All right, hello everybody! Thank you for coming out. You guys could have been doing anything else tonight. Right now, you could be watching Game of Thrones or you could be going to McDonalds. You chose to come here to learn. I’m super thankful about that!
So, the goal for this presentation, if you guys can get it on the screen, is to drop so many golden nuggets here, and make this worthwhile for you. That’s my goal. So, I want everyone to leave here tonight learning something new with actionable insights to grow their business. If they don’t have a business, hopefully this is also helpful. So, lets…can we get this up? It’s on.
All right, great. So, just real quick, hands, who here is an Amazon seller? Okay. Who here has a storefront in an e-commerce store front? Okay. And anybody sell vacuum filters? Okay. Nice. That’s one of my colleagues at Crucial Vacuum. So good, we can talk openly. That’s helpful.
So, tonight’s talk is about the biggest rookie mistakes you can make in e-commerce. I certainly have made a lot in my career. I’ve been doing this now for the past decade and I’ve lost a lot of hair (as you can tell), a lot of money, and I’ve lost a lot of time. And so, if I can help you guys not make those same mistakes, I’ve done my job here tonight. So, there’s a lot to cover, right. We have 45 minutes. I just spoke for about a minute.
So, a little bit about myself. I was on Wall Street. I got fired. I was doing the corporate grind. I hated my life. I started to help my family build a vacuum business but realized that reselling was not the wave of the future and I decided to start my own direct consumer brand called Crucial Vacuum. I Built that business up, with the help of a great team, to 10 million dollars in revenue a year. And I started a software business to help me manage my business because there was nothing out there that can do what I needed it to do. So, for me this is all about networking. It’s about generosity and giving back, because one day, hopefully, somebody in the crowd will give back to my career as well. And so, it’s all about karma and paying it forward.
So, here’s, for me, like when I was compiling this, I was saying what are some super big mistakes? There’s a broad audience here tonight. Some of them are Amazon sellers, some of them aren’t, and some people don’t have a business. Some people do have a business, some people are doing the corporate grind and want to get the fuck out of the corporate grind.
So, these are the three things that I’ve come across that I think are painful mistakes that people are making today. So, we’ll start at the top, not solving a problem, being a reseller and not validating a product, right, just guessing. So, the first one. And, by the way, I want this to be interactive. So, if people have a question, if I mumble, if I stutter, whatever it is, like throw your hands up, ask the question. Don’t be scared, because chances are, somebody else here has that same question.
So, first thing is solving a problem. So, a lot of people are coming out with, like especially on Amazon. Or even they start a Shopify store front, they have this notion that they just want to create the next spatula or the next wine opener, and that’s not the way to win in e-commerce today as things are starting to get progressively more intense in terms of competition. The way to win is solving a problem that exists. And I teach a general assembly once or twice, every month or so, and there’s a lady in the crowd that was making a bobblehead toy and bobbleheads. I was like really? I don’t really think there’s a need for a bobblehead toy like, a little pet that needs to be bouncing up in your car. You really want to start solving problems before creating the idea. Make sure the problem exists. So, for me, when I come up with a problem, I look at my surrounding life. So, where are the friction points? Where are there points in your life? And like there’s… They happen countlessly throughout the day. There’s constantly points in time where you’re just like, “that’s bullshit, it shouldn’t be this way”. And we don’t do anything about it and it happens at least 15 times a day in your head, cognitively.
So, look around your life. Figure out where there’s a friction point and go after maybe some passions that are interesting to you. So, for me, if I was to start a new business today, I may come out with a new type of CrossFit shorts. Or I might come up with something that’s paleo, because there’s not a lot of paleo products that are out there today especially being sold on the Internet. Or I’ll go after something that’s yoga or e-commerce. But it’s all about also doing what you know and trusting your crazy ideas.
When I first started Crucial, my parents vacuum business actually wasn’t a success in their retail store and my sister was like, “Chad, why, you know, our parents failed. Why would you actually go into the vacuum business?” And I’m like, “I’m solving a problem.” I’m going direct to consumers, making my own filters. They don’t need to be sold for like… you can buy them for 21 dollars and sell them for 24. But now I can buy them for two and sell them for 24 and make most of them washable and reusable. So I knew that I was on to something and I just trusted my crazy idea. And you also want to find a product that people are willing to pay for. And I’ll go through some of this today as quick as I can because we have so much to cover.
So, CrossFit shorts, Simply Gum is like six ingredients. Like you can’t find a gum that has more, most gums have like 20 ingredients. So, I thought that was a brilliant idea. And then Skubana was out of an itch that I scratched where I’m eating my own dog food, and I was like wait, why do softwares have to be so expensive and unattainable? They shouldn’t be. So I created one, with the help of a founder. So, you want to solve a problem but the next piece of this is you want to do it better, faster, cheaper. And you want to go direct to consumer. If there’s anything you want to take from this presentation, is that’s the holy grail of e-commerce: is going direct to consumer. Are there questions so far? Am I going too quick? We’re good? all right.
