Episode 33: Updates on Our Businesses and Looking Ahead to the HolidaysJune 23, 2016 in Ecom-Crew-Podcast, Ecommerce, SEO
Today we just give you an update episode on how our businesses are doing. Mike is dealing with quality issues with his Chinese manufacturers. Grant is working on sourcing for Cuttingboard.com. Along with these issues we also share some of the bright spots of the businesses.
We discuss our plans for growing the businesses and what’s in the pipeline for both of us. There are a few challenges facing each of our businesses today, but with the holiday season right around the corner for online stores, it’s time to get everything in order for the biggest time of the year.
The topics we covered today:
- Hiring the right virtual assistance.
- Dealing with customer service problems.
- Mike’s upcoming promotion for Color-It.
- Grant’s Chopping Blocks progress.
- Mike’s new website purchase.
- Icewraps’ move to Shopify.
- Grant and Mike’s friendly competition.
- An exclusive deal with Amazon.
Resources from today’s episode:
If you have any questions or anything you’d like us to discuss on the podcast please go to ecomcrew.com and fill out the contact form. Also we would really appreciate if you would leave us a review on iTunes. Thanks for listening!
Full Audio Transcript
Mike: Hi, this is Mike.
Grant: And this is Grant.
Mike: And welcome to this week’s edition of the EcomCrew podcast. It’s been a while since Grant and I have really talked just in general about what we’ve been working on in our businesses lately. We’ve had a lot of awesome interviews and talked about some other subjects like SEO and things like that, so we thought that this week would be a cool time to just kind of take a step back and talk about just generally what’s going on in our businesses. We didn’t really do a lot of prep for this episode; we’re just going to kind of sit back and have a fireside chat, if you will, about kind of the things we’re working on, maybe rattle through three to five things each that we’re working on, and maybe, Grant, if you want to kick it off and we’ll go from there.
Grant: Yeah. Well, boy, it’s been a pretty crazy year and we’ve both been growing a whole lot, and with Cutting Board especially because it’s still a pretty young business – I mean really all of our businesses are young but – I think one of the biggest issues is trying to figure out a good direction to grow really. And because there are so many different options available, you can get more into sourcing or get into the marketing. I tend to do things in a bit of a burst. So right now I’m working on sourcing and I’ve got my marketing mostly in control. My search engine rankings are doing well. I’m ranking number one for “cutting board,” I’ve got a whole bunch of long-tail terms that are doing well, and even short-tail.
So sales are coming in and I feel like the one thing that’s stopping more sales is just not having the right inventory. So that trip to China was really great and I’m going to be bringing in I think about three containers of new product. I’m getting stuff from Tunisia now in terms of some more neat products. I’m getting more stuff from Europe, so really trying to build up the selection and trying to be able to increase my conversions just by having a wider selection base. So that’s unfortunately, a huge, huge task for sourcing as one person. And I wish I had like an army of people working for me to go and do everything, but unfortunately I can’t so I’m trying to figure out how to run my business and do that at the same time. So that’s Cutting Board in a nutshell. How about you? How’s everything been going?
Mike: Yeah, it’s been going good. I guess the first thing I’ll talk about just to segue right into what you were just talking about, sourcing. And I apologize, guys. I’ve been a little under the weather so you’ll probably hear the sniffling in the background. But yeah, we put this huge whiteboard together here in the office, just things that we’re trying to tackle over the next three months, and then we break that down into monthly goals as well. And under my section is just all these different products that we’re bringing in and it’s definitely a ton of work. You know, you’ve got all these different people, all these different balls in the air in different stages from getting samples to improving upon samples, making changes, and going through that sample editor process and then obviously getting orders placed and then waiting, which is the hardest part for me. I’m not very good at waiting around. It seems like we’ve been waiting around for quite a while on some of these products.
So yeah, we have a couple right now. This week we had two inspections that were done, and not surprisingly, both inspections didn’t go so well. It just seems to be a constant struggle in Chinese manufacturing and products, so we’re doing a follow up with the manufacturers on getting some of that stuff wrapped up. And then hopefully both of those shipments are going to ship together in a consolidated container. We’re going to have a whole container of stuff heading over here hopefully next week. So yeah, products and sourcing –
Grant: And just to be clear, Mike –
Mike: Yeah, go ahead.
Grant: Is that your ColorIt stuff or your Ice Wraps stuff?
