews, were there any other ways that you would find to get an idea who your target customer was?

Kurt: Yeah, so a couple of ways. One is, so with Amazon, let’s say you are starting with Amazon, you don’t have your customers email addresses which is a pain, but you do have their phone numbers, so you could drop, if you have had enough of them, you could drop all those phone numbers into a custom audience in Facebook. Facebook will look them up and then using a tool called Audience, to sort of match those phone numbers to actual accounts.
Then using a tool called Audience Insights, it will give you demographic information about the person. It gives you the basic stuff like age and gender, location, but then it gives you all these really fun behavioral data segments, well kind of give you an idea of what the person is like. That can be very helpful.

Steve: Just curious, did you run this process on the watch band company?

Kurt: Yeah, that one was … It wasn’t detailed enough where we got info that didn’t surprise us at all, it was like it’s men and excuse older, like that made sense.

Steve: Sure.

Kurt: But then within the demographic, you have some cute names for some of these demographics, and I think the one that we overwhelmingly have for [inaudible 00:15:35] was, I think it’s called skyboxes and suburbans, that’s their cute name for Yappy.

Steve: Okay, so there is nothing surprising there, and so it sounds like you took all that information and used that in your unique value propositions on the site.

Kurt: Yeah, you want to use … You want to tweak all your language around that. Essentially when you are talking to someone, like your website needs to be talking about the customer and not you. All the language needs to be you not I focused, and then really we want to hold up the mirror, we want to show someone a better version of themselves through our product.

And we could do that when we leverage that language from the reviews where people are saying that these are the phrases people use to describe what they like about it, what they got out of it. When you add that to headlines, taglines, titles, descriptions, all of that, it adds up into a very compelling experience where people will often want to buy.

Steve: A common question I get asked is like for people in Amazon often times they are only selling one product or a bunch of despair products. In this case was it just watch bands, or did they have a huge variety of watch bands?

Kurt: They had both, and what we ended up doing was, you want to separate not by product but by audience. So they were selling like low end replacement straps for whatever watch, and then they had this high end line for Rolexes, so we separated those into two separate brands.

Steve: Okay.

Kurt: It comes down to what the audience says, so if I’m selling, you know for all my products are sporting goods, okay I could probably put that into one Shopify store, but if it’s like, one is yoga mats, and the other thing is a gun cleaner, I’d probably want those, it’s different audiences. You probably want to run those as two separate stores. At the end of the day relevancy is absolutely critical, so that’s what you want to focus on is keeping it as relevant as possible.

If you are in a situation, you are in a tunnel, like you’re kind of shoot, I got 10 products and they are all totally different, well exploit the 80/20 rule, take the two best performing products and make a store for those. If that works out then go to the next one.

Steve: Using this watch band example again, let’s say we have a store selling the high end ones, but let’s say we have only like 4 or 5, do you kind of structure the website differently depending on the number of products that you offer?

Kurt: Yeah, I actually prefer … Stores with fewer products are easier, and not just from a stand point of oh I have to copy and paste these product descriptions, but from the customer stand point. The fewer products you have, you are really presenting the person with fewer decisions, you’ve got a tighter sales funnel, you are really making life easier on the customer and thereby making it easier on yourself to sell.

Steve: In the case of these watch bands, was the website pretty much like a single sales page like format?

Kurt: No, so what we did, the issue we had was rather to increase, the same strap actually fits every Rolex, or like a majority of them, except for some oddballs, but we didn’t tell people that. We instead walked them through this process where we made them pick their watch first, so we said, “Okay, choose which watch you have.” Then it would show you that strap, because buying all these Rolexes would be prohibitively expensive. There was just a mark up in photo-shop.

But we chose the strap on your specific model of watch, so in doing this again that concept of holding up the mirror, like we wildly increased the relevancy of this to the customer and they are able to visualize it on their own watch, and then they are willing to spend 2, $300 on a watch strap.

Steve: Let me ask you this question, let’s say this particular company sold a bunch of different Rolex accessories, how would that change how you would structure the site?

Kurt: I want to make sure, if I’m adding new products to my product mix, I just don’t want to do it because it fits the audience, I want to do it because it fits the audience and compliments what they are already buying. Ideally I would look for stuff that’s up-sales, like this incredibly successful up-sale they had was one day … Everyone who buys the strap obviously has to put it on the watch. You can take it to a jeweler, but you probably you are going to do it yourself.

What they ended up doing was selling private labeling, a very nice little tool kit and it’s offered as an up-sell, and it’s probably like 90% of orders, the person will buy the strap, and the tool to change the strap.

Steve: Interesting.

Kurt: You sort of want to work backwards and look for up-sales to your existing product mix.

Steve: I’m just trying to think right now like if this person, let’s say he specializes in watch accessories of which Rolex brands are only one, and let’s say they sell replacement parts, I’m just trying to get an idea, sometimes it’s a pain in the butt to just open another store, right?

I’m just trying to get an idea of how you would integrate display of products onto a site. Would you choose one of your main sellers, and then target the whole site towards selling that one product, or if you had like let’s say two or three best sellers that were somewhat despaired, but all fall under the umbrella of selling watch accessories, just trying to get an idea of how you would structure the site in that case.

Kurt: That’s a good question. Probably I would look by use case, where at the start I want to present them like here is the pain I’m solving, so let’s say we did, it wasn’t just watch straps, it was like watch straps, watch tools and cases, so then we could sell them like watch winders, watch boxes and watch rolls, like a tool. We’d say, I’d probably present that as like 3 featured images on the home page that say store your watches, maintain your watches, and customize your watches.

Steve: Okay.

Kurt: I’m always doing it by what pain they have.

Steve: Sure, okay and then you would probably just have 3 choices where they could just jump to the category page, and on the category page, you would probably focus on the value proposition message.

Kurt: Yeah, once I’m in there and I would strip away everything else, like they have already self selected, they’ve told me what they are there for, so I don’t want anything else getting in the way. I want to really increase that signal to noise ratio, and then after they’ve made the decision to buy, then maybe I might offer an up-sell, or I might offer a bundle, something like that.

Steve: You’re talking about the category page; you would remove the navigation to the other categories at that point.

Kurt: Well what I see is like, okay so let’s say the collection page or the category page, so from the homepage, we try to ask them what their problem is, so if they say, “Oh, I need to store my watches.” When they click on that, we send them to a collection page deliberately, a paragraph or two about the proposition, about the description, and then our selection of watch boxes or whatever.

Then in Shopify actually I would sort them by bestselling, as one of the nice options. So essentially you have self optimizing category collection pages, because you can always list. It will automatically take the thing that sells the most and push it first in the list.

Steve: Right, okay. In terms of just SEO and content, do you try to include content on all these collection pages? Is that important?

Kurt: Ideally yeah. I mean, is it going to make or break to you? No. Does it going to absolutely increase the chance that someone finds it in a Google organic search or someone links directly to this? Essentially if you add description to a collection or category page, its going from, here is a grid of products to landing page, and that’s how like let’s take everything like a landing page, and really that’s just a content issue.

Steve: I’m just trying to … I’m just wondering how you rationalize having content versus pushing the products further below the fold.

Kurt: I’m still out on how the fold really matters. If I have really compelling relevant content above the fold, I think that’s going to get people to scroll and really that’s kind of a design question. But ideally I’ve never shied away from long sales pages, from more content. It’s never been a problem.

Steve: Do you typically work with people who have just a handful of products versus someone who has like a library of hundreds of products?

Kurt: If someone came to me and said, “I have got hundreds of products and I want to move those to– I want to go from Amazon to Shopify I would say. All right, which 10 do you want to work with? What’s your best seller? Building a store, I mean you are setting yourself up for failure to begin with, like if you are building a store with hundreds of products. It’s really hard definitely moving from, especially moving from a market place to Shopify, I wouldn’t recommend it.

Steve: I mean if they are all related products, would you still try break them apart? Like you know watch example …

Kurt: It really comes down to how, again it’s like if they all fit the same audience, and they solve similar problems then you could make it work.

Steve: Okay, so let’s switch gears a little bit and talk about traffic. I understand you help some of the folks with traffic, so what are some of the first things that you tell these people who are just completely not used to driving their own traffic? What do you recommend?

Kurt: Well so number one is first recognize that. I mean the thing the you’ve been paying for Amazon, the whole time whether you knew it or not is they’re delivering these wallet out ready to buy people to you? Fundamentally if I am on Amazon, I’m probably not even in research mode. I already trust Amazon, I’m there looking for a product, I’m going to add it to a wish list or buy it.

Not only do you already have the traffic, but it’s really qualified traffic, and making that mindset shift to your own store. Well it’s like okay you’ve got to get the traffic and then you have to make them trust you, and then you have to get them to buy you. You’re really moving into this concept of a sales funnel, and that’s something people aren’t used to. The first realization is someone will probably have to visit your store maybe 5 times before they buy, and they don’t know you. They have to trust you.

If I walk to a physical retail store right now, I know fundamentally like there is payroll, and business licenses and leases were signed, there is implicit trust versus your random Shopify store in the interne. If I have never heard of you it’s like the equivalent of a guy in a parking lot, popping his truck and saying you want to buy some t-shirts?

Steve: Right.

Kurt: It’s totally different, so adding those trust indicators.

Steve: Let’s talk about some of the trust indicators, let’s be specific. What are some of the things that you recommend?

Kurt: I think number one is, two things. I think there are really two parts to these trust indicators. Number one is availability, if you have got a toll free number, if you make yourself as available as possible, so a live chat with an actual person manning it, a toll free number, a public address. Those things whether or not people actually choose to reach out to you, we don’t care if they reach out to you or not, just the fact that you’ve made yourself available and professional makes you look trustworthy.

Steve: Do you think a toll free number matters anymore these days?

Kurt: It’s kind of funny; I mean you are right to ask because who pays by the minute anymore? It doesn’t matter, but I think we are still ingrained with this idea that, “Oh toll free numbers means it’s a real business.” And they are so inexpensive with services like Grasshopper, and I’m sure there is half a dozen others. I still recommend it. I think you look better with a toll free number than a local number.

Steve: Okay.

Kurt: I mean the image you are fighting against is you have to assume that when the person comes to your website and hasn’t heard of you, they assume that you are some guy in your mum’s basement, and you have to prove otherwise. I think a toll free number is one of the ways to do that. That availability, that trust is really it’s about risk reversal, spelling out a clear guarantees return policies, that sort of thing helps a lot.

Steve: Okay.

Kurt: I think the big advantage you have that a lot of people pass on, and it’s frustrating for me is be a person not a brand. People relate to people not brands, and when you leave Amazon, that’s one of the great things you get to do now, is you get to be yourself, you get to be an authentic person with an authentic voice. I always recommend people at the very least have an about page that tells your story, has your pictures, says who you are and people can relate to that.

Steve: Okay, what about getting actual traffic. These are all great I guess conversion things that you’ve been mentioning.

Kurt: Yeah, I put all that stuff, everything we’ve talked about probably it falls under conversion for sure.

Steve: Yeah, what about getting the actual people to the website, what are some of your recommendations there?

Kurt: Let’s say, the only guaranteed thing is PPC, is pay per click, and there is no one winner, but I would say absolutely for sure do remarketing. Earlier on I said that someone might have to visit a store 5 times before they buy. Well remarketing is going to help you make that happen. When someone visits the site, they get cookied, and then they’ll see ads for let’s say 30 days about the product they viewed.

Steve: Do you actually run these campaigns for your clients or no?

Kurt: Yes I do.

Steve: Oh you do? Okay, so what has been more like, so do you use Facebook and Google for this?

Kurt: I no longer … I recommend both, but I personally have focused on being a Facebook ads expert. Google is too fast a landscape, I think for anyone to really master Google you have to be doing it full time. I recommend someone else to tackle it. Google product listing ads I think is a phenomenal place to start.

Steve: Can you explain those by the way, just in case some of the listeners don’t know what that is?

Kurt: Okay, so let’s say you search for something on Google, we search for men’s wallet, and then you’ve got the first thing at the top of your search results are those text ads. That’s just a regular traditional Google ad, this text ad, they are really expensive now, they are hard to get to convert. And then, below that are the organic results, which that’s what we think as traditional SEO, and then in the upper right, you’ve got like a picture of the product with the title and the price. Those are Google product listing adds, and that’s just a data feed that your Shopify store provides to Google, and then it will just automatically run ads against it.

They are actually significantly cheaper than running the text ads, and once you’ve got the product listing ad going, really what you’ve done is Google understands your product catalogue which means you can now do what are called dynamic remarketing ads. So let’s say someone goes to your site, looks at a pair of shoes and leaves, well Google knows that’s the last product they looked at, and now an ad with that specific product title price will follow them around the web like a lost dog.

Steve: Just curious, why have you moved away from using Google remarketing?

Kurt: I still recommend it, I just don’t manage it myself anymore.

Steve: You don’t manage it. Okay.

Kurt: Just because it’s tough, I mean it’s genuinely– there are so– when you log in at the Google Ad Words dashboard, there are so many knobs, dials and switches, and it’s updating all the time that it’s tough to get it going, and say like…

Steve: That’s correct; it is quite intimidating for a new user.

Kurt: Yeah, I think it’s intimidating and then for me it was frustrating there like I had set something up and then a month later something breaks. I’m like I got to go fix this, and if you are not absolutely on top of it and I think really like sleeping breathing AdWords every day, that’s just bound to happen.

Steve: You know it’s curious that you said that like, so I run all my own campaigns, and Google like what you haven’t set up it’s a lot more hands off than Facebook in my opinion. I was just curious what your opinions were on that, because Facebook you constantly have to be rotating your creatives and testing new things, whereas AdWords which is like search based, you can pretty much set it and then check up on it every couple of months.

Kurt: That’s a solid point. Yes, I think especially when dealing with Google product listing ads, that’s absolutely true. You set it and then you are good, until it breaks, and ideally usually it shouldn’t for months if it’s set up once correctly. Verses Facebook ads, you get into this problem of ad fatigue, but I think it comes down to having highly relevant customer audiences, and then really reducing the length of time they can run.

So if I set, I could set a window where I say all right I’m only going to show people, assuming I have enough traffic to pull this off, you could build the sales funnel where like a person sees an ad only within 24 hours of visiting your site, and then from 24 to 48 they see a different ad. You could run that out to a week, where you have– they see a different ad everyday for a week, and then if they haven’t bought after that, we can assume they probably weren’t going to begin with, and stop showing them ads.

Steve: Let’s talk about your Facebook ads strategy actually since you seem to run those for clients. Let’s take this watch band example again; can we just talk about how you would structure the campaign?

Kurt: Yeah, absolutely. I think the more segmented you can make it obviously you are going to increase relevancy, but with, and that really comes down it’s like a function of how much traffic you have. But the basic, the most basic sales funnel in Facebook that I would recommend people setting up, has four steps in it. The first is we want to bring people who’ve never heard, we’ll call them anonymous people, people who have never heard of the brand before, and we could do that using a look alike audience.

A look alike audience being we give Facebook, let’s say we have 1000 customer email addresses, and they’ve opted in to our email list. So we give that to Facebook and we could show Facebook will find those people and we could show ads to them if we’d like, or Facebook based on that amazing and kind of creepy behavioral data will target up to let’s say like a million to 2 million people in the same country that look like your customers.

And they buy mailing list form big box retailers and credit card companies, they know everything about you, like if you bought a pregnancy test, they assume okay here’s like parents who are trying to get pregnant, like everything they know it, it’s creepy. But it means we can have very relevant ads, and we can do it on autopilot. So the first one would be ads just introducing people to the what we are doing, to the brand, to the product, to the problem, and getting them to the website.

Steve: What would the creative look like in that case?

Kurt: That’s a good question. We want, generally I’ll try and pick something that’s like an action shot that shows someone using the product, so really hold up the mirror and have that customer avatar out there. And especially because we’ve got it in their news feed, it’s less disruptive and fits into their news feed, and that’s actually they are more likely to check it out and read that headline, read whatever our tagline is.

We just– all we want for them to click through and visit the site, because then we’re going to cookie them, and once they are cookied, we’ll exclude them from that prospect list where they are seeing their first ad, and instead show them ideally probably like a carousel ad, so our 5 they got these sliding carousel ads, they are wonderful. So we show them say our 5…

Steve: Can we back up a little bit, sorry so that first initial ad, like what would be an example of a headline for watches let’s say just off the cuff, to get them to click?

Kurt: Good question, since I’m assuming you are editing this later, let me look it up.

Steve: Okay, yeah.

