E215: Amazon or Shopify – Where to Focus to Maximize Growth
Amazon or Shopify? For established entrepreneurs, it's not really a matter of choosing which one to use as both platforms are necessary for business growth.
But if you're just starting out and have limited time and capital, trying to grow both at the same time can be immensely stressful, if not destructive.
So if you have a Shopify store and also sell on Amazon, which one do you prioritize to achieve maximum growth?
The Entrepreneurial Itch
Yolanda Suyemoto is the owner of Umizato, a company that sells handcrafted blue light filtering eyeglasses that are perfect for people who stare at computer screens for hours on end every day.
Before founding Umizato, Yolanda has been unknowingly scratching the ever-present entrepreneurial itch. She got into the events space, and also into app development with her husband as they both have a programming background.
Yolanda joined EcomCrew Premium because she wanted to grow Umizato to $750k – $1M in revenue this year.
One of her dilemmas, which is the focus of this episode, is to know which platform to focus on to achieve her revenue goal. Growing both at the same time will spread her resources too thinly which could be detrimental to her business.
We also discussed the following:
- How to increase testimonials using Stamped.io
- The danger of having too many SKUs that compete with each other
- How to get rid of excess inventory
- Qualities we look for when hiring a VA
Do you want to be a part of EcomCrew Premium? Click here to join our giveaway and get a chance to win 1 year EcomCrew Premium membership.
Until the next one, happy selling!
Full Audio Transcript
Intro: This is Mike and welcome to episode number 215 of the EcomCrew Podcast. Before we get started today, I want to remind you guys, you can go to EcomCrew.com/contest for your chance to win an annual membership to EcomCrew Premium. Again, that's EcomCrew.com/contest for your chance to win an annual membership to EcomCrew Premium. With the EcomCrew Premium, you get all of our courses that we've done to this point and all the ones we will be doing in the future, access to Dave and I to ask unlimited email questions, two monthly webinars, and access to our private Facebook group. So, good luck in that contest and thank you again for supporting EcomCrew.
Today I want to thank Yolanda for coming on the podcast and doing an Under the Hood segment with us. Yolanda is an EcomCrew Premium member speaking of EcomCrew Premium and we've been trying to get more EcomCrew Premium members to do these Under the Hood calls with us. They're really interesting folks, who built an amazing community over there, and it's been just an awesome year and I'm looking forward to see what we do in 2019 with that. So, right on the other side of this intro, we're going to get into it with Yolanda.
Mike: Hi Yolanda, welcome to the EcomCrew Podcast.
Yolanda: Hi Mike, how are you?
Mike: I'm great. It's so great to have you on. We're doing something new here but something kind of old. I was kind of just explaining to you before we got on here, we're interviewing EcomCrew Premium members. I thought it would be cool to select a few EcomCrew Premium members that have been instrumental in the community just with questions and participating in the Facebook group and get some feedback on what's been going on with EcomCrew Premium. Also talk to them about their business just to give people an idea of the different types of people that have been a part of EcomCrew Premium, but also turn it into a bit of a Under the Hood segment, which we've done in the past and see if there's things that I can help you with that we haven't been able to discuss on the monthly webinars or an email. So, I'm excited to do this. I want to first again, thank you for coming on and doing this with us.
Yolanda: Well, thank you for having me Mike. It's definitely really exciting to be on this end, just because I've been listening to the podcast every week and just been part of the community. So it's pretty exciting.
Mike: Cool. So how long have you been listening? Like, what would you remember the first episode you listened to and how you got introduced to the podcast?
Yolanda: Yeah, actually, I've probably been listening to the podcast since about June, July of 2018. And I think it wasn't the podcast that I started to listen to, I think saw an interview or I heard an interview with you and Scott Voelker, I think. I was actually watching some of his YouTube videos. And I think I saw you in one of his interviews, and just thinking that everything you said sort of intrigued me. So I started following EcomCrew and then I was hooked. I mean, I didn't really believe in putting myself and actually just learn, but I followed by example, and just really tried to follow the steps. But after I saw how, I guess, genuine and actually just the way you taught, it just really, really helped me understand how I think I should be running my business as well. So it's been very, very helpful.
Mike: Cool. Well, it's always neat to hear how people get connected. It's interesting, it's always — it seems like we're so incestuous in the podcasting community because like I’m on Scott's podcast, he's on my podcast, we’ve become great friends. And same thing with like Steve and Andrew and Ezra and all of us have all become good friends. Which is great, because I think it's very different from the environment that I came from before in the online poker community where someone might back over their moms to not give up a listener or something like that. So, for me, it's much more enjoyable and it's cool to hear how you kind of came through the system there.
So yeah, so I guess to get started here, I'm curious as well; I ask this a lot on Under the Hoods. But just more so because this a little bit different type of segment, how you got involved in e-commerce and what your journey has been like to this point, and what you sell what your brand is if you could maybe take a little bit a couple of minutes here and give the listeners just a little bit of a profile of yourself.
Yolanda: Sure. Well, to begin with, I currently sell computer glasses that help you sleep by filtering out harmful blue light from digital devices. So it is used on people who stay on the screen a lot, which is actually a majority of us these days. And we actually started with this particular product line in February of 2018 started selling on Amazon 2018 in February. But we started the brand itself in 2017, selling completely a different line of prescription glasses. But we pivoted completely into blue light blocking glasses instead this year.
But just to give you my background, I actually studied computer science in college and soon after I graduated, I was looking at more of a technical job. But I always thought about starting my own business even at that that age, just because my parents, they owned a family business, or they still own a family business doing wholesale sunglasses and readers. So two years after I graduated, I had two other friends who asked me to join an e-commerce business doing children's apparel. And that was back in 2004. So we started selling on eBay first, where at the time it really wasn't hard to get into the market because there was low competition and eBay was the thing at the time.
