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…I’m going to take you behind the scenes and really listen in on what six and seven-figure store owners are doing, what they are concerned with, what they are excelling at. And the way that I’m going to do this is I am going to have you listen in on a conversation that I had with Andrew Youderian who happens to run a very, very large community with six and seven and even some eight-figure store owners and he gets to kind of listen in on these conversations every single day. So, I wanted to get him on. He’s a good friend of mine, but I also want to get him on to really just talk about the ins and the outs of like where is e-commerce today. Is e-commerce just Amazon selling or is there actually businesses being built outside of just Amazon? Is it still a thing? Are people even starting with that in mind? And I think you’re going to be surprised at what we dig into.
And the other cool thing is that Andrew every single year does this pretty extensive report where he takes 450 plus business owners and he has them fill out a survey and he gets all the data back and then he puts it into this really, really cool kind of like state of the e-commerce or state of the union how they kind of do those. It's kind of like that with all these data points and it's really interesting, and we can dive into that as well. And I’ll link up to that in the show notes at TheAmazingSeller.com/570. Now, before we do jump in, I should tell you that when you listen in on the first part of this, it's going to seem like we were already talking which we were. And the reason why you don't get to hear that is because, well, for some reason it didn't record up to that point on my computer. It was like maybe 10 seconds in, maybe 15 seconds, but it was where he was telling a little bit about his background as far as how he got into e-commerce and I’m going to kind of fill in the blanks here so this way here you understand where Andrew even got into this business.
[00:02:01] Scott: Well, back in about 2012 he decided to start an ecommerce business kind of just from scratch and he did all of the data and all the research. It was really in drop shipping and he got into CB radios was one of his businesses and then he got into trolling motors, and these were all drop shipping stuff. We actually talk about drop shipping and what it was then, what it is now. And then when he started doing that, he decided to start this thing called eCommerceFuel and he did that for about a year without really making any revenue from that at all. He’s just publishing content, kind of like me with the podcast and publishing a whole bunch of content and not really seeing anything come in because we weren’t really worried about that. We were just publishing. And we knew that if we built an audience and we were able to give good value and all that stuff, and we actually talk a little bit about this at the end of our conversation, so you might want to listen on that because it’s kind of interesting to hear how things kind of play out. But then what he did is he ended up selling both of his businesses, both of his e-commerce businesses, and then he wanted to just focus exclusively on eCommerceFuel and that's what he’s been doing now for the past couple of years.
But a great guy and also someone that gets to listen in on these conversations with six and seven-figure store owners and it's going to be really interesting for you to listen in on our conversation because I really want to know personally some of these answers that he's giving us when I ask these questions. So, you're definitely going to want to stay tuned here. You’re going to learn some stuff as well and you're probably going to have some eye-opening moments as we talk about like where people are focusing their time and energy, and even some of the common frustrations and how they're dealing with them. So, I'm going to stop talking now, guys, so you can listen to this conversation that I had with my good friend, Mr. Andrew Youderian.
[00:03:45] Scott: Let me ask you, how did you ever get into like CB radios or trolling motors? Maybe you can take me back in time a little bit in a time machine and maybe we can travel, and you can let me know exactly how did that thing happen.
[00:03:58] Andrew: It was definitely not a passion project.
[00:04:00] Scott: Okay. Okay.
[00:04:01] Andrew: It was more of a very analytical approach come out of that job. My number one goal was to build a business that could support me, and it could buy me some autonomy and freedom. And so, I had a very this whole set of criteria about what I thought would go into a viable niche online. And so, I had like six, seven, or eight different items on there and I just spent probably two weeks just brainstorming a bunch of ideas, running them through that criteria list, doing market research, and came on the backside and thought CB radios was that. That was kind of the answer that the formula spat out and I was kind of shocked and surprised but trusted the process and so I just moved forward with that. And same thing with trolling motors too.
[00:04:41] Scott: And was that drop shipping?
[00:04:43] Andrew: They were, yeah. Both were drop shipping businesses.
[00:04:45] Scott: Okay. Okay. Yeah. And I know that, I mean, nowadays, I don't know, you know better than I do, are people really still able to make a living drop shipping? I mean, the margins are so thin.
[00:04:56] Andrew: They are. Yeah. You know, the CB radio business still, I think, is fairly viable because of a couple reasons that we can get into if you want but, yeah, I mean today I will probably not start a drop shipping business in 2018. It’s just it’s getting so much harder to market to get an audience. You got to pay for almost everything. Not everything, but a lot more than you used to 10 years ago on Amazon. If you look at like the number of people that resell products on Amazon, it’s really difficult to make any kind of margin do that well. So, it's a lot harder today if you don't buy a business with an existing kind of organic footprint in some kind of differentiating aspect to it from the drop shipping standpoint. It’d be hard to make work.
[00:05:42] Scott: Yeah. Let me ask you this too. Something just kind of popped in my head. Are you seeing people that are getting into this business? Are you seeing them buy businesses first or start them from scratch? Or is there a certain number? Like, I'm just curious, how are you seeing that? Because I know in your community, people are generally established but are people that want to start, are you still hearing that they're starting from scratch, or they’re buying a website that already has traffic? Like, what are you hearing? What are you seeing?
[00:06:13] Andrew: There's still a lot of people. I would say the new members that come into our community, I'd say probably 80% to 90% of them started their business versus buying it. Yeah.
[00:06:21] Scott: Okay. That's good news actually.
[00:06:24] Andrew: It is. It is. I mean, it’s definitely a different ballgame than it was 10 years ago, but, yeah, it's still very possible to start a business from scratch today. Yeah.