So when you’re solving a product, you want to know what’s your value prop? So, for Casper, their value proposition is that they make better beds and they go direct to consumer and they do it faster, better, and cheaper than anybody else. What are you building it for? And who? understanding who your demographic is and who you’re targeting. We’re going back to this is you want to solve the problem you want to do it better. And so, I have four case studies here at the bottom and we’ll go through them very, very quickly.
So, Bonobos is a company that started making better fitting pants direct-to-consumer. Like for men, like myself, some men have larger thighs and Gap just won’t do or J. Crew pants, skinny pants won’t do. So they created pants, that’s a pant that is made to fit better for men and that’s how they came to be. But free shipping and free returns, the customer experience is so much better on Bonobos than actually buying from the Gap, which is a pain, it’s a hassle to actually return things. But the most important piece here is its direct-to-consumer. The one thing that’s missing in my mantra, which is better faster, cheaper, easier, and direct-to-consumer, is the fact that it’s not cheaper. So for me, I’m like, ding ding ding! There’s an opportunity, right? These pants are only available to the one percent of the population.
Next one is Warby Parker. Most people here I’m assuming have heard of Warby Parker. a massive total available market, but $99 eye glasses direct-to-consumer. Guys, keep in mind, these guys did not invent the eyewear. They didn’t invent eyewear, right. They’re just doing it better, faster, and cheaper than Luxottica. On top of that they have a social mission.
Dollar Shave Club. Again, massive total available market. They didn’t invent the shaving blade. They just figured out a way to sort of tap into the Millennial Generation and to make it so much easier to buy your blades. It’s a dumb product and they’ve made a smart way to buy this product and it’s a recurring subscription revenue and I think that’s very, very important. Especially when you’re looking to have a higher valuation as Ari can attest to. So, you want to do it better. You want to do it faster, cheaper, easier and direct-to-consumer. The blades are like three dollars to start on a monthly basis.
So, Crucial, we didn’t invent the filter, the vacuum filter, right? We just figured out a way to make it better, faster, cheaper and direct-to-consumer. So why are we better? Well eighty percent of our filters are washable and reusable. Our filters are a fraction of the cost of retail, right? If Dyson is selling it for 24, we sell it for 12. We also have a social mission. We plant a thousand filters, a thousand trees for every filter that’s sold and we’re translating that disruption into a lot of other verticals.
So, now we have Crucial Vacuum, but I tapped into what else is important to me. I love coffee. I’m a super large coffee snob and I was like, “why don’t I make reusable coffee filters as well?”. So, we started translating the successes into other verticals. Crucial Air is like air purification filters, humidification filters. We make marijuana filters for rooms. So it’s all about taking what you know, mixing it together with what you’re passionate about, and to see what happens.
Questions on this so far?
So, this is the second problem. I’m seeing this happen. There’s a lot of people out there that want to just resell product, and I don’t believe that selling product and just being sort of a musical chair where you can just be cut off by a vendor at any given time is the wave of the future.
All right, so the story is not changing here. I’m not trying to recreate the wheel. I’m trying to throw some kickass, gold-plated hubcaps on the car. I’m modifying the car to make it work better. And the essence of disruption is making the system work better.
All right, here’s some examples of just a few cool direct-to-consumer companies. Right now, there’s a massive wave of direct-to-consumer companies that are disrupting the industry. And these are just a few. So, Hello Flow is a subscription to tampons to your home where they know your cycle and they give you a piece of chocolate in the box. To me that’s genius, right? Because you’re taking the thinking out of having to buy this product. Or Capsule. Like, for me, I have a really, really thick wallet. And so Capsule came out with the thinnest wallet in the world, because when you sit on your wallet, it throws off your pelvis.
So, these industries that have been owned by incumbents for like, the past 50 years is changing. Sleepies is literally sleeping, while Casper and Lisa and Toss and Needle are disrupting and taking ownership. And Millennials is actually going to be the biggest buying group in the next year or two. And so, they understand how to tap into Millennials’ buying behaviors. Like when was the last time you went into a Sleepies? It doesn’t make me want to go in there at all. And so, these new companies are sprouting and right now there’s a wave happening where these industries, like there’s industries that haven’t been touched yet that are ripe for disruption.