But about one two years after that, we started our own e-commerce site and then focused mostly online as eBay started getting more expensive and getting hard to compete in. But in 2012, I decided to step away from the day to day operations of that specific company to start another business with my husband, Gary, who was a software developer at the time. Even though I was still involved in that other e-commerce business on a weekly basis, I wasn't involved on a day to day business basis anymore. So my husband and I had started a few different businesses, one being a game apps company. But that didn't bode well for us. And then we ended up somehow getting into the event business with renting out and creating our own photo booths.
And we soon found out that event business and local business, it really wasn't suitable for our type of personalities and I still wanted to get back into e-commerce. So, my dad had been in business for a long time. He had been trying to encourage me, getting me and my husband to start a ecommerce business doing prescription glasses online. And it wasn't until several years later until we actually decided to really try this. We actually thought okay, there's a market for this. But by the time we actually launched, it was late 2016, early 2017, it was a very competitive market already, and we didn't really know what we were doing.
We didn't have a good niche, it was just very general. We found out that prescription glasses, there's a lot of room for error when you do it online without having doing it locally with an optician just looking at your eyes versus wearing glasses. And so, keeping inventory of the lenses was tough, and then just making it accurate and correct for the customer was tough as well. So we did some sales, but it just wasn't enough to really be sustainable. And we knew that we needed to pivot but we didn't know exactly where to go from there until we thought about needing to go into the Amazon game. My husband has been saying, we need to get into Amazon, but I just knew that prescriptions was not good, there's just too much customization to really be on Amazon.
So then we looked into another niche which was computer glasses, blue light blocking computer glasses. And though there's some kind of competition, it's still fairly new I think in the market even as of today. And there's still a lot of people who don't even know what this product is yet. And that's when we really still got started with — I think we started finally launching our first few SKUs on Amazon in February. So before that we had our own Shopify store, it was not that successful. And then we started a completely different line on Amazon starting in February.
And again, even at that time, I don't think I knew what I was doing exactly. I just knew, okay, I need to sell on Amazon. I had my some basic skills that I knew in marketing, but not quite a bit until June and July, when I started to really understand, hey, there's actually a lot more to this. I need to do a lot more, I need to build a list, I need to get my own customers, I need to run PPC differently. I need to get outside traffic as well. But since then, we've grown quite a bit. I mean, we're still trying to grow. But I'm pretty excited about the results so far.
Mike: Cool. Well, that's an awesome background. I took two big things out of listening to you through all that. Number one, that you're just like me, you're an entrepreneur at heart, for sure because you've been bouncing around from thing to thing, none of which include working for someone else. So I mean, it seems very similar. I think a lot of just true entrepreneurs through and through, will go through a whole bunch of different stuff until they find the thing that finally clicks, and then kind of go all in on that. And it seems like that's definitely been the path you've taken, which is just cool to hear another entrepreneur talk about it in those terms, going from developing apps for a gaming company to a local business event planning, to selling prescription glasses online, it's been all over the place.
And now it seems like you're getting some traction with the blue light glasses, which is awesome. So that was one thing I took away. Another one is that it sounds like some of the smoke and mirrors that we've been selling, building a list and all that stuff seems to be helping you, which is kind of cool.
Yolanda: Yeah, definitely. I mean, it's all part of a brand building, I think. And without it, I think it's really hard to grow as much I think. And I mean, I really, really learned a lot from EcomCrew. So, you can see a lot of — I guess, I've learned well, by example. So when you're able to actually provide those examples specifically, it really makes me understand the process a lot better.
Mike: Cool, awesome. So I mean, as we're recording this at the end of 2018, and it'll go out I guess, probably early 2019 or something. But at this time of year, always thinking about New Years, and what the plans are for the following year so I'm just curious, where do you see yourself going over the next year?
Yolanda: Oh, well, I definitely see the brand itself and me as a person trying to balance out my personal tasks or my time and be able to manage it better. For example by I'm actually looking at hiring a VA right now, which I really need to do, and actually creating better quality product. I think there's always room for improvement. I mean, our Amazon star ratings have been for the most part have been between 4.3, 4.7. At some point, one of our products was 4.9 for many months and that that helped us tremendously with that sale of that product. And I really wish we could get that back. And there's a few negative reviews that can just bring those down and it's tough but you do what you can.
So the quality I think can use some improvement. But also we carried old frames from the past when we were selling prescription glasses, and I feel like I want to definitely get rid of some inventory by trying to do some close outs and then bringing in new styles. And I think that's going to help our brand and just being more focused on where we're going to go in terms of that. So on top of that we're really trying to increase sales, both on Amazon and on Shopify store as well.
Mike: Perfect. So, even though it is a newer space, it's still like already really crowded, what are some things that you've done to help differentiate yourself and work on building that brand?
Yolanda: Right, so on the Amazon space, I noticed that the competition on there for blue light blocking glasses are definitely on the lower priced end. The quality of the products, a lot of the frames are made out of injection molding plastic, and therefore they're able to sell it for lesser price. So, it's the type of material you'll find when you buy sunglasses at your local thrift store or Rite Aid, or even like the gas station. So it's not meant to last as long and I think that's okay for some people. But our glasses are actually, are frames are actually made originally for prescription eyewear. So they're meant to be used daily on a daily basis for eight plus hours a day, we're focusing on lighter products. So the things that are made out of, for example, [inaudible 00:14:13] which is like flexible memory material. We also have some titanium available as well.
So it's basically selling longer lasting products at a price where it's still pretty affordable. We try to keep — our lowest product prices without the sale price is at 49 starting point and they go up to about $99. And I think a lot of the competition outside of Amazon if you look at the brands that are actually out there that are doing well, they do sell at a price point usually 89 to $95 for the established brands that are selling the same type of products. And so we are a little bit lower than that but we are trying to have the same if not better quality.
Mike: Got you, makes a lot of sense. So since you were nice enough to come on the podcast today, I'll give you an opportunity real quick to tell people why they should be wearing these glasses and how they can find your glasses and go buy them.