[00:06:32] Scott: Okay. Yeah, I mean, there's 100 different angles we could go here. Now, I know that you wrote a very long blog post and it's 2018 State of the Merchant E-Commerce Report, very professional, by the way, really well done. Dude, man, I mean this thing is like well done. I was telling you earlier, I’m like, if it didn't have all the pictures, I don't know if I would’ve been able to scan through it, but you had a lot of great pictures.
[00:06:56] Andrew: We did the infographic just for you. Most of the people read that but, Scott, we wanted to make it easy for you.
[00:07:02] Scott: Well, I’ll tell you what though, as you’re scanning, and you'll stop on a graphic and then you'll be drawn in because you like to see like just at a glance like what does the market look like? And I think it says here that you've interviewed over like 450 or 450 store owners actually responded to the survey that you did and kind of how you collected all of this information which is incredible. When did you start these reports by the way?
[00:07:28] Andrew: It started a couple of years ago, so this is our second one and planned to do it annually every year. So, yeah, we just been doing it a couple of years now.
[00:07:35] Scott: Okay. Awesome. I mean, it's a lot of work. I can tell you that but it's a great amount of information here. So, okay, what I wanted to do though is I wanted to – I'm going to probably scan through here and we’re going to hit some of these, but I just wanted to kind of I guess have the conversation with you about like I know that sometimes it feels like to me, anyway, like you have two sides of e-commerce right now. You’ve got the one side that's like pro like Amazon and the other side it's like against it. And I'm just curious. Has that changed in the past 12 months, 18 months or is it pretty much still that way? Or are there still people that are resisting Amazon and they’re like, “I'm not doing that because they’re taking too much of my money and I'm just going to do it on my own,” or are you finding it to be a little bit more people are at least leaning that way where they’re like, “You know, I'm just going to go ahead and at least put my products on there. I mean, why not? There's traffic?” So, what are you seeing right now with all of your community members?
[00:08:30] Andrew: I think you see a little bit of both of all of that and not as a cop out answer, but I would say maybe I’ll start with the macro attitude and then kind of get down in some of the personas, but I think the last 12 to 18 months, especially, you started to see people really realize that Amazon it is great but it's a very, it's almost like a drug like it’s easy to make money there or easier. It can scale up but you also run a lot of risks from the fact that you don't own the customer. You don't have the platform. You’re renting versus owning when you look at it versus the Amazon versus your own website. So, there are – I always say if I had to look at the attitude of most people in the community, in our community, it would be that Amazon is a great opportunity especially if you have your own proprietary product, your own brand, your own line, and that you should take advantage of it. But you have to have some kind of plan long-term to try to be building up your own asset, your own customers on your own website.
And so, a lot of people are alarmed at how much of their business Amazon now makes up and it concerns them and worries them and they’re doing as much as they can to try to build that presence on their own website. So, they’re definitely using Amazon and leveraging it but they're very hyper-aware of the fact that they need to have an investment strategy in their own property.
[00:09:45] Scott: And so, what are you seeing people do? What is like the first move if they are feeling like they're addicted to the Amazon drug? I love that too, by the way, because I've heard that so many times that people are like I’ve got high-level people doing six figures a month in my inner circle and they are, they’re admitting it. They’re like, “I'm addicted to the Amazon drug in a sense because it's my business. It’s like 80%, 90% of my business and I'm afraid because I’m lying awake at night hoping that something doesn't happen to my account or my products or whatever because they do control that.” So, like what are you seeing like how are people getting the sales to their website? Is it through Google advertising? Is it through Facebook ads? Is it building your own funnel? Like, what are you seeing and hearing from these high-level sellers?
[00:10:42] Andrew: Do you mean in terms of how they’re directing people from Amazon to their own website or just in general, how they’re building a program?
[00:10:48] Scott: Just in general. I want to start at general like right now they know that they got Amazon channel but then they also have their own channel. How are most people driving sales into their business, not counting Amazon sales? I mean, like how are they – because, again, a lot of us are like, “Well, wait a minute. Why don’t we just go where the people are?” So, for an Amazon, right? I mean, that’s the easy way, but we know that the other way we can kind of get that traffic and then if we can convert it, we own the customer. We can then follow up with them and do all that good stuff.
[00:11:15] Andrew: Right. So, I would say if you just asked me and said/, anecdotally from looking at your membership, what are people doing? I would’ve said most people 2018 are doing mostly paid acquisition so AdWords, Google shopping, Facebook, YouTube ads, those kinds of things. But when I surveyed people this last year and asked them what was their top traffic source, 51% of people said their top traffic source was organic search which shock to me like you hear so much about like SEO being dead and like the service is getting so crowded. So, that was interesting. Paid traffic was a number two easily at 30% and then you had all the other ones kind of broken up with social and email and all that kind of other stuff. So, I would say organic surprisingly is still the same. I think a lot of that probably is a little bit left over from more established merchants that may be built up that organic presence when it was a little bit easier four or five, six years ago.
I would say if you are looking today if you kind of cut that pie in a little narrower and said, “Okay. Let's look at businesses that are younger, maybe at two, three years old, where are they getting most of their traffic,” I would say most of that, that would be coming from paid traffic and especially on Facebook just from what people are talking about in our forms and I hear from people. So, I don't have the data to back it up, but I would guess Facebook is probably the biggest driver of traffic. That being said, there's a lot of people, not a lot, but there's some people that especially if they’re in super visual niches where they built in some figure brand off of Instagram. That’s all they do. They’re amazing at it. They’re credible at it. And they built the whole business off of that. So, it can definitely vary based on the model of what you're doing but that's what I’ve seen.
