E177: Product Line Diversification and Having a Successful Amazon Launch (Under the Hood with Ryan O’Connor)
It takes more than a great idea to achieve success in the ecommerce ecosystem. As Ryan O’Connor will tell you, there have been plenty of hits and misses after he got his ‘lightbulb moment’ four years ago. Ryan is the co-founder of One Tribe Apparel and the guest for today’s Under the Hood segment. He also runs an SEO consulting business.
Ryah's goal is to boost monthly revenue so that he can transition to doing the business full time. He’s also looking for insights on how to launch new products successfully, particularly now that the company is selling on Amazon FBA.
How Ryan got his start in ecommerce
Ryan and I followed the same trajectory early in our ecommerce career. Playing poker also led him to affiliate marketing and by 2008 he had a small poker site. But it wasn’t until 2014, while leading the life of a digital nomad in Thailand, that he got the idea that has now evolved into a bohemian apparel and accessories company.
One Tribe Apparel is an LLC company that started in 2014. Ryan originally started selling his Thai inspired pants through an online store created on the Big Commerce platform. The following year he moved to Shopify. Today, One Tribe Apparel also has merchandise on Etsy and Amazon, with 25 wholesale accounts. From an initial revenue of $2,500, the company capped 2017 with $200,000 in revenue with 50% net margin.
Goals and Challenges
In the past year or so, One Tribe Apparel has been adding new products to expand its existing line and boost revenue but the efforts have been unsuccessful. Ryan personally would like revenue to reach half a million USD to justify working on the business full time. He also wants to do a serious Amazon launch as there’s potential demand for yoga accessories in the marketplace.
After getting a sense of where his business is at, here are some of my recommendations.
- Get on Google Shopping and get those ads to be profitable.
- There’s a huge audience surrounding yoga and the living a holistic lifestyle on Facebook that One Tribe Apparel can capitalize on. Upping engagement on the business page and launching a free plus shipping offer can be great marketing initiatives on this social channel.
- Complement awesome product photography with detailed information. It would be good to talk about eco-friendly materials that go into the product’s construction.
Thanks for listening to this episode! If you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.
If you have any questions or comments, feel free to leave them below. Happy selling!
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Full Audio Transcript
Mike: This is Mike and welcome to episode number 177 of the EcomCrew Podcast. I hope you guys had a great Labor Day weekend if you live in the United States. It was a nice getaway for me. I actually took a couple days off and went up to Mammoth Lakes California, first time up there, really beautiful. So, we skipped the episode on Monday, but we're back today with another episode, episode number 177 of the EcomCrew Podcast. You can go to EcomCrew.com/177 to get to the show notes for this episode.
And today we're back with another Under the Hood today with Ryan O'Connor. I want to thank Ryan again for coming on and doing Under the Hood with us. For those of you who are new to the EcomCrew Podcast, the Under the Hood segment is an opportunity for us to get podcast guests to come on the show. We give them one free hour of consulting and in turn, we record that and make it a podcast episode. So that's what we have here today. If you guys want to be on your very own episode of the EcomCrew Podcast, you can go to EcomCrew.com/UndertheHood and sign up for that today.
Before jumping into today's episode, I just want to let everyone know that the 5 Minute Pitch still has some open slots. And we did an episode about this; we’ll throw it in the show notes. But the 5 Minute Pitch is going to be the show that I'm recording with Steve Chu, Scott Voelker, and Greg Mercer. The four of us are going to be interviewing people about their businesses. And it's going to become a bracket thing where we're going to have businesses move on from round around.
The first round is going to be 32 businesses. And we're going to be kind of doing a elimination style whether we do like you and you can move forward or you don't. And then it'll be a little bit more in-depth from there. So, go over to 5minutepitch.com and sign up for that today. We're still accepting applications. That's going to be closing here in just a couple weeks. And the winner of this is going to get $50,000 cash. We will not own any part of your business or anything like that. It's just a $50,000 gift or grant from us.
And in addition to that, you'll get one day of each of our time, my time, Scott’s, Steve and Greg and we’ll come out to your business and talk to you about that and evaluate things and give you our advice on how you can grow to the next level. We're looking for a business that can really use this money, that has an innovative product or service and that can really use that to take their business to the next level. So that's the 5 Minute Pitch, go over to 5minutepitch.com. So without further ado, let's dig into Episode 177, get Ryan over here on the podcast, and do his Under the Hood segment.
Mike: Hey Ryan, welcome to the EcomCrew Podcast my friend.
Ryan: Thanks Mike. It's great to be here.
Mike: Yeah, definitely. And just so everybody knows, this is another one of our Under the Hood segments. We started these back in early January, not sure this one would go live. We've recorded quite a few of these now. It's been really good. I'm excited to be doing this. But basically the concept is to get a podcast listener on the line and interview them and basically give them a free hour of coaching and try to help them as much as I possibly can. And in return, we record these segments and they become public for everyone else to listen to. And hopefully as you're out there in EcomCrew land listening to the stuff, you can relate to this and hopefully be able to get some help from it as well.
And if you have any interest in being on the Under the Hood segment, you can go to EcomCrew.com/UndertheHood. So Ryan, let's dig right into it. And as you know, the first 15 minutes or so I'll be asking you a bunch of questions. And the first one I've been asking everyone that comes on doing this segment because it’s just a personal curiosity is how you got into e-commerce.
Ryan: So my background at the beginning was a little bit similar it seems to yours. I found out about the kind of online marketing world through affiliate stuff. I used to play some online poker, had a little online poker site, had an NFL related kind of sports betting site. I kind of hit those right at the end of the good times around 2008 before everything collapsed. And then that kind of piqued my interest. And I ended up getting a job at an SEO agency. I did that for two years. I went freelance and then I was doing a lot of work for e-commerce companies, kind of learning the ropes there, and I started kind of doing the digital nomad location independent thing.
I was in Thailand. I saw all these people mostly kind of from the west, from Europe, from America wearing this particular type of pants they make in Thailand. And kind of I'd been trying to figure out what my e-commerce idea was going to be and there was kind of like a light bulb moment just seeing all these tourists wearing this specific product, and it started from there for my current business.
Mike: Got you. And in what year was that?
Ryan: That was 2014.