So here at the bottom you can see another company I took this off of Everlane’s website. Everlane actually shows you what their cost is and they deliver it to you for a fraction of the cost that you can get it for retail. Just one company out of many many, many companies that are doing this. But in order to win in e-commerce right now as a direct-to-consumer seller, you have to beat these companies at their own game. The way Warby Parker is beating Luxottica. The way Casper is beating Sleepies. Like, I can keep going on and on. the way Chubbies has just invented a whole new vertical in short shorts. Any questions? I know I’m going over a lot.
There’s got to be some questions out there. Feel free to speak up. Pardon?
Goldieblox. Okay, so Goldieblox is smart toys for women. So, instead of just giving women Barbie dolls to play with when they’re young, they’re trying to create a culture of women that want to be engineers and want to solve problems. So, they’ve created smart toys to compete with Mattel. That’s Goldieblox. And Paleo Pax is actually a curated way to buy paleo goods. So, like, if I can’t find it at Whole Foods, they’ll give me a sampling of all these products that I can buy and test it out myself.
So the question is where do I make my filters? They’re made actually in Asia because in America we lost our production capabilities to actually manufacture a vacuum filter. There’s like nowhere in America where you can manufacture vacuum filters today. So, I have no choice but to partner with Asia. A lot of people out there are like “you’re taking away jobs from America” but America has changed too. In a way I’m actually creating jobs. When every time I make a filter and sell a filter, I’m employing more people in the United States, to manage my business and help us grow. Pardon?
I make reusable filters on the same production lines that other OEMs make it, and again, most of our filters are washable and reusable. So, we’re trying to get rid of this idea of disposing away of items. So, we do it better, we do it faster, we do it cheaper. I think the quick fix and what a lot of Amazon sellers are doing today is that they’re going on Alibaba just to find a spatula to buy and they’re like, “yeah I branded a product, I’m done”. So, okay, we can keep going back and forth on this. I do want interaction for sure but I want to make sure that everyone else cares about the question.
So, look, at the end of the day you do have to have the resources you have to actually do the research, and a lot of people are doing it. Look at another company, like Yeti Coolers, right. They’ve disrupted the cooler space but now there’s a competitor out there called Rtic. RTIC. And they’re making a competitive offering for a fraction of the cost and they’re doing it even better than then Yeti did it. So, there is a way to do it if you come from nothing. I came from nothing to start my business, and if I could do it anybody in this crowd can do it. It just takes persistence and being relentless.
Sure, so let’s back it up a little bit. So, I was on Wall Street. I would take the bus across town from the Upper West Side. Shout out to the Upper West Side. Every day. And I would take a bus and look at the Sun and be like, “when am I going to get the hell out of this rat race? I can’t continue this way”. My parents had a retail store. when was the last time you went into a vacuum store, a retail vacuum store? Right? That’s how much time has changed. And my parents were going out of business, so I took their product and I listed it on Amazon. And I created a Volusion storefront, which is an old legacy shopping cart that I wouldn’t suggest anybody use today. And we did really well. We sold out all the product and when I went to go repurchase the product I was buying it for 20 and it didn’t make sense to me the price I was buying it for. I was like, “there has to be a better way”. So what did I do? I actually went on Alibaba and found people that were making similar products to what I wanted to make and then I took a trip to Asia and went to the factories to see what was going on. That’s all I did. And look, there’s more actual penetration in vacuums than there is internet in America today, so I knew the market was very large. But it doesn’t take a brain surgeon to know that, right? And it doesn’t take a brain surgeon to know that the subscription razor blade market is large and the mattress market is large and I can keep going on and on. So that was my transition into the filter space and I was like you know what? I really want to make a brand, not just be a private label seller on Amazon. I don’t want to compete with the buy box. I don’t want to be held at the whim of a supplier. I want to control my own destiny. I want to control the supply chain. And that’s how I came up with Crucial and I decided to pay extra for my filters to make sure they’re washable and reusable. And then I moved into vacuum belts, and I moved into rollers, then I moved into hoses. Now we actually spend a lot of money curating new products and solving problems, which is the next piece of this is: how do we solve the problem? How do we figure out that there is a problem to be solved? Does that answer your question?
So the question is how did I market my products? That’s a great question and I can probably spend a half an hour talking about that but to briefly answer your question, I started by buying a minimum quantity. The supplier in Asia will always say “our minimum is 5,000” and my answer is “No, you want me to buy 5,000 but I’m going to buy 100.” So, I actually started with a really small sample size. “Now as I promise, I’ll be loyal to you but just let me buy a hundred.” So I bought one carton then, I moved to three cartons, and I did a pallet and I did three pallets. Now I’m bringing in like 80 containers a year.