[00:12:53] Scott: Okay. Yeah. I mean, I agree. I mean, again, I think it depends on also like the market you’re in or wherever your customers are hanging out but I'm going to agree. I think a lot of people they're going all in on Facebook ads because I think that you can pretty much reach almost anybody there that you want and then if you want to go over in Instagram, you can go over there too with that same platform, same as platform, which is really, really cool. Okay. The other thing, I'm scrolling through here and this eye candy that I’m looking at through this report, which, by the way, if you guys want to check it out, I'll go ahead and drop it in the show notes to this episode and then you can always head on over and just the e-commerce report 2018 from eCommerceFuel. So, I don’t know if you have a pretty link to that or not, Andrew.
[00:13:36] Andrew: Yeah. It’s just eCommerceFuel.com/ecommerce–report–2018. It’s not super pretty but it could be uglier.
[00:13:45] Scott: Yeah. No, it’s fine. And I’ll link it up in the show notes but the one graphic I'm looking at right now was the fastest growing categories and the slowest growing category. I thought that was interesting and I wish that we were live-live in a sense because we could probably ask the audience what they thought that the fastest growing was and what the slowest they thought it was. But I'm going to go ahead and kind of give it away and I'm actually surprised that toys and games was actually out of the four categories that was looked at was actually the lowest in the fastest growing. They are still growing fast more than the slowest, but the top was pet supplies which is insane. I know it's a big market. I mean, I’m a customer but it's like wow. And then food which is crazy. So, at 66.7% was what you came up with for the pet supplies. That's incredible. Did you think that right off the bat before you did this survey?
[00:14:38] Andrew: No, and I didn’t, and I should give a little answer, a little bit of a start of all the data points I have in this report. This probably has the fewest data points and so take that with a little grain of salt and still knocked out some of the outliers to give a little a bit than average but, yeah, I was a little surprised there but not too surprised because I feel I’ve seen a lot of – I feel like, A, people go bananas over their pets.
[00:15:03] Scott: Oh. yeah. I do.
[00:15:04] Andrew: It’s just crazy. And I live in Bozeman, Montana where dogs are pretty much had the same rights as people. And secondly, like just I feel like I’ve seen a lot of companies do really own the pet space over the last three or four years.
[00:15:19] Scott: Yeah. That’s great. Okay. So, let me ask you this. Do you think it’s too competitive in the pet supply space to even get involved in that game?
[00:15:25] Andrew: Oh, man.
[00:15:28] Scott: You know, I mean, I don't know. Okay. I’m going to give you my quick opinion and then you can give me your thoughts on that. If you have some type of platform where you're a dog trainer or you have some expertise and you had a following then I say, “You can get into that space,” but if you're going into that space and just going off of organic, it's going to be a long road, but I think it still could be done but it's going to be a longer road, unless you have someone that's an influencer in that space that can start to promote and push those products to help you get ranked and get your stuff found. What do you think on that?
[00:15:56] Andrew: I’d agree with you. I think today, and we can get this too, I think if you asked me 10 years ago, passion versus practicality, how would you get into a market? And I’d say 10 years ago, oh, and that’s what I did, give me the totally very practical analytical approach to a niche and I think today with just as the way marketing works and the way, having a brand is so important, and one of the crucial things behind a brand is having authenticity, is having something that people that you believe in is putting together products that are really well done and thought out. I think I’d come flipped on that. If I was going to start a big brand today, I’d want to do in something I believed in. So, yeah, to your point 100%. If you love dogs, you got an audience there, of course, I mean the headwinds or the tailwinds are with you, but otherwise, yeah, I'm not sure if I could say quit your nuclear engineering job and go make stuff for that brand.
[00:16:46] Scott: Right. All right. And the slowest growing categories was tools and home improvement which is kind of surprising a little bit to me because I know home and improvement is like humongous like, I mean, look at Lowe's and Home Depot, right? I mean, they’re massive but I guess pets win and toys and games with kids. I mean, that's the bottom of the fastest growing categories. You have four categories there and that kind of makes sense. But toys and games, I mean, that’s a very, very strong category as well. But, yeah, tools and home improvement I would've thought would've been a little bit more but that's interesting. It's interesting data.
[00:17:26] Andrew: Yeah. And it's hard to know why that is but I wonder too with tools and home improvement the fact that you do have two monsters in the space probably plays into a lot of it, not everything but there’s probably a lot of tools and home improvement stuff that’s larger. It’s bigger stuff. It's harder to ship perhaps.
[00:17:42] Scott: That’s true.
[00:17:43] Andrew: So, yeah, I mean, there could be a lot of reasons behind that.
[00:17:46] Scott: Yeah. I’m actually scrolling through here again and you do have a nice little graphic on traffic sources and paid acquisition so definitely, guys, check that out. You have it all broken down here, paid, organic 51.1% and paid traffic you have at 30.3% which is pretty awesome and then, yeah, referrals, email marketing, all of that stuff. That's really good stuff, guys. Definitely check this out. This is really, really cool. Okay. So, what else in this report? It's long. What other things stood out to you? Is there something that just comes to mind you’re like, “Wow. That's kind of I didn't expect that or I didn’t think of that?”
[00:18:22] Andrew: Yeah. A couple of things. So, one thing we do is we look at gross margins both for Amazon sellers and non-Amazon sellers and also the trend. We only have two years of data on this but, see, if you look at the net margin, well, in sort of the gross margin. Gross is what you have left over after. Just with your product cost without any overhead. You know, if you're selling on your own storefront, the average gross margin is about 40% and if you're selling primarily on Amazon it’s about 36%, you get that down to the net margin, what you keep at the end of the day after everything, and that 17%, almost 18% for your own storefront and about 16.5% for selling on Amazon. So, I was surprised. It thought there would be a little bit, I thought you’d make a little bit more money at the end of the day selling on your own storefront versus Amazon because it’s more work, all these kinds of things. And granted, you make a touch more, but you don't make as much as you would think and so Amazon, once you factor in all the cost of acquisition, all these other things that it ends up being pretty close.