Mike: It’s actually ColorIt and I think we’ve mentioned on the podcast we’re doing some stuff in the baby space moving forward here. So that shipment’s finally heading out so we’ll have our first shipment for our baby line that we’re doing.
Grant: Ah. Very neat.
Mike: Yeah. So we’re definitely – that inspection went way better than the ColorIt order. The ColorIt order, so frustrating. Like we spent a lot of money on packaging and we used these like Apple-esque type white boxes. It looks very similar to iPhones or when you get a Mac, right? Like that. And whoever was in the factory doing the assembly did it with like mechanic’s hands and just completely got the boxes all dirty with fingerprints and handprints and stuff. And we just told the manufacturer flat-out like, “We’re not paying for that. If you’ve got to order new boxes, we’ll wait another few weeks but we’re not accepting it.” And they said that they’ve been using like a rubber eraser of all things because luckily the material’s kind of got like a gloss to it. So I got this vision of these like people in a factory with an eraser trying to get the black marks off. But they said it’s working and they showed us some before and afters and it looks good. So we’ll see.
Grant: I’ve had that same problem with my factories that are getting stuff out. I mean it’s just dirty. Factories are dirty places and even Amazon’s factories are dirty and like those bubble bags that I get on the outside of my product, I mean even those are covered in dirt sometimes and I just think to myself, “Man, I just really hope I don’t get a return just because they’re covered.” And it’s one of those problems unfortunately that’s very difficult to solve. How do you tell a factory not to have a dirty factory?
Mike: Yeah. I mean I think this was probably a lesson. We’ve kind of been compiling a list of things to tell manufacturers upfront to do or not to do or that we’re going to do through the process, and I think telling them, “Making sure that you keep the packaging clean is important to us,” and it’s actually the reason why we pay to shrink-wrap everything. I mean I completely agree with your, Grant. Amazon’s factory, when we get returns back from them, the stuff’s filthy. So we’ve learned to shrink-wrap everything and keep it in the nicest condition possible. It’s pennies to have it shrink-wrapped in China so yeah.
I mean luckily, that was the biggest problem. We’re ordering some gel pens and there was a little bit higher than – like, you know, there’s always these completely unacceptable errors and then you have like major errors and then minor errors. Those are like the three categories that these inspection companies put everything in. We had no unacceptable errors so it wasn’t like completely bad. And the major error problem was every single box they inspected – I forgot what it was, like 70 items or whatever – had grease stains all over it. So that was like a fail. And then it was like 7 of those had broken pens inside, like at least one broken pen in a set of 48, or something that was like not as clean as we would like it with the pens, so we discussed that with them and the manufacturer agreed. And it’s good because sometimes they push back and it’s like really uncomfortable. They just agreed, “Yup, we should’ve been careful with the boxes. We’ll get them cleaned up for you and we’ll go back through every single set and check on the pens and make sure that they’re all replaced.” And we told them that we were going to do a re-inspection and that this time we’re going to inspect like four times as many because they failed the first time. We honestly probably won’t go back and do that, just put them on alert that we’re serious about this and we’ll see what happens.
Grant: Yup. Yup. Well, you always talk about getting those inspections so I got my second inspection done for one of my other brands that’s coming in and yeah, it failed as well. So it’s just a constant, constant issue and, unfortunately, this is one of those things I don’t think even gets easy. It’s just part of the business and you just kind of learn to deal with it. And it’s kind of like returns in a way, you know? Like returns never go away no matter what you do. You just get returns and it’s just like a part of the process that you just learn to deal with.
Mike: Yup. Yeah, it’s definitely frustrating. I mean I have a huge leg up and I know you speak Chinese somewhat as well, Grant, but yeah, it’s a second shift. You know, we come home and it seems like we’re talking to China three or four nights a week now. But Michelle gets on the phone (my wife, who’s fluent in Chinese) and is just dealing with these issues. But yeah, it’s an hour or two every night where we have dinner and then we wait for them to come online. It’s pretty funny now. We’ve kind of established a cycle second shift in the evening. One of us is like, “Oh, China is online,” because like the email starts coming through or WhatsApp starts going off or Skype or phone or whatever.
Grant: Yeah. I avoid Skype at like 8:00 because I have like those suppliers start talking to me too and, man, it’s like email after email after email. Like the minute you give them like a little piece, they know that they’ve hooked you so they just want to keep talking to you but yeah. It’s like you’re their only focus sometimes but your focus is split apart, so it doesn’t really work out well.