So, in terms of marketing it, I started with Google AdWords. Back then there was no product listing ads; it was just straight-up text ads. I started there and I started building products on Amazon and also putting on eBay because people used to shop on eBay. So, I started just diversifying and spreading love of all my products onto every channel to be seen, and this was before there was a Facebook that made it even easier, or Instagram. So, I started with Google AdWords. I mean I right now, in Amazon, forty percent of product searches happen on Amazon today. Forty percent. So, just by putting your product on Amazon, for those that aren’t on Amazon, you’re already getting forty percent more traffic and exposure to your product by putting it on Amazon. If you’re not on Amazon, you’re really not relevant. and then selling off Amazon. Forty percent of the U.S. Go ahead.
So the question is how do you prevent a factory from screwing you over? Well, A) if they want your business, they’re going to make sure the quality is intact. For me, I would buy a ton of samples from them initially to make sure that there’s solid quality throughout, like not just one but by two or three or four or five, to give you samples. I now have an employee in Asia who does all my quality control but I have heard, everyone has heard nightmares, right? The idea is you want to mitigate risk to the best of your ability. To me, mitigating risks, especially dealing with a foreign culture, is going into Asia and meeting them. Going to the factory floor and shaking the hands of the guy that’s actually producing the filter. Taking them out for a beer, Chinese whiskey, and getting a foot massage with them. Seriously. That’s the way that you’re going to build a relationship because, for us in America, a handshake doesn’t really mean a lot. But in Asia a handshake can go a really, really long way. And even companies on Alibaba that say they’re a factory, a lot of times they are in factories, a lot of times they’re just trading companies that are, like, sort of middlemen. And the idea here is to go direct-to-consumer. Get as close to the consumer as you can. Or as direct or close to the factory as you can. Or as close to the consumer as you can.
The question is what do I use to research my product on Amazon? And so, we’re going to get into that. So, can I cover it as we as we progress? No worries.
So just to surmise this and we’re going to get into validating your ideas next.
You want to find a problem before creating an idea. You want to go direct-to-consumer. You do not want to be a reseller. I’m sorry for anybody that here is a reseller. You want to focus on what you know. And you want to go after low-hanging fruit. So, I’m not here to create the next Facebook or Twitter. Maybe my software will be that at some point, but for me I’m going after base hits. I want to get the first before I get to fourth. And then of course you want to make sure that you’re minimizing your time, your hair loss, and your money, which is validating the idea.
So, remember, I mentioned about forty percent of product searches happen on Amazon today. And I use different things that are free tools. Everything I mentioned today is going to be free because I’m strappy and these things are going to help you figure out and make sure you minimize your time.
All right we’re 20, 22 minutes. We’re good? All right, so when you go on Amazon today, Amazon is a plethora of information. Amazon’s like a massive database that’s sitting at your fingertips ready for you to exploit all the information. And if Walmart or Target or any of these other companies or Bed Bath and Beyond would have been smart, they would have read the reviews before buying. Like you don’t really need to have 50 different coffee makers in your aisle anymore. You should just have good, better, best, perhaps.
First of all, if you go to Amazon today, there’s reviews, right? For me, I always look at reviews and I think people that are in the Amazon space today, they care about getting reviews for their product. But they I think forget to realize that there’s a lot of negative reviews on your competitor products. Analyzing negative reviews, Amazon lets you search these reviews and find all the negatives of the product. And I turn those negatives, like Biggie did, into positives. okay no one got that joke? Okay. Tough crowd tonight.
So, actually, I usually like to show on Amazon “how do I do this?”. On amazon.com, if you type in whatever you want, let’s just say coffee maker. If you search coffee maker and you have to pick a category. But you can see the best-selling shit that’s on Amazon today by actually filtering coffee maker, picking a category and then sorting by it used to be called “new and popular”, now it’s called “featured”. I think Amazon was on to what I used to be doing. I used to be working till 3am at night in the morning, and my wife would come home and she’s like, “Chad what are you doing?” I’m like, “Yo babe I’m on amazon. Chill, like, I’m having fun”. And I read reviews constantly to find out what’s going on in the market. What are the best selling products? How do I capitalize on these and do it better than what they’re doing?