The other thing that surprised me was that margins didn't slip as much as I thought. E-commerce and just online is getting so much more competitive. I would've thought we would've seen a lot of margin slippage from last year this year and there was a little, but not very much, very minuscule amount so that surprised me. And then the third thing I’ll say and then turn back to you is when I looked at what people, you know, Amazon growth was huge. The number of stores reported in Amazon as their primary channel was up 20% from last year. People selling a lot more stuff on Amazon, but there was, you know, the number of people who reported that one of their biggest worries or problems was Amazon went up 200%, just a huge spike in 2018 for people that are saying that Amazon is just getting harder in terms of everything from compliance issues to just getting more competitive to them feeling over-relying on the platform to feeling like their own model was getting pressure from Amazon. So, those were some of the other things that stood out to me.
[00:20:29] Scott: Okay. Yeah. And I guess the next question I have for you is are you finding that – and the reason why I'm asking you like all these questions because you're like really close with like all of these e-commerce sellers that aren't just like focused on selling on Amazon. A lot of them came in just because they have their own website and they're selling and they're doing well but now they’re leveraging that platform but are you finding that any of those store owners or anyone in your community that you're starting to hear that they're saying that they're losing sales because they don't offer on Amazon because of the trust factor? Or maybe that's why they did it because they’ve seen a slippage and now they’re like, “Well, people are just going over to Amazon because they feel like they trust the platform more?” Are you hearing or seeing any of that?
[00:21:11] Andrew: Yeah. So, in terms of people losing out on business to Amazon because they’re not listed on the platform. Is that what you’re saying?
[00:21:16] Scott: Yeah, kind of, like I hear that a lot like people are all saying, “Well, no one’s going to buy in your own website. They’re just going to go to go to Amazon and buy it,” and my reaction is always like, “Well, they might but they probably found you on your website and then they’re going to go to Amazon to see if you sell it on Amazon,” and then they’ll buy it because they know they’ll get the refund. They don't have to worry about through you even though you will give it to them. So, yeah, I guess I'm asking like do you feel like there's a trust issue on your own site now?
[00:21:42] Andrew: I don't feel like it's a trust issue as much. It depends like if you have a real shoddy website that looks terrible, the design looks like it's from 2003, oh yeah, I mean, trust can definitely be an issue, but I think there’s still most people are comfortable buying off of Amazon if they feel like they're on a website and a brand experience that is trustworthy. So, if people are reselling products, yes, especially the higher the price point goes, the more likely people are going to be losing sales to Amazon and I have seen that. So, people reselling products I think have anecdotally from what I’ve seen struggled in the community but more than people who have their own private label or brand or something. But if you have your brand and I know someone in our community who they have a really well-known brand and they just made the decision not to sell on Amazon. Part of it was a deal that I think they made with another distributor, and part of it was the fact they were just – I think they got sick of dealing with some of the Amazon shenanigans. And because they own the brand and the distribution, if people want their product, they have to go through them.
So, yes, people are losing on Amazon sales in terms of price and convenience especially if they’re reselling but if you got your own brand and you don’t want to sell on Amazon, people are definitely making it work without going on Amazon.
[00:22:56] Scott: Yeah. Let me ask you this. Okay. You talk a lot about building a brand. I talk a lot about building a brand. What is a brand? Like what do you look at as like if someone says, “I have a brand,” what do you look at and go, “Yes, you’re a brand,” or you look at and go, “You’re not really a brand?” What are some things that you look at that you're like, “Yeah, you’re a brand?”
[00:23:17] Andrew: I would say at a real kind of non-emotional level, it's a proprietary product or service, something that you can offer that other people can't. And maybe it's even as simple as just something differentiated even if it's as simple as a white label to white labeled apron that has your logo on it versus somewhere else. But I think to generally build a real defensible brand, you have to have something that a company or a set of products or experiences that all shares the same values and feelings around the entire process of the purchase, getting the product, and the using of the product. And so, I communicate with the business. So, people say it much more eloquently than I do. I kind of butchered it there but to me, if you can create a sense of feeling around the entire interaction that anyone has with your company that extends all the way through, to me, that is a much better and much more defensible definition of a brand and what people should be aiming for.
[00:24:16] Scott: Yeah. I think that when I'm looking at a brand that I look at Bulletproof like they’re a brand, but they have other things that I love about a brand that some people call themselves a brand, but they don't have. To me, a lot of it has to do with the story. I like to have the story behind the brand because then that just brings in that trust element of, again, why did I create this certain pet supplement? Because I couldn't find one on the market that was clean and had all of these additives. I didn't want those. So, I went out there and through a years’ worth of testing and finding these different laboratories, I found the one that works the best and it's worked great and these people have been using it and it's worked for them too. So, it's kind of like that story. I don't know. I think a brand with a story it just elevates that brand a little bit more.
[00:25:02] Andrew: Yeah. Totally agree, if you’ve got a great story. I mean, think of like every kickstarter video you've ever seen for a great product. It's like we had this and we did this and then we went through all the prototypes and they do like that the B-roll footage of all the sketches, all the different. So, yeah, I mean if you can have a compelling story that helps a lot, but I think even more so like a set of really tightly believed in values that kind of permeate every experience with the brand is even more important that I would say than even the story.
[00:25:34] Scott: Oh, yeah. No, absolutely. It's kind of like I guess the message or the mission of the brand is really what you're kind of like you're saying you're enforcing whether it's a person or it's just the brand itself and you have this strong presence and just a strong take on the market and the positioning of that I think is huge. Let me ask you this. What kind of problems right now are you hearing that just e-commerce, in general, is facing? Like what are some of the struggles and frustrations that you're seeing and hearing of people that are, you know, they're just throwing their hands up or they’re like I'm frustrated with this? Like, is there something that comes to mind that maybe we can bring up and address?