Yolanda: Well, for one thing definitely, so our company name is Umizato. We carry blue light blocking computer eyewear for those who stare at the screen several hours a day, for those people who actually have a hard time falling asleep at night because the blue light affects their melatonin levels and so these blue light blocking glasses will help with the suppression of melatonin levels. And therefore allowing you to have a better sleep experience, being less tired or your eyes won't feel as fatigued. So if you get a chance, please check us out.
Mike: Cool, and what's the URL?
Yolanda: Umizato.com, U-M-I-Z-A-T-O.com.
Mike: Awesome. All right, I'm going to buy a pair after the podcast, it helps for you guys, appreciate you for coming on and doing this, so cool. So we've kind of gone over and learned a whole bunch about you. And like as usual what these kind of Under the Hood segments I love to turn things over and flip the whole thing and let you start interviewing me and asking me questions and things that I could potentially do to help you with you guys business and help you meet your 2019 goals.
Yolanda: Great. I'm sure that — so this year we've been doing about 96% of our revenue actually on Amazon and so just only about 4% on Shopify. And a lot of that is due to the fact that we definitely focus on Amazon first and it's definitely paying out. But I've been also trying to split my attention on Shopify, but it's definitely more time consuming and a lot harder to gain that traffic on Shopify itself. I mean, ads are more expensive, ads seem to be pretty expensive, and it actually takes some time to learn how to do the ads well I think. So, I still think I need to do a lot of improvement on our Amazon side. But looking into it, what would you suggest on the next steps of growing the business to get to the point of larger revenue?
Mike: So what are your revenues right now?
Yolanda: So right now, we just recently, the past few months we've been doing about a little bit over 40,000 a month on Amazon side. But as a whole, the whole year we've only been doing about 230,000, just because the first few months weren't as good by far.
Mike: Yeah, well then first of all congrats, it’s like a half a million a year pace now. So I mean, that's amazing and the growth is amazing because if you started out the year a quarter million and you’re at a half a million, you're on an amazing path, which is awesome.
Yolanda: Yeah. Great thank you. And so ideally, in 2019, I mean, really, ideally, I would like to see a million in revenue, realistically, even 750,000 would be great. But that's what we're looking at for 2019.
Mike: Got you. Okay, so I mean, let's kind of break things down. I guess the first part is like do you go after Amazon sales more or do you go after Shopify sales? And if it was my brand and someone just handed me this for free, and so this is the only way you can make money, how would you approach it? So it’s kind of like the first way I think about things. And the Shopify sales angle is tough because the ways that I've learned, there's basically a few different ways to get sales on Shopify. Either you run Facebook ads, Facebook direct ads to a landing page to get them signed up for some type of a an offer, and then email them over a long period of time and sell them something, maybe a free plus shipping offer or something but get people through Facebook ads somehow, some way.
It could also be Instagram or just some sort of paid advertising on social platforms. So that's that. Then you also have like Google AdWords type advertising, which would be Google Shopping or particular search terms through Google AdWords. You have search engine optimization where you're trying to rank for things, there's influencer marketing. But the point being is that none of those have built in traffic ready to go like Amazon does. I mean, Amazon already has people searching probably thousands of times, if not tens of thousands of times a month for something like blue light glasses.
So, it's a tough angle because I think the bottom line is that when you're investing in Shopify stuff, it's like this long term prospect. It's very difficult to move the needle to like double your sales, for instance, just by in year one by doing the Shopify stuff. The Shopify effort that we put in, I think, took over a year before we really started seeing all the ramifications that the effort that we put into it. So if you have more of a short term outlook where you got to pay the bills, and you have to make money, which is totally respectable, I think that focusing on Amazon is the best first place to do that, because the sales are already there, they're just going to somebody else. And it's just a matter of how can you rank higher or better and leverage that.
But then you have all the other ramifications of Amazon where there's outside competition, and lots of the people doing it, you're not really necessarily building a brand. So it's kind of this double edged sword, right, where you're constantly like Jekyll and Hyde going back and forth. So I think that it realistically, like taking a balanced approach is probably your best bet, where maybe it's like the 80/20 rule. You spend 80% of your time focusing on the Amazon stuff and trying to move the needle there and 20% of your time on the Shopify stuff. So you're planting those seeds now, so they can continue to grow later. Because it's writing articles that take time to rank in search and optimization, you are writing like the best article ever written on the internet, that's probably 6,000 words long or something about why you should wear these types of glasses.
And then having similar articles that talk about glasses when it comes to gaming, or in the workplace, or the damage that computers do to your eyes, and all these different things that people are searching organically for on Google and they're in that buying frame or mode. But I think that running this type of an ad to cold Facebook traffic is tough, because it's hard for someone to have that instant aha moment of, oh, I need to have — a pair of glasses are going to help with my sleep. It's just like a hard thing to bridge in your mind, right, versus someone who's already kind of over that. I mean, for me, I've already heard about this and I understand why this is important.
So, for me, it would be easier to convert me into a buyer than someone who's like, wait, you’re telling me that because I'm looking at blue light. It's like changing the way that my brain functions. And that's why I can't sleep. That seems like BS to me or something. It's hard for people to have that leap of faith. And it's hard to convey that in a five to 10 second Facebook ad because you only really get the first five to 10 seconds to get somebody to have that aha moment. So I think trying to run Facebook ads is going to be difficult is basically my hunch. I could be wrong. I mean, maybe there's an audience out there that converts better than another. But I think that focusing on writing really great content, long term stuff that you're planting the seeds for on your Shopify store.
The one thing we haven't covered yet is Google AdWords. I would definitely be focusing on that. I think that that's very low hanging fruit through Google Shopping. I mean for us, our Google Shopping ads this month are giving us a 9X ROI. It's just like the only low hanging fruit there is left in the Google world. But if someone is typing in blue light glasses or blue blocking glasses or whatever, you want to be ranking there and try to get those sales through Shopify. And as you get those sales, work really hard at building a testimonial database. I think copy a lot of what we’ve done with ColorIt where post sale we have an opportunity to get a coupon for X dollars off the future order.