So, the Aeropress. Has anybody here heard of an Aeropress coffee maker? Anybody? Nobody. One. Okay wow. This is the best-selling coffee maker on Amazon today. Nobody knows it, right? No one’s heard of it and it looks like some syringe-like device from a hospital and this thing has reviews with people talking about that the filters are bleached. They make their filters not reusable; they’re disposable and they’re made with bleach. So, I came up with the idea to make a reusable coffee filter disk for this product and it turned out to be a number one coffee, number one selling item. We have like 87 reviews or maybe we have a hundred on this now for this product itself and it was just by me going and seeing what is selling on Amazon. How do I solve a problem better than what’s happening today? And you can do this in, if you love cars, you can do the same thing for car windshield wipers. If you wanted to. Go ahead
So if it’s never been done before, what I like to do is, I like to see, I go to Alibaba always just to see what’s going on. And I search, like if I know that it’s a disk filter, that it’s made with puncher holes in it, I try to find a similar product which means they have those similar capabilities. So, if you’re looking to make the lightest weight backpack in the world, I would go to a backpack manufacturer, even though they’ve never made the lightest backpack in the world. And I would start talking to them and seeing what fabrics they can make it with and going through with each factory to see what’s happening. But I would start my search on Alibaba. I do not use a trading company. I don’t use a sourcing agent. I use my own internal employee now.
I have two thousand products on Amazon today. They said when they introduced me that I’m in the top 250 on Amazon and it’s a hard place to get to because there’s two million. I’ll repeat it: two million sellers on Amazon today. That’s crazy. I look at the Amazon bestseller rank and Amazon actually puts in their listings the Amazon bestsellers ranked. Like, literally, they’re giving away this information for free and you’re asking, “why are they giving away this information for free? Why would Amazon tell you the number ranking of a product? Does anybody know? Anybody. I’m sorry, so okay, so no. That’s actually interesting.
The reason why they do this is because traditionally people compete for the buy box on Amazon so resellers used to go into these listings and say, “shit this product is number 56 in kitchen & dining”. Amazon, by the way, has like four million kitchen and dining products, so number 56 means I want to start sourcing this product and selling it, driving down the price to win what’s called the buy box. Right here, right there, in the top right-hand corner. The golden buy box.
So back to sourcing, right. So, you had a question on these programs to actually find what the rank is and how many are being sold. So, the software is out there today that will literally take the best-selling rank and calculate for you how much sales is done for a product on a given listing. So, there’s two out there there’s one free one called Unicorn Smasher. and there’s a paid… Unicorn Smasher, the weirdest freaking name in the world. And then there’s a paid one called Jungle Scout. All right, Jungle Scout. SCOUT. These companies like Chrome extensions that you can download, they will tell you the sales for a product, the revenue, the units, all that good stuff is actually quite useful in your product research. Making sure you minimize the money that you’re spending on products. So, the other thing; there’s a lost company called eBay. They’re still around. And there’s a company called Terapeak which allows you to see, because if you’re not selling on eBay or if you’re not selling on Amazon, it’s likely or if a shopper isn’t buying on Amazon, sometimes they buy on eBay. It could be a weird product; it could be a collectible, it could be a watch band that you want to buy on eBay. And so, let’s just say you want to come up with the next cool watch band. Terapeak is this software, and there’s a free trial you can use it, play with it a little bit. It’ll give you all the competitive intelligence on categories. They have something called hot research and in fact if you find and zero in on a competitor and you want to kind of know what their sales are, you can zero in on it here you can type in the eBay seller name for the certain time period. And I like to use 30 days and you can see all the shit that’s selling on eBay for this competitor. The interesting thing here is that the person that sells, that buys on Amazon… Who here shops on eBay? Raise your hand. Two. Wow. Who here shops on Jet.com? one, two, three, four? Okay. And who here shops on Amazon? Raise your hand. Damn. And that’s why you need to be on Amazon everybody. Did everyone see that shit? Everyone raised their hands. Who here shopped on Crucial Vacuum? Okay that’s why I sell on Amazon. Boom shakalaka.
All right, so back to this here. The shopper that’s on eBay; the two people that raised their hand, are a unique shopper. Sometimes buy less expensive goods online, yes. And you can see that there’s different best-selling things on eBay than there is on Amazon. So I use it just to validate my idea before I move into a product. The third piece is Google, and the interesting thing with google is… I’m trying to keep this high level because there’s a lot of different people in the audience. I can go on and on and on and I’m at 29 minutes so we have 15 minutes left, so I’m pacing myself here.
The thing with Google is… someone actually asked Eric Schmidt, the former CEO of Google, they said, “Eric, who’s your biggest competitor?” And he didn’t say Yahoo. He didn’t say Bing. He didn’t say Ask Jeeves. He said it was Amazon. So, if forty percent of product searches are happening on Amazon today, that means sixty percent are happening off Amazon. I’m not encouraging everyone to just sell on Amazon. I believe that building a brand off Amazon is very, very, very important.
So, with Google, I validate the idea of what I want to move into because if you have a Gmail account, you can access what they call the “keyword planner tool” for free. You go to and you can just sign up through your type in Google AdWords with your Gmail login and you can access it for free, and let’s move on, the next one, the button’s not working. It’s probably hard to see in the back there but essentially you can type in whatever you’re looking for. You can make it broad, you can do exact or phrase, and you can even go geographic level or even browser level. Like you can get really surgical here.