[00:26:20] Andrew: Yeah. Two come in front of my mind immediately. One is especially on Amazon is dealing with kind of dirty tactics from people either people taking over your listing or selling on unauthorized products or all the issues that come with people trying to sell on against your product. So, that's a big one and you can probably speak to those more intelligently than I can because you’re deeper in the Amazon world. So, that's a big one and the other one is just kind of I think just the increased difficulty of getting people's attention and marketing. Like, if you look at us talking about this, but between organic and paid traffic, and between last year and this year looking at how much people I saw their ad cost go up, ad acquisition costs went up by 14% year-over-year and you think about today.
And I'm not sure the exact percentage but I think it's in the 60% to 70% range of traffic is controlled by Amazon, Google, Facebook, and maybe one or two other sites, those big three or four players and they've got it in a monopoly but pretty close and it's getting a lot harder to be able to reach people outside of those and those platforms know it and they’re all auction-based and so it's getting a lot more expensive to reach people. So, I have heard many a lot of different people say, “You know, it's just a lot different than it used to be in terms of it’s getting a lot harder especially on the marketing side.” So, those would be the two big issues I think that pop to mind immediately.
[00:28:00] Scott: Okay. Yeah. It totally makes sense. I mean, I could hear people right now screaming, “Yeah. That's me like the hijackers like on Amazon, that's me,” and then the other ones it’s always like how to acquire a customer and I get it. I think my marketing brain kicks in and says, “Well, that's why we should be building our own type of whether it's a follow-up with an email or a retargeting or any of that stuff,” it’s still maybe you’re paying for that in one way, but it’s also a way to bring back that customer that already knows, like, and trust you to buy something else. That's why I would like to see a business have more than one thing that they can buy over and over and over again whether it’s a supplement or something that’s replenishable because that just takes a lot of stress off of just keep finding like new customers, new customers, new customers. And I know, I mean, again we can go down a whole bunch of different rat holes. They got like chatbots now and like that's a new thing and people are all like, “Oh, you’re getting an 80% open rate,” and we all know that that's probably not 100% accurate because an open could be then it automatically opening up in their Facebook and it's counting as an open.
Clicks are a little bit different and I was surprised by that. I don't know if you played around with any of the ManyChat or any of that stuff, but it was crazy. The opens were like they were crazy. It was like 80% or 90% but then I’m like, “Eh, but that’s just because they’re probably auto opening if you're on your browser.”
[00:29:18] Andrew: You can't. It’s harder to fake a click though.
[00:29:20] Scott: Yeah. And those clicks were like 40% to 50%. I was like, “Holy crap. That's insane.” Now, will that last? Probably not but it's one of those things that it does get your attention and you want to jump on that train so again it's one of those things. It's like you can be just chasing all of these different hacks or techniques or whatever but in the end, if we can acquire a customer and then if we can remarket to that same customer, whether it’s through email, whether it’s through chatbot, whatever, to me, I think you have a better chance of not having to worry so much about acquiring the customer because you own that customer in a sense to where you get to market to them.
[00:29:58] Andrew: Oh, one of my biggest regrets about my first two e-commerce businesses was the lifetime value like the repeat purchase wasn't very high, and especially with drop shipping where your margins for those sites were anywhere from 10% to 30% on the gross side which is not super huge. You just can't make paid advertising work at all. And the more, you know, if you got a bunch, I mean, most people probably know this, you know this, but the more stuff you can offer especially if there's a built-in high likelihood of them buying if they're happy with you makes it so much easier to scale a business because you know they’re going to be coming back as long as you treat them well.
[00:30:35] Scott: Yeah. No, it’s huge. Let me ask you this too. This is another question that I don't hear a lot of people talk about. Do you find that any of your store owners they’re in e-commerce but do they have any digital products that they offer their customers? Because I think that's a huge opportunity that people aren't taking advantage of or they don't think that they have the ability. I mean, even with CB radios like you could've, if you're a hand radio person, you could have like a guide and then you can sell that guide or maybe set up. I mean, like there's ways to create like even if it was just like a free plus shipping offer and maybe a printed manual. Does anyone talk about that at all?
[00:31:11] Andrew: It’s funny you say that. I just interviewed someone on the eCommerceFuel podcast about it.
[00:31:15] Scott: Oh really? Nice.
[00:31:17] Andrew: Yeah. That sells digital products. But that being said, like I would say of all of our members probably less than 5%, maybe even as low as 1% or 2% sell digital products. Almost no one does, and I mean you know this, Scott. I've sold digital products before. You have as well and do and it’s hard to beat the business model.
[00:31:38] Scott: Yeah. No, it really is.
[00:31:41] Andrew: There's no ship and the margins are incredible and as always, you can create something of real value to people that add value and it makes sense for them. It's a pretty sweet model to have work. And so, if you can marry that with e-commerce marketing chops, yeah, I agree with you. I think it’s a big opportunity and I am surprised I don’t see more.
[00:31:56] Scott: I know and to me, it's like a hybrid. It's kind of like you have two different vehicles to bring in revenue, but also bring in customers. I’ve got one guy I know, and he sells in the food space and he basically also can teach people how to cook and kind of prepare and he actually created a course on how to cook these certain meals for a certain market. You know, it could be keto, it could be whatever, and he launched that for $197 and he’s selling them. So, he's got this thing running on the backend. He might sell sauce and spices and all of these other things that go with it, and now he’s got two different vehicles that are driving revenue and also customers, and it's great. It’s just so awesome to see this happening and there are so many things you can do cool with a digital product or even the other thing that I've seen people play around which have worked is if you do like a manual or something, that's a printed version of it. Not just like a three-page thing. I'm talking like maybe a 40, 50-page book.
