EP10: Amazon: Selling Strategies to Achieve Massive Growth, A Deep Dive on Reviews, and Advice on How to Combat Margin Erosion | Brian Beck, Managing Partner of Enceiba

What you’ll learn:

Traditional selling and distribution will never be the same, thanks to Amazon. Our guest, Brian Beck, explains how brands have a huge opportunity to capitalize off this massive marketplace. You won’t want to miss it.

About our guest:

Brian is an eCommerce industry pioneer with 20+ years of experience, including more than a decade as a hands-on, C-level executive at companies like Harbor Freight Tools and Pasun. He has repeatedly driven annual revenue growth rates in excess of 100% per year and has built digital commerce operations to hundreds of millions in sales. He’s also the author of ‘Billion Dollar B2B eCommerce’. Today, Brian serves as a trusted advisor to dozens of mid-markets and global B2B firms on eCommerce and Amazon strategy and is a regular speaker at the top industry conferences.

Key takeaways from this episode:

  • Why all brands can (and should) capitalize on Amazon – 4:50
  • Dealing with margin decline and how to stay on top of search results in a competitive marketplace – 9:22
  • What makes the most sense for your brand: Seller Central or Vendor Central – 17:20
  • The future of Seller Fulfilled Prime – 20:00
  • Amazon’s biggest priority as a business that you always need to keep in mind – 21:27
  • Deep dive into Reviews: how to generate them quickly (the right way) – 22:22
  • Three steps to take to successfully sell on Amazon – 29:27
  • Counterfeit companies and Amazon White Labeled Products: the advice you need to hear – 33:56
  • How to handle the fake, negative reviews that are killing your product – 39:35

Podcast Transcription

Announcer: Welcome to the Page One Podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies, to tariffs, influencer marketing, best in class product launches. And all the details about how to accelerate your e-commerce sales with the big box retailers, or what we call r-commerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page One Podcast. I’m your host, Luke Peters, this is the podcast where I bring you the best and brightest leaders to share in their consumer product knowledge. I’m the CEO and founder of NewAir Appliances where I cut my teeth selling products, and right now have started a company called Retail Band. Where I hope to bring those marketing and sales expertise to brands that are interested in growing their reach on Home Depot, Lowe’s, Wal-Mart, WayFair, and all of those B2B, big box retailers that we focus on. Today, I have Brian Beck, Brian Beck’s an Amazon expert and just a quick bio on Brian. Brian has 20 years of e-commerce experience, MBA from Rutgers, and he’s a partner in Enceiba, which I guess I’ll let Brian explain that a little bit more. He’s also the author of Billion Dollar B2B E-commerce. So, thanks for joining me today, Brian and great to have you here.

Brian Beck: Yeah, thanks again, I’m excited to be here and talk about all those things.

Luke Peters: Awesome.

Brian Beck: Let’s dive in.

Luke Peters: Okay, cool. Why don’t we start out with Enceiba, and just let’s learn a little bit about it. If you want to give a quick background on what the company does.

Brian Beck: Yeah, sure. So, as you mentioned, I’ve been in e commerce 20 years, and during the course of 20 years I’ve run e-commerce, and many different companies. Brands, retailers, and some B2B and, over the course of my career, I have ran Amazon programs, since the late 1990s at every one of those companies. It’s really incredible to me to watch firsthand what Amazon has done in terms of really their dominance, US and increasingly global e-commerce. When I had the opportunity a couple of years ago, to get more involved and start a business in the area of e- commerce with some partners. We really wanted to help brands and manufacturers to take advantage of that growth for themselves, we see that as a real opportunity for folks like that.

Brian Beck: We’ve built a whole team of folks to help with both the strategic aspects and then the execution of Amazon programs for brands. Myself and the rest of the team brings quite a bit of experience in building Amazon programs, and also thinking about it not just in the context of Amazon. But also the broader context of how they’re going to market, how they’re using e-commerce, what other channels We’re selling through it et cetera. So, we’re blessed to have a nice group of not only a team now, but also a nice group of clients that we’re working with, that are largely mid market and some larger product manufacturers. So hopefully that gave us a little bit of an overview there, does it?

Luke Peters: Yeah, that’s super helpful, how about the total number of team members so people can get a scope for how big the company is?