Mike: 2014. So you've been at this for three to four years or so.
Mike: Cool. And let's talk about just revenues and stuff from when you started, and what your growth pattern has been like.
Ryan: Yeah, so the thing with this business is actually the entire time I've been doing it, it's almost been a little more than a side project, maybe 50% of what I do. But the entire time I've been doing this, I've been doing SEO consulting, basically still to pay the bills, not really knowing anything about inventory management or paid traffic really just kind of being an SEO specialist. So, when we started out, it was really small. I think it was like midway through 2014 around August when we were officially an LLC. And by the end of that year, we were only doing maybe 2,000 or 2,500 a month. I think 2015 was 85,000, 2016 was like 135. And then last year was 200.
So it's been good but it's not been that kind of explosive growth where I've been able to kind of say, hey, I'm going to step away from the SEO consulting. And so I do really want this year to be the year where I either take it to the next level or I kind of decide, okay, maybe this isn't the right niche and I sell it and I move on to the next project.
Mike: Got you. Okay. And as far as margins like on the 200k that you did last year, what's your net on that?
Ryan: So, the net would be, the net is about 50%.
Mike: Okay, so I mean it’s definitely really good margins on these products. It's definitely more than we can do for sure. So that's awesome. And what do you think you need to be doing to make it the full time gig? What would it like have to do in 2018 to make this something where you would stop doing the SEO stuff and focus on this full time.
Ryan: I think if we — I mean because we do have good margins and there are new products we're working on. We're trying to keep that. I think if we got to 500k, then that would be the level I'd have to do. And one of the other reasons and that is I've wanted to really expand the product line. I mean, we have 140 of our own skews now, and so that's been a priority and expanding on FBA. And so all that takes a lot of capital reinvestment. So, it hasn't been a problem for me to just kind of keep reinvesting I mean, for the time being, but of course, I want to get to that point where I'm drawing a realistic salary.
Mike: Got you. Yeah, that definitely makes perfect sense. And as far as like tech stack in channel distribution, let's kind of go over that for a second. You have your own store, which I'm on here on One Tribe Apparel. So, for anyone that's interested in seeing these types of pants and stuff that you're selling, they can go there. Is this a Shopify store or BigCommerce, what are you running here.
Ryan: Yeah it's Shopify. So we started on BigCommerce actually like mid 2014 and just wasn't thrilled with it and quickly moved to Shopify early 2015. And I've been pretty happy with Shopify overall and they're kind of keeping up with things like the Facebook Messenger integration, other channel integration. So, Shopify is the main store. At first I really did just want to focus on that, and I felt like I'd be spreading myself too thin to learn these other channels. I of course wish I got on FBA earlier now that we did do it last year. So Shopify is still the number one channel, and then it would be Amazon would be number two, Etsy number three, and then we have 25 wholesale accounts now.
Mike: Okay, and if you had to break that up into percentage buckets, what would those be like what's your percentage of sales on Shopify?
Ryan: Right. So it's changing pretty quickly with Amazon picking up a lot of speed. Like for January of this year, it's like Amazon is just right behind Shopify. And I think it's about like 40% Amazon, 40% Shopify, 20% Etsy. But we didn't launch fully, even now we don't have a full catalog on FBA. But for last year, the total for FBA would be about 20% and Etsy is about 15% from last year.
Mike: Got you. Okay excellent. I'm just looking at your shop, your Amazon account here real quick just like I have it in front of me. Is your seller name there One Tribe Apparel or is it something else?
Ryan: Yeah, yeah. If you just go to shop/onetribeapparel you can see them.
Mike: Okay, excellent, I got that up in front of me. Excellent, so I guess my next question is, I've asked a lot of questions, it wouldn’t be my first one. My next question is you're at 200k now; you're looking to target to get to 500k. In your mind, what are the things holding you back from being able to do that this year? Or do you see a clear path to getting there?
Ryan: Well, I think historically the biggest thing is — so last year on Shopify, the pants we sell are about, it was about 80% of the revenue. And we've tried all these other products. We have these kinds of more high end handmade handbags. We have kimonos, we have yoga straps. And on our Shopify store, these just really haven't clicked. They're doing better on Amazon and Etsy. And I think especially yoga accessories is a big one, but we've kind of tried new a bunch of new things and whether that's new product line or bringing in someone to help us with something like paid traffic, and it's just kind of bombed.
I mean, end of 2015 I brought on like an AdWords consultant, and I think their fee for like the two months was around 5K and there was an 8K sent for like 2,500 in sales. And so we just had a couple experiences like that where it's like, okay, we save up some money from the cash flow from like organic and social media and everything and then we'll try a new product line. And so far, nothing has really clicked. On Amazon, we actually unfortunately sold out. We had these yoga mat straps that just kind of flew off the shelf.
So, I think there's a lot of potential there for yoga accessories. That's a big one for me. And what I kind of want to do is really take the Amazon launch process seriously. I've already listened to your podcast on that twice. I don't think we did that right because again we were — it our first time. So I think the big thing is we can kind of test more products on our own site. And then I’d like to do a more limited run and have three to four big launches of new product [inaudible 00:11:39].
Mike: Okay, got you excellent. Well, I got a lot of background here from you on all this. So, let's – I’ll let you start firing away and asking questions. I know Abby does a pre interview so she kind of clued me in on some of them, but we haven't talked about them in advance. So, just start firing away and I'll do my best to help you out and give you advice any way that I can.
Ryan: Great. So, the big problem we've had is basically paid traffic, and I know you you've done really well with Facebook ads and other channels. Amazon is the only one and it's I'd say our ad cost suspended. I've gotten it down to about 25 to 30% now and our cost of goods and Amazon fees is about 35%. So that still leaves us with 30 to 35% on there. But with AdWords, with Facebook, with Instagram, we just haven't been able to make it click. So, I guess my question would be like looking at this in fashion, should I just focus on what I'm good at which is SEO and then Amazon, or do you see anything here on Facebook or other paid channels that you would recommend?
Mike: Yeah, so I guess the first thing I just want to ask real quick, I want to ask one more question. All these clothing items, are they your brand, are they private labeled or are you buying and reselling other people's stuff?
Ryan: Okay, so the pants and the kimonos are private label, the bags and all the yoga accessories are our designs and that we've created and has like a small design shop that does for us.