Mike: Yup. Yeah, it’s definitely tough. But yeah, just more on the product stuff, I mean, quite frankly, I’m a little disappointed I guess in myself or I guess just it’s probably just the way that it is but by June of 2016, I hope to have had more stuff, new products, in the door here. I mean if you were to ask me back in January when I was planning things out, like what we would have in here by now, it would be more than we have. You know, we’ve been trading I wouldn’t say perfection, but definitely quality over speed of getting it and we’ve had to push back on these manufacturers quite a bit to improve in the inspection phase here or in the sample phase, and all this stuff, a week here, a week there, week here, week there like adds up really quickly.
We’ve been back from China since May, early May, so it’s been almost two months or whatever and we still haven’t placed any orders from that trip. We’re pretty close with a lot of it, even things that we knew that we wanted to order right then and there, but again, it’s the sample phase and getting all the little details right on these first orders just takes an incredible amount of time and on the other end of the spectrum, we’re already thinking about the holiday season and getting inventory in for that and being prepared for that and yeah, I mean it’s always obviously a struggle back and forth but obviously once you get the products in, it feels great when you start selling them.
Grant: Yeah, it’s an issue, spreading yourself thin, and I think everybody that’s an entrepreneur will always have that as a challenge to deal with. And with both of us, I mean we’ve got the business that we’re trying to run and keeping it running while we’re trying to grow and I think one of the benefits, really, that people don’t realize when you first start a business is that you can spend all your time growing it and it sounds kind of crazy to me, but maybe you would agree: sometimes I feel like your own business gets in the way of growing it. What would you say to that?
Mike: Yeah, I definitely think that that’s true and we were in the phase for a while. I think every business goes through these cycles, right? So yeah, when I was just kind of a one-man band, you can grow, grow, grow, and do everything you can and you kind of come up against resistance of there’s only so many hours in a day, trying to hire your first employee, but like you’re working with them hand to hand and you can still grow, grow, grow. And we hired another employee and it got to the point where we were just kind of like lost in the minutia or just running the business day to day. So it’s actually been the biggest focus that we’ve had, and talking about things we’re doing right now, this is a big push.
And if anybody on the podcast follows the Digital Marketer guys, I bought the Trafficking Conversion Summit videos and the biggest takeaway that I got from that wasn’t actually about digital marketing, but it was about like how to run your business and scale. And one of the things that they mentioned was they have two to four virtual employees for every person in their office. That just kind of blew me away. And immediately, I was sitting on the plane watching this, I was like, “Wow. Like I have a VA. Like how come my employees don’t have a VA. Like that’s a brilliant idea.” So actually, I’ve been instituting that right now. We’ve hired a couple VA’s here. Unfortunately, one of them didn’t work out that well; the other one is doing a great job and we’re in the process of re-hiring one or two more to replace the one that wasn’t working out that well. But they’ve already allowed us to start kind of pushing past some of the stuff you’re talking about, Grant.
And the other way that we’ve been able to do that is to put everything in writing that we do and make a process for everything, no matter how small or large it is. So I mean we’ve made processes on how to add items to Amazon and how to launch contests with Gleam or how to set up emails in Clavio. I mean we’re just churning out processes. Everybody’s got a task of getting at least three processes written per week in that office here, so right now we’re just making 12 processes per week, and slowly but surely, we’re generating more and more processes and it takes time to make them the first time, but then you can just hand off that process to a VA and some of our consulting clients have asked for them. We just actually handed one off to a consulting client today and it’s already done. Like you put all that effort into it once and you can replicate it. So that’s another big thing that we’ve been working on over here.
Grant: Yeah, we do something similar with our Help Scout templates because we have so many kind of the similar support requests, and having run a technical support center for a while and been a lead, we usually get about the same 20 questions over and over and over. So my thing is all about answering it once and making that your last answer, and then at some point you have about 100 different answers in your library that you can pull from and it’s just about pulling one off the shelf and giving it to them. And there’s something to be said about customizing your help and this and that, and we try to do that, but I really do understand why big companies start getting a lot of the canned responses, because at some point you’ve just got to look at your bottom line and go, “Hey, I’ve just got to get through all these support things and whatnot.” And when you’re a small company, you can take the time to do that and that really makes you even stand out. But as you scale, the owners can no longer just be doing support anymore or even taking phone call. I try to take the major phone calls when I can, but for the most part, I let my employee take the call and do the sales, and if it’s a big sale, I’ll jump in there because I know I’m the best sales guy around for what we’re doing. But, like you said, so much of that, you’ve just got to be willing to let it go and let somebody else do it, and a lot of that’s like getting the right documentation and workflow in place.
