E118: Under the Hood with Cory Stout Part 1 – Trimming Down SAAS Subscriptions
We've released 4 Under the Hood episodes so far and we've been getting a lot of good comments about the segment. It seems to resonate with a large listener base, and since we've been really happy about your feedback, we're bumping things up and releasing more of these episodes.
For today's episode, we have Cory Stout of Woodies.com on the spotlight. Cory is living a nomadic lifestyle while running Woodies, and since automation is a big part of his business, he has been racking up a long list of SAAS (Software as a Service) subscriptions. Today he and I talk about his subscriptions and evaluate whether or not they're worth keeping.
Some conversation points:
- How Cory got into ecommerce
- Why he sold his first business to his AirBnb host
- The background of Woodies
- Why he chose to sell wooden items for his second business
- His mom's role in his business and the “2017 Employee of the Year” award he gave her
- His SAAS subscriptions list (spoiler alert: it's a long one)
- My evaluation of his SAAS subscriptions
In Part 2 of our conversation, Cory and I continue to evaluate and talk about his SAAS subscriptions. Stay tuned for Part 2 on Thursday!
Resources mentioned:
As always, thanks for listening to this episode. Until the next one, happy selling!
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 118 of the EcomCrew Podcast. This week we're back with another Under the Hood segment. We've been getting a lot of really good comments on this segment, so we've kind of bumped up the frequency of these a little bit. Not sure we're going to be able to sustain them forever, but for right now we're trying to get as many of these Under the Hood segments in as we can in between other interviews and other topics.
So for episode 118 and 119 we're going to do an Under the Hood segment with Cory Stout from Woodies, a really interesting guy. He's got a great business. Again I love doing these Under the Hood segments. If you want to be on a future Under the Hood, just go to EcomCrew.com/UndertheHood. Don't be bashful; we’re really easy to talk to. These make great segments.
If you enjoy listening to this, you should be on this segment. Don't be just a consumer, be someone else who gives back to the community, and be a part of this. I think that it's a great way to tell your story and get some help and advice along the way. So if you want to go to the show notes and comments for this episode, go to EcomCrew.com/118. And without further ado, let's crack into this Under the Hood segment with Cory. See you on the other side of this break.
Mike: Hey Cory, welcome to the EcomCrew Podcast my friend.
Cory: Hey Mike thank you very much. I've been a listener for a long, long time. So this is really cool to be on the show.
Mike: The pleasure is all mine man, and I definitely appreciate you doing this right before the holidays. We were just talking for just a couple minutes before the podcast; you have an interesting nomadic lifestyle, which is cool. I've done something similar, but you mention that you're at some family right now, and I appreciate you taking time away from family to record this.
Cory: Yeah sure thing.
Mike: Yeah so just so everybody knows, this is another one of our Under the Hood segments. We've been recording several of these lately, and I'm just really pleased the way this has been going. I think that this is a new interesting and neat content for the EcomCrew Podcast. It's a way to identify with a wide range of people that are entrepreneurs just like everyone that listens and myself, and obviously Cory here.
I think it's interesting as we've had some people on the podcast for the segment that are just getting started, some that are way further along on their journey. And I think it's just neat to see the diversity. And you'll see that here as we talk to Cory. We didn’t have a chance to talk much beforehand. As I mentioned all of these episodes we try to do as little prep as possible to make them not staged, and just be able to have like an open candid on the fly kind of a conversation.
So with all that said Cory, the first question I've been asking everyone because I think it's just a neat conversation opener is how did you get in e-commerce?
Cory: Okay, I graduated University of Florida in 2009 and there were no jobs, so my friend Mike happened to be living in China, he was teaching English. So I just went out there for six weeks just to see what it was all about. And I quickly found out like, oh this is where all the stuff in the world gets made. So I started talking to suppliers that I’d at the markets, I found some cool products, and so I brought them over to the states. And then I got, I just felt like online was the way to go. So I got a BigCommerce store if you remember way back when…
Mike: I do, we were on BigCommerce ourselves at one point.
Cory: Yeah that was the entry point. And then through them I contacted – even then Groupon was a big deal like in 2011, they were huge. And I talked to the lady in Austin who was their rep, and I convinced her to run our product. And I think I was the third product ever to be run on Groupon.
Mike: Wow crazy.
Cory: That was we sold like 300 locally in Austin and a couple of months later they put me on a national deal. We sold like 10,000. That was not even close to preparing, so it just kind of went down. But then Woodies kind of came up.
Mike: Got you. So when you were doing the stuff in 2009 when you went over to China doing the BigCommerce thing, doing Groupon, what were you selling then?