Ryan: So, the biggest selling products are private label. We're trying to move towards — this is like a design we made and so it's completely exclusive to us. And we also — our main manufacturer, they mostly sell just in Thailand still. So some of our prints were their similar products, we have some prints that no one else has on the pants.
Mike: Got you. Yeah, because I mean, I think as you're focusing on paid traffic, this is an important component. You don't want to be spending money promoting like something people can buy elsewhere. I think that's a pretty important factor. Let's break down the different channels you mentioned. We'll start with Google AdWords. I actually just did a presentation at ECF Live just talking about this specifically, just the difference between like intent based advertising versus interruption based advertising. So I mean, your approach to Amazon versus Google, versus Facebook are going to be very different.
But starting with Google AdWords, I mean, I'm sad to hear I guess you spent $13,000 here and got basically $2,500 in sales back which basically means $1,000 in profit or something like that. There's certain things that I'm always reluctant to sub out to an agency and these are kind of the things that bother me because your interest is on a line right. I mean they're making money no matter what. They got their 5k and whether or not it works out or not, it doesn't really matter to them because they'll just move on to the next — I guess the word I'm looking for here is sucker and I feel bad saying that.
But I've been that sucker too in this in this relationship because we did a thing, a similar thing with like a PR company last year or two years ago now. But just one of these things where they're like they know that no matter what they're going to win. And that's never like a good relationship to be in. So, for the most part, we try to keep this stuff internal just to make sure that our interests are aligned, right? I know what we're willing to spend and I can do that on a smaller scale. And I don't need to send for some huge commitment like this where the person is going to go home and sleep well that night no matter what, versus you probably stressed out about this for months, $13,000 isn't a small amount of money.
So I look at it from that perspective. I'd be surprised if there isn't some opportunity for you in the Google paid traffic sphere especially Google Shopping. Google Shopping ads tend to be the only thing still out there that isn't completely like arbitraged to death. So if someone is typing in yoga pants or Gypsy yoga pants, whatever you call these things hippie pants…
Ryan: Heavy pants, inherent pants are the two most popular.
Mike: Yeah, so they're searching for that. I mean they're looking to buy those like at that moment. And while there's a large variety of choices for them, which is a problem like I mean, one of the things you had mentioned in the notes that Abby had put down that this can get commoditized pretty quickly, which is one of the reasons why I asked if you're the one selling these designs. I think that's really important. One of the things you can do to defend yourself is have designs that if people like that design, they only can buy it from you.
But nonetheless, I still think that that Google Shopping ads will be the first thing that I would start with, with Google and not worry about AdWords as much and try to get Google Shopping to become profitable for you. Because if you can't do that, then you'll never get AdWords to work because AdWords is always going to be more costly than Google Shopping. And I do think there's an opportunity there for you to be going after things like hippie pants or whatever it might be for Google Shopping. And I think that's something that you can learn to do on your own.
There's plug-ins for Shopify now that make it relatively easy to launch Google Shopping ads, and I would definitely do that. And I think that that's something that you can get a win on in 2018 for sure. And then if you get to a point where that's working really well, you can start branching out and looking at potentially doing AdWords which is just going to a little bit more costly. For us AdWords has worked well when we bid on long tail stuff.
So for ColorIt we're bidding on very detailed long tail type keywords that we know are going to convert that are applicable directly to our products and that is a profitable endeavor for us. But bidding for like the head terms just doesn't seem to work anymore. It didn't work when we were doing treadmill, it doesn't work for IceWraps, it doesn't work for ColorIt. Bidding for something like gel pens just one of these like high head terms, they just doesn't convert, but bidding for something like glitter gel pens does work or bidding for something like Mandala adult coloring book, something that's a little bit more long tail, those things do work. So that would be my advice on the Google font.
On Amazon, I’m not surprised at all that you're able to get your costs down. Again, that's an intention based ad. People are typing in something like hippie pants and they're looking to buy hippie pants at that exact moment. Having that add up there is still incredibly cost effective. I mean, I do see that becoming a bigger and bigger issue over time as more people get on Amazon and these things get more competitive. But definitely something that's pretty low hanging fruit.
I mean, our Amazon ads do very well. And I would definitely continue to doing those, especially if you can keep your ACOS in line. And for some terms that you're trying to rank for, you might want to even bid a little bit more aggressively and try to get more conversions to try to be able to get your organic rankings up for specific terms.
But the platforms I'm talking about here are Google and Amazon, those are intent based ads and it's a lot easier to convert that stuff than Facebook which is interruption based advertising. So I mean you're showing people an ad that they're looking at on probably on mobile. I use — my slides at ECF for basically like they're on the bus. They're walking across the crosswalk, about to hit by a car, they’re in the bathroom. That might be the time that you get the most attention from them on their mobile device. So it's a lot harder and this is something that you'll need to try a bunch of different approaches for until you might find the right thing.
But I would be encouraged if I were you just knowing a little bit about this market because we did some research on this space at one point, ultimately decided not to get into it because it didn't really fit a bunch of other criteria. But there are very large audiences on Facebook for things like yoga that I think would be really good for you to target. And then it would just be a matter of what is your approach. Maybe it's some type of free downloadable content, that's worked well for us to get people on our list and then market to them over a longer period of time. It could be a yoga pose a day, or something that you send them, a yoga pose a week or whatever.
You know what's going to resonate with your audience a lot better than I do, but something that the barrier to conversion is very quick and easy, which is going to be getting their email address or getting them on a bot sequence or something. That's a lot easier than getting them to purchase, because again, they're probably very distracted. You get a four and a half minute window. That's the average session on Facebook. And it's hard to get someone to go through the whole purchase process that quickly. But if you can market to them over a long period of time, then you can drip in between your free content of different yoga poses, you can tell them about some new pants that you just got in, or whatever it might be, and sell to them at that point.
Another option might be like a free plus shipping offer. I mean, maybe there's a close out on one of these pairs of pants that you can buy, like really, really cheaply from the manufacturer and get yourself a few thousand pairs to make the whole process of setting this up worthwhile. And maybe they cost you $3 to buy and you can send them out first class shipping because they're very light, and you do a free plus shipping offer for 5.99 or whatever the number might be, and you just give someone a free pair of pants. Psychologically, that's going to work a lot better than trying to sell them a full price item, or whatever it might be.