And that just depends on do you think that people need a second pair of glasses? If they don't, then you can just offer them a straight up Amazon gift card or something, but something to get them to give you a picture of them with your product. So then eventually, that can become your ad. So it's thousands of people have used our glasses and it's just a like an Animoto type video of people just cycling through with your product. And that's something that's resonated really, really well as we were doing ColorIt advertising. Once we kind of got over that hump and got dozens of testimonial images, our advertising dollars went way further and it also looks really good on the website.
So I think, that would be something also to work on. And then it just becomes a matter of how can you grow your Amazon presence, which is tough, because a lot of these products look the same. So it becomes what can you do with your listings to make them stand out from the crowd, things like maybe a picture of the materials that are being used, or a comparison chart where it's like your brand — and I can give you a link after we record this. We did this with a couple of things that we do, and have had really good success with this particular infographic style image that has our brand and then like two competitors and like check marks and x’s in columns of what makes our product better, because people will look at that picture and have that aha moment.
So I think doing things like that to tweak things using Splitly to constantly be testing images and marketing copy to get your conversion rate up, even if it's just fractions of a percent each time to where over time, you start ranking higher. And anyway, you have a good product, like I'm looking at it on here, and it's four and a half stars, like you were saying. And so, I think that you're definitely on the right track. It's just a matter of — when I do type in blue light glasses, you guys aren't ranking yet. So it's a matter of how to get yourself off to those rankings.
Yolanda: Mm-hmm yeah, definitely. Thank you. Yeah, I've noticed that the strategy has been trying to get more customer testimonials in terms of video, photos, actual testimonies, and I feel like that this product is very suitable to that because it does need a little bit of more convincing like you said, than just showing nice glasses. I mean, I'm not going to wear glasses just to wear glasses on people. So, showing the effects on other people, that seems to be the best effect. And we've recently shot a video that hasn't been completely published, I took bits and pieces to make other videos. But as a whole, it's supposed to show all these benefits as well as include customer testimonial. So, I'm really hoping that it's going to be helpful. But I really like your suggestion on the infographic of comparing our glasses with others, because there's just too much competition with like you said, too many styles that look similar, but the customer won't know the difference between buying that 19.99 pair versus our $59 pair. So I think that's pretty crucial so thank you.
Mike: Yeah. And so one of the things, as you were saying that I was looking at — I see a definite cause for concern here. I typed Umizato on Google and you're you have a Google AdWords ad that pops up, but your own website is not ranking. So something is like really wrong from an SEO standpoint, either you have like the website blocked from being crawled, or Google has delisted you for some reason. Are you aware of any problems there?
Yolanda: Okay, maybe I need to check that. I don't know of any problems so far. But I need to definitely, I mean, it used to show up. On my end, it does show up but I think it could just because you're not using the incognito window. Maybe I should try that. Yeah, definitely I need to look at that.
Mike: Actually I just realized that I had a typo there. That's why it was doing that, but now that I typed it correctly, it is ranking number one. So I apologize about that. But yes, you do rank above the Amazon for that, which is good. I was like having heart palpitations for you, like I was talking about this…
Yolanda: I was getting worried myself.
Mike: Yeah, sorry about that. I had transposed the A and the T. So yeah, I mean, it looks like you're ranking here. And I think that putting some effort into some of the content I was talking about, I mean, if you look at just how some of the content that we've written for ColorIt is performing, it's made a huge difference. I mean, we're getting tons of free traffic off of those articles. But it takes six to 12 months for them to start really ranking. And just like when I did go to your website here, just a heads up like there's a pop up that's like get 10% off your first order. And I hit X on that and as soon as I hit X, it popped up again.
Mike: So it’s showing it a second time.
Yolanda: Okay, got it.
Mike: Yeah, so that's something I would just take a look at. But besides that, the website looks really good. I mean, you have a good looking store here, just kind of looking at it from a high level of just looking at for the first time. So I think you've got a lot of the branding and it looks high end, it looks good, it looks professional. So just some of the content stuff and working on the testimonial stuff even a little bit more, especially with a thing like this, I don't see that stuff on the homepage. There is what our customers are saying thing here but it's just written words, it's not a picture of them. And anybody could have written this, it might not even be real. That's always what I think.
And there are some reviews down here that look like they're either put at Yotpo, or one of these other review platforms. But again, it's just a picture of the actual product and not their faces. So that's the type of stuff that really resonates with people. And if you look at some of the ColorIt testimony, we have pages of it on our fan of the month page, and we use it in a lot of email marketing. And it just — I mean we literally have thousands of them now and we turn that into video ads and it really can help.
Yolanda: Okay, do you have any suggestions on how to gain more customer testimonial? We are currently using Stamped IO, I think one of the more basic versions and we're trying to encourage — we are offering, I think it would be like a $10 coupon or a 10% off next, or 15% off your next order. But we haven't seen — we don't get a lot of sales on Shopify. But even out of those, I would think that it would have been more of it. It seems to be hard, especially these past few months to really get a lot of people willing to do reviews.
Mike: This is always one of these like chicken and egg problems. We went through the same, if you don't have any sales; it's hard to get reviews. And it's hard to get reviews if you have no sales. So I've definitely been through that. And it's, I think that 1% is about the best you can hope for is like one testimonial per hundred, which if you aren't doing a whole lot of sales, I mean, you said it's like 96% Amazon. So it's definitely tough. I think that my recommendation would be to have like an absurd offer until you get 10 or 12 of them. Offer people 50 bucks or whatever you have to because if you think about what it's really worth to you, if you think about in a vacuum, it's like, why the hell am I giving this guy $50 for a picture, especially if they'll do a video, it's worth even more.