Mike: Yeah. Yeah, that’s obviously a struggle upfront. It’s a lot of work upfront. We did like a quarterly meeting over here recently, like about three weeks ago or whatever, and I drew a chart, basically, of a linear line just kind of going up at a 45-degree angle or 30-degree angle, whatever it would be, just kind of growing linearly. And then the other one’s like exponential, which is basically putting the effort and time into developing the processes and I think you actually go backwards a little bit to start with, which is awful. Like it’s a bad feeling when you’re not getting as much done productivity-wise day to day, and that’s just tough to like be discipline and continue to do that. But like once you burst back through the linear line, it’s just never going to be seen again. And I’m looking forward to, later this year, being in that position.
Grant: Yeah, and I think for a lot of the other small business out there, or some of these medium-sized, anybody that’s doing probably, I would say $300,000 to $1 million is kind of in this like middle-ground pain point because under $300,000 – and obviously this is really going to depend on your average order volume and there’s a huge difference between selling 3,000 units at $10 a unit versus selling 30 units at $10,000 a unit. But considering an average value of, let’s say, $20 to $40, it becomes unworkable at some point for one person to do it, so you hire an employee but an employee takes like a huge amount of your cash flow because I guess if you hire just a warehouse person, maybe you can pay them minimum wage just to pack boxes or whatnot, but for most of us, I think we’ve got to hire not just a warehouse person, but somebody that can also do support, a little bit of sales or office stuff, and you just can’t pay that minimum wage.
So the money that was a positive cash flow you end up putting right back to your employee. And if you do it correctly, then you get to the next stage, hopefully get to like $500,000, $600,000, $700,000, but at that point you need another employee. So all the cash flow that you keep positively generating, you keep putting right back into your business. So it’s almost like you never had this time to breathe because the more sales you do, the more you’ve got to reinvest into the business, which mean you’ve got to get more inventory, which ideally means you’re working on your marketing, which means that you’ve got to get your email up, you’re got to get your online channels going. So to me, it’s almost like running down a hill and you just keep running faster and faster and faster and you’re trying not to fall down at the same time.
Mike: Yeah. Yeah, so I mean, I guess switching gears to some other things that we’ve been working on over here. We’ve been working on a really cool promotion. We haven’t talked much about it publicly yet because we’re still refining it, but since we’re kind of in this “what are we working on right now,” I’ll definitely share it. But the promotion’s basically a free-plus-shipping offer. So instead of saying that you’ve got to may $3.99, we mark it as it’s free to get this thing, and then just pay $3.99 shipping. And it’s been doing exceedingly well in the early going here. We have developed a really extensive flow for this, work flow. I diagram everything out and then we go these types of things on a flow chart type diagram. And we’re just getting the final pieces in place for all the email flow components that go with this, but basically what we’ve done is we’ve expanded on our four free download drawings.
So I know we’ve talked about this on the podcast before where we were doing just basically a lead magnet, where you can download four drawings and print them at home, and then we would do that over a long period of time, like five-week period of time, to send out a lot of emails and cultivate customers. And that was working really well, so I was like, “Well, the thing is these are people that are getting something for free and you don’t know that they’re ever going to become a customer. They could just be complete freebie hunters.” And at the same time, like they see some of our artwork, but our artwork, as good as it is, it isn’t necessarily that much better than the competition. Where our product really shine is the actual paper that we use. We use like a very high quality artist-grade paper and 99.9% of the coloring books on the marketing are using the same paper that you’re using for a fiction novel.
So we put together this promotion that costs us like 90 cents to make, which is actually like 13 sheets of paper. There’s a cover sheet and then like a special offer and then “more about this offer,” then we sandwich it in between two pieces of cardboard and shrink-wrap it so we can just do nothing but throw a mailing label on it and send it out the door. And First Class shipping for it right now is costing us $2.60. I’m negotiating with the post office right now because we’re sending so many of these things out, I think we can get that down. There’re some First Class discounts available. But we’ve been able to capture – now we’re not capturing leads anymore; now we’re capturing like actual sales, right? And yeah, they’re getting something for “free” quote/unquote but they’re paying us $3.99 for shipping. We actually make a little bit of money in a vacuum on the drawings and the shipping part, so like if there is no ad cost and someone just comes to ColorIt and does this, we make a little bit of money so it’s not a loss leader for us. It’s just basically a way for us to get 10 of our drawings in someone’s hands and have them have that a-ha moment.