And once you get them to buy the free plus shipping offer, you've done that micro commitment purchase. You've gotten them over that hump and you can get to a point where hopefully you can get them to buy again. And I think that that would be my approach for this and hopefully that all kind of makes sense.
Ryan: No, that makes a lot of sense. And to be honest, that's probably the one main thing we haven't tried. I mean, I knew like last year I knew video was getting big. So we got these two really nice videos done. We gave some money to a charity called Elephant Nature Park at $1 for every sale, and we went out to the park and we had this like, basically kind of looks like a fairly high end music video. And I kind of felt like this is it, this is going to be like the thing that gets like the — kind of goes viral and people are going to share it. It's like girls kind of frolicking around with elephants and this part that's like the cool free Park.
And we kind of worked that into the video. And I was just shocked at how expensive the engagement was. And then aside from that, I guess a lot of what we have done is more to carousel product ads and then [inaudible 00:23:14] a sale. I mean, and sales are really the only thing I've been able to get quite profitable on Facebook. If we're having a spring sale or like a new launch sale, that's worked for us, but I've never really been able to get a kind of like a funnel like you're talking about.
I actually had thought about it with maybe not necessarily the pants but like doing something let's say like free plus shipping on an elephant bracelet and then kind of doing like an upsell like when they get to cart like 50% off a pair of pants or 25% off a pair of pants or just getting them on the list and in the funnel like you were saying.
Mike: Yeah, I actually think that the free plus shipping offer on a bracelet is a brilliant idea and I think that that would work really, really well. That would be something I would try like in the first quarter of this year if you can pull it off. I mean it's a little bit of work obviously, like putting all this stuff together. It's not just as simple as throwing up an ad and five minutes later you're up and running. You got to have a plan and really think through exactly all the steps that you want to do here. But I would have — let's just kind of like talk through the process of what I would do for this.
I would have multiple assets for the ad itself created whether they are images or videos, at least two to three and realistically hopefully three different imagery assets or video works even better. So if you can put together a video whether it's with Animoto or something, if you have to do it on the cheap, or you can get someone to get some video clips done for you. Those tend to do better. And then work on your headline and your ad copy and work on getting an ad that's going to get you the cheapest conversions.
You'd be surprised that through your testing, like how much of a difference this stuff can make. And that'll help you start to hone in on the messaging and then you can start honing in on your audience. But a bracelet is one out, so you can ship that thing for under $2 or whatever the first class shipping rate is on that and I'm sure the cost of it is very cheap as well. So I mean, you can offer a very high perceived value item for something that cost you very little and at a minimum, hopefully break even on the whole funnel, the free plus shipping thing. And you can either send them to a page directly in your Shopify store where you're selling — how much is your shipping normally on your site?
Ryan: So, we basically have — for us shipping, we use a third party fulfillment center and we basically do $5 first class or $7 priority, and then it's free shipping over $60.
Mike: Okay, so if you use your standard shipping rates which is what we do just to make it easy to do this through Shopify, you can have a page where get this elephant bracelet free. You can just send the traffic directly to that, so you don't have to even get involved with something like ClickFunnels or whatever it might be although that works a lot better for up sells. Just doing it directly within Shopify does keep it simpler. And I think $5 should cover your shipping cost and the cost of the bracelet or at least get you close. Is that true or am I off by a couple of dollars?
Ryan: Well, the reason I haven't done jewelry so far is the warehouse, and this is one of those things I actually think I need to take another look at again this year. The problem with our warehouse is they don't offer any breaks on like lighter items. So, it's basically like dollar 65 base fee plus 65 cents for each item.
Ryan: And they have really low, I mean they have really low fees other than that. One thing I have looked into is we could either do this like it's like — we did it as a one month thing. We don't like to ship things from Thailand except kind of like some of our high end made bags. We do those made to order. But I could do as a one month campaign to grow this. There's even I've started looking into a little bit there's a couple of like suppliers on AliExpress that have bracelets like this for quite cheap just like in the range of 2 to $3. So we could even do something like do about ePacket for this promotion to get people on the list.
Mike: Yeah, I love that idea actually. And what you could do — so the way I would set that up basically is it's a free plus shipping offer. I don't know if you have back end capability of routing things based on like what's in the order. But like if they just take advantage of the free plus shipping offer only, then I would just ship it ePacket or from AliExpress. But if they purchase other things with it, which is like what you really hope would happen, then you can fulfill from your standard fulfillment center and just have that product there because then you can afford the buck 65 or whatever it costs to have them fulfill it, because it would be tagged on with an order that they're actually people are buying something else with this.
Ryan: Right, so it brings down the cost a lot if there's more than one item for each additional item. Yes, that's a really good idea as well. I could have 100 sent, a couple of hundred sent to the warehouse. And then if they just do the bracelet, I could just have it yeah, ePacket.
Mike: Yeah. So the way that we do it, we use Skubana and basically if they just take us up on the free plus shipping offer, then we route that to here and we just ship it from here. And here being we have our own warehouse in San Diego. We're based in San Diego, we have a warehouse here. And that free plus shipping offer, it comes from the factory ready to ship exactly in the package they send it to us. So, all we got to do is print the label and slap it on the package and send it out. So it's a couple of minutes a day.
We just line up all the free plus shipping offers, we check them all off in Skubana and print out however many labels we need. We have a high speed printer and just they can stick basically is what I say. We just peel and stick and it takes a few minutes, and all of our free plus shipping offers go out. And then if it's combined with a book or markers or pencils, or whatever else, we just let that go from our fulfillment center or whatever because it’s just easier to just absorb it into the cost of shipping the whole thing and it's faster for us.
We don't want to — we try to fill as little as possible from here. We just use the warehouse because we are here and we can, but that would be kind of the way that I would handle it I think from your perspective. So I mean, you just make it a skew on your site, put it up for zero dollars. Your standard shipping rates apply. So if they just only take advantage of just the bracelet, they're going to get charged $5, or if they want it faster it would be seven. If they take the $7 option, you can have it route to your fulfillment center in the US because that way it would get there faster.