But the reality is that that becomes worth a ton. If you were to hire a model just to sit there and do it that was fake, it would cost you more. So this is real. I mean, that's really a person. We used to offer way more for our testimonials. We just don't have to anymore because we have more than enough. But I think that $50 Amazon gift card, something that's more valuable to them than another pair of glasses, because why do you need a second pair of these really, if you have one pair is probably enough, you don't necessarily need a second one. Some people are more stylish than others, they might want to a second pair.
But I'm the kind of customer that would only buy one. So, if you offer me 15 bucks off a second order, I'm just never going to buy another pair unless I break them. So it's using strategies like that to just get those testimonials and you can plaster them all over your sales page, which will help your conversion rate.
Yolanda: Right, that's a good idea. I’m definitely going to do that.
Mike: And especially link them to like if they posted on their own Instagram accounts, someone like that just adds even more credibility. That's one of the things that we've done with ColorIt. If you go to any of our product pages, and this is actually a function of Stamped.io. So all the pictures that are on our product pages are links from people's Instagram accounts. So, it just adds that extra layer of trust and I guess just trust really with the customer because they see that and they realize that this is not just something that we call it ourselves. It's like a picture up of it's an actual customer that’s bought our product.
Yolanda: Right, I’m sure that really helps. So yeah, so focus on trying to get like for example, 10 to 15 reviews, at least on your product pages, and just basically do a lot to try to get these customers to do so.
Mike: Yeah, exactly. That's the exact method we took. And we definitely saw a huge uptake in conversion when we added customer testimonials to our site. It makes a big difference.
Yolanda: Okay, okay. Yeah, I'll definitely be doing that one then.
Mike: And you can also use that in your Amazon listing. So I mean, you’re brand registered, I think, right?
Yolanda: Right. Yes I am.
Mike: So I mean, you can add a video to your Amazon listing. And then the video can be, loved by thousands of people or whatever and just like cycle through a whole bunch of people that are sending in there testimonials. And that'll definitely help your Amazon conversion rate as well. So, I mean, it's a bigger play than just getting the testimonials just for your own website. It will go a long way on your Amazon listing. And that also — it brings me to my next point, just make sure you add a video to your Amazon listing. You've done a good job here with enhanced brand content. I'm looking at the listing but there's no video. So, I would spend the time to make a video and explain why your glasses are better than others. That video will make a big difference.
Yolanda: Right, I believe it would as well. And actually yeah, we've just recently submitted a video for a lot of our products but they haven't been approved by Amazon which I feel like during the holidays it's been taking Amazon a long time to do a lot of things including receiving inventory.
Mike: Oh God, doing this probably is a sore subject right now.
Yolanda: As with me as well.
Mike: One of our best selling or I guess our second best selling product is out of stock right now because sales have been way better than we could ever even begin to imagine, and we sent a ton of inventory and replenished it weeks ago and it's just like taking forever to get. I don't know what it is, but it's — other skews have gotten their way faster but the ones that we don't need there to be there as urgently. It's always the Murphy's Law.
Yolanda: Yeah, I noticed that. It doesn't really matter when you actually send to them. There's been products I've had and they've received that several weeks ago and I just haven't seen any receiving of them actually putting it into the inventory yet. It's been tough because especially during the fourth quarter it's probably the most important time to be there.
Mike: No doubt, I mean, this is definitely one of those businesses that will screw with your mind because you don't want to have too much or too little inventory and it's hard to get it just right.
Yolanda: Right. And inventory planning has just been, it's been killing me just because I think I'm doing the right thing by planning correctly, but for some reason it always takes longer or it's selling better than I thought or one way or the other. I do have another question.
Mike: Yeah absolutely.
Yolanda: I've heard from another podcast and I can’t remember the article that you mentioned, you have a rule of selling at least $10,000 for a product to have it worth continuing. I was just curious on what your thought process was on that and how you came up with that amount. I mean, I realize every business will be different, but I was just curious what criteria you had for that amount.
Mike: Yeah, that's a great question. So, the thought process is not necessarily whether we can continue to do it or not, it's on what I do want to begin with. So when I'm looking at a potential new product, I'm looking for things that I feel like I had the potential to sell a minimum of $10,000 of that product a month before I would even consider doing it. That's as you were kind of alluding to, every business is different. So that's for us at this point in our journey. I was certainly not of this frame of mind a couple of years ago. I was happy to get something that would even do $1,000 a month in sales as long as the profit margin was there. But at this point in our journey, the reason behind it is that what I've come to realize is that there's only so much time and there's only so much money.
And the amount of effort that we put into a product regardless if it sells $1,000 a month, or $10,000 a month or $100,000 a month is virtually exactly the same. The amount of effort that goes into finding the manufacturer, getting samples, going back and forth to the manufacturer to make improvements, to write the listing, to do the keyword research, to do the enhanced brand content, to set up the Amazon PPC campaigns, to set up a Zipify landing page, to do the ManyChat launch sequence that we do for Amazon, to send out emails to our customers, there's only so many products we can launch in a year to a customer database before we start to get saturation or fatigue to that list, etc, etc. It's like this list goes on for a long time but you get the idea.
So because of all those factors, we're looking to launch products that yield a minimum amount of results for all of that effort. And that minimum amount for us at this point is 10,000. It's kind of an arbitrary number that we picked up off our rear end, but it also isn't. It also is just kind of, as we've looked through, we looked through all of our top products on Amazon and see just kind of like drew a line right around $10,000. It's like that round number that made sense for us. So now it's a different story if we launch a product, and it doesn't sell as well as we were planning for.
Let's say we launch it and ultimately like it only does 10,000 a month and — I'm sorry, 5,000 a month, let's just say ultimately only does $5,000 a month in sales. That might be a product that we would continue to sell, like if it's reliably every month, month in and month out selling $5,000 and all we have to do is reorder it at that point, all we got to do is send an invoice to the manufacturer, that's as much work as we need to put into it moving forward, it's kind of like, well, there's no reason not to continue selling it. That threshold is much lower, there's definitely some number, we're cutting out a bunch of skews this year, at the end of the year here because they're doing less than 5,000, they are doing less than $1,000. There's skews that just aren't doing that well.