Kurt: I would literally do like for that and say something like, we may say something as simple as Customize Your Rolex, and then show a photo of a watch on someone’s wrist. What’s nice about Facebook it’s especially organized with Shopify, it does conversation tracking, and it tracks value of sales, you could figure your cost per acquisition.

Let’s say you give it 5 images for 1 ad, it will know which ones are converting, and then start showing that the most. So after a week of running the ad, I will just go back through, turn off the 4 that didn’t convert well or the 4 post converting, keep the top one and then like try like 4 variations on that, and you just keep going like that in a cycle.

Steve: The reason why I asked that question is do you entice them with some useful piece of content for that first ad, like what is the landing page of the carousel?

Kurt: Good question, so it depends on the product. You often will use, will take the product page and make like a really long form version of it. Much like Amazon we’re trying to bust every objection, so I’ll have kind of like a more narrative product description, ideally a video, customer reviews, just like a very, a longer sales pages is going to work better here, or even advertorial content. Maybe like a blog post, an article, something talking about the problem and walking through like this story of the narrative, like here’s how the inventor came up with this problem, and then had a successful kick starter, and you get them involved in the story.

Steve: Okay. You absolutely don’t want to send them like just straight to a product page, right?

Kurt: I think the worst thing you could do is just drop them on the home page or drop them on a traditional product page. You could make it like a very long form sales page will work well, or sometimes collection pages that have a really long description. Like we’ve made 10 collection pages and 2 decent landing pages, but no you are right, I mean just dropping someone on a whatever page and crossing your figures isn’t going to be the best.

Steve: Just curious, do you use incentives to get them to buy right then and there, or is the whole purpose of that first ad just to get them aware of your products?
Kurt: I assume, well I mean if they buy that’s fantastic, but I will generally, I just want to build that awareness. At first it’s worth it just to have I think a longer sales funnel and then I’ll be pushing, I try not to push especially discounts at first. I want to save those to later and not leave money on the table.

Ideally though if you have a lead magnet, like in an ideal world we could do, we introduce them to product via an article, so we’ve got like a 1500 word article with an interesting original story, and then that also probably includes the inventory, really makes it very personal. And then in there at the end we’re still not necessarily going to try and sell them anything, but if we can get them to opt in to a newsletter, now we can show them our Facebook ads, plus get them on an email list, and really rump up those numbers at touch points.

Steve: How do you calculate conversions and the effectiveness of the ad, given that like that first ad really isn’t meant to convert a sale, so do you measure the effectiveness of that ad based on like email opt-ins, how do you do the measurements?

Kurt: Well, in this case you can do it based on page views, you could do it based on opt-ins, but what Facebook does, you could define the attribution window. So if they view that ad, let’s say they click the ad and bought within 7 days, we would count it as a conversion like an assisted conversion, but a conversion nonetheless because the first ad was involved. And ideally like I had put one funnel into a single campaign, so that way I can track the whole thing holistically.

Steve: Okay. We’ve got them to our site, let’s say they haven’t bought yet, but we have cookied them, and then you mentioned the second ad is more of like a carousel ad displaying different versions of the product?

Kurt: Yeah, so let’s say for the second ad I love to do carousel ads, I just they are a little more engaging, and a carousel essentially it’s like 5 tiles, and each one can have a different link and it’s a different photo. And Facebook will reorganize them based on conversation. In there what we do — so if you had like, we could put your top five selling products in that category, or we could do the same product but have each of the tiles be one of the benefits of owning the product. Or we could do it go even broader and do it by category.

We are like all right here is the three categories of products we are selling, something where we just want to sell — we want the person to segment themselves. But if we are only selling one product yeah you just do five benefits of the products and a carousel ad, and that’s where we might — at this point we would send them to the product page, or an extended version of the product page.

Steve: Okay, and then still any incentives to buy at this point or?

Kurt: Not yet, no at this point we probably want to talk about a lot of times like the content or using those ads, or the landing page both are reviews. I always go, at this point once they are aware of it I just need to convince them with social proof; I think it’s the best way to go about it. We’ll do a lot of like quotes from customers and testimonials and reviews. And if we’ve got like big blogs or magazines that have reviewed the product, we want to include those logos and quotes as trust indicators in the ads or in the landing page. At that point…

Steve: So once gain this is like a separate landing page again, right?

Kurt: Yes, yeah we can either do — usually what it is, is a product template that we’ve made, that’s in an ideal world. I think you could get away — we’ve absolutely done this with a regular product page so long as it’s got a lot of content on it. And at that point we just — our goal then, so in our first our intent was get them interested. And now with this our intent is just get them to add it to the cart, and if they buy that’s fantastic, but if they don’t and they’ve add it to the cart we can actually segment them again.

At this point I’m just going to show them an ad that links them back to slash cart, and say something like your cart’s waiting for you, we saved it. And then we want to get into a risk reversal where we will talk about return policies and satisfaction guarantees. And this is the first time that I might introduce, if it makes sense for the brand that I would introduce a discount code.

Steve: Okay, and just curious how often do you rotate these ads, like what do you let the frequency get up to?

Kurt: So on Facebook we’ll do — like for that first ad we would set it to daily — we wanted to go for daily impressions for reach. And the worst it’s going to do is show them each one person one ad per day, supposedly what Facebook should do for us. And if I have got five ads in there, then I could show them essentially five different — I could show them five different ads for one business week which is that should be more than enough.

Steve: So that first add really you’re not even doing anything for conversation, it’s really just straight impressions, then maybe clicks?

Kurt: No, the first ad is just straight up like I don’t want that hard sale, I just want these people to opt-in to my funnel is how I look at it.

Steve: Okay, and for your best converting campaigns like what is like a typical cost per acquisition, let’s take this watch example.

Kurt: So this is the one issue with doing the sales funnel the way I have suggested it is you have to have the margin on the product that can support this. So if you’ve got a very inexpensive product with a very slim margin PPC is already going to be a problem, but doing these long Facebook campaigns is going to be tough.

And especially you can still do like the remarketing, you could probably still do it, it’s just that step one of getting new people into the sales funnel, that’s where you are spending a lot of money. But presently in my campaigns I’m shooting to get my cost per acquisition under $10, off top of my head the last couple I have worked on I have been in like probably $5 to $9 range.

Steve: That’s actually pretty good.

Kurt: Yeah, it works; it sounds a little crazy in that far — like a lot of people brace off that idea of like well the first ad we don’t actually expect to sell anybody anything. But when you make it part of this longer experience, it works well plus we are then — our third ad is that cart abandonment.

So people who just happen to visit the site for other means, they are still going to see those cart abandonment ads. And then afterward we can segment recent purchase service into an up sale campaign, where we try and sell them additional products. When you add all that together that’s when it really drives the cost per acquisition down.

Steve: So in your cost per acquisition calculations you are kind of including email also it sounds like?

Kurt: Yeah, in my ideal universe those are the two channels you want. You need some — I love Facebook for the segmentation. And then email works phenomenally well for turning people into brand evangelists. Like typically we’ll look at email as a thing that starts the moment they buy, because I want this very — I want to increase lifetime value of a customer. And again this is where we really give in to the advantage that you’ve lost with when you are on Amazon. Like the person buys from you and then they are gone, and you could follow up for customer service and that’s about it, versus…

Steve: I know for me I have problems like kind of tracking email conversions versus Facebook conversations. Even though I might have like just like a separate list or tag just for people who sign up through Facebook. It’s not, like I have to go out of my way to calculate that. Is that something that you do or?

Kurt: The only way around it, I don’t unless it’s like until you are spending — I mean it really depends on how much you are spending. But the solution to that is through UTM tagging, adding — just adding core strings so you could separate out who is buying from where.

Steve: So for all your emails like every link in your email is — okay so you tag it.

Kurt: Yeah, and the issue is because you are right, if someone like got an abandoned cart email and click through that email and bought let’s say you use I like Klaviyo for email, so Shopify because it integrates the best.

That might like that for sure will take credit and say, oh yeah this abandoned cart email earned $300. But then if they had clicked any of my ads in the last 7 days Facebook is going to say, oh they fall on the attribution window and they clicked our ad. And it’s going to take credit too, and it’s like oh you…

Steve: Yeah, it gets all like a little hairy at that point.

Kurt: But then the question is like well would the abandoned cart email have worked had they not seen the Facebook ad. So you get into — and it’s really, it’s hard to know like I mean you start getting to questions of human psychology and behavior.

Steve: Sure, sure, sure. I was just wondering of you had…

Kurt: Like at some point you are just like you could dive so deep that things start to get crazy.

Steve: Cool, Kurt hey we’ve been chatting for quite a while now. I also wanted to give you an opportunity to kind of talk about some of the other web properties that you have, and where people can find you.

Kurt: Sure, probably the easiest thing Google my name kurtelster.com. Sign up for my newsletter and I run my own podcast, the Unofficial Shopify Podcast, we talk about stuff like this once a week, and I send that out as an email to my list. Or if you are looking to DIY, DIY store of ecommerce bootcamp.com is a book on the topic that’s essential, a knowledge transfer to get all these thoughts out of my head into you. Or if you have an existing store and are just looking for ways to optimize my video series called ecommerce X weekly.

Steve: Cool man, hey good thanks a lot for coming on the show, it’s always interesting to see how other people run their ads and how they design their sites. And I think that the listeners will find your insights very useful.

Kurt: Yeah, I hope so. If anyone has questions that’s why sign up for my list and reply to it and I always — people who reply to my list I always make sure to answer.

Steve: Cool man, well Kurt thanks for coming on the show.

Kurt: Yeah, my pleasure.

Steve: All right, take care.

Kurt: You too.

Steve: Hope you enjoyed that episode. If you are only selling online primarily on third party market places like Amazon, you really need to own your own web property. And I hope Kurt’s traffic strategies are useful for you going forward.

For more information about this episode, go to mywifequitherjob.com/episode118. And if you enjoyed this episode please go to iTunes and leave me a review. It is by far the best way to support the show, and please tell your friends because the greatest compliment that you can give me is to refer this podcast to someone else either in person or to share it on the web.

If you are interested in starting your own online business, be sure to sign up for my free 6 day mini-course where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page and I will send you the free course via e-mail immediately. 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.

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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’ve got someone really special on the show, Will Tjernlund. I met will at the StartupBros conference and I’m really glad that I did. He and his brother Andrew made about $7.5 million from Amazon in 2014 in their own stores last year making him one of the most successful Amazon sellers that I’ve had on the podcast thus far.

The best part is that they are basically a two man show with just he and his brother. Now you might be wondering how that is even possible. Well, Will sells his own private label items, buys from manufacturers in China, and then sends his products directly to Amazon for fulfillment using FBA. And today we are going to go into great depth on how he does it. With that welcome to the show Will, how are you doing today?

Will: I’m doing pretty good. How are you doing?

Steve: I’m doing good. It’s good to hear. We chatted a little bit before the interview started. There’s a lot of stuff going on with you. I did want to, I was very curious on how you kind of got started in ecommerce, because I understand you did this while you are still in college, right?

Will: Yeah, even kind of before that. I’ve always been kind of looking for gaps in the market and always looking for different ways to make money ever since I was in like high school even. Me and my buddies were doing black [inaudible 00:03:29] out of my basement the whole grade, every Friday that kind of thing, always finding a way to make money. And I actually started selling online when I was still in high school.

I worked at Target and I would buy all the Nintendo Wii and Xbox 360s when they were in high demand, and sell them for about 30% more on eBay. That’s when I first started selling online. But then from there, my brother graduated high school in 2003 and soon after that he started private labeling from Alibaba and selling on eBay. And so even when I was only 13, I saw it was very possible to import and make money selling online.

Steve: So your brother was the first one that kind of got to get you into this?

Will: Yeah, at a grand scale like I could not believe it the first time even when I was 13, when he showed me Alibaba and saw the prices on there, because this is way before any kind of private labeling and stuff people were doing now, and a classic example will be like if you just saw Alibaba today and you saw like the price of tablets on there. You go, wow you can get like a android tablet for $12? This is crazy. They go for $200 in the stores, because we just didn’t know back then like what kind of quality assurance and all that kind of stuff that factories were doing.

Steve: What was like the first product that you imported over to sell?

Will: The first one I personally imported all by myself was like my sophomore junior college and it was actually a marijuana vaporizer pen.

Steve: How did you come over that Will?

Will: No, seriously though, it was one of those things where I was just constantly doing the one tab Alibaba, one tab Amazon and just looking for random crap. And I got on the tobacco products, and then from there they all qualified themselves as tobacco products. But I saw that they were charging $100 and I go, well that can’t cost $100 from Alibaba. It ended up costing like $7. So that was like one of my first big products.

Steve: So you were in college, where did you store the stuff. I assume you had– you shipped it to yourself.

Will: Yeah. I would just have the stuff air freighted or myself. Then from there I was– I was even doing FBA when I first started doing like my sophomore year in college. There’s actually a post office on my campus. So I would just have a backpack full of vaporizer pens that I would drop off on my way to class.

Steve: I see. So was this for eBay or was this for Amazon?

Will: Both.

Steve: Both?

Will: I was even doing a little Craigslist.

Steve: So can you kind of describe why you decided to use both platforms?

Will: I just kind of– it’s the– I always think in terms of why not? I knew that eBay sold well, and I knew Amazon sold well. For me to just– I was pretty much create the listing once, then copy and paste all the descriptions and photos and all that stuff over. So for an extra whatever 10 minutes of time, the potential value could be thousands of dollars.

Steve: What’s your take real quick on just Amazon versus eBay, the type of customers and selling on those platforms?

Will: I hate eBay more than anything. I hate the all the customers. They are all terrible. Etsy is like the anti-eBay. Where in eBay you deal with every single individual customer, they are always asking for tracking information, and they are always bugging you about the kind of intricacies of your product, where on Etsy, the customers are always overly nice, they are super optimistic.

You tell them I’m sorry, the shipping is going to be three weeks, they go, “Wow, that’s great. I’m just happy it’s not four,” kind of thing. If I sold 1000 items on eBay in one day, my life is going to be miserable trying to flip through all those orders. If I sold 1000 times in one day on Amazon, I don’t even notice.

Steve: Yeah, I mean I had the same experience in eBay. Everyone there tends to be cheaper buyers.

Will: I compare to people who shop on eBay are more Wal-Mart shoppers, and people who shop on Amazon are more Target shoppers, where the Amazon customers are willing to pay maybe that 10% more to get like the automatic two-day shipping and have them more quality experience, where the people on eBay are shopping more for deals and they are wiling to deep dive and try to find those diamonds on the raft.

Steve: Do you still sell on eBay today?

Will: No. we sold over a million dollar in 2014 on eBay, and we quit even though it was all automated through our fulfillment and everything. My brother and I quit selling on eBay in 2015, because we were spending just as much time on eBay as we were Amazon, but selling 7 times as much on Amazon.

Steve: Okay. Amazon is it all FBA or do you do any merchant fulfilled?

Will: The only merchant fulfilled I do would be most likely if I’m like drop shipping.

Steve: Okay, okay. And you pretty much only drop ship when you are testing the product or?

Will: Either when I’m testing it or say like, I sign up a deal with a distributor where their catalogue has a thousand products. I only want 50 of their products, but the other 950 I have available for me to drop ship. So I might as well throw up a merchant fulfilled listing for all those to see if I can get anything. Even if those things sell maybe one unit a day, it’s still an extra thousand units a day.

Steve: Yeah, I know, that totally makes sense. So, I know the listeners out there are very curious on how you actually come up with stuff to sell. If you can just kind of talk about your strategy for finding stuff that will make you a profit.

Will: All right, so I can go all day about this. Cut me half when you need to. But basically I’m just looking for items that have high proceed value with minimal down sides. I make sure that the product can always be liquidated. Example, say if I’m buying a set of four drink coasters for a dollar, and I usually sell for $20, if I sell them for $4 and break even, they will fly off the shelves and at least I know I can get rid of say 100 units I order as a sample.

I always make sure they can be liquidated, and I always try to have minimal moving parts and minimal electronics in it. So like my perfect product is the drink coaster, because nothing can go wrong with it. I’m not really worried about quality assurance or anything like that. It’s just going to be a square piece of say wood, and there’s not going to be anything else to it. I really like kind of products that just nothing can go wrong and products that are super simple where I’m either selling a hunk of rubber, metal, wood, or plastic.

Steve: So when you say liquidate, do you mean liquidate on eBay or Amazon?

Will: Either or, just liquidating in general where something where I can charge such a low price that people can’t help but buy it type of thing. Whereas I give everyone selling a product for $30 and I’m just trying to sell for $4.50, there’s no way that I don’t at least just get rid of my inventory.