And over the last 10 to 14 days since these have finally been showing up at people’s doorstep, the comments have been incredible. So we’re really excited about it. We just ordered several thousand more of them so we have them here to ship out, and now that the work flow’s all done, starting next week, once the rest of the second order of drawings comes in, we’re going to attack this pretty hard, and probably into the next month or two, we’ll have a lot more data on it. But I would encourage you if you’re in a business where you could afford to have an offer where you’re sending somebody something for free, like, “Just pay the shipping and handling for us and we’ll send it to you for free,” if that works within your business model, it’s definitely something I would consider.
Grant: Yeah, that’s a great way to grow that business. I wish I had something I could give for free. I unfortunately can’t shop up pieces of cutting board and give that out, I’m sure. I do definitely do like samples and whatnot for the Chopping Block side because the average order over there is about $1,000 to $1,500, so if I send out a $5 sample, it’s not a big deal. I’m assuming that I’m going to have far better than a 20-to-1 odds of getting somebody to close the deal. I think I’m probably about, I’d say, even 2-to-1 on the sample. So half the time I send out a sample, I end up sealing the deal. So I’d probably break even if I sent half a table every time I did it so it’s really like a good deal for me.
And speaking of Chopping Blocks, I guess, I’ll probably talk a little bit about what’s going on over there because, as everybody knows that might have been following EcomCrew, at one point I was trying to do a narrative of how to run a chop-shop and that kind of fell off the face of the planet and I apologize for everybody for not updating that. But things essentially have been just taking off, both on Cutting Board mainly, and Chopping Blocks has been doing pretty well. I think the last time I had mentioned by conversions were low after switching to Shopify, I actually went and installed Hotjar and had Inspectlet going and really kind of isolated the issues. I started looking at my demographics really well and I found that they were in the 40- to 60-year-old range that were really looking at it, and I had a lot of people on Internet Explorer. So I ended up getting McAfee and the BBB icon for the site and I’ve got to pay like $40 a month for McAfee and, honestly, I think that’s really a joke because McAfee’s like an antivirus and my website’s not going to be infected. It’s running on Shopify. I mean it’s completely out of my hands. If Shopify gets infected, we’ve got serious issues to worry about.
So it’s really just buying kind of a trophy symbol and honestly, I don’t even know if it works all that well. Probably next year, I’ll do like a split A/B testing where it’s removed half the time and showing the other half and see if it even has an effect. But right now I don’t get enough traffic to make a decision either way so I’m kind of going on my gut hunch over here. And I did get my Better Business Bureau certification and half the people out there don’t even know like what a BBB thing is and I think me and Mike – what do you think? Do you think we’re probably the last generation that’ll even know what it is?
Mike: I think so. I mean we’ve stopped paying them money. I think it’s a rip-off. That’s just me.
Grant: Yeah, I definitely fall into the category. I do think it has helped me just from my gut reaction because when I mentioned my conversion was somewhere around like 1.5% or something, now I’m seeing about 5% on Chopping Blocks so I’ve tripled my conversion and I’m actually even a little bit embarrassed because the site’s not where it should be right now. It should be a whole lot better and I haven’t done a whole lot to keep pushing it. I have started doing paid ads and Bing and Google obviously. And the paid ads are doing quite well and I’ve got something about like 800% return on investment. Every time I try driving that notch up, though, I start getting my return on ad spend going quite a bit lower so I know that I need to work on my conversion because once I really, really start going for a lot of visibility, I’m losing out to other people. So that’s kind of how I know that I’m not doing as well as I should be.
So unfortunately, the thing that’s just taking a lot of my time right now away from Chopping Blocks is Cutting Board, which, I guess, is not really unfortunate. It’s a good thing. But Chopping Blocks has a hole. I don’t feel too shy about saying this, but I guess I’ve already paid for the site and then some, so it’s been more than 100% ROI. I think at this point, it’s almost like a 300% ROI so I’m definitely pretty happy. We get some pretty nice orders coming in over there. The search engine traffic, I’ve been slacking on that one. I even see my own ranking falling so that’s almost embarrassing for me, given that that’s my specialty, but again, it’s just prioritizing where the money’s coming in, and right now that’s just on Cutting Board.
So other than sourcing, what I’ve been really focusing on is trying to get the conversions up and everything and on PPC. And now that I’ve got a year on PPC – and I’m also still running your campaign on PPC too, Mike. I don’t think you probably even care because it’s such like a low amount over there, but that’s still active right now.