Cory: Watches, silicone colorful watches, you could interchange the face and the band. So I think I was one of the first people to start importing those, but then within a year and a half there were at least 50 other brands importing this.
Mike: Yeah it’s frustrating isn’t it? It seems to be a common thread whenever you do anything that successful in e-commerce or anything really. There's a lot of copycats who always win to nip at your heels. So what made you get out of the watches game? It sounds like it was at least moderately successful between BigCommerce and Groupon. Did it just get too competitive and you let it go, or did you sell it? How did you make the exit out of that?
Cory: Yeah so the prices kind of kept getting drilled down from competition, and the product was just really cheap to begin with. So I got a lot of returns and warranty requests that kind of swapped me. And then it was I was traveling. I was in Bangkok, Thailand and my Airbnb host happened to sell these same type of watches. So I ended up selling the company to him. There was an email list of like 8,000 people, a little bit inventory, and I sold it for like 5,000 bucks, just got…
Mike: A few losses and enjoyed Bangkok for a while.
Cory: Mm-hm.
Mike: Cool so how long did you take a hiatus from e-commerce before you got into the next thing?
Cory: It was just a couple of months because even though I let that watch company go, I still had the Groupon connection. And the interesting part is my Groupon rep; I told him I had a new idea for wood sunglasses. He said he'd give me a national deal if he could invest in the company.
Mike: Wow.
Cory: And so we had – it was me, and then my China friends who were my sourcing guys, and then this guy that worked for Groupon. We were 30 partners.
Mike: It's crazy, interesting. I’m not even sure that's legal from him to do that, that's a whole another story though to say I'll put you on Groupon if you let me invest.
Cory: Exactly.
Mike: That's a little bit sketch, but it has worked out it sounds like for you which is good. We’ll kind of get into that. Cool so when did you start that then? It sounds like that might have been 2012, is that about right?
Cory: Yes six years ago, five, five and a half, six years ago.
Mike: Aha and what has revenues looked like for you like 2013, 2014, 2015, 2016, 2017.
Cory: So let’s see, working backwards it was like 100,000, 300,000 hundred, 600,000, and this year we're getting close to 1.5 million.
Mike: Awesome man, congrats that's awesome. And I mean is it a good margin business, you earn pretty good on that or is it tight margin, you have a lot of competition?
Cory: I'd say the margin is strong, I’d say it’s strong.
Mike: Awesome. So I mean I see a lot of wooden sunglasses. I actually saw a bunch when I was at Canton Fair. It seems like just like the wooden trend. Are you concerned about the similar things that happen with the silicon watches happening again, or because you've been doing this now for long enough you have a brand that's well known enough that you're not really facing some of those pressures?
Cory: I think I have a brand this time just going by the amount of Google searches that are directly for my brand instead of my category. That's been huge. And then I think I was kind of the first one to set the market with glasses, and now my best listing on Amazon has over 1100 reviews. So I feel like I have a strong moat to defend against somebody else kind of it takes a lot to get that amount of reviews.
Mike: Yeah I agree. I mean we are in a similar boat with a lot of the stuff that we've done for ColorIt. I'm sure there's lots of competition out there on Amazon and everywhere else. But being first to market means a lot and you have to almost try to screw that up. And it's easy to do, you can like run out of stock and your best product to be out for a couple of months, and try to re-launch and probably be completely screwed pretty quickly. But as long as you do the right thing, so for you you'll be in good shape.
Cory: I hope so.
Mike: So is it just wooden sunglasses? Is it that one thing, or do you have accessories or other things you're looking to getting into as well?
Cory: I’ve got wooden watches, and they were a lot stronger but the competition for those things has been out of this world. I don't know if it's like the e-commerce starter pack, it’s like the garlic press. Wood watches is like the entrepreneur soup of the month, and it's just like I know that these people buy them for eight dollars, and they sell them on Amazon for like 16, it’s crazy.
Mike: They are making pennies because after fees it's just brutal. Okay interesting cool. And then what about channel split on the 1.5? How much of that is Amazon, and how much of that is your own Shopify store, and then how much of that is other platforms.
Cory: So I’d say it’s 85% Amazon, 10% my own domain, and then 5% is just like random source of income, like if a company wants a thousand sunglasses with their logo on it, it'll be that income.
Mike: Got you. And how many employees do you have? Are you just kind of a one man band, do you have other people that are helping out with all this?
Cory: It’s just me, and then I got my mom doing customer service which is the greatest thing in this and she is awesome at it. I just got her — just awarded her 2017 employee of the year plaque.