Steve: Okay, so that implies that your margins, you require something on the order of 8X then?

Will: Not necessarily 8X. It’s more kind of a proceed value type of thing. It’s different per each product category. When I’m selling something that’s like more home and industrial, that kind of product has a lot less price fluctuations than maybe say like a fashion item. And so that one I can only charge maybe 20% below market price, and still liquidate it pretty quickly because everyone has the same exact price, as opposed to drink coasters where some might be five dollars, some might be $100.

Steve: Okay, and so can you give us an example of your ideal products. So with coasters, I mean, I don’t know that’s like a real product that you just mentioned?

Will: Yeah, exactly. That’s a perfect product where I’m walking through Target, and I see some men drink coasters a four pack of them for $25. And I go, that doesn’t make any sense because a cinder block cost like a dollar. So I go and look that product up on eBay, I mean on Amazon real quick.

And I go wow, they are selling concrete drink coasters and they go for about $20 for four pack. That still doesn’t make sense to me. Then I look it up on Alibaba store, and I go, wow, those things are four pack cost a buck. Well, if I order 25 packs, it’s really hard for me not to at least just get my money back kind of thing.

Steve: Okay, do you use any sort of tools to find these products, or do you just go through and flip through Amazon.

Will: Yeah, I don’t use any tools. I feel like when everyone uses the same tools, it draws the same conclusion for everyone. It’s hard with these analytics tools, and an example I always use is the drone landing pad, and still no one sources yet even though I’ve used that example a million times, but there is two listings currently on Amazon. If you throw a drone landing pad, you’d be the third one on Amazon. It’s just like there are certain products like that where you would be shooting and fishing a barrel not to source that product and try it out.

If you looked it up on one of Amazon’s softwares it would say that there’s a very low sales velocity and that you shouldn’t even try it, but that’s because not enough people are offering quality product yet, because the only drawn mini pads are like one foot by one foot landing pads and not like what the customers really want. So the software can be kind of deceiving because it won’t show sales for products that aren’t there yet.

Steve: So how did you find like a drone landing pad for example?

Will: I just continuously click the also bought with button.

Steve: Interesting.

Will: And so I will go and I will see – I was looking at drones just to buy one myself just to see what kind of price they are at, and then I see like also bought with XYZ and I’m like, weird. I didn’t think about drone accessories. Then I looked up drone carrying cases, and then after looking at the shipping and the pricing it’s like, oh, there’s no money to be really made there and it’s like okay how about drone spare parts.

I was like no money will be made there. It’s like, oh what about a landing pad. Then I looked it up, and there’s no one selling it and it’s merchant fulfilled with reviews. It’s like, wow, I could just come in here and just dominate this market if I wanted to.

Steve: Are you worried at all that if there’s not that many people selling it that the demand might not necessarily be that high for it?

Will: No, because I know the demand is going to keep going up with drones just in general if you look at Google trends. Also, I love the idea of products that fly under the radar, instead of selling the silicon baking mat and try to sell a hundred units a day, and constantly finding a few people piggy backing on your listing and fighting off all these competitors.

I love the idea of selling say a 50 dollar drone landing pad that I get for ten dollars that I make $25 a unit, and I sell for a day. I’m sneakily making a hundred bucks a day, 36 grand a year off of this drone landing pad, and people look it up and go 4 a day, that’s not worth my time.

Steve: Okay, so I was just curious then, so for your seven and a half million revenue that you did in 2014, how many products was that?

Will: 1700.

Steve: 1700? Holy crap! When you sell these products, do you ship them direct to Amazon, or do you ship them to yourself first and analyze them or look at them?

Will: Ship them to myself first. I still don’t fully trust any of my Chinese suppliers to do everything correctly, and I would hate to have a container get denied at Amazon. It doesn’t cost that much more like an insurance policy for me to have it stop it at my place beforehand, or my pre-fulfillment place beforehand.

And then with my wholesale suppliers I think a lot of them don’t know I’m selling on Amazon. I don’t want them just to send straight to Amazon, because then basically I’m teaching them how to cut me out of loop.

Steve: 1700 products and you use the same strategy you are trying to fly under the radar with these products.

Will: Yeah, it’s way easier to sell a thousand products once a day, than to sell one product a thousand times a day.

Steve: Interesting. So then it doesn’t really matter I guess when you look on Amazon you don’t see that many listings, you just go with your gut is what it sounds like.

Will: Yeah, with my gut and like very small low risks moves over and over again. Where I’m not sitting there going and buying a crazy amount of inventory right off the butt, I’m sitting there ordering 20 units, then 100 units then 200 units, then 1000 units kind of thing where I never get caught with like my foot in my mouth, because I ordered too much and I don’t know what to do with the inventory.

Because it’s all about basically once you get product selection down, which is not– it’s like one of the more difficult parts, the whole entire Amazon game basically just comes down to cash flow, and how can you hold the perfect amount of inventory where you have enough cash on hand to keep growing, but at the same time you have enough cash to replenish your current inventory.

Steve: What are some of the price points that you like on Amazon then? Do you have any guidelines there?

Will: No real guidelines. More times than not, I tend to lean towards more expensive products, because I like the idea of knowing like I’m getting a size more cash every time I sell a unit. So instead of me saying, oh I did a thousand dollars in sales doing 20% profit margin after everything, I’ve become more and more tuned to saying, I sold four units and I made a hundred dollars. I put a hundred dollars new in my pocket from those four units, as opposed to saying I did 400 in sales at a 25% margin.

Steve: Does that imply then that your price points is in the order of hundreds of dollars then?

Will: Yes, my brother and I our average price point was like a $130. But it was the kind of thing where, that kind of skewed as I explained earlier because of say they had those thousand skew catalogues we would get, and we’d only source a 100 items, and then have 900 items or whatever as an example drop shipped.

More times than not we are drop shipping those one because we don’t want to tie up cash in them because there are hundreds and hundreds of dollars. My brother and I we are selling some products that are like $2000 each.

Steve: Oh, wow, and you’re fronting the inventory for that?

Will: Yeah basically we are just sitting there having a merchant fulfilled and say as soon as we see a sale come through we just email the supplier and say we have a drop ship to this address. And so we only spend the money once we’ve already made it.

Steve: Oh sorry, I meant like the ones that you actually store at Amazon using FBA. Like what’s your price point?

Will: Oh we try to be lower. It really comes down to like you prefer under a hundred dollars. But at the same time it really comes down to sales velocity. So how fast can I get that dollar 20 back in my bank account after I spent that dollar. If I sell say, some of my products were selling like say 15 units a day. I don’t mind that it’s a more expensive product because I know I’m flipping my inventory quickly, where if I know I’m only going to be selling five units a week, then I’m probably going to back off on ordering so many units of that if that makes sense at all.

Steve: Yeah I know. It totally does. And so if you can, can you just walk me through a typical example of how you proceed from product inception all the way to the sourcing process?

Will: Yeah, I will give you an example of a product we used to sell. We used to sell knee scooters. When someone injures their foot, and they scoot around, if you’ve ever seen those instead of scratches.

Steve: That sounds like an oversize product.

Will: It is. It’s like a 3 foot by like 1 foot by one and a half foot box.

Steve: So you don’t care about that either.

Will: No, because the thing is that they are such low competition in margin. So these things were going for like 200 to 300 dollars on Amazon, and we can get one for 60 dollars landed. So like there’s plenty of margin we made there. Even after everything we were only making 40 bucks a unit, it’s like that’s still a pretty good margin.

With the knee scooter was my cousin broke his foot, and he had to get a knee scooter. And he emailed my brother and I since he knows we like buy stuff online for a living and said, “I’m having trouble finding this knee scooter for anything cheaper than like $200 to $300 anywhere online. Do you think you guys can find anywhere cheaper online?”

And so we went and looked all over online and couldn’t find a cheaper, and we go, that’s kind of bizarre because it’s just like less moving parts like a child’s bike, and a child’s bike doesn’t cost that much. Again it comes down to perceived value, like why does this cost so much for no reason?

So then we looked it up on Alibaba and saw that after shipping and everything we can get them for 60 backs landed. It’s the kind of thing where we go, well crap. We only have to sell maybe half of a 20 foot container to break even. That’s not going to be too difficult.

And so we ordered I think it was a 20 foot container which was 210 units, and what got tricky was we sold 5 units that very first day between eBay and Amazon, and so then it took us 60 days from us ordering to getting the items in stock at Amazon. We are looking and we go wow, we ordered 210 units, five units a day for 60 days, that’s going to be X300 units. Even though we only sold five units of that container, we had to go buy another container already which was kind of an annoying thing to do.

Steve: So what are your guidelines then when you are sourcing? You mentioned before you like to start out with really small quantities. It sounds like here you start out with a 20 foot container?

Will: Yeah, that’s the thing where it’s hard for me to give guidelines, because I do something different almost every time where with these knee scooters I looked and I go this is a product people need not want. This is a product where we can just kill people price wise, where we can go, oh you are selling this for 300, I’m going to sell the same exact quality one for 160 bucks. It’s like, what are they going to do about that?

It’s like, when I show up and then two it’s a low velocity item. After I get like two sales in a review I’m already on like the first page. And so when they see mine for 160 bucks with good reviews, everyone else selling for 300 bucks, I just knew that people couldn’t help themselves. They’d had to buy ours, because it would literally make zero sense for them to buy anyone else’s. Also ours came in different colors, and everyone’s else’s in back.

It’s like I just knew there was like four different ways that we were going to just knock the competition off the pack. So I was willing to do a bigger order right off the butt, where if I’m using concrete drink coasters, they might be more competitive and I’m not really sure what the sales velocity is, and it’s a product that people want, not need. I’m going to order maybe 20 units because I’m not sure about it.

Steve: Okay, with these scooters then, that’s like a pretty large outlay, but you were confident– how were you confident that the quality was the same as the others? Did you actually buy the competition and compare the two?

Will: No, we did get one– we did bite the bull and get one air freighted to us very quickly. I was like, test driving it around like a little warehouse and that kind of stuff, and beating it up pretty bad, nothing happened to it. I was like trying to like rough house it and everything seemed fine. It seemed like a great product. But this is why we don’t source them anymore, is because everyone needs a new scooter for about 3 weeks. And so everyone returns it when they are done, and gets their money back.

Steve: Okay.

Will: We had about zero negative reviews, but 75% of them got returned. What does that say, kind of thing?

Steve: Right. I’m just curious. Are you only selling in Amazon or do you have your own site?

Will: I have my own sites, but for like a different private label brands. They are basically there for legitimacy. They don’t really make any money. It’s kind of thing where I don’t know that much about SEO or like social media marketing, or any of that kind of stuff where the amount of time I’d have to spend to the returns is not worth it to me.

Steve: Okay. So let’s go with your coaster example, because that seems like something that is more obtainable for someone who doesn’t have a whole lot of money to invest. So let’s say I only have like $500 or $1000, how would you proceed?

Will: Okay, if you had say 500 dollars, I would go and I would try to find lower competition products and that’s something that’s like in a top 100 BSR or anything, I would try to find lower competition products for anywhere from one to four dollars on Aliexpress. And buy these items for one to four dollars, will sell from anywhere from 15 to 25 dollars on Amazon. You are going to be looking for stuff on Aliexpress with a big price discrepancy. You are going to be looking for stuff with free shipping and shipping that’s in 15 days. If you can find products like that, you can basically undercut the price enough that you can make yourself competitive no matter what.

Then I would go and order with that $500, I would order say 20 units of five different skews. So say in that, like say that can be at five dollars a unit landed. That’s even on a high end. From there you send in those five different skews, 20 of each unit into Amazon, set up the Amazon PPC and sit back and wait for two weeks. During those two weeks, you are just trying to see if, if you flip a generic sample with no reviews, and you get any traction at all on Amazon, you know you are on to something.

Like a typical example is I put up a listing of a new product I’m trying on Aliexpress. I sell maybe two or three units the first week, and in the next second week, I end up selling seven units, and I go, “Wow, I sold ten units in two weeks and I have zero reviews, a crappy picture and a crappy product?

Now that I know that there’s demand for the product and I know that I can compete, I’m going to start keep continuously flipping my Aliexpress product while I start working on my Alibaba order. Because of the time zone difference with Alibaba, it takes forever to go back and forth which is prior and takes forever to get all the details ironed out, and so you might as well keep selling and making cash from Aliexpress while you go through that whole process.

Once you are done with the Alibaba process and you actually have your order in hand, say two months later. You can go back to that listing from Aliexpress, you can reupload the photos, reupload the title to a new private label title, and have this listing with reviews and with sales history to launch your new private label product from.

Steve: Okay, so the five skews then, you just run with the winners and then you just liquidate the crappy guys that don’t sell.

Will: Yeah, and then repeat that process every month. So, this basically came from– My brother and I had 1700 skews at Amazon, and we kind of looked at it and go wow, it’s an 80/20 rule to the max where the top 100 units make up 90% of our sales. Then our top ten units make up like 65% of our sales. It’s like, wow, wouldn’t it be sweet if we only had like ten skews and we are still making millions of dollars.

This would be like the easiest job of all time and it would be so easy to manage. The only way we found only those ten skews is through testing all those products. And so once I started working by myself this past May, I’ve started just testing tones and tones of products from Aliexpress trying to find my ten true winners out of the 1700.

Steve: So you guys sell 1700 and it sounds like to me that you want to reduce that number to just a handful.

Will: It was more than 1700 if you include all the drop shipping. But yeah, it’s the kind of thing where 1700, it’s an easy way to build up a bunch of revenue and make a bunch of money easily, but now I’m spoiled enough where I can focus more on my lifestyle than the cash flow. That’s where I’m more worried about. So it’s cool making all that money with my brother, but it’s not cool working in a factory over 40 hours a week. And so I’d rather make 100 grand working an hour a week than ten million dollars a year working 100 hours a week.

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Steve: So back in 2014 you guys were still a two man show, right. I would imagine to house all these products, like four or whatever five million dollars worth, that’s a pretty big warehouse and you have to go through each product?

Will: Not necessarily, because we were really efficient about it. We could get a container in and have it out the same day.

Steve: Okay.

Will: So we would get a container in and then me and my brother would just mad men unloading this container, labeling it, making sure everything looks legit, stacking it out on pallet, wrapping the pallets, weighing the pellets and having all the weights and pellets and everything labeled by later that day where then we could call the freight company, the third party whatever freight company, and they could pick it up and bring it on its way to Amazon later that day if we got it early in the day. So the longest our inventory ever sat at a warehouse was like 20 hours.

Steve: Oh wow, okay, you guys are sick. I think I saw a picture of your warehouse. It’s pretty big.

Will: Yeah, we have like a – it’s kind of confusing, I was worked out, but my family owns a manufacturing company. So they have like a manufacturing type of warehouse where it’s like we don’t go anywhere near for like safety reasons. But we got our own little section because they moved over to lee manufacturing and had a bunch of extra space. We use their extra warehouse space and knocked down a couple of walls to add some more loading dock doors for ourselves.

Steve: I’m just curious, you are doing all these products, have you ever had any problems with quality control and dealing with vendors?

Will: I haven’t really had much to deal with quality control. The only kind of issue I’ve ever really had is when I either get like a few samples and they just suck, and I just basically throw them away. It’s a price of doing business. Or I once get a container of these products where the two sides didn’t fit. But I had already ordered say four containers in the past year from this company, and I was a good customer and I told them that “Hey, you attached the wrong part to it. It doesn’t fit properly.” Without question for free, they air freighted out the right part and we got it all fixed and everything was fine.

Since I had a past history with them, and I would spend tens of thousands of dollars with them, they had no problem just to admit that they are wrong and just air freight the stuff out there. I have very good relationships with all my suppliers. So I have no problem asking them to bend over backwards for me at this point.

Steve: Do you think the reason for that is because you pick really simple products like your coasters example, right?

Will: Yeah, that’s the main, main reason is that I really try to go out of my way to perceive any problems ahead of time. Then when I don’t perceive the problem ahead of time, it’s something stupid like the knee scooter where people just return them like in 30 days which I just had no idea. I didn’t think about that.

Steve: Did you end up liquidating those knee scooters then?

Will: We ordered a second container, sold all those and then we thought about ordering a third container and said F it, we don’t want to waste our time anymore.

Steve: Okay, and so with your vendors then you mentioned that you start out with like 20 units and that’s like from Aliexpress, right?

Will: Usually. Yeah.

Steve: Then for your second order, you said you graduate, I think you said like a hundred units or something like that.