Mike: Cool. I would’ve probably noticed if it was taking off, but when we started talking about it, it was one of those things where I just didn’t think it was going to be very profitable because that’s a very tough keyword to be bidding against.
Grant: Yeah. I think your cost per acquisition is still right about half of where you are, so that’s better than when we started, which was 100% of the sale. So now you’re about half of the sale, so you just got to increase your lifetime value by 50% and you’re golden.
Mike: Nice. Well, when we get pencils back in stock finally, we might actually be able to do that.
Grant: Yeah. And this was actually one of the things that me and Mike talked about trying to measure our average customer lifetime value, and one of the problems with a young company is that you don’t really get to know that. You get to know your average order when they come by the first time, but to get your average lifetime value, not a lot of websites or platforms actually kind of calculate that for you. And correct me if I’m wrong, but I don’t think BigCommerce or Shopify do any of that, right?
Mike: Yeah, I don’t think so.
Grant: Okay. So yeah, I’ve been trying to play with that a little bit on PPC and that’s one of the big reason I’m trying to expand my sourcing, which is kind of a backdoor way of increasing your lifetime customer value because once they buy from you, they really open the door to accepting you as a trusted company, and if they had a good experience, they’ll buy from you again. And I definitely see a lot of return visitors from just looking at the orders every day and I go, “Oh, wait. I’ve seen this guy before,” and especially because I get some restaurants and I get some businesses. I actually get a decent amount of contractors, which is wonderful because they just keep buying from me over and over again. So it makes me really happy and if I can land a bunch of restaurants, I know I’m going to be extremely happy because they’re just evergreen when it comes to cutting boards.
But the PPC side, I feel like I’m really killing it on Cutting Board now. The last time I wrote a post, I think I was at a 4-to-1 in terms of conversion cost or value to cost of conversions, so for every dollar I’m spending, I’m getting $4 back essentially. So now that’s getting pretty high. I think I’m about 5-to-1 or 6-to-1, so my conversions are going up, I’m spending less, and my negative keyword list is getting just phenomenal at this point so I’m just taking off a lot of the bad performers. So my PPC’s in an incredibly healthy position and it’s to the point where I’m probably going to start bidding on the dangerous terms, like the very short-tail terms, which can kill you completely. So that’s going to be kind of my coup d’etat if I can start bidding on straight up cutting board terms and just do well on those because it’s kind of a black hole.
Mike: Yeah. On Ice Wraps, we were at about 500% return on ad spend, so 5X. We actually hired a new PPC company a couple months ago to just take that off our plates, through a friend of mine, through ECF. That’s been doing a good job for us. Yeah, I mean we’re in between 500% and 600% return on ad spend so we’re kind of in a similar spot.
Grant: That’s awesome. Are you getting most of that from Google Shopping or is it from your normal ads right now?
Mike: It’s both. I mean Google Shopping outperforms everything, as usual. But we’re also bidding on keywords, I mean long-tail stuff, like specific things and they’ve cut out all the fate. I mean we were at like something like 300% return on ad spec before we brought them in. So they definitely helped out quite a bit.
Grant: Yeah. Yeah, that’s great to be at 600%. I think most people, if I had to guess, are probably somewhere at 200% to 300%. I hear even a lot of really big companies, because of the cost that they have to pay for their PPC agencies, are not profitable whatsoever on their PPC and they’re just waiting for the lifetime value to make up for it. So…
Mike: Yeah. I mean on ColorIt, we can do 200% return on ad spend because we have a lifetime value, but like on Ice Wraps, it’s basically all transactional based and if we don’t make money on the sale, like we can’t depend on 6 to 12 months later or 2 years later, them needing a replacement. So we just look at a transactional base.
Grant: Yup. With Cutting Board for my home audience, I completely am in the same boat, so I’m trying to figure out how to target that commercial audience. And once I get all my products sourced in, I’m going to go hard on Facebook and just go for every single restaurant like head chef and restaurant buyer, just start slamming them with Facebook ads saying, “Hey, want to buy some cutting boards from yours truly?”