And if they take the $5 option, you just put a note on the page that this thing takes four to six weeks for delivery, you're getting it for free. And I think that would be the way to kind of handle it, and then that way they're already on your store so like if they add that into your cart or to their cart, they're in the confines of your store and they are already being basically up sold natively, because they're just finding out about your store for the first time they're going to start clicking around and hopefully they buy other items. This is what we see happen all the time with our free plus shipping offers.
And then also you could install something like One Click Upsell that if they only by the free plus shipping offer, they get up sold to something else right afterwards with a discount like you're talking about. This is like one of these things where I would just be shocked if it didn't work well for you. I mean, sometimes I'm surprised, so I never say like absolutely this is going to work anymore because I have realized that there is no absolutes. But I know a lot of people that have deployed this process and some are just more obvious than others that they're going to be successful before you even get started because not everything has the math to work number one, and not everything has like the proper messaging or has the perceived value. But this does.
You can say that the bracelet is 20 bucks and they might legitimately be a $20 bracelet because there's such high margin in jewelry that you're going to offer for free plus shipping. And now you have them on your list, you got them hopefully like on a Messenger bot, you got them — ability to email them, you can do a one click upsell, all kinds of other long term marketing. I think this will work well for you.
Ryan: Yeah and I actually now that I think about it, one thing Facebook that I saved last year was someone was doing a free plus shipping on like a little elephant pendant. And even in the ad you could kind of barely see it but it said like free offer necklace. And it had — it was one of those ones with 100,000 likes, 10,000 like 2,000 comments, a couple of hundred shares, or whatever. And that kind of I was like, all right, I really need to figure out a way to do jewelry and accessories.
Mike: This is the kind that could go viral, right? You're talking about the other thing you did like just kind of crashed and burned and not really all that surprising. Some of those things are very hit and miss, but this could go viral because it's just like this is where you're like, holy crap, like friend the friends on Facebook like I just got this thing for free and they share it, and then it goes viral because everyone loves a deal and loves to get something for free. And I think this could be that thing for you.
Ryan: Right. Yeah, I agree. And that was going to be my kind of follow up question on that. So, what I realized after these kinds of higher end videos we did, we did the one with the elephant and part we did one in Hawaii was that people don't, it doesn't really necessarily seem to stop people's attention as much. So, one thing I was thinking or even for this, I'm going to be in Thailand to do kind of help oversee the photo shoot for our spring stuff.
And I was thinking of doing more video. I've seen this more lately especially on Instagram where you kind of have, you might have the model there but they're like talking directly to the camera. For instance, like hey, this is Sean. I'm here in Thailand; check out this bracelet, free if you click below me today, and points below our swipe up for Instagram stories.
So that was the kind of approach I was thinking of taking versus this kind of highly stylized, have it be the model and maybe dress like kind of bohemian style with a kind of like show the bracelet, talk right to them and be like hey, like I'm out here in beautiful Thailand, I want to offer you something special today. This is the deal and I Swipe up to take advantage or click below for Facebook or however I do it.
Mike: Yeah, I love it. I think that again, I'd be shocked; I’d love to do a follow up with you in a couple of months and talk about how things are going. And this would be like one of those things where I’d just be absolutely floored if it didn't work well for you.
Ryan: Yeah. And I think you're right. I mean I’ve seen it work a couple of other times on Facebook with just kind of the stock image from AliExpress. So I feel like if we get some decent photo and video and we split test it correctly, this should be the right pursuit for us on Facebook instead of just the direct sale product ads.
Mike: Mm-hmm. Yeah. Cool. So, there was one other thing I had written down here kind of in this group of stuff that while we're talking about it which is influencers. And I'm curious if you've worked with any Instagram or YouTube influencers for these products yet?
Ryan: Yes. So we have — in 2015 and 2016 we've tried to go all out on Instagram. It was working really well for us. We have 54,000 followers. The algorithm has kind of changed how much traffic and traction we get from Instagram and then the amount Instagram influencers now one, has shot up drastically since 2015. So, we don't do quite as much but in 2015, 2016 we're doing probably, we're trying to do 30 collaborations a month. And we do five to 10 paid and then the rest we find smaller accounts where they would just take a free pair of pants basically. And that's basically the main way we grew to 54,000.
Mike: Got you okay. Yeah man I just I know a lot of people that have had a great success with influencer marketing. I know other people that it's crashed and burned. For us we're in the crash and burn category because there's really not a good channel directly for coloring. We're about to really push this hard for our Baby and Tactical brand in 2018. But I would think that there's a direct correlation of like the hippie/ yoga type crowd on both Instagram and YouTube. And just using them to build your brand and get the word out I would think would be something that would be relatively successful for you.
Ryan: Yeah, so I mean we probably haven't given YouTube its full shot but we did also that year mostly 2015. We worked with a couple of different people, and then we were part of kind of like hey, I'm doing again on boxing or I'm putting together a whole outfit and like, these are the five different brands and it just really didn't move the needle for us. And then I think, I mean from what I've seen and from some of the other brands I’ve talked to, YouTube works so well when you can kind of do a tutorial or solve a problem, I think like a makeup video tutorial featuring a certain brand. And we haven't really been able to quite do that.
I did think there's — one thing I would like to go back and revisit is there's some like popular travel videos about Thailand and some other places where maybe we could sponsor that or bring them on as an affiliate. But what we've been doing a lot of at the end of 2017 on Instagram is we started doing — wanted to co brand new ways a month and that was working quite well. Basically what we do is just find a similar brand in our niche. So we did one with like these cool like ceramic coffee mugs, we did one kind of these van life t-shirts and we just — to enter the contest, there's just the simple kind of like tag two friends, you’re following both brands or each friend you tag is an extra entry.
And we grew 1,000 followers a day on those. And then since you're working with another brand, they benefit and they're not trying to charge you this kind of huge amount where you don't know if you're going to get any ROI, which I feel like is what's happening with Instagram influencers. They're just getting a lot of money thrown at them lately, and it's kind of skewed the market.
Mike: Yeah, no doubt. Yeah, there's definitely a lot of competition there. And I think that those guys are going to start to go through a period of realizing that the good days are over because I think that brands are asking why is that they're just kind of throwing money away because the reality is, is that you should only be paying fractions of a penny per follower because it's just kind of a shotgun hope and pray approach but yeah, anyway.