Will: Again, it’s a really case by case kind of thing where say, if there’s $100 a unit, I’ll probably just order another twenty again and just keep ordering 20 every week, because I don’t want to tie up my cash flow. But if they are a dollar a unit, then I might just order 500 because it’s like I just don’t want to waste my time ordering again.

Steve: Have you ever run into any problems where the vendor like after that small initial order that they want you to order like 500 units for example?

Will: Well not on Aliexpress, because you don’t really talk to the vendor at all. You just …

Steve: Oh, this is all in the context of Aliexpress.

Will: Yeah, I don’t order from Alibaba and tell them I’m going to order a large quantity, that I’m going to actually private label and do like a little bit customization to it and all that stuff, because that process takes long. I hate wasting two months of emailing back and forth. I want to make money now kind of thing.

Steve: Okay. You mentioned before I asked you this whether you had like your own store for your own website. You made it sound like those are just place holders I guess or brand pages?

Will: Yeah, they are basically there if I ever want to make an ecommerce site, like it’s indexed on Google for a certain amount of time, so it looks better and two if anyone ever like searches the brand name, something at least pops up and it looks like a semi legit website and stuff. It’s something like my business partner and I will make a square space site in the afternoon, and then that’s good enough for us. It’s not like we are spending a bunch of time on it.

Steve: Are you showing your products on there with links to Amazon listings at all?

Will: Yes, that’s exactly what we are doing. We are doing like the add the cart button and the add to cart button links to our Amazon listing through a super URL.

Steve: Here’s one thing I was always curious about. Are you worried about Amazon kind of pushing you out and going direct to your manufacturers at some point?

Will: I don’t think worried is the right word. I know it’s going to happen. I’m just ready for it. I have grown up in a weird time where I was born in 1990. And so I’ve seen like [inaudible 00:32:08], like Yahoo, AOL and Myspace like go out of business over night. I’ve seen a bunch of tech companies come and go, and that’s basically how my whole life has been.

I’m so very used to the idea that like Amazon might just come in and wipe everyone out and take away all the third party sellers, and then ten years from now Amazon is going out of business because the rejects is going crazy or something. And so it’s kind of thing where I’m always have the kind of mind frame that this is probably not going to be there tomorrow, so make as much cash as you can today.

Steve: Are you doing anything to kind of prepare when that happens, or are you just prepared to gradually lose this over time and come up with new things?

Will: Well, if you can’t beat them join them. I’ve been selling a lot to Amazon.

Steve: You mean with the vendor program?

Will: Yup.

Steve: Can you just describe that real quick for the listeners who don’t know what that is.

Will: It’s basically you just sell to Amazon instead of on Amazon. It’s a little bit more annoying because they place like multiple purchase orders a week and you kind of have to have the inventory ready to send to them or to back order it. But it’s a very wise thing to do if you have a very hot selling product and you are competing for the buy box, because if you sell to Amazon, Amazon will basically control the buy box, and yes you will make a smaller profit margin, but controlling the buy box 100% is pretty sweet. Amazon will buy a lot from you. They will pay you fairly fast, so it really clears off the cash flow issue.

Steve: Can you talk about like the decision making process or was it just clear cut decision to sell to Amazon for you?

Will: It just kind of like…

Steve: Because there’s pros and cons I would imagine, right?

Will: Well there’s definitely cons, but it’s how do you take advantage of Amazon’s greed. Do you know what I’m saying? And so you think and they are going, okay, Amazon wants to have every skew possible, and they want everything for like low prices. If I see a product that’s not on Amazon yet, and I can get like a wholesale say account with them, I can take that catalogue of a thousand products and upload it to Amazon saying, “Hey I had these thousand products and you want to buy them for me.”

And if Amazon even looks at them and goes “Wow, we don’t have any of those products yet. Yeah, we want to add to our catalogues, can we get three units of each?” Those sell out probably instantly within like a week, because Amazon promotes its own stuff a lot more than third party sellers. Then I sold 3,000 units to Amazon that week kind of thing, and I did nothing besides copy and paste like a spread sheet over to them.

Steve: Let’s say you said to Amazon, “Hey, I don’t want to use– I don’t want to sell direct to you,” and then they go with someone else, are you pretty much screwed at that point?

Will: That’s why if you have like a legitimate private label brand, there’s really nothing they can do about it. So that’s basically the only time you wouldn’t want to sell to Amazon is that you have a legitimate private label brand, you are the only one on the listing and you are selling 30 units a day.

If you sell to Amazon, you may go up to 40 units a day, but then you are going to lose your profit margin. You are going to make any money in that. If they go and they try to source any of your competitor’s products to try to like run you out of business, there’s nothing you can do about that. At that point, if you are competing with Amazon like that, then I would just sell yours to Amazon too.

Steve: So by legitimate you mean something really unique that no one else is offering.

Will: Yeah, if you are just selling some crappy yoga mat with just like your logo on the corner, or you are selling something like meat cloths, or like barbecue gloves or something like that where you are adding zero value and there’s nothing unique at all about your product, then yeah, I wouldn’t blame Amazon for taking down all those similar listings and just having a few barbecue gloves. But if you actually have something somehow unique, then yeah, I doubt they are just going to [inaudible 00:35:39] your listing because you are competing with them.

Steve: Can you give us an example of something that you are selling direct to Amazon or?

Will: Yeah, I’m trying to think of something on top of my head. Because it’s like we were selling like those knee scooters directly to Amazon. Once we kind of like things started slowing down a little bit, and we thought that might boost sales, but also with mostly like my brother just signed a big contract with a wholesale company that has 10,000 skews. He uploaded those 10,000 skews to Amazon, and Amazon first order from him was for 500,000.

And so my brother made basically like 100 grand of that being a middle man. That 500 grand is already sold, it’s not like you are sending 500 grand in the inventory and to wait to sell it for months, its already sold because Amazon bought it from him. It clears the whole cash flow issue.

Steve: So here’s a question on that, a perfect example, why don’t they just list their stuff on Amazon and instead go through your brother?

Will: Because, this is where it gets kind of slimy. Have you ever read “The Everything Store.” It’s Jeff Bezos’ biography?

Steve: No, I haven’t read that.

Will: He explains in there a story about wood stove knives. Have you ever heard of wood stove knives?

Steve: Yes, of course.

Will: Okay. Most people I tell this example to have never heard of it which is like okay, I know you’ve heard of it.

Steve: Are they not married? I mean the real one registers for those.

Will: Exactly, so Wood stove knives was contacted by Amazon. This is back like 2008 or 2009. They were contacted by Amazon saying, hey we want to sell your knives. They say– say wood stove buys 10,000 knives to a knife store for $100 and then they are supposed to market it for $400. They sold their knives to Amazon for $100. Amazon went around and sold them for like $101 on Amazon.

Wood stove just freaks out and goes, “What the heck are you doing? You are screwing over like a hundred year history of our family selling to all these different brick and motor shops, you are screwing up our whole entire supply chain, all our wholesale accounts, we are not selling to you anymore Amazon. Amazon goes, “I don’t care. There’s a million Mom and Pop shops already have contracts with you who will sell directly to us.”

And so all these Mom and Pop shops sit there and sell all their stuff to Amazon, wood stoves are trying to contact these 500,000 distributors they had throughout the world, saying who is selling to Amazon. They can’t figure out who it is. Amazon is still selling them at break-even prices. Most more times than not, big large manufacturers and distributors don’t want to sell to Amazon, because they are afraid of them undercutting mat pricing, and they don’t want them to screw up all the distribution channels. It’s basically, you are sitting there being kind of like a middle man for Amazon to make sure they can get inventory, they can’t get their hands on personally.

Steve: Interesting.

Will: Again it’s taking advantage of Amazon’s greed.

Steve: Do you see like the Asian manufacturers selling direct on Amazon?

Will: A little bit. I don’t know. It’s like no offence to anyone anywhere, but like from a lot of Chinese businesses I’ve dealt with, they are a bunch of idiots. Like they would never– they are very good at following very strict directions, but I don’t think a lot of them are like good at thinking outside the box and thinking about like, “Oh look, we are selling a crazy amount of these products and he’s having us label them for Amazon.

Maybe we should cut this guy out of the chain and just sell these directly on Amazon, because it’s easy enough for them.” It’s not blocked in China, Amazon is in. they just look it up in Amazon and go, “He’s getting $40 a unit? We are selling to him for $4 a unit. Why don’t we just cut him out of loop? He already showed us how to label it for Amazon.”

That’s happening to maybe 1,000 different suppliers throughout China and not one of them has just skipped the step, and instead they put up these super crappy listings on Amazon that are merchant fulfilled with like 70 day shipping. It’s like obviously they don’t understand how Amazon works, how the customers work, how prime works, anything. It would take them a half second to look it up, but they just don’t think that way.

Steve: No, I agree. They are actually really good at copying stuff, not so good at—but here’s the thing, whenever I get on the phone and I notice someone has perfect English, that’s when I get worried.

Will: Oh yeah, that’s for sure. I even thought about is a consulting job just doing my rounds around Shenzhen and Guanghou and just teaching everyone on how to sell on Amazon, and just making billions of dollars and screwing over everyone, because they just like shooting fish in a barrel.

Steve: Yeah, totally, yeah. Let’s take a step back. I want to talk a little bit about this before we go. Do you have like strategy for getting your first sales on Amazon? Do you use any strategies and reviews services when you launch a product, or do you just let it ride?

Will: I use it as PPC and just let it ride. I’m usually going after super low competition products, or very specific products where I’m selling each HP190SL, which is like a specific model of someone. You know what I’m saying where’s it’s like someone is going to search HP190SL and even if mine has zero reviews, it’s going to be the first one that shows up because it’s such a specific search.

Steve: Okay, so all of your products that you sell in your store, kind of follow these guidelines so that you don’t actually need to do like a zone blast or something like that for example?

Will: Yeah, I don’t really believe in zone blast or a lot of those give away services. I’d rather, like I was saying earlier, fly under the radar and sell a thousand products once a day. Those are kind of my ways, it’s dumb really kind of trying to grow my business quickly, because it’s just the easiest way with the least amount or work on my end.

Steve: So on that note then, when you are doing your research, how many sellers do you like to see on Amazon for a given product?

Will: It really depends. It really depends on their price because– they is going to be a thousand sellers if they are all selling for $100, and if I can make money at $50 then I don’t really care if there’s a thousand sellers. I go compete with them. Like my wooden sunglasses, I sell just because I can go in there and totally undercut everyone’s price, and so that’s why I’m luring not because of my style. But then another one is where it’s I know I can’t cut the price down as much. I need to make sure there’s not as many sellers out there, so it’s a balance.

Steve: What is your strategy going forward assuming that Amazon is going to push everyone’s prices down to like the minimum?

Will: Strategy moving forward is I’m going to start my kick starter most likely in 2016. I’m also going to build out a few of my brands and actually try to do some legitimate marketing for the ones that are really selling. I’ve also looked at selling some of my private label items to brick and motor stores, and all sorts of different things. I’ve just been looking at every single thing I can, and listening to every business podcast I can that’s not about Amazon, and trying to use outside business tactics and apply them to Amazon.

Steve: I guess what I was trying to get with that was, are you going to try to invent your own unique product that’s kind of tangible?

Will: That’s what the kick starter. That’s what I think about with that is I’m going to take some products that has already been made on Alibaba, just add a few quick little things to it, and say I’m coming out with a brand new product. If I can create say 20 to 40,000 dollars, and pay for that first container, I’m just going to make a killing, because once you can get up to the sea freight level, you pay so much less per unit.

Steve: It sounds like you feel like that’s kind of like the way to create a lasting business going forward, right?

Will: Yeah, it’s no way you are going to be able to have a business where you are just slapping your brand name on it ten years from now.

Steve: Okay, to prepare for that– so it obviously requires a much larger investment, that’s why you are mentioning kick starter.

Will: Yeah, the kick starter is not only the investment, but it’s also the proof of concept. It’s also that I get everyone’s emails from kick starter. So as I come out with more products in that brand and that niche, I can sit there and spam out to say a thousand people who funded me over and over saying, hey now we are coming out with this version of it, now we are coming out with the waterproof version, and just doing that over and over again because now I have actually a built in base.

Steve: That was actually my next question. Do you do any marketing for your Amazon products outside of just Amazon’s visibility?

Will: No, I don’t at all. It’s something I’ve done in the past. I’ve done something like Google PPC and that kind of stuff, but it’s too expensive. But if I actually had like an email list of people who are interested in my products, I think it would be a totally different thing.

Steve: Do you try to gather any emails or having people register for your products? Do you have any inserts in your products?

Will: No, well not really inserts. I have like I go and visit print and I get a bunch of really high quality stickers that have like a logo on it, have our website and have like our Instagram and all that accounts. I stick those outside the packaging, so it looks like it’s actually part of the packaging.

That sticker also has like a UPC coat on it. It’s like a super nice glossy looking like sticker that’s maybe the size of a deck of cards. Yeah, it has our logo, it has our UPC, it has everything on it. And so like we can label that one fell swoop and then two, Amazon can’t get mad at us for like us trying to drive traffic to our website instead of Amazon, because it’s actually a part of UPC label we have to have it.

Steve: So let’s say people do go to your website, are you doing anything special on your website like do you offer coupons in response for emails or anything like that?

Will: No, honestly. The amount of traffic we get say like four visitors a day or whatever, it’s not something that I will really spent too much time on.

Steve: Okay, so it is literally just a brand website, and so even if you were to drive traffic there, it doesn’t really matter that much.

Will: Yeah, if they got ten thousand visitors today, I don’t know if our sales can go up on Amazon really, because it’s like – they are really not that awesome at all.

Steve: Here is kind of a question that I have been curious about since we’ve been experiencing with our store. Prices in China have been increasing pretty dramatically from year to year. Are you looking in other countries to source besides China at this point?

Will: Yeah, I only do China usually because it’s the lowest price I find in Alibaba. If someone says they can give me a higher quality lower pricing in Vietnam or in Canada, or anywhere, I don’t really care, I’ll just buy the lowest price at the highest quality. I can care less what country I do business with.

Steve: Yeah, but are you– how would you find those other vendors like in Vietnam or Pakistan for example?

Will: Alibaba does have a bunch of other countries on there. But then to go into like the different trade shows and all that kind of stuff and just through my networks now that I know enough Amazon people, and I know people who have designed their own products enough times that it– I can go and I know people I can contact who’s like, “Hey this guy has made back pack before.” I can go to this guy about back packs.

This guy has made cosmetics before. I can go talk to him about the natural cosmetics. I’ll go talk to someone like that and kind of pick their brand and see what they know about the industry and say, “Oh no, yeah, you definitely want to go to source it from Vietnam.” You don’t want to source it from China. Then I will go with that. So it’s just kind of– I’m totally open to it, but I don’t have any specific way how I target non Chinese countries.

Steve: Have you traditionally then just used Alibaba and trade shows for your vendors then?

Will: Yeah. Like 99% Alibaba and then for like the wholesale accounts I get, that’s just stumbling upon them on Amazon where I see something selling for 200 bucks, has 200 reviews and it’s isn’t fulfilled by Amazon. It’s like I should probably source that and take over the buy box.

Steve: I see, I see. Just to kind of close this interview, we’ve been talking for a while, if you were to give some advice to people who want to try this, just to get into ecommerce and Amazon, give them a couple of pieces of advice.

Will: Don’t over think things. Don’t try to anticipate too many problems before they happen. It’s just going to make you freeze, you don’t move forward. I had someone email me today saying, “Should I start on Amazon Canada because I’m afraid I might sell too much out of the gates and on Amazon US, and I’m not prepared for it.” These are the kinds of problems that you do not need to worry about. It’s just a total waste of time, worrying about what if I sell too much and I can’t get my account under control. Figure out once you get there.

But these are the kinds of things where people try to sike themselves out, and smart people try to over think things. One of the biggest benefits I had was that I was young and dumb when I first started and I wasn’t worried about if I find LLC on [inaudible 00:47:38] and I wasn’t worried about if I was paying the exact custom fees, or any of that kind of stuff. I just got started and didn’t think about it. It sounds like that would be terrible advice, but honestly, until you sell 10,000 worth of stuff on Amazon, just don’t think about anything. Just get selling. And then once you hit that five figure plateau, then you can actually start systemizing and actually figuring out how to actually run your business.

Steve: In terms of timeline, minimum investment.

Will: Minimum investment, the more the better. At least five to ten thousand dollars, is you are going to be able to move a lot faster than if you only have say 1000 dollars. If you have 1000 dollars, you can maybe expect to be doing five thousand dollars in sales within six months, but you start with $5000, you can maybe be doing 20,000 dollars in sales in the six months.