And at some point, they do take up headspace and we're discussing them and there is a cost of having them in our catalog. But again, if it's doing something like 5,000 a month, it certainly it's worth having it still in our catalog, because when it comes time to reorder, everything is done. I mean, we become a paperwork agency at that point, rather than anything else. Because again, the sales volumes, they are the things already ranking, it's already got, PPC is already set up, all the things are already done, and all we got to do is — and this is the time that you're going to make your money in this business.
It's very difficult to make money on your first order with any product on online because of all the upfront work I just went through and talked about. So typically, where we start to make money is our second or third order. And so we want to make sure that that process is as smooth and efficient as can possibly be, because that's where all the money is to be made. And again, if we already have something that is making money, if we're getting $5,000 in sales, we should be making at least $1,000 net profit off of that at absolute minimum and that's $12,000 a year. If you have 10 products like that it's $144,000 a year. It's not an insignificant amount of money from a product that might be not as successful as you were hoping. So it does add up. And it's all about incremental income.
My goal is to continue to add skews that produce success like that and not worry about having failures here and there. Because as long as we can continue to incrementally add profitable skews, we can write off bad ones and move forward and continue to build a business that's worth more and more, significantly worth more and more. I mean, for every one skew that we produce $1,000 in profit for, it probably makes the business worth an additional $40,000 or something along those lines when we get to sell it someday. So if you think about it in those terms, it's continuing to add significant value to the business having skews like that on the catalog.
Yolanda: Right, that definitely makes sense especially if you've already done the work to get to that point, you're not spending that much more besides on inventory.
Mike: Exactly, I mean, nothing's going on the P&L for development cost, for sample cost, for all the other things that add up all of our time to make all the things I mentioned, the videos and landing pages etc. All that has a cost to it, we're not having to do any of that anymore. So, the profitability of that item becomes as good as it possibly can be at that point, and especially if we can consolidate that item with others and we typically can, because we have a lot of shipments coming from China. So we get that item, even though we might not be ordering a ton of them, we still get it in a 40 foot container combined with other stuff that we're bringing in. So the shipping cost also the lowest possible.
Yolanda: Got it. Yeah, that makes sense. I'm just curious, for example for ColorIt; I know you have a lot of different products. I've looked at the website a million times, but for example, the coloring book side, do you find that if you're selling it on Amazon, for example, that if you have too many skews with coloring books, you end up competing against yourself because you're trying to rank for the same keywords for all your different listings? Or do you find that it doesn't really matter because each product is different and it has its own design, and especially your product is more considered a consumable product where people will come back for another book, rather than just buy one.
My product may have glasses and if somebody is coming back, the percentage is a lot lower. And sometimes I'm having trouble figuring if I should put a lot more skews or less skews because we were just selling different styles, we’re still competing with the same exact keywords practically.
Mike: Yep. So specifically with this question, with the coloring books, the reason we have so many, and we're going to continue to release four or five more titles next year, as well, each one actually goes after different keywords. So we see very little cannibalization, because one book is going after Mandalas and another one is going after cats or dogs or whatever. So like someone is typing in cat coloring book or some like that, it's very difficult to get a book to rank for like adult coloring book, for instance. We have one book that ranks for that term, which is basically the Nirvana term, but everything else, there's zero cannibalization. It's they're typing in Mandala coloring book, or cat coloring book for adults, or something along those lines, doodle coloring book. And so, we're actually going after a completely different keywords set for each title.
If I was in your shoes, I would want multiple skews but I would be careful about spreading yourself too thin. Because what we’ve also seen is exact examples of what you're talking about. The best example I can give you is on one of the skews that we sell that we had nine colors of. And at some point we had let's say 10 different sizes of it. So it was literally we had 90 different skews between all the different, the 10 sizes, times nine colors. And at some point along the line, this is a couple of years ago now. I was like you know what, selling all these different colors, number one, it makes us look a logistical nightmare. Trying to keep all these different things in stock, and it makes LPOs way bigger than they need to be. It gets very difficult to manage all this.
As we were getting bigger, it was like this is just becoming a pain in the ass to manage. I also had a thought that we were cannibalizing our sales and we were ranking not as well because someone would search for a particular product, and only one color can rank. And so they would come to our page that had variations, and they would buy, not the blue one, but the pink one, let's say. And so that's one sale that we didn't get, that lowers our conversion rate for the blue one that they originally came to. And so I was like, you know what; let me take not our best seller of this product that has this phenomenon, but our third or fourth best selling one. So we have someone who has enough data and volume, but we're not going to destroy our best seller to do this test with.
And I just stopped ordering all the other colors. I was like, you know what, let me just see what happens if we only sell blue. It's kind of like the Henry Ford; you can have it in any color you want, as long as it's black. And the result was over the next few months, our sales of that product increased significantly, like big time. We had a drop to start with, so like our aggregate sales, I was like, oh God, what did we do, this was a huge mistake. And I actually had placed an order for all the colors again, until I started — while I was waiting for that to get produced, I saw the sales uptick start to happen as Amazon's algorithm finally kicked in, and the ranking started going up as we passed, got through the 90 day moving average that they establish. And the reality was, is that was like one of the best things we ever did was to have less choices.
So you got to be careful about how far you take that. I mean you have glasses; you can't just have one hair with one color, that that's obvious. But I think that the moral of the story is I would probably have as few skews as feasibly possible that the more skews you have it’s probably hurting you overall, most likely more than helping you because you're trying to — in this case, you are trying to legitimately rank for that exact keyword for all the different variations. So you're spreading yourself thinner.
Yolanda: Correct, that’s really makes sense.