But I like to see what’s happening for the vacuum bag. What are the most searched items for vacuum bags? And it’ll tell me how many monthly searches are happening or even like how many local monthly searches are happening based on a certain geographic region. I also like to use this when I’m building out Amazon listings or even my own listings on my website for keyword research. I want to know what other people are searching and I do it through Google. And I think the other side I would probably show you is, on Amazon.com in the search. For example, I was just helping somebody that manufactured a water bottle and their listing was really, really bad and I said, “Go to Amazon, type in “water bo”, and Amazon will literally show you all the index searches of what people are searching for water bottles, and giving you more keyword ideas to sort of put into your listing. So, they were only hitting a certain piece of the market and just with the Google keyword planner, copy in water bottle, you can see what people are searching with water bottles and you can also see what people are searching on Amazon. So, it’s like the stuff is right at your fingertips and these big companies don’t know what the hell they’re doing anymore and so that’s the way you can win. So, we have more time, so I’m actually going to keep going. Is everyone cool with that? All right. I have some bonus slides here.
So, the other rookie mistake I think people make is not understanding what’s happening with their competition. When I first started Crucial, one of my big mistakes was, I was like, “There’s got to be a better way to ship this product”. And I had this bright idea which was, I want to go shop on other people’s sites as much as I can and see how they’re shipping. It’s pretty reasonable, right? So I actually went. I started shopping like crazy. Actually, I don’t know what last time I went into a retail store, I mean I think this is probably the first time in a long time. So, I shop online all time to get ideas. What do I look for, I look at how it comes packaged, what kind of box is it in, how do they ship it on the shipping label? What’s in the top left-hand corner? What address is it shipping from? I take that address I put it into Google to see if it’s a 3pl, which is an outsourced warehouse, or are they shipping from their own warehouse? I look at the label; did they ship it with USPS,UPS Ground, UPS Short Post? There’s so many different ways to ship right now because shipping is a core competency. It’s a defensive position; if you can get better shipping rates than your competitors, you have a leg up in this crazy jungle of e-commerce.
There’s something called FBA, and you can use FBA. But if you want to sell off-channel, like I do, you need to ship product out of a warehouse. You need to print shipping labels. You need to manage inventory. You can’t just have Amazon do everything for you. I mean, this this is kind of a nice parlay into it is that, I believe that starting on Amazon is a great way to build a business, but not finishing on Amazon. Would you ever invest in a stock that had one customer? Would you invest your life savings into one customer? Into a stock that has one customer. No. So why would you invest your life savings into a channel, an Amazon channel, with everything. You build a whole business on Amazon and literally, they can suspend you or take it away from you overnight and it’s happened to me two times. Suspended on Amazon. And on the second time I was like, “I’ve had enough and I’m going to build a real brand on other channels”. Where do I sell? Amazon, eBay, Rakuten, Sears, Newegg, Walmart, Overstock, Wayfair, Shopify, Magento. Am I missing anything? Okay, all right, so I sell everywhere to win because I look at the world of e-commerce; it’s like playing Monopoly. How do you win in monopoly? You have to be on every piece of the board to win. You want to own the Railroad Park Ave. You want to own the slums. You want to own it all because when somebody lands on that piece of the board, you win.
The other really interesting advice for people, is there’s this competitive intelligence. A lot of people don’t know about this. Guaranteed, Jay over there doesn’t know about this and this is going to pay for the price of admission, which is free tonight. So, after 911 happened in the United States, America was like, “Shit we can’t control our borders. We need some sort of outside help because there’s a lot of containers. We’re importing more than we’re exporting. We’re an import nation. How do we control our borders?” So, they essentially, they took this bill of lading. When you import something to America, there’s a receipt that’s on file and the government is too bureaucratic to keep track of those receipts. So they send them to these companies like Panjiva, which I use personally, to essentially record the transaction in a database. And then the government buys back the transactions in the database, but Panjiva open this up to everybody. So, if I want to know where lululemon is buying their product today, I go to Panjiva, I type in Lululemon and I can see every shipping record that Lululemon has created. That’s crazy, right? So if you’re looking to buy, if you’re making the next greatest idea which is a lightweight backpack, you can go and see, okay where is Jansport? That’s a blast from the past. Where is Jansport buying their bags from? We want to make them. Or where is Herschel buying their bags from? Let’s make them.