You have it printed in CreateSpace and you can fulfill that just like you do like with FBA but they would actually print it on demand and you do a free-plus shipping offer and then on the backend to that, you can have an order bump of something else or you can add something else as like maybe your spices or maybe your sauce or whatever on the backend so you’re acquiring the customer with a digital frontend and then on the backend you can then strap on some of your physical products. And to me, that's like it's just so creative and to me, it's not that hard to do if you understand how the process works. Again, you need to learn that thing but I’m telling you, it’s so worth it or find someone that knows how to do it and partner with them or do something to have them bring that part in your business. It could change everything.
[00:33:40] Andrew: That’s another thing you do too on the digital is even if you’re not going to lead with selling digital products, you can use digital products to enhance your physical products to make them more interesting. Like, at the CB radio business, we would sell these packages and you could go out and get a lot of the parts on Amazon, but what you couldn’t get at Amazon was a really detailed 25-page illustrated guide on how to install this kit on a vehicle. And a lot of times people I feel like with drop shipping if you don't have some friction point, some way to differentiate your product from what's out there, it makes the customer say, “Ah, I could buy it somewhere else but it’s easier, it’s more convenient to do here.” They’ll go somewhere else. And so, I mean, those guides took us a little bit of time and effort to put together but they allowed us to sell a commodity at a non-commodity price which was great.
[00:34:27] Scott: Yeah. It's funny that you say that because there’s a brand that I'm partnered with and we just created something very similar to that where – but it's so professionally done. We didn’t do it ourselves, but we had it done and I think it cost me $500 but this is an asset that I only had to pay for it once. I'm going to be able to resell that thing forever. It's all relevant. It's not to change and now I have this asset that cost me $500 once and I can continue to use it in different places. If I want to, like you said, if I want to strap it onto a purchase, I can. If I want to lead with it, I can. So. I always try to get people to think a little bit outside the box of just you’re in a physical products e-commerce business. That's all you can do. No, you can do so much more, and I think people just need to look outside the box sometimes.
[00:35:16] Andrew: Yeah. Agreed.
[00:35:18] Scott: All right. So, we’re going to wrap up here and I could keep talking and digging into this report, but I think people should just go and check it out anyway. I want to ask you something else. You and I, we talked recently. We were going to talk a little bit about this on your show, but we ran out of time. I’m curious. This is totally off-topic but like you got into like e-commerce then you started up this eCommerceFuel thing which is pretty massive now and you've got like some really awesome sellers like how does that all happen? Like, how does that like you go from e-commerce to you're selling to, I’m going to do this thing and then now that's all you're focusing on really? And I'm just curious because I'm very similar, right? It's like when I started selling 15 years ago it was in my photography space and then from there, we went into digital, and then from there that taught me a whole bunch of stuff and then I started a community there and then from there I learned a ton and went to the other. So, I'm just curious like how was those transitions for you like going through that process?
[00:36:15] Andrew: Yeah. I think it was 2012 is when I started e-commerce, sort of started blogging about running an e-commerce business and I don’t know about you, Scott, but like when I started, I had no idea if it was going to pan out. I didn’t know what it was going to be. I just knew that if I was going to – I wanted to create some kind of ideally business around the knowledge and experience I’ve gained there but I didn’t know how it was going to look but I did know the one thing that was important was building an audience and adding value. So, really, when I started eCommerceFuel I had both the other e-commerce businesses mostly systematized which was nice and was able to spend probably 75% of my time for a year just working on building audience and marketing the business. And so, that's what I did for a full 12 months before I offered any kind of paid service or product or anything.
[00:37:05] Scott: That's crazy.
[00:37:06] Andrew: Yeah. I think right now it's so easy to want to have like shortcuts and start on some other new things and get impatient like I have to remind myself like this stuff takes forever if you’re going to try to do it right.
[00:37:17] Scott: Let me ask you this because this is always a question I get asked. Because like a lot of people just look at like, okay, where you are now and they’re like, “Okay. Well, he just started something, and it worked.” And the same thing for me like, “Oh, he started this podcast and, boom, it worked.” They don't know of all the other things that you’ve tried, and I don't like even saying fail. They just didn't work and then you learn, and you gain experience and then you move that to the next thing. But like during that process that you started this thing and you knew that if you built an audience, you added value, you knew that things would then fall into place, so you didn't really have like, “I'm going to sell this thing.” Did you along the way when you're creating the stuff and the audience just wasn't there, were you having doubts? Were you thinking yourself, “Eh, I just, I don’t know, I might just stop posting,” did that ever cross your mind?
[00:38:03] Andrew: It's especially in the first lesson with eCommerceFuel, but more so with the first CB radio, the first e-commerce business I started. I mean, it took, it was all organic-based and there was probably a three-month period where I was cranking out content, doing guest posts, connecting with people, writing guides, where I was putting a lot of content out there, but the SEO didn't catch up because it takes a little while and, oh yeah, for sure. I'm in the middle of something like that. I think everyone goes through that. And even that second store I sold, the trolling motor store, it was a – I wrote about this all publicly. So, I think it was doing when I sold about 600K, but it wasn't making that much money, especially when you think about the fact that I was spending some time running and it was only making about 10% so about 65K per year. And after two or three years which wasn't bad like I’m not complaining at all, but it was definitely not what I had hoped for it to hit and I end up selling that partially because I want to focus on other businesses and that didn’t pan out quite how I’d hoped. So, I mean, definitely, yeah, I mean this stuff, no one has, everyone is always terrified it's not going to work when they start out.