Ryan: Yeah, I agree. I mean, I think I'm in an Instagram Facebook group, I joined to help learn about growing ours, and they just have these crazy metrics that don't make any sense. I mean, the standard in these groups is for every 10,000 followers, they expect $100. So, they have 50,000 followers, they want $500, and for one photo, one post and there's just like let's say if we just look at a standard 3X, you have to make 3x back in sales to have any kind of ROI. I just don't ever see that happening, unless you have the most insane loyal following.
Mike: Yep. No, I agree. It's like the math is definitely tough. Cool. All right, let's move on to the next thing. What's the next thing you want to talk about?
Ryan: So actually kind of talking about that and all the different channels available. One thing I was thinking about a lot, first of all, I'm 100% going to do this Facebook funnel. But aside from that, I kind of thought I've split my attention in a lot of different ways, not doing everything correctly. I’m trying to learn to AdWords, trying to learn Facebook as is trying to all the different things to go along. And I have a pretty small team now and it's still not my full time job. So, one thing I've been thinking of doing for this year that we started testing is we actually have put a few drop ship items up this month for the first time.
I just wanted to see if you had any thoughts on an existing brand that mostly sells their own products also adding drop ship products. And the main reason for me doing it is I have a bunch of big press and link opportunities coming for our existing products. We’re on page one for a lot of the keywords. So my thought being the more categories I had the more traffic I could get from SEO as we've been kind of limited, just having basically yoga accessories, pants and kimonos as the main products. So we'd be able to add things kind of like more bracelets, flash tattoos.
And there's a good Shopify app now called model list, and they do US based suppliers versus AliExpress, which is the way I prefer to go. So, that was a long winded way of just asking, do you think it makes any sense to start drop shipping other products when you already kind of have an established brand?
Mike: Yeah, it's a tough question to answer. I mean, I know people that do this very successfully, whether they're a drop shipper exclusively, or they're using a hybrid model. Personally I'm not like a real big fan of drop shipping. The reason being is I just don't like someone else being responsible for my success. And what we've had problems with drop shipping is number one, you sell something and then you find out that it's not really available, like the suppliers run out of stock, very frustrating customer experience. You got to go back and say sorry, we actually ran out of this thing. Not always embarrassing but it takes up a lot of time, and I'm a very big like scaling kind of guy as well and those things like really, really hurt.
The other thing is they don't necessarily ship it on time, or they don't get you the tracking number in time. The product might get lost along the way like whose responsibility is it, those types of things. Communication back and forth to get that resolved takes time both on your part and also like the customers getting frustrated along the way, those are the things that that I don't like about it. There's obviously a lot of really big benefits like if you can sell things — we've been having a guy that's been here for the last couple of weeks in our office, he’s a friend of mine helping with the EcomCrew, he does drop shipping exclusively.
So I mean like he's able to live out on the road and live anywhere he wants. Has no warehouse, it makes it very easy. There's a lot of benefits to it as well. It lets you sell things that you don't have inventory for so there's no cost. So I definitely see all the benefits. I think the one question I have that comes to mind first for you that could be a logistical challenge is someone orders one of your branded products and then also a drop ship product on the same order, those would have to ship in two separate shipments. Do you have the margin to absorb that extra shipping cost because that can get quite expensive having to do that?
Ryan: Yeah, so what I did is for the drop shipping stuff we added, I built that basically in just as like an assumption and probably priced it a little a high just because I wanted to just test it and also just see I got some content written for the category pages and the products that we did want to try. I just want to see where we would rank. That's my number one concern. I guess the big thing on our end is just is cash flow like we're trying to — I mean, I want to put a lot of cash flow into growing our Amazon business which doesn't leave as much to kind of grow the One Tribe Apparel brand site.
And so that was kind of the big thing for me and then also I figured let's say we add — we already did just as like the test but we added about 30 bracelets. If those are going really well, that's something where I can go find a manufacturer, go direct to manufacturer or keep in stock. So those are the main benefits to me, but that's my biggest worry is the multiple shipping or even I mean if someone orders three different products and I'd have to go back, we have an affiliate program. If we decide to stick with the drop shipping, I'd have to adjust that because there's no way we could also then pay an affiliate on top of those kind of lower drop shipping margins from this product.
So, there's a lot to consider, but I mean, the big thing for me was I was just thinking both content wise drop ship wise, I'm not really focusing on the one thing I really know how to do which is scale things up from an SEO perspective. And it's at least twice I've thought about we're giving it a little test run right now.
Mike: Yeah, I mean, I think overall, I would do it like I would do for it in the situation you're talking about. I mean, the one thing I would do is not use stock photos. So, I mean from an SEO perspective that can be kind of a bad thing to do. So, I mean, if you can justify taking photography and writing your own descriptions, and not just taking the catalog descriptions and photography, then I would for it, I think that it's worthwhile for you to do it. I think the benefits I see for it are like you just said. You can test stuff before having to invest the cash to do it just to see if your audience is going to respond to it. I love doing that. That's one of the things that we've talked about on the podcast.
I was talking about that I think in my 2018 launch plan or one of my things I was talking just like ways to test stuff with an audience before dropping 1500K to go buy something, I think it's very important. So, I think that it does that for you. If you already have a list and you're growing the catalog, I don't know, we haven't talked about email marketing at all yet, but if you have something like Klaviyo, then you can do things like bought this, haven't bought that and you can put this stuff in automated flows. I mean, it's just extra cash coming in the door for very little work. I don't know, I don't see like the huge negative to it.
But I see negatives, obviously, to kind of address those. But, like the positives seem to outweigh the negatives in my mind just thinking about it for just a couple of minutes here and by a pretty big margin. I think it's like kind of like 85/15 kind of score, right? I mean, isn't like a 55/45 thing. I think there's a pretty good excuse to do it.
Ryan: Great, yeah, that all makes sense. And yeah, for the stuff we did we already added our own descriptions. I didn't do the photography yet, but that's makes a lot of sense and that's something I can do when we do our big kind of photo shoot in Thailand in about a month. That all that all make sense.