Mike: Yeah, there's something to be said for having real estate, being able to have two or three things that are, let's say you could get three different pairs of glasses to rank on the first page for that keyword, as long as they're vastly different, I think it's okay. But if you have a whole bunch of subtle differences, I'm pretty confident in the long run, that's probably hurting you.
Yolanda: Okay. Okay, that that really makes sense. I didn't really think about the conversion aspect of it, people searching and finding it, the initial listing for example color, and then choosing a different color. So it's actually hurting the initial product that they searched for.
Yolanda: Great, thank you. Okay, great. And I just had one more question.
Yolanda: I was looking into different channels or different ways of getting rid of some, close inventory that we want to get rid of, basically, and possibly, not even selling them with the blue light blocking lenses, for example, just selling the frame itself. What are some channels you might recommend? I've been currently selling it on Amazon but I'm finding it expensive to sell on Amazon, just because it takes a lot of time to list, and also, PPC is pretty costly for products that are brand new. So, if it's not something that I'm looking to continue to begin with, it just ends up being an expensive way to advertise, and get rid of them. I’m just wondering if there's a better avenue, for example, eBay or something else which I haven't tried yet.
Mike: Yeah, we do try to get rid of some stuff on eBay. It just depends on like how big the problem is. I mean, are we talking about like 10 widgets, or 10,000? So, eBay works well if you have, let's say 100 or less things that you're looking to get rid of because you can slowly drip them out over time, and they will sell. But it's relatively slow, at least has been our experience. If we have something that has thousands or let's just say, we’ve never had tens of thousands of things we needed to go but thousands. This year, we're actually just donating a lot of it.
We made a decision that it's easier just to do that and take the tax write off than try to screw around with it. Because it's again become about efficiencies for us as we've looked at the numbers more and more and realize the carrying cost of that inventory and the headspace that we have and it comes up all the time about this thing that's in the back of the warehouse that just wasn't doing very well, and every inventory business is going to have this problem. I think it's impossible not to over — let's say, five years, like it has been for us selling stuff, not everything is going to be a hit.
And you look at the storage fees, and just again, the cash that's tied up, and everything else. Now is a good time of the year to be thinking about the tax write off implications because if we donate $10,000 worth of inventory right now, that's $3,500 in taxes or more like $5,000, because we're in California. It's close to $5,000 in taxes that we don't have to pay in April, that'll help us with cash flow at that point, being able to buy other products. So, the reality is that math is probably better than most outcomes, than you try to sell it for something that recovers close to your cost of goods eventually, and all the time that what happens between now and when that ends up happening, and the storage that you have, and like what you could have done with the cash.
Because when you start looking at the compounding effect of what you could do with the cash, that's when things get pretty overwhelming in your favor to just move on. Because, if you got $5,000 that you could recapture and buy something that is selling well, that when you saw that $5,000 worth of stuff, you got $10,000. When you sell $10,000 worth of stuff, you get $20,000. And again, if you're in a business that has limited amounts of cash, I think pretty much anyone listening to this does, none of us have a rich sugar daddy with billions of dollars and we can just buy unlimited amounts of stuff. So the reality is that that might be your best option depending on the situation.
Yolanda: Right? Okay. Yeah, that makes sense. I'm definitely going to try to get rid of – to gain cash flow. I think that's the biggest thing. We just have a lot of stock inventory from the past that we need to get rid of this year.
Mike: Yeah, if there's any time of the year that it makes sense to do it, it's right now because there will never be a faster time to recover that than December 31 to April 15. It's the shortest time of the year. If you do it in January, you got to wait basically 16, 18 months or whatever, I guess 17 months, whatever that works out to be able to take the write off at that time. So, right now it's definitely a really good time to be thinking about that.
Yolanda: Okay, great. Thank you.
Mike: And doing it through a charity or a liquidator or something like that versus like throwing it away. Number one, donating it makes me feel way the heck better. But also, if you just write it off and throw it away, it's a cause for an audit. I was talking to my CPA about it, if you don't have a paper trail saying that this thing changed hands, that oh, I threw it away, it becomes, she said, versus if you document the fact that it actually changed hands. It happened on this particular date, it didn't just arbitrarily happen on oh, “I threw this inventory away on December 31,” how convenient. It would just cause for getting your stuff audited or getting in trouble. Versus, again, just we have a manifest of the goods that we donated this year, it's clear cut, it's going to be a great write off for us in April.
I would have rather have sold the inventory and had the things happen to it that I was planning on all the illusions of grandeur I had when I ordered the item to begin with, but again, not everything works. And what I always tell people here on staff when we order new products, we only need to be right like let's say 60% of the time, we don't have to be right every single time. And over time, if six things end up working out well and those are things that add incremental income to your bottom line, year over year, and the other four you end up literally having to throw away and donate, you can add another six skews, the following year another six skews.
As long as you're above 50%, you should be able to sustain the cash flow to continue to build your business. And we're north of 90% success rate. I mean, we just launch a lot of products. So we end up with some that are just duds in the warehouse that just didn't work out the way that we hoped, and it's going to happen.
Yolanda: An inventory business will run into that.
Yolanda: Okay. Well, I do have one final question for you.
Mike: Let’s do it.
Yolanda: So, I'm actually in the process of just hiring a VA in the Philippines. We actually do have some part time people here but I definitely want to try to look for a full time VA to help some of my workload and keep my time so I could do some more high level things. So what are some apps — I know you've answered a lot of these questions before, but I just wanted to clarify on some things, what are some absolute qualities that you look for specifically when hiring in terms of personality traits, or educational level, or just quirky things that you find that really helped your business?
Mike: Yeah. So if it's a VA, if it's someone in Philippines, the number one is just impeccable English. They're going to be interacting with your customers that are in the United States. The reality is that the average American looks down upon poor English when they're interacting with customer service. There's lots of stereotypes about India for instance, when you're talking to someone over there, people get frustrated really quickly with it. And even if it's written Indian English or British English is different than American or I should say United States English.