[00:39:12] Scott: Yeah. Well, let me ask you this. Do you still have those feelings?
[00:39:15] Andrew: Of course, 100%. Yeah. I mean, I think a lot of entrepreneurs, myself included kind of have a worst-case scenario mentality where they just are kind of fearful that everything will fall apart one day. And even now, you know, we’ve got some new stuff we’re working on and, yeah, it's a grind and you get frustrated. And even yesterday I was cranking on some stuff for this project and it’s a horrible day. I didn’t get anything done because I couldn’t figure out like where to focus my time and effort, left early and I like left home dejected or left the office dejected more or less. So, today has been a lot better but, yeah, I mean, this stuff, it’s kind of like comes with the territory and I think everyone if people don’t face this, I think if they didn’t face it at least largely at some point, I think they’re probably lying to you.
[00:40:04] Scott: Yeah. No, I agree. So, let me ask you this question. This is sometimes a tough one, but I think we all face it like what pushes you through? Like I think that's the thing. Mindset is huge. I know you know this. It's like mindset is everything. The people you surround yourself with is everything but what gets you through or what like gets you to say like, “Well, this is just part of it. I know this is the way it goes. It's going to work. I’m going to make it work.” Like, what drives you? Is there something in the past that you’ve kind of done that helps you or prepares you for that or are you just born that way?
[00:40:38] Andrew: Yeah. No, good question. I think you absolutely have to have somebody, something driving you in a reasonably important reason. I think that can and should change like for me when I started, I absolutely under no circumstances want to go back to a job when working 70 hours a week and have no control over my life and that was a really good motivator like I got more done that first year, Scott, than I ever got done in a year in my life like I just – and that drove me and I would say leaving yesterday on the bike home just thinking like, “What a terrible day. That was awful. I didn’t get anything done. I couldn’t get engaged.” Part of what, coming back today made it easier was a shift in thinking like, “Yeah. I want to have, you need to have a viable model. You need to do something that adds value for people,” but for me, I'm going to point now where I’m fortunate enough where I’ve been able to build a little bit of that autonomy and material things are a huge driver for me as much as like doing something interesting and having fun.
And so, yesterday that was not part of the equation and I’m not to say that you should try to, again, you got to have a viable business model and add value. But for me, at least, coming back today like thinking about a way I could dive into something and do something I enjoy on the technical side of things, like diving deep with my hands a little bit. Kind of getting a little off basis here, but it's changed a little bit from that driving reasons to doing something that you feel like I'm doing good work. I feel like I’m doing good work. Now, it's something that's interesting that I could also add value. So, that's kind of changed.
[00:42:03] Scott: Yeah. It’s got to keep you interested, I think. But I think the last thing I'd like to ask you before we wrap up is like a lot of people talk including myself, like if you can build your business model around something you're passionate about, like, that's awesome but it doesn't mean it has to be. Like, what's the difference between a passion and an interest? Is there a difference?
[00:42:25] Andrew: I think an interest is something it’s just the level of magnitude. I think a passion is something that you could talk about for four hours and you might not even notice the fact that half of people are asleep because you're so excited to talk about it. Whereas an interest is like, “Oh, you’re going to an NBA game? Oh, I play a little basketball in college. Maybe I’ll go.” Yeah, just this level of magnitude I'd say.
[00:42:45] Scott: Okay. Because I get a lot of people that say like, “Scott, do I have to go into something that is like my passion or can I do something that I'm just interested in and I want to learn more about or do I just go after something that just the numbers look like they’re great?” So, if you were going to give someone advice and they came to you and they said, “I want to start a business and I haven't started anything yet,” or I’m switching businesses, where would you steer them towards one of those knowing what you know now?
[00:43:16] Andrew: It’s really hard.
[00:43:17] Scott: It’s a tough one, right?
[00:43:19] Andrew: I mean, on one hand, I do think it's more important to have some level of interest, especially if you’re creating a brand today, a product-based brand, but on the other hand there's a lot of people who follow their interests and their passions and end up not making a lot of money. There’s a great quote someone much smarter than I said that you can either have a sexy business with not very sexy money, that doesn't make much money, or you can have a really sexy money with a non-sexy business. Not always, but I think more often than not that's pretty fair, so I think that’s a hard one to answer kind of just across the board. I think it depends on the person.
[00:43:58] Scott: Yeah. I know. There’s not really a right or wrong. I guess my thought is if I'm going to start from scratch, I'm going to try to look at the things that could really fire me up and then I'm going to start looking at the market and say, “Can something be built here if I was able to put enough energy into it?” Like, are their product selling? I mean, with all the tools and stuff now, we can kind of see if there's a market that's selling products and what we would need to do to compete and stuff like that. But If you did that and you looked at all those numbers and you're like, “Well, even if I did everything right, there’s still not a lot of money there. Maybe I don’t want to do this.” Like, yeah, I would say that I would probably advise that.
[00:44:35] Andrew: Oh, 100%. I mean even if you're passionate about something, do your diligence to make sure it’s going to pencil out for sure.
[00:44:41] Scott: Yeah. Right. No, absolutely. All right, man. This has been awesome and it's always fun to talk and shop anyway and just even again like your model has changed since you started, and I just love to highlight that for people listening because what you and I are doing today doesn't necessarily mean we’re going to be doing five years from now. Obviously, we’re hoping that we’re going to be driving ourselves towards that thing, but I think we’re always growing and we’re always striving, and we want to. And I think for you and me right now our big mission right now is really to just reach more people and help more people in their businesses and in their lives and that's where we are today. But that doesn’t mean that we were even yourself back in 2012 and you’re building that business that was mainly to make some cash, so you can get out of your corporate job. So, I think just things change, but I love hearing the stories and I love hearing where people kind of bust through those and I appreciate you sharing that stuff. So, let me ask you this. You got some new things that are in the works. I want you to let people know, number one, where they can find out more about eCommerceFuel, the podcast, and anything else that you guys are working on over there.