Steve: Okay, and in terms of timeframe, how quickly can you make your first sale?

Will: That day. Like I do it all the times where I’ve thrown up listings and sold something maybe 20 minutes later.

Steve: Oh, you mean when you don’t have products?

Will: When you don’t have products?

Steve: I mean the whole process from start.

Will: You are starting from scratch? The fastest I’ve ever done it was from, with these glowing sunglasses, but they were from me ordering hitting buy now on Aliexpress to be in stock in Amazon and my first pair sold was ten days.

Steve: Wow.

Will: It was very first in China. It was like 6 days from China, and then I immediately later that day got it sent it to Amazon and it was like 3 days until I was in stock in Amazon and sold later that day.

Steve: So you can literally get started in two weeks, it sounds like.

Will: Exactly. That’s why it really discourages me when people spend two weeks just doing research, because they can already know whether something sells within two weeks.

Steve: It sounds like if I can just put some words in your mouth, you like to go with the shot gun method so to speak. You just put a bunch of stuff up, see what sells and just ride the winners?

Will: Yeah, and I’m not a detail oriented person. I’m not a marketing type person. I’m a type of person who likes to take action and see results after the fact. The shock and effect works great for me where I can go try a million products, and if none of them work, whatever, if they all work, great. It’s kind of thing where if you test a product and you have to liquidate it, a looser looses once and a winner wins forever.

Steve: It sounds like the minimum investment, I mean you are not putting down large amounts of money to test each of these products either, it sounds like.

Will: No, I am. I had this, like I was mentioning, I had this marijuana glowing sunglasses I was selling that were for like when you grow in indoor rooms, and they are basically sunglasses with a key word marijuana growing in front of them. I bought 20 pairs for $70 landed and I sold them out within two weeks and did $400 in sales. I turned $70 into $400 in two weeks. So it’s like you can’t really beat that kind of…

Steve: I kind of like your strategy actually. Less thinking, more action which is what a lot of people lack actually.

Will: Exactly. That was the whole entire reason why I kind of came up with this. It’s between what my brother and I what worked. From same people go, okay, I spent X amount of money in software, I’ve ordered two samples, I’ve been talking to suppliers for three months and I still haven’t sold anything yet. What should I do? It’s like, well, by three months, you should have already tested twenty products, you should already know what sells, what doesn’t and be on your way.

Steve: Interesting. Hey, Will, where can people find you if they have questions?

Will: You can email me, just my name WilliamTjernlund@gmail.com, also Twitter at @Wtjern add me on Facebook, I’m pretty easy to find because of my last name. Besides that, yeah, that’s the easiest way to get in contact me.

Steve: Awesome Will. Thanks for coming on the show. I learned a lot and it was kind of refreshing to hear a different Amazon strategy actually.

Will: Yeah. There’s– I’ve made money about a million different ways on Amazon between drop shipping, private labeling, wholesaling, everything and it seems everyone is kind of stuck in the same ark of chambers. So I’m happy you gave me an opportunity to kind of express my opinions.

Steve: Well thanks for coming on the show. I really appreciate it.

Will: Thank you.

Steve: All right take care.

Hope you enjoyed that episode, Will’s story is awesome, and it just goes to show that you don’t need a large stuff to run a seven figure ecommerce store. Now imagine just making 7.5 million dollars with just two people. Obviously it can be done. For more information about this episode, go to mywifequiteherjob.com/episode109.

Once again I want to thank FameBit for sponsoring thing episode. As I mentioned earlier FameBit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online and it works. one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And it costs as low as 50 bucks to start. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off. So go to famebit.com right now and get famous YouTubers to promote your products.
And finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

Before we begin I’m happy to announce that I’m holding my own ecommerce conference on May19th in Miami Florida this year called the Sellers Summit. Instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture a small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com and watch the video.

Now before we begin, I also want to give a quick shout out to famebit.com for being a sponsor of the show. FameBit is the number one market place for influencer marketing, with over 20,000 YouTubers, Instagrammers, people on Twitter and vine looking to promote your company in any vertical whether it be beauty, tech, gaming, pets, and more. Yes, you can get famous YouTubers and Instagrammers to promote your business for as low as 50 bucks.

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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’s your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I’m thrilled to have John Rampton with me on the show. John is someone who I met at Fincon two years ago, and he’s got an amazing story to share with you today. In fact his story is almost unreal. But ten years ago he was working in construction when he had his legs crushed in a very freak accident. He didn’t think that he could walk again.

During that time when he was bedridden, he actually studied upon business; marketing and selling online pretty much 16 to 20 hours a day, and fast forward to today he’s started a bunch of seven figure companies. He writes for Forbes, Entrepreneur, Huffington Post. He’s the founder of his current company due.com which provides simple online invoicing and time tracking for freelancers and businesses.

The reason I decided to have John on the podcast today is because one, he’s awesome and two I wanted him to talk about his former 7 figure Amazon business. So that’s right, John used to sell on Amazon and he made a lot of money doing it until one day he was banned and lost it all. With that, welcome to the show John. How are you doing today man?

Rampton: Hey doing very well? Thanks for having me.

Steve: Tell us about your back story. I mean I kind of glossed upon it in the intro, but how did you become the serial entrepreneur that you are today, and how did that freak accident shape who you are?

Rampton: I’ve always kind of been an entrepreneur. From a young age, I really loved money. I like making money. I like what it can do, but more importantly I kind of like when it just builds up in your bank account, and you could see that number just growing.

Steve: It is fun.

Rampton: Yeah, it’s a lot of fun seeing that number grow. From a young age, I started the candy stand, did this and working. After and I guess during college as you mentioned I got in a freak accident. I was working at a construction site. I got ran over. It crushed my right leg, completely just crushed it. The doctor said I’ll never walk like ever, ever walk again.

I spent the next however many years it was. It was about a year I spent in bed. I had to be– I mean to the point of I was sponge bathed and had– I couldn’t get out of bed for nine months. During that time, you still have bills to pay even though I was a college student. At the time I was with my parents living there. I still had a car payment, I still had this payment, I still– you still have bills. So I had to find a way to make money from my bed. That’s kind of when I got in into the whole marketing thing is I had no other choice. That’s what I had to do.

Steve: Amazon wasn’t your first venture then, right?

Rampton: No. I originally worked at real estate startup. We were helping people, helping real estate agents sell their homes online and…

Steve: This is from your bed or?

Rampton: Yeah, I was working pre bed and post bed. I mean if you can imagine that. So I got hurt. I was working a side job on the side, and decided I was going to make some extra money on the side, that’s when I got hurt. Basically what happened is I worked at this job and every time I made a sale I got paid like $8. I found this, when I got hurt and even while I was at my job, you can only call so many people every single day as a sales person. There’s only so many calls you can make. So then I started doing other things. I got into affiliate marketing. I got into tax marketing. I started finding there are better ways to sell than to just sit and call people on the phone.

I went on Craigslist and I said for $6 per sale, I will pay anybody who can sell what this is for $6. I was making a $2 cut. I was the top sales rep at the time, and I was getting like ten sales a day. Then I started having other people sell for me, and just playing the middle man and that, and I started getting really good at people and getting to know people and having men sell for me. My top sales day there was 540 sales, and the next higher sales rep was like 11.

Steve: That’s crazy.

Rampton: I was– one I was making great money, but two, I really learned how to sell online. And if you are going to get in to like ecommerce and selling on Amazon, and doing that type of stuff, you need to find what works and find ways to make money online. And as a business owner, you can’t just be like, “Oh I’m going to sell this way, or oh my customers are going to come to me.” You have to go out there and find those ways.

Steve: Okay, and so how did you transition from this real estate company to selling physical products on Amazon?

Rampton: That was kind of a weird transition. I actually left that company that I was working at and I started a competitor about a year and a half or about two years. Technically we launched like two years to the day after I left there. So we launched this company. It went very, very well. We sold it. We made some money. We ended up taking that money and pouring it directly into an ecommerce company located in Southern California called organize.com. We bought organize.com…

Steve: That an amazing domain by the way.

Rampton: Oh yeah, it was a great domain, and had existing sales. We had this very, very large warehouse with about 56,000 skews. We were selling pretty decent amount of things, of product. Had a little team and I came in there and I was like you know, I’m really good at this online stuff. I can triple the sales. We came in and I started applying my methods and stuff. We started really getting into ecommerce.

Some of the things that you can do in ecommerce and especially on Amazon, there’s a couple different tools you can use that for example they go on Amazon and they say, “Hey here’s your product, and here’s” — there’s twenty other products on Amazon just like yours. So you can say, “Hey I want my product to be 8% lower than the lowest price, but here’s the lowest I’m willing to go.” We went and did that for most of our products. Immediately we started, we almost doubled our revenue in a couple of weeks. We were selling a lot more. We weren’t as profitable, but we were selling just massive amounts. I mean …

Steve: Can we back a little bit. Why did you think you could triple revenues as soon you went in there? What things were the companies not doing when you got there?

Rampton: Well first of all, I analyzed the numbers and I’m like, man first of all traffic perspective. They were only converting at about a half a percent.

Steve: Oh my goodness, okay that’s really little, okay.

Rampton: So I look at that and I’m like man, there is one way I can triple. Second I went in there and most ecommerce companies have this problem. What happens with large ecommerce companies that have been around for a while is they are not up to date on current methods and practices. For example, when an order came in for us, we printed off a piece of paper. That paper then was taken over and manually entered into our system.

Then another then taken, they stamped it, take it back to the warehouse where the person would pick the stuff, ship it, mark right on there the shipping address, and then we would have to manually go enter that into Amazon.

Steve: Oh my goodness.

Rampton: Once that was entered into Amazon we take the reference number and enter it into Quick Books. That sadly is how a lot of ecommerce companies today are.

Steve: Was this a purely Amazon business when you got there or was it…

Rampton: It was Amazon. Their own website did about 10%, 12% of all things and there were a couple of other things, but it was primarily Amazon.

Steve: So it wasn’t FBA, it was self fulfilled Amazon?

Rampton: Correct.

Steve: Okay got it.

Rampton: Yup. When you have that many skews you really can’t – it’s really hard to do FBA. FBA for those who don’t know is fulfilled by Amazon where they fulfill the orders for you. If you’re– FBA has to have a good profit margin for them. You pay them a lot more and the skews have to sell very, very quickly. They don’t like inventory sitting on their shelves. Most of our things were ones to two Zs. We did have a lot, but we wanted the actual profit margin.

Steve: So these were other people’s branded products or were they your own branded products?

Rampton: They were other people’s products. All we did was sell other people’s products.

Steve: Okay, and so the margins probably weren’t high enough to make FBA worthwhile?

Rampton: I mean, they were, but the problem with FBA, and if you have somebody else’s products is – I mean one reason why we left FBA is if they are not your products, they will find the original person, and take you out of the equation. Amazon did that several times, and that’s how they ruin a lot of companies, middlemen, like ourselves. If you are going down that route and FBA will– if you put in there, they’ll go direct.

Steve: Okay. So this business was already there when you had acquired it.

Rampton: Correct, yeah.

Steve: They were selling organizational products?

Rampton: Correct. Like picture the container store online. We are probably their largest competitor online.

Steve: I see. So what was the differentiating factor? Were you just selling similar products in container store, or did you kind of have like a — what was your value preposition is what I’m trying to get at?

Rampton: I mean one the trust. I mean people just go online and they say what’s the lowest price, and we were usually the lowest price. So that was our biggest value differentiator. We sell the exact same products as container store. All container store is us with a different marketing. There’s a million other stores out there too that have these products and sell them online.

Steve: Okay and then so you went in there and you found I guess in the fulfilling side, there were a lot of inefficiencies, but how did you increase your sales on Amazon? You mentioned you used some automated pricing tool where you reduced prices by X number of percent. Was there anything else that you did to kind of scale this?

Rampton: I mean instead of like when you direct people to Amazon, there’s a couple SEO techniques. For example if your emailing out a list and you are saying, “Hey, buy this product on Amazon.” We usually say, “Hey go search this specific name,” and we direct people through the funnel instead of directing them to the end of the funnel. It doesn’t help you out as much on direct sales at that moment, but if you can direct people down the funnel that you know the majority of people are doing and everybody goes to you, Amazon’s algorithm is set to make it so that you come up a little higher in their search results.

We did this on two or three different occasions, one for example on a Christmas tree storage box. We said go type in Amazon Christmas tree storage. We were on page two. At the time we sent like– our email list was like 600,000 customers. We had a very, very large email list, but we directed probably like 50,000 clicks, people going towards this. They all typed in Christmas tree storage and they wanted the lowest price, and they know that ours is the lowest price because they could search it really easily.

They search that, and then they go to page two and they find us and they purchase us. Well over the course of one week we went from page two to page one, and that increased our sales on that one product by like 2000% because all of a sudden anyone who types Christmas tree storage is now, we are number one. And we are the lowest cost, so they are always going to purchase that. So we got– I mean we had one day where we had almost 6000 orders of that product.

Steve: Let me ask you this, how did you develop that 600,000 email list when Amazon doesn’t give you emails?

Rampton: Those were actually from our own site. We do get significant orders. We do have a lot of people ordering from our own site. Amazon also used to give you the email addresses. They don’t anymore.

Steve: Okay, what year was this by the way just for context?

Rampton: This was in 2014.

Steve: Oh, so it was just last year?

Rampton: Yeah, 2013, sorry.

Steve: Okay. So you were building emails based on your website sales which were about 10% of the over all.

Rampton: 10%, maybe 15% of the overall.

Steve: And then at the same time Amazon was giving you emails which you added to your part of your email addresses.

Rampton: Correct, yeah.

Steve: And then just to summarize for everyone listening, you’d have someone do a search and then you take that URL with the search term in it, and then drive traffic to that.

Rampton: We would actually drive them to Amazon and say to like Amazon.com, or to the category page, and we would say search this term. Like look for us.

Steve: Oh I see. You would have them do the search.

Rampton: Yeah, we would have them do a search. We won’t direct them through the search. We would direct them to the search. Again we lost a lot of money doing this, because we are directing people to our competitors. But we found that whenever we did this, people would search out our product, and find that one, we were still the lowest price. That’s in most worlds that’s the most important thing is having the lowest price. But we would direct them and we would say here is how you find us, here is how you do this and it worked, very, very well.

Steve: That’s interesting, because I’m just curious what the math look like, versus directing that traffic directly to the buy button on your own site, and I imagine your margins are a lot higher.

Rampton: We did a split test where we sent 25%. We originally started with 50-50, but then we switched. We always did 25% to our own website. The rest to Amazon, but on our own site people would do that, and we got usually a very high significant, literally when we sent that email out, we probably of the 25% versus 75%, we probably made equal revenue between the two.

Steve: Oh wow, okay.

Rampton: I mean it hurt us a lot. Having, from it taking us from page two to page one, or– we didn’t tell people what to type in either. We just said, whatever, and people used their own keywords, their own prices. We did say, type in Christmas tree storage or whatever you are looking for on the storage and find us there, because we have lots of products. People– so all of our search terms, now you type in that, and we were number one on all of them.

Steve: That is interesting. So that was just like a long term…

Rampton: The short term result within seven business days, they broke even, both of them 50-50. The longer term thing is we noticed the week after, like our sales improved by like 10, 15% a week.

Steve: That’s crazy.

Rampton: Like Intel was like, holy cow, we are getting– like I said we had one day where we had like over 4,000 or 5000 orders of one product.

Steve: That’s interesting. Do you recommend that strategy today?

Rampton: Yeah, it works. I mean don’t like bet all your chips on that, never put all your chips in one basket. We will get into that a little bit later.

Steve: Yeah we will.

Rampton: But like that was a very, very strong technique that worked very, very well for us. Again it hurt us in the short term; it helped us in the long term.

Steve: So can you talk a little bit about FBA, because you didn’t have the prime monitor next to your product, right?

Rampton: Correct, no we did not.

Steve: Were there any competitors with prime that were competing against you?

Rampton: We still beat them. The prime versus non prime, it still comes down to a pricing issue. If they can get it, if a person has to wait one additional day, they are already waiting– online shoppers are actually really, really good shoppers. They know what they are looking for and they are willing to wait. If they are not willing to wait, just go down to WalMart and buy it, or go down the container store and buy it.

Those are for people who have to have it now and impulse shoppers. Online shoppers are typically online impulse shoppers, but they are willing to wait. They are willing to wait a couple of days. The difference between getting the package in two days versus getting a package in three days is not that big of a deal.

Steve: Interesting. Okay and you still think that holds true today?