Mike: I think it's really important, like we have a case study ourselves with a couple of different brands, I mean treadmill.com and Icewrpas.com where we were selling or still even are selling other people's products on IceWraps. We've gone and did all of our own photography. And when we did that specifically on IceWraps, I mean this was a site that was just kind of languishing from an SEO perspective. And when we went through in and redid all that it made a massive difference, and it also I believe is part of our success with treadmill.com as we were doing SEO in the early days.
We went out and not only did all of our own photography but we hired a model and like did our own videos. We would fly out to — the manufacturers were all were nice enough to have us be able to go out to their facility and provide us with like a studio. And as long as we paid for the time, they let us use all the equipment. And it was a lot cheaper for us to go there than have 20 different treadmills shipped to us and try to do it ourselves. By having our own photography and video around the product just made things a lot better.
Ryan: Right. Yeah, no, that makes total sense. And we have the capability to do that and especially, it's much, much cheaper to get fairly professional photographers and studios, and things in Thailand than it is in the States. So I mean we have the ability to just do that product stuff for a couple of days. So yeah, right in depth. That sounds new, we’ll definitely do that.
Mike: Awesome. Cool.
Ryan: So the one other question I had maybe a little different than all the marketing stuff is I wanted to ask you about kind of how you determine pricing and margins because I think I tend to overprice and maybe build in too big of a margin. I'll give you an example with our main product the pants we’re on the higher end for that. Our three biggest competitors, one is at 27.50, one is at 25, and one is at 22. Two of those ship from Thailand and not from the US, so it's like a two to three week delivery.
But then even on Etsy and now on Amazon, people are — some of the manufacturers are going right to FBA. They're dropping the price to 16, 17, $18. So I just wanted to see if you could give me any advice on like how you build out margins. I feel like that's one of the hardest parts of e-commerce and I've tried to read a lot about it. But I mean there's no right answer really. But I just want to see if you had any take on that.
Mike: Yeah, you mentioned all these different competitors’ prices. What was yours again on that item?
Ryan: Ours is 28.
Mike: 28. Yeah I mean, it's tough to answer. I mean, I'll give you a bunch of different information, throw a bunch of things at you to help you kind of get you some things to think about, I guess. But so to answer the question, first off, like exactly how do we approach it? We've gone about it probably the most half ass way that or maybe an incorrect way that there possibly is, maybe or maybe not. But when we're developing a new product, my goal to start with was to double my money basically.
So, if I buy something for 10, after I've sold it, I want 20. So and that would include, like all the fees from Amazon, inbound freight customs, just like all in costs like after I've sold it obviously minus overhead. It doesn't count like employee costs or things like that. That would that would be like my target. And what I've realized is even that isn't enough, we want to have even higher margin than that.
So now we're latching that up a little bit more trying to be more like 1.5. And the reason we look at it from that perspective is because like every product is different in terms of shipping costs, especially like on Amazon if you have something that's like oversized versus not, or if it's small and lighter, standard oversize versus large oversize, or whatever it might be. So, I look at it basically like all in. And also duty is like another thing like an inbound shipping. So, I look at that all in cost and use that as my comparison.
And what we found is a few different things. It's actually interesting. We ran some experiments accidentally on a few products where we raised our price in hopes of slowing sales down because we were running out of the product on Amazon. And what we found is that our sales actually went up when we raised our price. It was ridiculous or stayed the same but they didn't go down. Now there obviously is a threshold when you raise it a certain amount where it does start to hurt things. But the bottom line is the tendency is to do this race to the bottom thing where you see someone else lowering their price, you lower yours and the next thing you're selling it for like these really slim margins.
What I would encourage you to do and what we've done here is like you make a spread — if you can make a spreadsheet and put in these different price points and put them like projected units sold per month, whatever you do like you're going to be better off selling less and making the same amount of money than selling more and selling the same amount of money. That’s just like basic math right, I mean because there's overhead component to that as well. And so there's some line as you're going from 28 down to 17, yes there probably is a number if you sold X number of units per month that you'll make more money at 17 than at 28, like overall net profit in the bank.
But that number is going to be huge like you're going to have to sell like a ton more widgets to get there. Is that even possible? Is that volume even possible? So, I guess the bottom line is you don't want to erode your margin just for the sake of following everybody else's like number one. Number two, what we've been able to find is that we've been able to — our products like on Amazon, everything that we sell is way above average. Our selling price on every single thing we have on Amazon, except for the two brands that we have exclusivity for where we don't control the price. And even on those two brands are still higher than a lot of the competitors out there.
We're going for that premium look and feel and brand type aspect rather than just having a commodity even though we're still selling commodities like a gel pen is a commodity. But yeah, we can sell our gel pens for 30, the same ones that other people sell for 10 because of all the other things that we've done. So, if you can continue to work on those aspects and kind of follow our lead on what we've done to make that premium brand, I think you'd be way better off than just trying to bottom fish on the commodity market.
Ryan: And that what we’ve kind of done to date. We definitely tried to say that – no, I kind of cut you off, but that's what I've tried to do to date and almost like I'm where I'm wondering like am I doing this too much. But we've tried to make it hey, we ship fast from within the US, we've tried to introduce kind of other higher end products like handbags. And then the big thing I really want to do for Amazon this year like I mentioned is these basically like a yoga mat bag with this really nice like rich embroidery.
And we just did a small run of those on Amazon, they sold out super quick and our margin was — not including Amazon fees but the cost of goods and shipping it to Amazon was 80%, so really good margin. And that sold without us even doing any advertising, any Amazon advertising. So that's going to be my focus this year. We have a little more control of the quality whereas can sell a little bit more of as I said the commodity. So this is my plan for Amazon this year is to really working on the designs, we have to launch three to four new yoga mat bags and those we have a little bit better quality control for and also design control and they're completely unique to us. So for Amazon that's my primary strategy.
Mike: Yeah, so I mean what I would do, what I think is very important here with this is to illustrate this stuff in the photography like have some sort of infographic or something that calls out this quality, right. I mean, like why is this thing $28 when I can buy it for 17. So something that points to the — and forgive my complete ignorance with this, I'm going to start saying things that are probably completely incorrect, but maybe like you have an arrow that points to the waist band and it's just like triple stitch, ultra adorable, elastic or maybe it's like made from non rubber products, like good for the environment like as the other thing on the waist band.