So that's something that we look for is that someone that's writing and conversing in USA style English. If you haven't traveled around the world and haven't interacted with people around the world, it actually is pretty substantially different. The words and sentence structure in the UK and India are pretty different. So even in the Philippines, it depends on where they learn their English from. It's mostly from US stuff because they watch a lot of TV shows and things of that nature. But there are British English schools over there that teach a little bit differently. So that's one thing that we look for is just trying to find the needles in a haystack that have perfect English skills, because everything is communication is written with what we do.
So again, it's unfortunate. I think it's ridiculous personally. I mean, I'm a kind of a globalized person. So for me, as long as I can communicate with the person and it makes sense, I'm fine with it. And I don't look down on them because these are people that I think that are way smarter than I am. They all speak at least two languages, if not three, or four, and who am I to judge the fact that they it isn't perfect, but you also have a business to run. And unfortunately, you got to be looking at that as a part of what you're doing. So that's number one.
Number two, I'm looking for people that can think on their own. I cannot be there with them 24/7. So, we will ask questions throughout the interview process to see how they think on their feet. We typically will ask questions that they've never heard before just to see how they react to them. One is a joke at the office that I always ask is give me 10 uses for a pencil that's not writing, just like one of these like off the wall questions that makes them just see what they say. Some people give up. If they give up, I just don't hire them. If they can't come up with 10 ways to use a pencil that isn't writing, you could say, doodling or erasing or playing chopsticks or twilling it or poking somebody, using chopsticks as a weapon.
I mean, you can just go on and on and on about ways you can use a pencil and just seeing how long it takes them, and how uncomfortable they get and how they deal with that is an example of something that we’ll do in the interview process because again, like we may not always be there to help them. We never will be there to help them in person. We only have a small window each day where we're interacting with them. The rest of the time, it's up to them. So we usually give them a test as a part of this as well. So, after we kind of get through the – and Mia does all this for us now. She's the one that does all this pre interview stuff. But she also gives them a test as a written test.
We give them sample questions that they might get a help ticket and see how they do. So it's not canned. So it's something they have to actually put some thought into. If it's someone that's a content writer that we might be hiring, we make them write an entire article, we pay them for it. If it's a graphic designer, we have them create fake images for some project that we just made up or whatever. Again, we pay them for their time and see how they do. And I think this stuff is really important to just see how they react before you hire them. Especially as you start to get a team, you don't want to hire them and have to fire them because it just shakes team up a little bit.
So, we try to do our very best to only hire top quality people, not give up on our search, it can take three to six months sometimes to find somebody. We've had a couple of job openings now for months. It takes a long time to find somebody that operates at the level that we want that can come into our office. So our structure is more limited to a very small part of Cebu city in the Philippines. And if you're hiring, you have all the Philippines to open it up to which will help you significantly. But yeah, I mean, it's important to us to make sure that we're getting the prime people.
Yolanda: Okay, that makes sense. Do you find that — I mean, this is thinking for down the line. But if I were to hire somebody, do you think there are certain cities I should look into? If I did, for example, we need to visit them in the future or build a bigger team later on where they need to be in the same location, do you feel that Cebu is probably a good choice?
Mike: Yeah, I mean, Manila, Cebu, and Davao are the three big areas. I think if — I don't know this for sure, because it's hard to know what would happen if I was to do everything all over again. But I think I would probably pick Manila. I've never been there. I've heard that it's a lot more traffic and it's not as enjoyable of a place to be but there's a lot more people there. So there's more of a pool of talent versus Cebu is a much smaller city. It's harder to get to internationally. I think there's a direct flight from New York to Manila and LA to Manila. So I mean, you can get there a lot easier.
And it might not seem like much when you travel as much as we do this type of stuff makes a big difference. Cebu has generally been a giant pain in the rear end for us to get to and get out of unless we're going to Hong Kong, but for us it's been worth it. I mean, I wouldn't replace it for the world. I mean, we have an amazing team, I'm very happy with them. So it's hard to imagine having 12 different people that aren't there because you never know how things would have worked out. So I'm happy with the way it worked out. But if I was advising someone starting from scratch, I would say probably look at Manila first.
Yolanda: Okay, that helps a lot. Thank you.
Mike: Awesome, so any other last questions or thoughts before we sign off?
Yolanda: Oh no, I think that's covered most of my questions. And I just wanted to say that thank you so much for providing so much knowledge and your patience with everything. And I know you've taken a lot of time to answer questions that I’ve had over email as well as on the webinars. So it’s extremely a great value for us.
Mike: Yeah, no worries. It's always good to get positive feedback. I think the service from a flattery with this is that people keep their membership. So, it usually means that you're doing something right because it isn't cheap. But we try to provide more value than it's worth and people keep their membership, and it seems like we're going in the right direction. So it's always great to hear this positive feedback and appreciate it.
Yolanda: Thank you.
Mike: Cool, best of luck with everything in 2019.
Yolanda: All right, thanks Mike.
And that's a wrap folks. I hope you guys enjoyed the 215th installment of the EcomCrew Podcast. You can go to EcomCrew.com/215 to get to the show notes for this episode. As always, I want to thank you guys for listening, for supporting the podcast, and for everything that we do here. It's just been an awesome 2018. And now that we're in 2019, I'm excited to see where things go from here. So as always, happy selling and we'll talk to you soon.
Outro: Thanks for listening to the EcomCrew Podcast. Follow us on Facebook at Facebook.com/ecomcrew for weekly live recordings of the EcomCrew Podcast every Monday. And please, do us a favor, and leave an honest review on iTunes, it would really help us out. Again, thanks for listening, and until next week, happy selling.
I have a business that has always been B2B. The addition of an e-commerce site site is an essential. I wish I would have discovered you earlier, because I am learning so much. Grateful to have found you how. Thank you!
Thanks Stephanie – glad you discovered us now :)