Rampton: Oh yeah. I mean, did it hurt us? Yes. I’m sure it hurt us. I’m sure there’s a percentage of people that say effort. I want in two days or I’d rather pay a $1.50 more to get prime. Overall I would say the majority of online shoppers are really, really, like price conscious, that’s why they are going online and not running over to WalMart. It’s a price issue for them.

Steve: So I was going to ask out this question, if you saw an FBA you said Amazon would seek out the true supplier. Did that imply that you do not recommend selling FBA for products that are non-branded to your own name?

Rampton: Correct.

Steve: Okay, so anyone selling other people’s products you don’t want to use FBA and sell much and fulfill to take advantage of the actual profits.

Rampton: Correct, if you are selling others, I don’t recommend it. Again if it’s small and you are doing ones and twos numbers, it’s just fine. If you are a stay at home mum and you are making $3,000, $4,000 a month, they are not going to go after you. But when we were making–when we were doing– I mean we had one product that netted us probably $2 million in one month. They are going to go after that.

Steve: Okay. And when you are selling other people’s– okay, so you basically out strategize all your competitors by getting it to rank in Amazon?

Rampton: Correct.

Steve: Okay, got it. I want to transition us a little bit, did you ever have any problems with Amazon going forward. I mentioned earlier that you got banned, was this just like a total surprise, or did you see it coming?

Rampton: Amazon is a little hard to work with. It’s a good thing and it’s a bad thing. What happens with Amazon is Amazon wants you to have a certain satisfaction rate and shipping rate and on time rate. When you are selling other people’s products and for example we did some drop shipping, which a lot people listening to this are probably going to be drop shipping.

It’s really, really hard if the drop shipper runs out of products. So you are last on the totem pole to get that. For example, that one product that we sold 5,000 in one day, we preordered 100,000 units in our thing. But within about 30 days we’d already blown through almost 100,000 units.

When we were selling those and when you are selling things, if you run out of something all of a sudden your shipping date gets kind of screwed, which forces you to fall below. They have a very high, I think it’s 96% customer satisfaction, 94% shipping rate, and 95% on time shipping. So you have to ship it by a certain day, and it has to be received by a certain day.

Then all the customers have to be happy. Around Christmas time and in high demand times, that’s very hard on any company. During that time, we were getting again, a minimum of a 1,000 orders of a couple of products a day, and when somebody runs out and you– we got probably on average like 3,000 orders a day.

Steve: Crazy.

Rampton: Yeah, we were getting massive volumes. It was great. Whatever that is, if you are getting 3 orders a day and one of those three orders is behind, that all of a sudden causes all your numbers to be skewed.

Steve: You can’t just cancel the order?

Rampton: Well, that hurts your customer satisfaction, because that is not good customer service to cancel orders.

Steve: I see.

Rampton: You can’t cancel up to like 3% of orders without it hurting you– but after that, for every like 1% of your total volume, I’m not sure what the exact is, but I’m kind of mixing this up, but for everyone 1% of your total order volume that you cancel, you go down 1% in customer satisfaction.

At the time when they canceled that and they told us, so they told us two days after they run out. And we’d run out as well. They are like it’s going to be a week and a half. And we are like all my work. By that time, by the time we paused that, we had 7,000 pending orders.

Steve: Oh my goodness.

Rampton: When you are only having 3,000 orders a day, and you have 7,000 pending orders I mean even for an entire month, that’s 10% of all your orders. You are screwed.

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Steve: How big is this operation, how many employees did you have?

Rampton: At the time we had like 14.

Steve: 14, that’s it. Okay. This kind of…

Rampton: We had most of our things were dropped shipped. 70% of all of our items were drop shipped. 30% were in-house.

Steve: So given that inventory is so crucial when using merchant fulfilled, you really had to have a very strong tie to your drop shipper’s databases.

Rampton: Correct, yup.

Steve: Okay, and so you had this one…

Rampton: For all of you wondering, that’s called EDI.

Steve: Yes, I think that’s a little advanced for the listeners, but yeah.

Rampton: Yeah.

Steve: So this one order basically screwed you guys over or this one product?

Rampton: This one product screwed us over. It was actually a combination. We had this a couple of times. This actually happened twice. So what happens in Amazon is you’ll get paused and then you’ll say, oh sorry we are improving this, then you have 30 days to make it better. But if all those orders are still like screwed, I mean it kills you overnight.

We got turned back on and then this happened again like three months later, whereas if somebody didn’t turn it off and it really, really hurt our company, and we ended up getting shut off permanently by Amazon. The first time they’ll kind of get back with you, the second time, like we tried everything. We contacted every person. I know every person I knew at the company and LinkedIn friend request them, everything. They would not turn us back on.

Steve: At this point you had a track record of doing lots of business with Amazon, right? It’s not like you were some pull down seller.

Rampton: Yeah, we had hundreds of thousands; I mean we had 100,000 reviews.

Steve: Crazy. And so that kind of implies that Amazon doesn’t really care even if you are making them a crap load of money. You fall below their standards and they’ll ban you.

Rampton: Correct. They just look at it as, oh, that product was making us a lot of money, but there’s still three other people selling that. Oh well. Or even if it’s your own product, they are like we are willing to take that, because we don’t want this perceived bad reputation.

Steve: I see. Could this have been prevented in your eyes looking back?

Rampton: I mean, automation, if we would have automated like if a person has a certain amount of orders that are outstanding, we automatically shut them off, but it’s really hard when you are getting massive amounts of orders for things. We could have preordered more. I mean we did preorder 100,000 or so units of one product. You figure that’s enough, but it’s not. In my eyes, there are little things we could do here, little things that we could do there, but overall there wasn’t much we could do to get over that problem.

Steve: I’m just thinking like this business model that you had doesn’t seem– it seems like you are going to get banned sooner or later.

Rampton: Most people, I would say yes. If they’re not your own product, yeah.

Steve: Just looking back also do you kind of still think that drop shipping this way is still a viable model?

Rampton: Yeah, I mean, I think it’s a very, very good model as long as you have good products that you can market that you know will go out, and you know your suppliers are not going to run out of.

Steve: Let me ask you this, the drop shippers, what’s their incentive not to list their own stuff on Amazon?

Rampton: Sometimes they just don’t want to deal with it. I mean we did have, we had like 4 or 5 customer service people. At times people from the warehouse and like our office staff had to come in and we had 8 people in customer service on the phone.

Steve: I see.

Rampton: A lot of companies don’t want to have to deal with that. They’re like hey, we make this product; we make a 20% margin on it no matter who we sell it to. Let’s just be good at that and sell that product, and there’re thousands of companies like that. They just don’t want to deal with it. To make an extra like 15% would increase their cost significantly; versus we have a thousand other products that we’re selling, so we can do that customer service.

You have to figure 1 to 3% of all orders will be coming back to you. It doesn’t matter if you have the best product in the entire world. 1 to 3 are going to be coming back, and most of the time the ones that come back are damaged or broken and problems like that. Again a lot of people don’t want to deal with that.

Steve: Even with FBA these companies– because you’re essentially outsourcing all that.

Rampton: I experienced the exact same thing like especially when you’re shipping containers and organizational stuff, like breakable items, a lot of these things just get broken in the mail and sure like, okay, it’s FedEx’s fault, or it’s UPS’s fault, but you still have a customer service, you stop to send out a new item, you still have to file that request. You still have to do all that. That requires a human body. For a $20 item, it’s going to take a person 20-30 minutes of time to get a refund on that item. Does that make sense?

Steve: It does, it does, so I’m thinking these people as like pure distributors. They don’t want to deal with anything consumer-facing, right?

Rampton: Correct. We are the consumers, the resellers.

Steve: I’m just curious logistically, when you got banned the first time,, were there any special steps that you took to get reinstated that first time?

Rampton: They make you go through a very, very strict process. Usually when you get banned you’ll get an email, you’ll have to log on, you’ll have to put together a reconsideration letter and send that back to them. It’s very process-driven and process-oriented. They do that because I’m sure they ban a lot of people.

Again we were a major account for them, but it wasn’t major enough to really have any direct people. I think that they could up their game in that, and really improve their company 10 fold by really caring about people like us, but again they don’t.

Steve: How long were you down for that first time?

Rampton: The first time we were down for 18 hours.

Steve:Okay. Oh okay, that’s not terrible.

Rampton: No, it wasn’t bad at all. I mean that still is a day, and a couple of hundred thousand dollars in sales, but yes.

Steve: Then the second time it was permanent. You were expecting that to happen then?

Rampton: No. We weren’t. We kind of got shut off. I mean we were tittering the line, but at the same time it was during our peak, peak, peak season. We were like okay, we understand this. We understand that we’re tittering the line, but we were a little bit over on the line towards the positive side. We were actually doing well.

Steve: You get that letter and then what happens?

Rampton: We got the email and our [inaudible 00:34:44] came in and she’s like, ah expressitory word, and I was like, well let’s get it back on. She’s like, okay I’m trying. I’ve already done this, this, this. The next day they didn’t respond, and the next day we submitted something and they were like we’ll be back to you within 24 hours. 4 days later we were like, okay. We started adding every person. We started calling every person, trying to make it work.

Steve: Did you shut down after that point?

Rampton: Yeah. It was like 2 weeks later, because I mean, our site sustains a lot, but it doesn’t sustain that many people, and in the ecommerce business we’re used to playing the numbers game. We have at any given time we had half a million dollars out like in accounts payable. We did have at the time like $180,000, maybe $200,000 in accounts receivable like coming from Amazon, coming from a couple different places, but that doesn’t make up for the half a million plus a good $50,000, $60,000 in payroll.

At that point I was like, we got to just nip this in the bud. There were a few little factors in there. I don’t really want to get too much on this, because it gets into details a lot more like on the thing. There were a bunch of other factors where we were just like, man this isn’t worth it to keep this alive.

Steve: Because I was just thinking, what I want to ask you was looking back would you have focused more efforts on your own site in marketing, or would you have still done the same thing and gone more or less selling on Amazon?

Rampton: I would have focused around, towards the end when we got cut off by them, we had never gone on Overstock, or [inaudible 00:36:50], eBay or other places. We put all of our skews on eBay, and we started selling like 200 units immediately. Then we put them on Overstock and we’re selling another 100 units a day. We made up for about 20 and maybe even 30% of that within a week, and we were like okay well damn it, why didn’t we do this originally, because that would have improved our margins and had us a lot more profitable and made us been able to sell more and stuff like that.

My recommendation for people getting into this business is don’t have 100% or 90% or even 80% of your revenue all from one place. If 50% plus of your revenue is coming from one source, you need to start working on other sources to get in revenue. If we would have done a lot earlier– eBay limits you in the beginning to how many products you can sell, same with Amazon, same with all of them. If we would have focused on that a lot sooner, we would have had a lot better of an ability to make a lot more profit earlier on which would have helped us through this time.

We were two and half, three weeks after Amazon shut us off before we were at actually live in Overstock. House was another one. They were another market place and we were selling like 10-15 units a day on their thing. If we had had all these other things along the way, and we’d been shut off, we would have been like, oh shoot there goes 40% of our revenue. We’ve got to lay off a couple of people, but not close down shop because it doesn’t make sense. We just didn’t have the time at working at those to really make sure that it would work.

Steve: Basically there wasn’t enough cash in the bank to kind of pay all the bills for a couple of months. Is that correct?

Rampton: Correct.

Steve: Okay. You decided to shut that down may be like a month later it sounds like?

Rampton: Correct.

Steve: What happened after that? Did you immediately start your next venture?

Rampton: Yeah. I started my next venture a little while after that, again kind of going back to the other thing that actually ended in a lawsuit. It was with the previous owner so part of us closing it down was it didn’t make sense knowing that a couple of things were not disclosed when we purchased the business a year prior. We actually ended up filing a lawsuit and winning that lawsuit about a year and a half later. It wasn’t that long ago.

Those were other reasons and any person needs to make sure that they weigh all their options. Like I wasn’t everyone to be like, oh my word I just want to shut this business down next. Like there were so many factors in this where I’m like, it doesn’t make sense for me and my family to do this, so we shut it down. I kind of tucked my tail, lost tons, and tons of money, but you know this happens in life. You have successes, you have failures.

I then went back to marketing which is my thing. I started advising some companies, I started building my own personal brand. I got a couple odds and ends jobs. I got a couple of consulting gigs where I was helping different companies in search, and I was paying my bills. I started basically building up that cash flow. My wife and I live very, very humble lives. We don’t spend so much money. We pay for cash for like everything.

These are things that helped us the couple of crashes that we’ve had in our lives. To know that like, sure like I live in Palo Alto California, one of the most expensive places in the world to live. What most people don’t realize is I rent out my basement. That covers all my expenses. My entire living expenses is covered by me airbnbeing [ph] my basement every month, literally everything, the entire mortgage covers it. We do things like that and that allowed us to get back on our feet and start saving up money for the next venture.

Steve: Which is dew.com?

Rampton: Which is dew.com. About a year and a half after that collapsed, I was able to go purchase dew.com. Dew.com is an online invoicing thing. Firstly we kind of did the same thing. We found a really good URL and I purchased it and then I went and I was like well I need something to do with this. I went and bought an invoicing company. I was just like, hey here’s a good invoicing company, and I put it on Dew.com.

Steve: I’m just curious; you seem to like purchasing existing companies as opposed to starting them from scratch. Is that just a personal preference?

Rampton: Yes. I realized that I am not the best product person in the world, but I’m an amazing marketer. I always say that nobody can market products better than me out there, nobody. I can market products better than anybody else out there. But actually building a good product that people like, I’m not the best at. One tip for people is know what you’re good at.

If you find what you’re good at, don’t try and be good at something else. Be really, really good at one thing and okay at everything else. I realized I’m really, really good at marketing, but I’m okay at products, so I went and bought a good product, a really good product. Now I can market the hell out of it.

Steve: I’m just curious, is there a reason why you avoided ecommerce the second time around?

Rampton: I was really burnt out and I hate Amazon right now, like I still hate them. I think eventually I’ll get back to that, but right now, I just haven’t.

Steve: The things that you learned about marketing you learned while you were in bed during your injury?

Rampton: I learned a lot while I was in bed during my injury, but I learned a lot along the way, like just trial and error. I’m the guy that takes chances on everything. I’m the guy willing to jump off a cliff, and see if I can build a parachute or build the wings on the way down. That’s my experience. It’s trial by fire.

Steve: What I wanted to ask you was, when you’re a brand new online store and you sell physical products, what would be your first steps on the marketing side to get your first couple of sales?

Rampton: My first steps on a marketing side is probably research. I would research and make sure that you compete. There are a lot of other people out there who have been doing this for a long, long time, and if you can’t compete with them and you don’t know, you’ll never go anywhere.

If you want to sell a product, even if it’s your own product, if you go to the market place just saying, here’s what I’m going to charge, because somebody said online that they’d pay me that much. It’s great, but if you’re an ecommerce store and there’s other people that are a lot cheaper than you, you’re never going to sell anything, or it’s going to be onesy twosies. I would say a lot of research. That’s the first thing I would do to market my product, it’s research online.

Next find tools that can different price matching thing, so you’re actually when people search for a product you are the lowest price. Start getting a reputation for yourself. After you start getting a reputation you can up that price a little bit.

Steve: It sounds like in our conversations a lot of what you’re talking about is price-based, which seems to imply that brand and quality don’t factor as much if you’re not well known. It always comes down to the lowest common denominator which is price. Is that …

Rampton: I would say that is pretty true. I would say in that I was never selling a bad product, or a non-reputable product. I have always sold very, very high end products; I’m just the lowest priced of the high end.

Steve: I see. If you were to do an ecommerce thing all over again, would you sell other people’s products, or would you try to develop your own at this point in time?

Rampton: I would sell in mixture.

Steve: You’re saying you’re in drop shipping as well?

Rampton: I would just make sure I get in bed with the right drop shipping partners, and make sure that I take priority.

Steve: How do you get into bed with a good drop shipper if you have nothing, if you’re a beginner?

Rampton: Trial and error, trial by fire. Go find 20 of them and start working with them and start selling, and really get to know– I would really find a company that works on EDI, because that means their inventory is live updated. You want to find people who are online, who know what their inventory is.

EDI updates on like a true second, every one to two seconds. Like it updates your database, their database and then in turn updates Amazon, eBay, all the other places. You know what your live inventory is, and that would eliminate the problem all together.

Steve: Unless someone screws up on their end?

Rampton: Unless somebody screws up on their end, but the likelihood of that happening with EDI is very, very hard, because they have to physically scan in every product, and when products go in, unless they’re defective which is one thing, but when products are purchased somewhere else or by another vendor, that’s automatically taken out of the system, so you don’t have to worry about that.