Mike: So Grant and I always seem like we’re running late on these episodes. So I had two things left on my list here. I’ll just bang it out real quickly and I don’t know, Grant, if you had anything left, and we’ll wrap it up with that. So I’ll just go quickly here. Last two things. So one of them is I actually bought another website. It’s a pretty funny story. I ended up purchasing it while I was on an airplane, from start to finish. I was flying to Chicago for IRCE and I can’t be without the internet so I got the internet and was like checking my email and one of our manufacturers for our ice packs contacted me and said that, “There’s this site that you might be interested in that’s for sale,” and gave me a link to Flippa and the thing had like a $100 bid on it at the time and I put in $1,000 to see what happened and I still hadn’t hit the reserve, and I put in $2,000, still hadn’t hit the reserve.
And I contact the person that was selling it and I was like, “Look, how much do you want for this?” and they came back with $6,000 and I was like, “If you end the auction right now, I’ll buy it now for $6,000. But like tomorrow when the auction ends, I’m going to be at a mastermind meeting at IRCE and I’m not going to be able to bid on it.” And she’s like, “Yup, I’ll end it now.” And we’re closing on the deal. I’ve already sent the money off to Escrow.com, but we close on it next week and I actually think that this is going to be a bigger homerun than IceWraps.com. It’s got a lot of similarities, as far as it used to have a bunch of traffic, it was on Yahoo Store’s platform and just started losing traffic over time and I think that we’re going to be able to crush it with this.
And we already are in the process of moving Ice Wraps over to Shopify later this year and I mentioned the baby clothing brand that we’re working on. So for us to do a third site like at the same time, again, we’ve been doing procedures for everything, so just having a VA follow the procedure to do a second or third site will be quite easy so I’m really excited about taking this thing over and just expanding what we’re doing in the same brand as Ice Wraps. And we’ll be able to use some of our same branded products and just market them a different way; instead of it being for aches and pains or whatever, it’ll be for keeping your cooler chilled. So that’ll be pretty cool.
Grant: Yeah, I thought just – man, that was such a great deal because I remember when you told me about it. You said, “Hey, guess what? I bought another website,” and I just kind of rolled my eyes and I was like, “Oh my gosh.”
Mike: I know.
Grant: Like, “Really? This is like George Foreman with another kid. Like this is not going to end well.” I mean…
Mike: No. I know.
Grant: I just said, “Okay. Like just give it to me. What did you get?” And then Mike sent it over and I was like, “Oh. Wait a minute. How much did you get this for?” And then he said $6,000 and I just said, “Oh my gosh.” I feel like me and Mike are having this competition like who can get the best possible deal at this point because I thought I really hit it out of the ballpark with Chopping Blocks because I mean I thought I got that one at a complete steal. And yeah, I told Mike there’s no way he’s not going to get like probably 300% to 400% ROI on this site. I mean at $6,000, it’s really hard not to make that back. And with what we know for the deficiencies for the website, unfortunately for the original operator, it’s probably deficiencies they couldn’t figure out how to overcome, but for us, because we’ve got that background, I think what? Maybe four to five months we can probably fix a lot of that, right?
Mike: Yeah, I mean that’s about how long it took for Ice Wraps. I really see it’s like the same exact situation. It’s just I paid $50,000 for Ice Wraps and I’m still tickled to death that I got a hell of a deal for that and I see this. You know, I got it for $6,000. I think it’s going to be doing an equal volume in sales as Ice Wraps within this time next year. So it’s a pretty sick deal. We’ll see. Obviously only time will tell but at $6,000, I didn’t even really ask any questions. I probably would’ve paid $50,000 for it, quite honestly. Like I would’ve had to ask a few more questions and make sure that all the stuff that she was telling me was jiving, but yeah, the thing’s still doing like $3,000 a month right now in its completely broken state in revenue. So I mean I’m basically buying it for 1X earning or something, or less, and of current earnings, not even potential. So it’s pretty sick.
Grant: Mm-hmm. And one of the things, too, we always say just is that if you buy a website by itself that’s doing under $100,000, like you’re buying yourself a job that doesn’t pay you anything, but if you’ve got other websites and you’ve already got the infrastructure there, especially if it’s in the same vertical, it really just is almost like another channel, another source of revenue. Unfortunately, you’ve got to give it the marketing food that it needs to do well, but if you know how to do that, then it’s okay. I think the only way I can beat you on that, man, I’ve got that other secret project that we have. Starts with a W. I’m still working on that. I told you I think it’s going to be a three-month job for me try to figure that out but I think that’s the only way I’m going to win in terms of getting something over your head on this one.
Mike: We’re so competitive.