So, essentially, I talked about free. It’s actually expensive to use the software. It is. So, two hints, okay. The first one is a nice one. You can go to the public library in New York City and you can hop on a terminal and use it for free. They have it at the terminal at the library, the large library in New York. The main one. Two; you can get a free demo of the product on Panjiva and if you like what you see, I suggest you buy the software. But you could do a command-shift-three if you’re a Mac user. If you’re a Microsoft user, I don’t know, anybody? How do you take a screenshot from Microsoft? Okay, nobody knows. Okay, print screen, thank you. And then drop it into Paint. And then there’s a free one called Port Examiner.
But, like literally, all this data is at your fingertips to actually make all these products yourself and to do it better than what’s already being done. You just have to figure out what do you want to solve, what’s the problem now, what’s the itch you want to scratch.
I’m going to keep going until I can’t go anymore. so, by validating the idea… is there questions by the way? Should we go to Q&A?
Warehouses. That’s a good question. So, I left the street and started building this business for my Upper West Side apartment. Then I moved to Harlem, with a warehouse. And I hired my first employee, then my third employee, fourth employ. Then moved to Little Ferry, New Jersey. Had about 15 employees. And dealing with the people that really dedicate their life to a pick and pack operation of a warehouse. You’re dealing with a certain type of economic status that I was never accustomed to.
So, to answer your question directly, I had so many OSHA violations that I needed to actually get rid of my warehouse and I outsourced it to a third-party logistics company, which is known as a 3pl. It’s called a 3pl; it’s a third-party logistics. That’s what it stands for and it changed my life. It changed my relationship with my wife and it actually was her idea. She should get the credit for it. And so, it really got to a point where we were bursting from the seams.
And for me, it’s all about another rookie mistake. It’s like you want to focus on your core competency, you want to focus on building your business. If you’re great at marketing, you don’t want to be managing a warehouse team, right? So, for me, I outsource it to a company in New Jersey called Swan packaging. Swan, SWAN. It’s a boutique third-party logistics company. Very small, family-owned operation. Because, kind of, the thought of actually getting rid of your warehouse operation is like crazy. because you’re like, “Am I going to stay in business? Or is my profit going to change?”. It allowed us to really focus on what we’re good at, which is solving problems and our core competency, which is marketing and building a brand. Not managing a slew of warehouse workers who are smoking pot, watching fish die in the river, sort of, all day. These are real stories here people. all right, good.
Alright, so to two questions: how do you expand internationally, right? And two, is how do you drive direct traffic from amazon? This is very touchy. So, the first one is an easy one. The second biggest channel for Amazon. Amazon US is the biggest property that Amazon has. The second biggest, anybody know the second-biggest channel property that Amazon owns? What? Japan? No. Canada? Europe? I heard Europe. Actually, it’s not UK. someone said Europe, okay.
This is my book that I wrote, it’s for you. Cheaper, Easier, Direct. You can find it on Amazon, no surprise. So actually, Amazon Germany is the second biggest channel, and then it comes to Amazon UK and then Amazon Canada. So, I would be spending… like right now, it’s a very crowded marketplace in the Amazon world. I would be focusing my energy on Amazon Germany and translating listings appropriately in German. And because it’s a ripe opportunity that nobody’s really tapping into. All right, so that’s the first one. Right? You said Amazon Europe.
And then the second piece was how do you direct customers to your own site? So, this is a little bit of, sort of, art and science, and so I’m not going to go on the record completely on the question. But if you’re a manufacturer, okay, and you make whatever you want to make, you actually have the ability to decide what’s in your package. Right? Now. If you have a warranty card for your product, you can collect email addresses and remarket it to those individuals. So, it’s against Amazon, let’s be very clear. It’s against Amazon’s terms of service to redirect any traffic anywhere else, however, if you have a warranty card in your package, you can collect that email signup and remarket to those individuals for warranty purposes only. Yeah? Okay. Glad we’re all on the same page. so that answers your question? anybody else? QA here.
Ah, what can you do wrong where they suspend you? So, I’ll give you my personal mistakes on Amazon. One: I mate replacement filters to fit vacuums. So, this brand called Crucial Vacuum started making Dyson filters and Dyson does about a billion dollars of business with Amazon. When James Dyson speaks, Amazon listens. So James was like, “Amazon, Crucial Vacuum is making counterfeit Dyson products. It’s really imperative that we would make sure that they stop this unlawful behavior. That’s number one. So, you got to be careful about legal jargon. There’s a lot of mistakes that are made where people don’t dot their “i”s and cross their “t”s with legal jargon in their own listings. I think it’s very important to make sure legal is involved.
The second reason is I was doing so many orders on Amazon and I didn’t have a system in place. To make sure, if you sell that bracelet on Amazon today and you sell 10 on Amazon. Or if I sell 10 on Walmart or Shopify, it doesn’t update Amazon. You need to have some sort of central inventory managing the process and I didn’t have that in place, which is why I started Skubana, which is a multi marketplace system to manage your business all-in-one.