Steve: I also want to give you an opportunity to talk about due.com, and what some of your value propositions are for your new business.

Rampton: We are due.com. We’re an online invoicing and time tracking company. Some of our competitors are FreshBooks, Xero, Cutlass, there’s a lot of them. Some of our value propositions; one you can bill people online, you can get paid online. We’re trying to make it a lot cheaper for people. You can integrate it with your own site, so you don’t have to go to a third party site to bill. It can basically all be done internally on your own site. When somebody gets your bill, they’ll come to your site to pay it. Those are some of the things…

Steve: Hope you enjoyed that episode. John’s story just goes to show that you should never, ever depend on a single channel for all of your income for your business. If I lost a seven-figure business overnight, I’d probably go and start crying in the corner and swear off entrepreneurship forever. What’s incredible though is that John has bounced back and has created another successful business, because he is the man. For more information about this episode go to mywifequitherjob.com/episode108.

Once gain I want to thank FameBit for sponsoring this episode. As I mentioned earlier, FameBit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online, and it works. One of my podcast guests, Emmanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing, and it costs as low as $50 to start. And the best part is if you to use the coupon code ‘mywife’ at famebit.com you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products.

Finally, if you’re interested in starting your own online business, be sure to sign up for my free six-day mini course, where I show you how my wife and I managed to make over $100,000 in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. Thanks for listening.

Thanks for listening to 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.

Now before we begin I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 Youtubers, Instagramers people on Twitter and vine looking to promote your company in any vertical whether it would be beauty, tech, gaming, pets and more. Yes, you can get famous Youtubers and Instagramers to promote your business for as low as $50.

The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before, one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com you will automatically get $25 off your first campaign. So go to famebit.com right now, and get famous youtubers to promote your products, 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 thrilled to have Kai Klement on the show. Now Kai is someone who reached out to me with an incredible story, and I knew that I needed to have him on the podcast. So Kai and his partner Joerg are the co-founders of Kavaj, an internationally top selling leather case manufacturer for phones and tablets.

Now they’ve sold over 500,000 cases generating over 90 million in revenue on a span of about four years. Now they both started out as former Amazon employees with zero knowledge of manufacturing product creation, and they ended up creating this awesome iPad and phone case company, and with that welcome to the show Kai how are you doing today man?

Kai: Thank you very much for the nice introduction Steve, I’m very well thank you, how are you?

Steve: I’m very good; I’m really excited to hear your story here. So give us the quick background story about Kavaj, how you kind of came up with selling genuine leather cases online?

Kai: Yeah, it’s very easy actually, so in 2010 when Apple launched the first iPad, Joerg — he wanted to have one, he was very, very keen on it. And by the time this case was only available in the US and as we founded our company in Germany, so we had to get it somehow. Joerg asked a friend who was a pilot at Lufthansa during the time to get one in New York. And once he had his iPad obviously he needed a case. So we both were looking around, checking out Amazon in particular what was available, because Joerg and he had his dream case already in his mind.

His dream case was a thin genuine leather case. And by the time nothing like this was available online and nothing available on Amazon nor somewhere else. This was like the turning point, then we thought okay let’s do it. We will produce our own case and we — yeah first we do it for us, and then second we do it for everyone else, because there was nothing around we liked. So it’s like the story how we came up with the idea.

Steve: It was — your primary motivation was because Joerg was looking for an iPad case?

Kai: Exactly, this is a private motivation, so it’s the passion for — we needed first ourselves and then yeah let’s do it.

Steve: Were you guys both working at Amazon at the time?

Kai: Yes, exactly this was the background, we both we used to work Amazon before we started Kavaj and yeah.

Steve: So did you start this while working on Amazon, or were there any rules about that?

Kai: Yes, exactly we started while we were working there; obviously it was not allowed like to build your company besides working there. So we did it like everyone else was doing it, who has this entrepreneurs [inaudible 00:05:19] like we used a company which was led by my wife, and then we were kind of advisors for her obviously we were running it all.

Every morning we were like we met at seven and discussed like our project, and before we started like producing genuine leather stuff, we did a trial. We took a little bit of everyone and then we did a trial in order to test the whole system like how to source stuff, how this stuff works, how Amazon…

Steve: This first case was not leather though, right?

Kai: Yeah, exactly we just took like simple case and then yeah created…

Steve: So before we get into like the product creation, I was just a little bit curious since you mentioned that you formerly worked at Amazon, did working there actually help you guys at all, and what did you learn from Amazon that kind of gave you the courage, or helped you sell this product?

Kai: Yeah, definitely it helped us. This was our idea in the first place to get into cooperate business for 2 or 3 years in order to learn as much as possible about business, about running businesses. And one of the most important things I think we learned even while working at Amazon is like to be so customer focused is one of the key factors of your success. Like this was the first reason in the first place I used to work for Amazon because I was such a happy customer.

Okay, I said, I have to work for this company because they are so customer centric. And while working there we recognized they really lived this kind of customer philosophy also internally. Every project, everything is like, on the top as the customer. If you have a reason why the customer will love this or will hate this, we will always get the project through management.

Steve: Okay, but in terms of any sort of insights and contacts inside of Amazon to help you launch, did you guys take advantage of anything like that?

Kai: Unfortunately not, I would even say we had a kind of disadvantage …

Steve: Oh why is that?

Kai: Because like all the people we used to work with, they said, okay, they know everything; they don’t need an account manager. So basically — imagine obviously we had the advantage to see all the internal figures, internal data of other people or other sellers working there.

This advantage, everyone has this, so during coffee breaks, stuff like this everyone was talking about okay, I would do this, I can do this. But Steve it’s one thing to have all this knowledge, it’s completely different to use it and do your own thing, so…

Steve: Sure, I was just wondering if you guys got by like sat around the water cooler and saying, hey, these leather cases are really hot, we need to get into that, because you have access to that data.

Kai: No.

Steve: Okay.

Kai: But there are a lot of products we have access to, but as I said it’s not the access to data or the information that’s really the use of it and really doing it.

Steve: Okay, so let’s start from the beginning then with your cases, you just mentioned to me earlier that you didn’t start out with a leather case; you started out by testing something, a plain old case. So was this just a generic case that you sourced from China or something like that?

Kai: Exactly, we started out with a simple plastic case we sourced on Alibaba, because we just each didn’t have $1000 and yeah. In order to get enough products, we put the money into the product and then just sourced via Alibaba and via email.

Steve: And what was the purpose of this test because it wasn’t anything close to your final product, right?

Kai: No, exactly it wasn’t like our dream case, the purpose was really to set up like all these background systems we needed in order to scale the business basically. So meaning first how did we get the products to Germany? How do we get the products to Amazon warehouse, so we…

Steve: Okay, so the logistics basically?

Kai: The logistics, so then the second part was what do we need company wise, which company do we have to establish? What kind of taxes do we have to pay, where? So the second biggest part and the third part obviously was how do we get the product to sell on Amazon. Obviously we had all these figures, but we didn’t– yeah, we hadn’t been like the seller so far, so we didn’t know how did we do this.

Obviously I was in working in this department, so I told people what to do, but I didn’t see what they actually did. We built up our own system and like promoting the product and generating traffic and marketing the product, so these 3 big things we basically set up with our test.

Steve: Okay and in that first vendor selling the plastic cases, they weren’t the ones that manufacture the leather ones, are they or?

Kai: No.

Steve: Okay.

Kai: This is what we recognized, we had one, it wasn’t a factory by the time it was an agent on Alibaba.

Steve: Okay.

Kai: When we started our real business with Kavaj we met this agent in China, and recognized we cannot talk, because we only communicated via email so far, and she was not able to talk in English. The boss of the factory of the agency wasn’t able to talk English either, so our relationship was finished once we met in person.

Steve: Okay, let’s talk about these plastic cases first.

Kai: Yes.

Steve: You listed them on Amazon how did you– it seems like they were just generic cases right that all the other guys were selling as well, so how did you get rid of those, or how did you move those in the first place?

Kai: Exactly, it was a generic case, we just proto did a simple generic name on it and RAR14, and then we listed the product. The first one we did is really we listed the product, we optimized like the whole product detail page.

Steve: Okay.

Kai: And we named all these information which are for free on Amazon on the detail page, first the title, the bullet points, the product description, the search key words, and the images is one of the most important parts, is the images. This is where we really had like the lack of founding a company very early, because we tried to find someone who took images like for our budget. We emailed 20 people around our city in Munich, and they all offered us images of like $1000.

It’s a very high price for one, the shooting of high professional images. The other day one guy came back with a really cheap like $200 offer, and we first couldn’t believe it and in the end it was really a very professional photographer who used 2 or who’s doing photos for BMW and all these big machines, and he said he really like our inquiry. He was starting a business also like 30 years ago, and he decided to help us out if we come back again. He wanted to test our inquiry if we were serious about it.

Steve: I see.

Kai: Then we got to him and we got really high, very, very high quality images, and I would say this is one of the key elements on Amazon. If you have really high professional images, you are way better than a lot of other of your competitors.

Steve: From what I understand you stood out from the rest of the park because of your product photos at the time?

Kai: Yes exactly, this was…

Steve: This is probably almost 10 years ago then right or no not that long?

Kai: No it’s like 6 years ago I would say.

Steve: 6 years ago, okay.

Kai: Yes 6 or 6 ½ years ago we did this, yeah.

Steve: Would that work today like going back and trying to sell a generic case, I’m just curious what your opinion is on that?

Kai: Yeah I think it still would work as a one shot, it still would work with this strategy, because it’s something a lot of people are doing like this one shot opportunities in several niches, because Amazon is such a huge market place. It’s going like when we used to work there like Amazon had 80 around 88 or something million customers.

Today I just checked the favor it’s like they have 295 million customers worldwide. They’re just growing this so huge that I would say it would still work, and but what we did after that is what works much better is like to build a brand on Amazon.

Steve: Right.

Kai: Because this is like the ultimate thing, we had to learn, we almost messed up with this but…

Steve: Are you still there?

Kai: Yes.

Steve: The tendency– so you had this one successful product in the beginning which was just like a rebrand of an existing product. How did you decide that that wasn’t good enough and that you actually needed to create your own branded product? Because a lot of people will just take that money and they go hey great, let’s keep this going?

Kai: Yeah, the thing is this case was as you said it was just a generic product with not designed anything name on it, and just a weird kind of name. There was no brand strategy behind it, not at all, so…

Steve: Okay.

Kai: Fortunately our designer by the time he convinced us hey if you want to really be successful in the long-term, build the brand, and do this consistently through all your channels, you’re using your brand, so…

Steve: Okay.

Kai: We decided to do this first, in first place we decided to do this in design and in naming process. The naming process I would say also with our cases because we have all got a city name, so…

Steve: Okay.

Kai: People nowadays after 4 years like they really look for our brand and the city combined. Then they find our case, this was of course like by chance, it wasn’t really planned out like this well, but now we have experience. We say okay, have you just started? The best way you can do this, build the brand from the start out, think about all your elements you can put into this.

Steve: Just curious, you said you had no practice or any experience, how does one go about designing a leather case from scratch?

Kai: Yeah. This is also pretty simple, because what we did is we took two weeks of our vacation at Amazon, and then we checked out okay, where can we go out to get ideas about a simple and genuine leather thin leather cases, where can we go? Then we checked out the fairs in Hong Kong and in China.

Steve: Which ones, the Canton Fairs…

Kai: Yes.

Steve: Did you go to Global Sources also?

Kai: Exactly we went to Canton Fair, Global Sources.

Steve: Okay.

Kai: And where all these suppliers meet 2 times a year and we went there to get ideas, so what was possible, and what exists. Then we met with a couple of– we did like our due diligence with the suppliers. After deciding which supplier would be suitable for us we went to the suppliers, and actually checked out their factories and met with the designers in house, because every factory basically has like the tech guys and designers in house, who are producing their design for the local market usually, and then we just talked as like as I said we wanted the case basically for us for ourselves.

Steve: Right.

Kai: We saw what they can do, and then we asked okay we want to change this and this and that, can you do a sample for us? So and then we…

Steve: Did you specify measurements, how specific were you when you…

Kai: No, we didn’t specify any measurements because for the devices like the iPhone, the iPad, stuff like this, it’s all like you cannot change the dimensions, they are all given so to speak.

Steve: That’s not what I meant, like if you wanted to put a little pocket on there, did you specify the dimensions, or did you let the designer give you?

Kai: No, we didn’t specify the dimensions, we iterated. We said okay we want like, we want the following like this, or we want to add something here and then they gave us a sample, and we checked it out with a real device. We said okay, no we don’t like this, we don’t like that, can you please change this, so…

Steve: Were you in China the whole time during this iteration, or did you shift things back and forth?

Kai: No, we were during our first order where we were in the first, we were in China all the time, so it was like a very fast process was kind of this, we did this.

Steve: Wow okay. Did you, I’m just curious, did you commit to a large order before they were willing to do this for you, or did they just make these samples for you?

Kai: They made the samples for us before committing to the core [inaudible 00:19:57].

Steve: How much did you have to pay for each sample?

Kai: Nothing actually, because we decided … I think because we tried to build relationships, like really from the start. They also had the feeling, okay these guys are serious. They are here, they ask us for samples which nobody really does in this … Because we would spend, really, hours and then days there. I think they were like also sure that we would definitely buy something if they just deliver what we asked for.

Steve: Yeah. That’s just a quick tip for the listeners out there. If you actually go to the fair and meet the vendors face to face, they’ll take you a lot more seriously. We found the same thing with our stuff. Clearly that’s something that Kai experienced with his case.

Kai: Yeah, definitely, much, much, much more seriously. We’re going to China basically 3 to 4 times a year just to foster these relationships, and do it face to face.

Steve: You’re iterating over these designs. For anything custom, what was your minimum order
quantity for your first design?

Kai: It was always 500 for every design.

Steve: 500 units?

Kai: 500 units, yes.

Steve: Okay. Did you start out with one particular model? Was it just for iPad and when did you decide to branch out to some of the other devices?

Kai: Yeah, this Steve actually was one big mistake we made, because we actually knew that we had to focus on a few models or a few designs in order to be successful, but once we were there in China, we took vacations, and was first time order and all these hundreds and hundreds of suppliers and millions of people.

We were kind of overwhelmed during the first days. Then we made the mistake to do 10, I think it was 11 designs for our first order. 11 X 500 different designs, and then also 3 different suppliers. Once we were back in Germany and we tried to build our system, we build with our test case; we recognized it’s impossible actually to get 11 different designs on page one of your main search keywords on Amazon, because this is the ultimate goal.
Your listener should listen closely, this is your ultimate goal for all you do on Amazon is to have your main keyword, and to get this main keyword, your product, on page 1 of Amazon search results, and in the best case, 1,2,3, because this is where the magic basically happens. This is not possible with 11 designs.

Steve: Right. Did you drastically cut back then, and only do a couple of designs per keyword I guess?

Kai: We drastically cut back. Unfortunately we had to remove quite a lot of these first designs. We didn’t sell all of these. We cut back to maximum 3 designs per device, so we can claim slot 1 to 3.

Steve: When you say 3 designs do you mean designs and colors, or do you just mean designs?

Kai: I mean designs, and we do 2 colors, so basically we have maximum six products per device.

Steve: The minimum order per color, per device is 500, right?

Kai: Yes, nowadays are down to– we can basically order what we want, because we have really, really good relations with our main supplier, so it’s possible to get way below 500.

Steve: Okay. Yeah. It’s like that with ours too, but I am curious when you’re talking with these guys … First of all what were your margins early on?

Kai: On the test case or on …

Steve: On your first leather case.

Kai: On the first leather case like it’s always around 50-70%.

Steve: Okay. That’s interesting. I would expect it to be a little higher than that. Basically you were making around 3X it sounds?

Kai: The thing is with genuine leather you cannot compare it to these cheap plastic cases. We have to buy at a much more higher price. In order to sell really big numbers you cannot price it higher than like $50-$60 on Amazon, because that’s like the matching price for on Amazon. After that it is just impossible to compete against the $10, $15 on the first page.

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Steve: How did you guys know that you were getting genuine leather?

Kai: We tested everything. Basically we asked a testing company to test all the stuff for is it genuine leather using no chemicals which could be possibly dangerous.

Steve: You did your first production; let’s just say you did 500 units. Once you got those 500 units, did you have any defects? Did you have any issues, or did you just kind of list those on Amazon right away?