[00:45:42] Andrew: Yeah. Well, thank you. Yeah. If you’re a podcast listener which you are obviously, we do a weekly podcast about e-commerce with we focus on tactics and stories and growing a seven-figure business. So, it’s called the eCommerceFuel Podcast. You can find that on iTunes or Stitcher or just eCommerceFuel.com. Like you alluded to, Scott, we have a private community for seven-figure store owners. So, if you're a seven-figure store owner, you can learn more about that community at eCommerceFuel.com and then just launched a job board as well. So, if you're looking to hire in the e-commerce world or if you are looking to get a gig and kind of learn the ropes before going out on your own especially at the manager level, the VP level, director level, or additional marketing level, we have a curated list of jobs that we update every week over there. So, and that’s eCommerceFuel.com/jobs. So, those are the big things.
[00:46:37] Scott: Yeah. Let me ask you about that before you go because I think we did a huge amount of time to dig into that. Where did that come about? Okay. Because here's another thing, you just added to the thing like where did that come from? Like, were you getting a need for it, a want, like where did it come from?
[00:46:51] Andrew: Yeah. You know, it's funny. I don’t know if you've ever felt this, Scott, but like was an e-commerce business owner, sold both of his businesses, and I made the intention, a decision to focus largely on our community because there’s a lot of things. I did a poor effort into there to try to do what I want to. But then I’m left without an e-commerce business that I can grow, and you feel, to be honest, like you feel a little bit like a poser and insecure about that. Even on the past, things change like your techniques change. Anyway, was just looking to the market and was trying to decide between growing an e-commerce, buying an ecommerce business, or starting something and kind of expanding eCommerceFuel a little bit and just looks at decided going the job board route because, A, there weren’t really any good job boards out there focused on great e-commerce roles. You can go to Indeed and you can go to, you know, Career Builder and stuff but you got to filter through a lot of stuff, so I wanted to have one that’s a little more curated, a little more focused on our industry. And then secondly, just tied in really nicely with the brand and with our store owners. We’ve got a thousand store owners that are looking for great talent and so that’s a nice little jump start there. So, yeah, decided to do it and, yeah, it’s been a lot of fun.
[00:48:02] Scott: Yeah. That’s really cool. I’m actually over there right now and looking at the job category. You got a whole bunch, Amazon copywriter, customer service, developer, digital marketing, email, paid traffic, SEO, social media. Yeah, that's really cool. So again, if someone wants to have someone that specifically can help them in that area basically hire someone so that's really cool. And, yeah, it was a need that your market needed and wanted and you're going to fill it, which is smart. So, awesome. Congratulations on that. So, yeah, go over and check that out, guys. I'll link everything up in the show notes as well and, yeah, check out eCommerceFuel. Andrew runs a really great group, great community over there and I know that what he does over there is really good stuff so definitely go check that out. So, Andrew, once again, man, thank you so much. I know we’re going to be hanging out, especially if we’re going to be ripping on our friend, Steve Chu, publicly.
[00:48:54] Andrew: Friend? You call him a friend publicly?
[00:48:55] Scott: Well, yes, I do.
[00:48:58] Andrew: Acquaintance like maybe on a good day.
[00:49:01] Scott: Yeah. We have some really cool stuff planned. Him and I, and you might be in on that as well, but we’ll be letting people know a little bit more about that. We’re going to be spending some time together. It’s going to be a lot of fun and, yeah, I can't wait to see what happens from those episodes. So, anyway, Andrew, once again thank you so much. I’ll let you get back to work and, yeah, like I said, if you need anything, let me know and I know everyone is going to get a ton of value from this and your community so thanks again, bud.
[00:49:30] Andrew: Yeah. Thanks a lot for having me on. I appreciate it.
[00:49:33] Scott: All right. So, there you go. Another great conversation with someone that's deep in the trenches in the e-commerce world and that's why I love digging into these discussions again because a lot of his people that are in the community, they all started generally just e-commerce to selling on their own website, getting organic traffic, which I thought that was a really, really eye-opening moment for me that a lot of people are still building a website and then going after search engine optimization and it's funny because like Amazon or eBay or Etsy or anything they have different changes and updates. Well, Google has had updates for the past 15 years and they call them now Google slaps and businesses have been really disappeared overnight because of algorithm changes and shifts and stuff and people are starting to hack the system and all that stuff, just like Amazon. Same idea. But I really found it interesting for him to say that a lot of people are still using search to have people find their stores and then buy stuff.
So, I think that's really awesome and it also lends itself well to what I've been really telling you guys and teaching you guys is this whole PACE method and that is going out there and building a real brand and something that can be found in Google and on other different platforms whether it's social media or your own blog, whatever. It's pretty interesting to hear that there's still businesses doing that and they're doing well, but they’re also capitalizing on Amazon's platform, why wouldn't you? So, all right, go over and check out eCommerceFuel. Andrew is an awesome guy and I'm sure if you have any questions he’ll be there to answer them for you and then, guys, the show notes can be found at TheAmazingSeller.com/570 and you can grab all of that over there, all the links that we talked about and even that report, I’ll link that up in the show notes.
[00:51:28] Scott: All right, guys. So that’s it. That’s going to wrap it up. As always, remember, I’m here for you, I believe in you, and I am rooting for you, but you have to, you have to, come on, say it with me, say it loud, say it proud, take action! Have an awesome amazing day! And I’ll see you right back here on the next episode.
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