Not yet. Inventory can be managed across all the channels I sell on in real time making sure everything’s updated appropriately. And so, for me, I oversold inventory. It’s Skubana. I’m not here to sell my software, but this is what we do right? This is coming out of an itch that I had to scratch. So, I oversold inventory. When you oversell inventory on Amazon, you don’t give a proper experience to the Amazon user, to the customer. I oversold like 250 items on Amazon and Amazon was like, “We’re dropping you, you’re done here. You oversold all this inventory, you promised it to our customer, now you have to refund all these customers. People go to Amazon because they want this amazing experience; they want the cost, they want the convenience, the selection, and the price. And I couldn’t abide by that.
If you send in the coupon code, it’s an amazon purchase? Yeah, that’s completely fine. There’s actually a really interesting company that does that right now, which I suggest everyone check it out. I have no relationship with them but they’re called Alpha Grillers. Alpha Grillers. These guys have private labels. When you open the Alpha Griller, it’s a temperature gauge for when you’re barbecuing meat and you open the box, you feel like it’s an Apple, like it’s a Microsoft experience. You feel like it’s a real Microsoft experience when you open that box and so they actually have coupons inside. You can join their discount club and they just bring you back right to Amazon. They have their own. They build up this club for you to actually create reviews. You bring reviews back to your new products that you launched on Amazon. It’s quite fascinating what they do. so highly check them out.
Massive. I just said before, you start on Amazon maybe, but you don’t finish. So, for me, my second biggest storefront is my Magento storefront. my third biggest now is Walmart com Walmart is now understanding it should be building a marketplace for more selection, for convenience, for price. And so, I highly suggest people don’t just sell on Amazon. It’s not a business to me, if you just sell on Amazon. It’s a channel. And especially if you’re selling your business or if you ever want to sell it, the multiple you get for an Amazon business versus being an actual branded business with like diversified revenue across local channels, the differential is probably a 4x.
Yeah, I sell in 15 channels. 15 different channels, maybe 16 now, maybe 17. I don’t know, I can’t keep track anymore.
I think that if you just segment yourself to just being on your website, I think it’s a mistake. I think that if someone’s looking for running shoes and you’re not on Amazon, and on top of that, people go to Amazon for social proof. Do you ever go to Bestbuy and you’re like, “Wait a minute, I want to see how the reviews are on this.” Well, where do you go? You go to Amazon. So, it’s a social proof mechanism as well. Not just being relevant in the world. This is what I believe. This is my philosophy; that I want to look at e-commerce like monopoly.
I do think you should have your own website, absolutely. You can create a shopping cart super quick. Shopify, Wicks, Big Commerce, Magento. You can use all these systems to build them and to run your business.
I go through the validation. I go through myriad problems. for example, I’ll give an example. Simple Human Garbage Bags. Has anybody ever heard of them? Simple human. It’s kind of like, an oxymoron. It’s a luxury garbage can. Luxury garbage can. My aunt, we were at the beach, we went to her beach house, and she was like, “Chad, these garbage bags are so expensive. You make vacuum bags. why can’t you make garbage bags and do it better?”
So, a year later we came out with Simple Human Garbage Bags. And I went through the same validation ways I showed you. If you go to Simple Human Garbage Bags on Amazon, people are complaining about how expensive it is for a piece of plastic that you throw away in the garbage. So, we developed our own Simple Human Garbage Bags. This is just one example.
Walmart.com. So, they just opened up their marketplace to other sellers and we reached out we were persistent. I badgered them for weeks and weeks and they let us onto the market place and it’s fantastic. It’s really, really a great place to sell because you can get that much more exposure. If you email me, I can introduce you to them and I’ll hook you up.
So, I got to be politically correct here. Crucial Vacuum, Crucial Air and Crucial Coffee are on Magento. Magenta was bought by a private equity company not so long ago. And so, I really wanted to get a sense of what Shopify was like, and save some money on top of that and build a new next-generation site that’s quicker than what I had. And that was my approach to doing it that way. I highly suggest, based on your needs, that you contact somebody who knows about the e-commerce space of where your product is, so you can pick the right shopping cart, because they’re not created equally. All shopping carts are very different and based on your needs.
It depends. Are there variations? Is there complexity to your SKUs? Is it a very straightforward
So, I think everyone should A) give yourself a round of applause for coming to learn tonight. Thank you for coming. You can watch Game of Thrones later or Breaking Bad or whatever. I’m sorry, I’m dating myself. Anyway, thank you for coming. Get to know each other. Introduce yourself to the person that’s sitting next to you. I think it’ll be a valuable introduction. Come chat with me anytime. Contact me, email me, I’m here to help.