Mike: Awesome, I love it that's awesome man, that's cool that you can — I typically say don't get involved with family members because all they can do is empale [ph] you a lot of times. But it's cool you have that awesome dynamic. Cool so I guess the next question I have is what are your goals for 2018? We’re recording this at the very end of 2017, will go live at the beginning of 2018. You did 1.5 this year, it looks like you’ve been kind of doubling every year, is that the goal, you’re looking to do three million next year?
Cory: Yeah that's the goal is to double. I think there is some opportunity to grow faster, but it would add so much mess to my life. Right now I'm super light. I travel with one suitcase, and I'm anywhere I want to be. And if I try to go any faster, I feel like I have to take on employees and more responsibility, stuff like that.
Mike: Yeah makes a lot of sense. So where do you expect your growth to come from in 2018 because I can tell you as someone that’s been on the same trajectory, it gets harder and harder every year to double. It isn’t equal or the same or easier as you get bigger, it definitely seems to be harder. So where do you see your additional 1.5 million of sales coming from in 2018?
Cory: It's a good question. I feel like the Amazon engine is just revved up, so there's some amount of natural growth just built into that. The place I feel like I could really make some gains is with email marketing. I’m pretty much not nonexistent but I send out random emails. I just can set up on Klaviyo with a guy that set up a bunch of flows for me, and then Facebook marketing. I'm pretty much spending 300 a month when I could be doing a lot more.
Mike: When you say 300 you mean like $300 or?
Cory: Dollars.
Mike: Okay like literally 300, okay got you. Any international expansion, are you already in some of these other markets?
Cory: Yeah I’ve got all the Europe marketplace is set up, I’ve got Canada set up, I've got India set up, and I just got Japan, the goods just got checked into FBA. I haven't seen great returns at any of those, but they're there and hopefully they'll grow.
Mike: If you add up all of the EU and Canada, what percentage of that is it to your Amazon US?
Cory: Maybe 2%.
Mike: Oh wow, that’s definitely on the low side. Hopefully that will change. It might be just a cold chill thing. There’s definitely some products that respond better in some of these international markets. But I've been talking to a lot people about this because we just are doing a big initiative to get into those other markets. And we have wide variety of products, so I think that something will stick in each of those, because we're doing medical products, we're doing baby products, we are doing coloring. So hopefully between all these different things, something will hit some traction in those international platforms.
Cool, those are all the questions that I have right now that I can think of, and Abby did a pre-interview with you and was nice to have filled the stuff on a spreadsheet here for me. So I know in advance the main thing that you want to talk about is just kind of doing a SaaS off audit, which SaaS just for people that don't know what that stands for, it's software as a service, software as a service. And these things can add up.
I actually mentioned this in my talk at Global Sources. I did a talk on ways to increase profitability in e-commerce, top ten ways, and this is one of my top ten ways. And I feel somewhat hypocritical even talking about it, because we're a victim of this as well. It's so easy to sign up for a free trial of a lot of SaaS software. You let it continue to go because you think eventually I'm going to use this, or I got a little bit of value out of that, or I’ll look at it later, and next thing you know, this line item in your PNL can balloon quite a bit.
So why don't you take a second to just to kind of walk us through all the different SaaS software, actually for pay because it sounds like there's a lot of extra on the right down here. What are all the different softwares that you have, what are you paying for them? And we'll go through that first kind of get everything down, and we can talk about where the pain points are and the things you might be able to cut.
Cory: Okay do you want to go one by one?
Mike: Yeah let’s do it, let's go through them one at a time.
Cory: Gusto, that's my payroll service, that's like 40 bucks a month. Zillow is my bookkeeping software. I think that's 16 a month. Feedback Genius, my review request, that's about 80 or 100 a month. Ad Badger is I’m on a trial right now. I think it's 150 a month, and it's Amazon PPC optimizer program. Inventory Lab is 50 a month, and that keeps information in a certain way to give to my bookkeeper that he can look at easily. Forecastly is 180 a month, and it's helping me forecast my stocks or stock on Amazon. Typeform is 20 a month, it makes beautiful forms, and I actually use it for a prescription glasses form to get the information.
Xavier is at 20 a month. That connects information from different SaaS products. So when I get an order from Shopify, it takes it to Typeform. And the customer closes that with Typeform and sends it to the optician who makes the prescription. Schedugram, 20 a month and that schedules and posts my Instagram content. Shopify, we all know what that does. Privy is 20 a month and it is my email newsletter pop up on my website. Klaviyo, spending 150 a month, all my email flow automations. MailChimp, I still have the $60 plan because I have a group there that I haven't fully switched over to Klaviyo.