And you point to the fabric and it's just like quadruple stitched woven silk blah, blah, blah whatever the hell it is that makes your fabric better than the next guy or the way that it's cut or the factory that it's made in is fair. None of that stuff is on your website here or on your Amazon listings. You have absolutely phenomenal lifestyle photos. I mean, you've absolutely crushed that aspect. But I think if you remove one or two of those and put in some of these other types of things I'm talking about, that can really help you.
Because I mean the reality is that I mean the polo shirt that you buy at JC Penney's versus the one you buy it at Nordstrom, or at Saks is like the same damn shirt, but you're convinced somehow that it's worth $100 at Nordstrom versus $21 one at JC Penney's or something and it's probably pretty similar here. So maybe if you can get that messaging across, convince people in an online format, the lifestyle photos aren't going to be enough to get them over that hump as important as they are like, they're really important, please don't take me wrong.
I mean, like, again, you've got awesome lifestyle photos, I mean it's multiple models and all these different poses and super high quality. I mean, like professional photographer obviously taking this stuff for you or that you're a professional photographer by trade.
Ryan: I’m not.
Mike: I mean, they're good photos but again, I think if you look at — I can send you after this call like to some of the things that we've been doing in this regard. And it's pretty shocking like the difference it's had in our sales. We've actually been able to double our conversion rate by adding some of these types of images, infographics, and call out type things to our listing. And a lot of it is just marketing. I mean, I don't want to say things that aren't true, but maybe the reality is that your waistband is the same exact waistband as the guy for $17 but you can call out what makes it better and he doesn't take the time to do that, whatever it might be.
Ryan: That makes a ton of sense. Yeah, that's a really good idea. And I have seen that in some other stuff where I think maybe I would look at something like a high end like men's travel backpack with all these compartments. I was like how am I going to do that for pants, but I think like you're saying; you can do it for anything if you take the time to be creative with it.
Mike: It absolutely can be done for anything without a doubt. And the other thing you might do is potentially offer something like a lifetime warranty. I don't know if that's plausible or even smart in this particular situation because maybe people wear these pants a lot, like they do wear out and that's part of the design, I don't know. But if it isn't, or like you think that…
Ryan: Yeah they do the pants especially, but the bags we could do something like that [overlapping 00:57:58]
Mike: Lifetime guarantee, like the pants could be like one year warranty or whatever, like you rip them, or they get a hole on them, they get worn out for any reason in one year, send them back we’ll replace them. And the reality is, is that like very, very few people ever take advantage of that. The ratio from purchase intent goes way up to like the actual people that follow through with that a replacement guarantee is so small. I mean if it increases your sales by 50% by having something like that on there like on the back end of that only like a half a percent of people actually take you up on that replacement guarantee.
And maybe a part of the fine print is they have this in the original pair back. So, the reality is by time they spend $8 on postage to get it back to you, it isn't really worth it for them to even bother with. Those are types of things you can do to differentiate yourself and try to justify your higher price even though again, it's probably pretty similar to the guy who's selling it for 17 bucks.
Ryan: No, that makes a lot of sense. And we do, do that on our website for 30 days. But I don't think we emphasize that on Amazon. And especially, I think Amazon especially we could do a bit better job of that, because we don't have as much control over the rest of the branding. So yeah, I agree that's a great idea.
Mike: Like on your website, you have like 30 days, no hustle return, but like that's different than basically a one year guarantee, like this product like got a one year warranty or guarantee or whatever it might be. And I don't know if it's necessarily on your website. And maybe you try that as an AB test. But on Amazon, it will make a big difference because again, you're like it's crowded there. When people get to your website, at least it's not crowded. The only thing that's crowded is all your different skews; they're on your website. They're pretty captive until they leave. On Amazon, it's very easy to jump to your competitors’ product and you need to distinguish yourself between them.
Ryan: Right. I love that idea especially for Amazon. Well, I know that's about an hour, I don't want to run over your time.
Mike: No problem.
Ryan: Everything has been a huge help.
Mike: Awesome. I'm glad it has been a help. Like I said, I’d love to follow up with you at some point and just see how this stuff has done. Maybe we can do a follow up call in like six months or whatever it might be just to see how your business is evolving and if this stuff is helping. If you have any questions along the way, you know how to reach out and find us. And we appreciate you coming on the show.
Hopefully it's been as helpful for you as it has been for us having you on here and hopefully to our audience as well hearing all this stuff. It's fun. The people we've interviewed for this sell just so many different things and it's cool seeing just all the different stuff that's out there in e-commerce and it's definitely been awesome talking to you today.
Ryan: Yeah, thank you so much for the time Mike. It's been really helpful. I'd love to come back on. I'm 100% going to do the free plus shipping thing and get some photos and videos for whatever bracelets that we pick out and really run with that because I feel like the light bulb is going off in my head now that why haven't I done that yet. So, that's definitely being get done, and I’d be happy to come back and tell you how it went.
Mike: Awesome. Yeah, just one last piece of advice on that in particular. I would say like, don't give up. I think that probably the first version of it that you do probably will suck, and just not convert very well; it's how it was for us. And we almost gave up, but I just kind of was persistent at it. And I just tried dozens of different messages on both the ads and landing page and tried different products. At first it was one thing then we tried something else. And eventually, you find the thing that kind of clicks and I'm incredibly convinced that this will work for you. I mean, some combination will eventually click and just take off like wildfire.
What you'll probably find is that you can't keep whatever it is that ends up being the winner, you won't be able to keep it in stock. You're going to have like inventory issues, which is a good problem to have, that's my prediction.
Ryan: Absolutely and that will be a great problem to have because we haven't quite had that rocket to the moon product on funnel yet. So it's kind of been this slow up and up and so it'd be nice to have one of those kind of out of the park home runs.
Mike: Cool. Awesome Ryan, well good luck with everything and we'll be in touch.
Ryan: All right great. Thanks again.
Mike: No problem.
And that's a wrap folks. I hope you guys enjoyed the 177th edition of the EcomCrew Podcast. You can go to EcomCrew.com/177 to get to the show notes for this episode. I just want to remind you guys again about EcomCrew Premium if you haven't heard about that yet. You can go to EcomCrew.com/premium to get our premium content, which is a monthly webinar behind the scenes webinar and a monthly Q&A webinar.
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