Grant: Well, that one we’re both in on for sure and we might even have that other guy in there too. So we’ll figure out… I keep getting hung up. I don’t know how to approach it when I get hung up on it and I still email the guy and it’s hard. The guy’s obviously quite bitter but I’m sure he’s probably done what? $2 million to $3 million a year and now it’s probably $2,000 a month if that. So…
Mike: Yeah. It’s always painful to see a business go that direction. So… been there, done that unfortunately. Yeah, so the last thing here real quick before we sign off, at least on my end, another big development on this end is we’ve gotten exclusivity with two manufacturers in the Ice Wraps world for selling on Amazon. So they’re going to kick off all the other sellers and there’s all these other MAP violators and people that are not managing their listings properly and things like that, so very exciting opportunity for us. I mean basically, it allows us to do the same thing that we do as a white-label manufacturer, where we have control of the listing and don’t have to worry about people undercutting us and all this stuff but they’re the ones that already did all the product and these are products that get consistent 5-star or 4.5-star reviews on Amazon and we’ll apply all the things that we know, how to make a listing and the photography and the ads and all these different aspects, and crush it for them.
So it’s a good thing for the manufacturer and it’s a good thing for us, and quite frankly, whether or not retailers realize it or not, it’ll be good for them, too, long-term because it’ll get rid of all the MAP violators and people that are just undercutting everyone on Amazon. So pretty massive opportunity for us so we’re in the midst right now of cleaning up listings and merging listings, doing a bunch of things I never knew how to do on Amazon – a complete pain in the butt, but we’re in the process of doing all that right now and pretty exciting times for us over the next few weeks with that project.
Grant: Yeah, that should be great. I’m so jealous because I’ve got one of my vendors that seems to be just on that teeter-totter as well and I just can’t quite convince them to make the jump. So I’m going to be very happy for you and I’m sure you’re going to make them a lot of money and do well for yourself at the same time. So I think that’ll be a great way of kind of showcasing that just putting your stuff on Amazon as a manufacturer just isn’t enough nowadays. Like you’ve got to step up your game and everyone just is going to have to come to that realization.
Mike: Yup. Sure. So that’s it for me. Do you have anything else, Grant, to close it out or you want to just end it there until next week? Where are you at?
Grant: I think the only last thing that I have to add is that in kind of the “we’re always kind of learning as well and we don’t know everything kind of vein” that we’ve talked about a little bit right now, is I’m actually starting to see my eBay sales pick up. And for the longest time for the last year, I’ve kind of treated eBay as my red-headed stepchild and I just leave it outside and just don’t give it any food and just have ignored it because eBay’s always just giving me maybe one sale or two sales here and I just kind of go, “Oh, gosh. I’ll just take care of this,” and they take margin and all that. But I think right around March and April, I started saying, “Okay, I’m just going to really sit down for like a week and focus on eBay.” So I cleaned up a lot of listings, I added some templating, I’m using a new platform called inkFrog. I’m putting a whole bunch of new stuff on there.
And the first months after I did that, I doubled my sales, which wasn’t really impressive because it was maybe $500 to $1,000 but I was like, “Oh, neat.” And then the month after, I gave it a little bit more thought. I doubled my sales again and I said, “Oh, well that’s neat. $2,000.” And now I’m almost doubling it again to $4,000 so I’m starting to turn into an eBay believer. And I know you used to be a Power Seller, Mike, and I now eBay’s a lot more competitive these days, but I might just have some more good things to say about eBay and we’ll see in the next few months or so.
Mike: Cool. Yeah, hopefully it’ll do well for you. Before the call, I was looking at my eBay sales. It’s about 1.5% of our overall volume. I mean it’s basically nothing. It’s enough to not turn it off. I mean 1.5%, I’ll take it. But yeah, it’s competitive, as you said. There’re a lot of people on there breaking MAP pricing. We don’t break MAP. We do sell a decent amount of our ColorIt stuff on there, which is cool. You know, people I guess that are looking for adult coloring books and stuff, that’s mostly the stuff that we are selling on there, but yeah, it still doesn’t add up to anything that’s going to change our lives.
Mike: Cool. All right, well I think that’s it for this week. Just a quick reminder for everyone: if you have a minute to leave us a review on iTunes, we certainly would appreciate that. I know I sound like a broken record asking every week, but it makes a huge difference for us and we really appreciate it. Obviously the podcast is free for everyone to listen to and if you can repay us in any way, we’d appreciate doing that by leaving us an honest review on iTunes. So definitely appreciate that. And until next week, everyone, have a great week and we will talk to you then.
Grant: All right. Take care.
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