Facebook ads, Google ads, Bing ads, AMZ Promoter is like 50 a month and it's an automatic service where someone gives you their email, it sends them a code to use on Amazon, and then it captures their email. Compass is analytics software, it’s 20 a month, and that’s just really key to a lot of good metrics just in one nice simple place. Trello is free, and it keeps me organized on my tasks. ShipStation is 20 or 30 a month, and my mom uses it to send out warranty stuff here from the house instead of through FBA. And that's all I got so far.
Mike: That's a heck of a list, my hand I got a cramp. But I mean to be honest with you like I don't really see or I hear that seems extreme, because I think that we probably have a similar amount. I guess that what I get the most confused with I guess would be Gusto, but maybe you're paying your mom as an employee just as a regular employee, so I guess you would need it for that.
Cory: And myself as an employee.
Mike: Yourself as well okay yeah. So I mean we use Gusto, I think it's awesome. I don't see how you could possibly get rid of that. I mean it would be nuts to get rid, I mean you're saving more than $40 a month and paperwork filing heartache. We use Quick Books. I've used Zillow before, and you've got to have one of the two. I don't really see a way around that. You got to know your numbers, you got to have accounting.
Feedback Genius is becoming less and less valuable man. It’s something that we've used for a long period of time. I'm actually using Jumps Send now, but just because I know Greg and he gave me the subscription. But I mean I don't know how you don't at least try to get reviews. I think even if you only get like five a month, that's worth 80 bucks. I pay $15 for a review. If I can get…
Cory: Yeah down by like 2% on Feedback Genius.
Mike: Yeah, it's frustrating. I mean you're basically paying for nothing at this point compared to what goes through.
Cory: And they send messages to Amazon's fan program basically.
Mike: Yeah, but again it's like how do you get rid of it because like it's like crack like for the 2% that goes through, I'll take anything I can get some. I mean it's that's tough. I don't know how you cut that. Ad Badger is actually one that I haven't heard of. It sounds like – does it do completely automated PPC?
Cory: Yeah it's still kind of in beta and it runs all the campaigns, and then you give it rules. You say like if a word has been clicked on more than 30 times, then put it in the negative list. If something has been clicked on at least ten times and has at least one sale, take it out of the auto campaign, put it into a manual under phrase match and then add it to the negative list of that auto campaign. It like just has all these rules.
Mike: Got you. That actually sounds really valuable; I might even look at this program myself and add another $100 a month to our PCC. We're using our team in Philippines to help with this now, but I mean obviously having efficient PPC spend probably saves you way more than $150 a month based on the sales numbers you talked about, so I’m not sure how you get rid of that either.
Inventory Lab, I have heard of, I don't use it. We're using really Sellics I guess to accomplish a lot of those things. But you probably want those statistics. Forecasting I have used, I know them pretty well. We actually use RestockPro, which is a competitor to Forecasting. I think they're both equally good.
We had used RestockPro back in the day, and I don't know if Forecasting has dealt with this year, but they didn't have availability to deal with local inventory. So if you had inventory in your own warehouse, you couldn't add that to the pile as a part of what Forecasting was telling you for reorder recommendations. So we ended up going with RestockPro and using them ever since, and we spend about the same amount of money. I think it's a little bit less, maybe one 120 a month for RestockPro. So I don't know that I'd switch for that because it's my time to learn the software it's not worth the 600 bucks a year, you'd say you can do something else with your time.
Typeform is a great piece of software for what you're using it. We use the free version, but for what you're using it for and the volume it sounds like you're doing it, I think it's well worth the 20 bucks a month. Same thing would Xavier. I mean we're spending way more with Xavier because we have a lot of — it has a limit on the $20 plan of the number of transactions you can do per month, and we're like way over that limit because of ManyChat.
Let's see here, Schedugram, I don't know anything about that program, but like having something that automates posts in Instagram seems like it's worth it to me, just because…
Cory: It is good. I kind of have this regarding Instagram, like I know I should be using it more but I'm not. And then so I just kind of keep Schedugram, I keep paying for, I rarely even use it. So how many months in a row without using it should I cut it, or should I buckle down and I flip and post?
Mike: I would say if you haven't used in three months you should cancel it, but in this case I would say go buckle down and do it, because my feeling is that Instagram would do well for you. Anything that resonates with younger people, which I think this does, it's kind of a cool hip thing. People that get to be my age you can put in some glasses on me, I don't really care anymore. I just don't want to squint; I’ve kind of given up.