Kai: No, we had like– not with the genuine leather cases we had no issues, but with two cases from the other designs we had issues because they were not packed properly. They got damaged. Almost half of them got damaged. Fortunately by the time we did the QC ourselves in Munich, we spent almost a day looking through 700 cases, and just throwing 350 away because they were just compressed, so we couldn’t sell them anymore. The thing is they just forgot something to insert into this case, so during transportation they just made the mistake.

Steve: I see, so an inspection company probably would not have helped in this case?

Kai: No, I don’t think so.

Steve: Okay. Your first batch, it sounds like you had to throw away half almost?
Kai: Yeah, half of one design. It was really one case … I don’t know how they forgot this, but it was this one supplier who forgot to insert something so that the transport wouldn’t harm the cases.

Steve: You went through everything and then you just listed them on Amazon. You hired a photographer to take professional pictures?

Kai: We still used the same photographer we had for our first test case. He was helping us out the second time, and the third time he said, okay, now you’re in business and I’m actually much more expensive. Please find another one. He was like really was time constrained and we found another really good one.

Steve: What are your steps to getting the top 3 spots on Amazon search, because iPhone and iPad cases are an extremely competitive area?

Kai: Yes, exactly. What we do right now is we have iPad, and obviously we expanded to iPhone and iPad mini and all other Apple devices. The key is there are 2 main aspects to this. First thing is really optimize everything on your product detail page you can do. Like I mentioned, like the key words, the title, the hidden keywords, and the images, and …

Steve: Let’s go to that in a little bit more depth before you go on. How do you figure out all the keywords and make sure that you’re getting all of them? Do you use any tools or …

Kai: Right now we’re using tools. Back when we started we didn’t use any tools. We just thought okay, what are the top 3 main keywords our customers would search for? Only during our time we made this process better, meaning one thing like you said buy a software that can help you with this, but the easiest thing you can do, or your listeners can do is really check out what Amazon is suggesting when you type in your best keywords, because Amazon automatically fills in your search.

For example if you type in iPads, you will definitely see iPad case as one of the suggestions, and these suggestions are like the main search terms in terms of volume, what is currently running on Amazon. If you do this like for example iPad case, you would see there’s iPad case and there’s very high volume search terms ‘iPad case leather’.

If you type in iPad case leather, you will see iPad case leather and very high volume is iPad case leather black, iPad case leather brown. Only by checking out these automatic search suggestions, what Amazon is doing there, you can find your top keywords very, very easily.

Steve: You mentioned you use tools today. Do you suggest any keyword tools to use?

Kai: Yeah. We use MerchantWords.

Steve: MerchantWords, okay.

Kai: Yeah, we use this to just like search volume, and it’s basically our primary search tool. Another one we use is FreshKey, I don’t know if you have heard of it.

Steve: FreshKey. Yes I have.

Kai: These are basically 2 tools which can kind of automate this manual work to check out the Amazon Keywords.

Steve: You’ve got your keywords down; can you describe the process of putting together the bullet points on your listing?

Kai: Yes, of course. What we do is optimize first title, because this is like priority number one on Amazon, and second is bullet points, and we use … All keywords we’re not using on the title, we try to use in the bullet points because priority number two when you search on Amazon is bullet points. Most current information is that Amazon is currently changing its algorithm, and probably ranking the search keywords higher than the bullet points, but we’re just trying to figure out if it’s already happening or something like this.

Until today we’re really optimizing the bullet points as the second step, meaning we put the keywords, we’re not using in the title. The second is we answer the five questions a customer would ask us in the store, in an offline store. Imagine you were an offline store and a customer comes in and asks, okay, what can I do with this case? We try to use customer language, and combine it with the keywords we found for product.

Steve: Interesting, so what are the five questions that a customer asks about iPad cases?

Kai: First, what can I use it for? Do we have stand functionality? Does it support auto wake up function? Can I access all ports? Does it match your other Kavaj products? It’s [inaudible 00:33:57] and that’s the good thing of building a brand.

Steve: yeah, definitely.

Kai: People right now, they really want like sets. They want Kavaj iPad, iPhone, iPad mini and now we started doing wallets, and they just combine everything and they just look for the brand, and then next product.

Steve: You have your bullet points down, trying to use the customer’s language, answer commonly asked questions, what about your details, the product description?

Kai: Yes. Product description, we also value this very, very high. We take the same approach basically. We try to use really customer language. We get this customer language before using and reading the reviews. What we did is we called a couple of customers and did quality interviews in order to hear what we’re really talking about our cases.

What language do they use, and then we put together a product description and also stating the main benefits and really what the cases can do for them and help them in. For example they can use it for watching videos and doing presentations very nicely and to type on the case. It’s something like this, what Apple is also really doing nicely. Not putting out all features, but to really state, what can I do with this in real life?

Steve: Just curious. Do you find that a lot of people read your descriptions and that it makes a huge difference?

Kai: Yeah. You really have to specify. We think so but it’s the whole package of your detail page. If it really looks totally aligned, like images, everything looks professional. I think this is which makes the difference, because then people are checking out. It’s very hard to specify on Amazon, because we don’t have hard facts, hard data.

I think in the long term, the customers will really check out the whole feature page, if it makes sense, the number of reviews, and the bullet points and they will come back and check out this. What we see a lot is really in the seller feedback ‘Product as described.’ This is like the best feeling you can get. If people are writing this or giving you this feedback, then they’re obviously reading it.

Steve: Just curious in the very beginning, let’s say you have your listing down and everything is all good, how do you get it to rank? Did you start giving away products for reviews? What was your early strategy to get sales?

Kai: No, we didn’t do like giveaways or something. What we knew from the beginning is we had to drive all traffic we can possibly get to our Amazon detail page, because we had these tests with one product. We obviously had only one product. Then we really tried everything. Every channel we can get and in the early days we even used Google PPC.

We bought ads on Google, and then we built our own website and like putting the professional images there and building like a detail page for the test case already. Then we bought the PPC ads on Google, got the people to our website, and then we sent them to the Amazon detail page.

Steve: That’s interesting. You’re paying for ads and you’re not taking the sale for yourself, you’re instead giving the sale to Amazon where you have to pay Amazon’s fees. So the rationale was that you want to rank on Amazon over your own site?

Kai: Exactly. The rationale is really, we want to get our products into this magic page one of Amazon because as I said, Amazon, there are already 295 million customers who are searching there. The traffic you can get on Amazon on page one is all for free, because the people are searching there for free.

If your product is on the first page of Amazon search results, you will get the traffic automatically. You just have to get there somehow, and then the magic will happen all along.

Steve: Was this an issue of PPC traffic? Was it profitable despite the fact that you’re …

Kai: No. No PPC traffic is profitable in the first place for us right now, I would say. It’s really, we spent– it’s really our strategy to spend there, and then get the sale and get ranked. Once we are ranked, like the sales of page one are coming in and supporting this initial spending on PPC so to speak.

Steve: How do you correlate the two, because it’s not like you can put a conversion pix on Amazon site. How do you know that the sales are actually coming from PPC?

Kai: We don’t know, but in the early days when you don’t have a ranked product, or if you put in a product in a category like iPad cases, you have one million results, no one will find your product if you don’t do any kind of either PPC, or getting all the traffic you can get from other sources to your products.

It must be from somewhere. What you do doesn’t matter actually, but if it’s PPC, or if you like have an email list, or if you have YouTubers, bloggers talking about your product, but it must come from somewhere else in our category.

Steve: Interesting, okay. What were some other ways that you drove traffic to your Amazon listings early on?

Kai: Early on what we did is we got in touch with YouTubers and bloggers through influencers basically, and gave them samples for free. They did a review for our products, and then like posted these on their channel, and obviously linked on their channels to our product.

Steve: On Amazon?

Kai: On Amazon exactly. This was one very, very good way to promote it.

Steve: How did you find these people? Did you use any services, or did you just reach out to people on YouTube?

Kai: Exactly. We just reached out to people on YouTube, and basically what happened was like they reached out to us. Somehow they found us later. It wasn’t kind of that we put this much effort into it, but we would recommend to do this much more right now. I know that there are even services nowadays who can connect you with famous influencers. I think you even had one guy on the show who was very successful for this kind of strategy.

Steve: Yes

Kai: We didn’t use the services, but we definitely will look into this. I hope this information– this could be a very good strategy.

Steve: Can you comment on driving all that traffic to Amazon where you have to pay the 15% fee on top of FBA fees as opposed to taking it on your own website, saving that 15% and having Amazon for full regardless?

Kai: Yeah of course. Our strategy is really the thing to get ranked. Your sale on your website is one sale on your website. The sale on Amazon is one more sale than your competitor, and this means Amazon will rank you higher, because sales and traffic is the most important you can get on Amazon in order to get ranked. In the long run, or we see it with our products, this will benefit your products in terms of ranking.

Once you’re ranked on Amazon, you will just get the sales, first of organic traffic on Amazon instead of the sales on your website where you always have to drive the traffic to your website, and will always cost you money to drive this traffic to your website. On Amazon, once your products are ranked, you will get all this organic traffic from Amazon and these organic sales, which makes a huge difference, because you will never get 295 million customers on your website so to speak.

Steve: Interesting, so do you collect emails, like how do you, do you do any marketing outside of Amazon then?

Kai: Yes, yes.

Steve: Okay.

Kai: We started this way too late actually.

Steve: Okay.

Kai: This whole email thing, nowadays when we last priced we use email as one of a big external traffic drivers as well, so we would recommend to use email very, very early on and try and start building a list so in order to spot your launches.

Steve: How do you entice people to give you their email because you can’t get it from Amazon right?

Kai: Exactly.

Steve: I assume you’re doing some sort of promotion outside on your own site?

Kai: Yes exactly.

Steve: Okay.

Kai: We just give them like a $5 coupon code, once they give us their email address, and this which is valid for all Kavaj products.

Steve: Okay.

Kai: Exactly and we place this very prominently on our website, so like nowadays.

Steve: I see and then you send out an email and then you drive those people to the Amazon listing, and that in turn boosts your Amazon rankings, because that leads to sales?

Kai: Exactly.

Steve: I see so you’re going all in on Amazon basically?

Kai: We’re going all in on Amazon, all in.

Steve: Okay.

Kai: 100%.

Steve: Have you had any problems with Amazon?

Kai: Obviously yes.

Steve: Can you just go through some of the common problems that you faced?

Kai: Yeah, we have problems, first problem is for example someone else will hijack our listing, so basically…

Steve: Okay, how do you deal with that?

Kai: Basically I just describe what happens, we have 2 colors for example one iPad case black and brown, and then from one day to the other there, well there’re like 20 color variations like red whatever, blue something like this. It’s a different seller we didn’t know who cannot connect; it’s just hijacking of our listing, and benefiting from our sales rank probably.

What we do is we registered our trademark and our Amazon brand very, very early on, and we contact Amazon either the support team or the service performance team, and just proving that we are the manufacturer of these products. We are the only seller of these products, we have the brand registry, we have the trademark, and we have the EAN code on our website which only shows that we are selling black and brown cases. Then we ask please remove the seller, please correct the listing and this usually works within 24 hours.

Steve: You in this regard you mean they put up a different listing, not sharing your Amazon number, right?

Kai: Yes exactly, they are just extending our listing variation to more colors, yeah.

Steve: I see, but what about the ones you piggy back on your exact product number, how do you get rid of those people?

Kai: We didn’t have this kind of thing so or so to speak, we have our sellers who try to sell these products, but are only very, very limited number, and it’s not a problem for us basically.

Steve: Okay.

Kai: Because they’re usually either selling like used or something, or they are selling higher prices.

Steve: I see.

Kai: And they are not, they cannot do FBA because we don’t sell them so.

Steve: Okay.

Kai: Yeah this is basically it, second problem is, or any question to this or?

Steve: No, no I’m good yeah.

Kai: Like the second very common problem is that Amazon is just removing our product from the platform from one day to the other without noticing us. And this usually happens during Christmas season.

Steve: Okay.

Kai: Like just one week ago again, so it happens all on all platforms in UK, Germany, US, I don’t know if you’ve experienced this, but…

Steve: No, you mean just a complete removal of your product you mean?

Kai: Yes.

Steve: No, we haven’t seen that yet.

Kai: Okay and this can happen pretty easily because Amazon has a process called [inaudible 00:47:35] court. Which means if one customer either one customer is complaining about the same issue twice, or if 2 or 3 customers are complaining and talking about the same issue in a very short time period, like the Amazon guideline is pull [inaudible 00:47:55] and take the listing off line and to protect the customers, or basically the future customers in order to experience these kind of issues.

Then okay once this listing is offline you can inform the seller, and you can ask the seller to yeah, provide feedback on this issue, and a system to get the product online again. But the communication is very difficult with Amazon regarding this. The solutions also because basically, most of the time it’s obviously by chance that this happens that really one customer has the same problem twice without notifying us. Usually the people come to us and ask, hey what’s the problem? Can you help me? But there are customers who just don’t speak to us, but first to Amazon…

Steve: Right.

Kai: They know obviously and…

Steve: Do they, does Amazon at least warn you that this has happened, or did you have to just notice yourself?

Kai: No, well yes.

Steve: Okay.

Kai: We have to notice it ourselves, so Amazon like we didn’t really fully understand how this works, sometimes they notify us, sometimes they don’t, so this is why we always recommend to monitor your listings very well on Amazon to also keep an eye is everything online. Especially your top sellers are they still online, because as I said it can happen pretty fast.

Yeah if just two customers are saying, okay I have this issue and the next comes I have this issue, like there’s a red light internally yeah on Amazon. The solutions also contact the Amazon support staff and then the Amazon service performance team and explain what happens. The best case you know what happens if they notify you. If you don’t know you have to just guess what happens.

Steve: Okay.

Kai: We had one example story from our products was we used to wrap all our cases into a wax paper, and at the beginning we only used black wax paper also for our coniac [ph] brown cases. People got these coniac cases, but saw okay they look black; I ordered brown, why does it look black. They just didn’t unpack the case, so they just saw the black wax paper, and figured okay this must be a black case, it’s a mistake.

They made it like Kavaj made it. They just reported us to Amazon that we shipped the wrong case, and if you ship a lot of cases during Christmas time, it’s very likely that two customers are not unpacking these cases, and then they’re just complaining at Amazon. This happened actually three times to us, and we always explained please check the bin, please unpack the case, the customer just had forget to unpack the cases.

Steve: I see, okay.

Kai: After three times we learned the lesson the hard way, we changed the packing material and now we wrap everything in their respective color brown or black.

Steve: Okay, that’s a good story. Hey Kai we’ve been chatting for quite a while, I understand you have a couple of other projects on the wing that I thought that you might want to mention.

Kai: Yeah definitely yeah, we got a lot of questions during our time during last couple of years because we built like Kavaj only in only 4 years, and we build a global brand in UK, US and in Germany, and people came to us saying how did you do this actually. We quite, we had quite a lot of people already in Germany and the UK and US and helping us out with explaining, just explaining what we did.

Then we figured okay we can share our knowledge like our experience from working in Amazon and building a brand, and what we did is we wrote a book and we put our whole story together. Steve for your listeners they can just go to kavajacademy/book, and they can get our book for free there.

Steve: Awesome.

Kai: We’re building like a whole Kavaj Academy around this topic selling on Amazon, because we saw there’s huge demand really how to sell on Amazon. We really love to get the feedback we already received from this book, and what we did with Kavaj Academy already.

Steve: Okay.

Kai: This is the second biggest thing we do currently besides Kavaj and expanding Kavaj internationally.

Steve: If any of the listeners have any questions for you Kai, where can they reach you?

Kai: Yeah, obviously as I said they could just go to Kavaj Academy, and we have a Facebook group, or a Facebook profile already for Kavaj academy, this will be probably the easiest way to get in touch with us or working.

Steve: Okay, sounds good. Well Kai thanks a lot for coming on the show.

Kai: Yes, thanks a lot.

Steve: I must say I think you are the first person who I’ve interviewed who drives all of their traffic from their own page to Amazon for ranking, so I found that very interesting.

Kai: Yeah, it is definitely very interesting, and it’s working, and all countries we use to do the strategy.

Steve: Yeah, awesome well thanks a lot.

Kai: Yeah, thank you Steve for having me and thanks for the interview.

Steve: All right take care.

Kai: Thank you.

Steve: Hope you enjoyed that episode. Kai’s story is truly amazing, and it just goes to show that you don’t need any business experience whatsoever to start a 9 figure business. All it takes is some initiative, a lot of hustle and a strong desire to learn and adapt. For more information about this episode, go to mywifequiteajob.com/episode 107. And once again I want to thank famebit.com for sponsoring this episode.

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And finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course, where I show you how my wife and I manage to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.