But yeah I think it could do well for you, so I would put this on a list of like just go do it, and if you don't then just cancel. The problem is what ends up happening is, uh it’s only 20 bucks a month, but reality is it's $240 a year. And even more so it's some four figure amount of money when you go to sell your business, because it's all on a multiple at that point. So it's always worth it to get the stuff trimmed down.
Privy I think is an absolute necessity. We’re using a different one, but Privy is one that I've used in the past and definitely would recommend using moving forward. Klaviyo is one that is expensive as crap man. I mean we're about to actually go up to $700 a month just on ColorIt plus another 500 on IceWraps. It's a ton of money, and our margins are a lot lower than yours. But the reality is that email should be at least half your business. I mean it is for us at least. I mean I think it's — let me just login real quick. I think it was something like 56%, 53% as of today over the last 30 days.
So I mean there’s a lot that Klaviyo does. It shows you your total revenue, and then how much of that is from email, how much of it is from flows and campaigns and stuff. So yeah 53% on ColorIt.com is e-mail. So beefing up your e-mail game I think is definitely worth it, and I think it's well worth the 150 bucks a month, and there's absolutely zero reason to have MailChimp if you have Klaviyo. So we get that stuff moved over, and be done with it.
And then the other thing you can do with Klaviyo to kind of save some money which we do once a month or once every couple of months is just pulling your list of people who aren’t opening your e-mails and or buying from you within four months, you should just get rid of them. So every month actually like literally just did this last night, and cut.
I mean it's painful; it was almost 10,000 people got chopped off our list, which you never want to see, but it does save 100 bucks a month by doing that. And these are people that just aren't opening the email anyway, like all those are doing is hurting you because if you're sending a large amount of email that isn't being opened, it hurts your deliverability rate for your entire account, which is really important.
We are constantly scrutinizing and we actually spent the last couple of weeks running dozens upon dozens of tests with lock apps. That's another thing I would take a look at since we're talking about email. And it's not essential, you can buy pay as you go credits. So like you have them and there's no monthly fee.
But you can run the lock apps against your Klaviyo emails, and see what the deliverability is before you send out campaigns and make sure the stuff is hitting the inbox and not getting in spam or in the promotions tab or any of that type of stuff. So we’re able to increase our open rates, and if we can't raise it at least we get more out of our email. But yeah I don't see any way that you can get away from that, and I would just chop off MailChimp.
The next one was just Facebook ads. I don't count that just because that's not really a SaaS or recurring fee. My feeling, I always tell everybody here in the office because I get asked the question what's our budget for this, and I always say it's unlimited. I mean basically almost literally, because I mean obviously there is some limit at some point because you would end up out spending for your cash flow needs.
But for all intents and purposes, our budget is unlimited for any Facebook ad that is converting within our metrics. I mean it's like I look at it this way, if you went to the carnival and you're playing a game or like for every dollar someone gives you back eight dollars, why would you stop playing that game? You would never stop. But like if it's the other way around obviously you would stop. So, that’s basically the way that we look at it, so I wouldn’t consider that a part of this.
AMZ Promoter, we're using ClickFunnels to do stuff like this. Using AMZ Promoter is completely fine. I'm sure it's a good piece of software. The reason I opt for something like ClickFunnels is it's more versatile. AMZ Promoter is only going to really do the coupon delivery portion of it where ClickFunnels are doing other like free plus shipping offers and contests sign ups and other random content or other up sell flows and things like that. It also does coloring.club for us, so that membership site and everything else.
But ClickFunnels is more than 50 bucks a month. So if you're only doing coupon delivery, then I would say that AMZ Promoter is probably worth it for you.
Cory: When you ClickFunnels, do you send out all your traffic to your actual Amazon listings or are you keeping those on your domain?
Mike: So it depends on what we're doing it for. But a lot of times if we're creating at the top of landing page, it's almost always to get the traffic to Amazon. So we have a landing page as well as email capture form, and then after they give us the email, there's a thank you page with instructions on how to claim the coupon with an affiliate link on that thank you page that goes to the product with the affiliate code, and also we have a chance to get back at least a couple points on that transaction. And then we also send them an email as well. So when they enter their email they get an email with the code just to have it. Yeah, that's basically how it works.
And that's a wrap. And as I like to say for these segments for now because these are two partners with these Under the Hoods, these get to be a little bit verbose. We don't want the podcast to be much longer than 30 minute. So we’ve got an episode 119 from the second half of this interview with Cory, just again a great interesting guy. I appreciate him coming on the podcast, and doing this and sharing his story with the community.
If you have any questions or comments about this episode just go to EcomCrew.com/118 to hit the show notes and leave a comment. And until next episode everybody, happy selling, and we'll talk to you then.