Brian Beck: Yeah. So we’re about 20 people now. And we’re just two and a half years old now. It’s growing quickly, myself and there’s several partners in the business and all partners are 20 plus year veterans of this field. We’re bringing a lot of experience, during 20 years you’ll learn a lot, what to do or what not, right?

Luke Peters: 100% and, we share a lot of similarities in the background, just because I’ve been working with Amazon along the way for many of those years, selling products into it. Definitely thrilled to have you on the show. And for the audience, one thing I just wanted to bring up is, a lot of the podcasts are going to be focused on those big box retailers. And that’s where retail band is able to help you guys grow your businesses on Home Depot and Wafer and all that. And I thought this episode was really, really interesting because Brian… Obviously everybody has to start with Amazon, or is focused on Amazon. And that’s why Brian’s going to bring a lot of his knowledge and can answer a lot of those questions and whatever your strategy might be as a consumer brand.

Luke Peters: Whether it’s reviews, a lot of those things you’re going to be putting those across all of your channels. I got some great questions here that’ll hopefully dive into the strategies and give the listeners some valuable insights.

Brian Beck: Yeah.

Luke Peters: That’s great, we have a background on the company, and it’s incredible. In a couple years, you’ve grown it to 20 heads, that’s great. And why don’t we start at the very beginning because pre call we were talking about what you guys do, and start first with Amazon strategy. And I thought, that’s an interesting question because I think one of the things you said is, “Hey, does a brand want to sell on Amazon to start with?” Right. So, why don’t you kind of walk me through that strategy and what brands should be thinking?

Brian Beck: Great question, look I do a lot of speaking at conferences and these types of things, webinars and podcasts about Amazon. And, one of the reasons we started the business. One of the most incredible facts regarding Amazon is the amount of search volume, it’s now starting there. And if you think about where we were even five years ago, where Google and retail sites were a primary place people went to search for products when they had product. Amazon is now responsible for close to 70% of product search, and I know that varies a bit by category and home furnishings in a Wayfair for example, it’s a lot of search. But overall, when you look industry wide, Amazon has just really taking in control of a lot of product searches, and as a result that challenges traditional notions and brand. And how you build a brand, how you retain loyalty, how people are finding product, and even your very relevancy.

Brian Beck: So, as you think about having a presence in places where the consumer is, right, it’s important for you to have some form of Amazon presence and strategy. And, for a brand or a branded product manufacturer our point of view, is that those companies really do need to have an Amazon presence. And frankly, what you’re doing with an Amazon presence is you are meeting the customer where they are. The consumer has more power than really ever before. In my book, I call it the age of commerce transparency, and the power shifted really away from marketers, and really to the hands of the buyer, whether you’re B2C or B2B, whatever you’re selling. As a brand to stay relevant, it’s important for you to have that presence.

Brian Beck: And I also argue that it if you’re differentiating, based on your product itself, right. Your product is what you’re best in the world at, as a product manufacturer, you really ought to be on Amazon. Because frankly, it’s just a shift of purchase preference, it’s search engine and purchasing transaction channel, right? So, if your product stands on its own, and the buyer understands that, “Hey, I got this product, this is a Newair product, and I recognize it as such.” Amazon is really facilitating transaction. Now, there’s some categories or products, are more commoditized, and the argument doesn’t hold up quite as much. But, if you’re a product manufacturer, we believe that you ought to be on Amazon and really controlling your destiny there, because of that search volume.

Brian Beck: And, if you’re in a different form of business, if you’re a retailer or distributor, or reseller, some type, you still have to be paying attention to Amazon. And I’d argue that you still need a presence there, at least with your private label products to understand and learn from what Amazon’s doing. And to retain your brand presence for your own company and what you do. There’s a mix of arguments for being on Amazon, and it kind of depends, what kind of business you are. But, certainly for branded product manufacturers in most categories, we believe there’s a very strong argument to the all in on Amazon. That makes sense Luke?

Luke Peters: It makes 100% sense, and I agree with those points there. And even just, I mean, a lot of times people will say Amazon, you have to think of it almost as like from an SEO perspective. They’re kind of the new Google, and if you’re not there, you’re going to lose a lot of eyeballs I think, that’s-

Brian Beck: Exactly.

Luke Peters: You I read into the lines. But, let me kind of pepper you with a couple of questions here.

Brian Beck: Sure.

Luke Peters: And I’m curious about these myself, by the way because we’re actively doing this, we’re selling our brands into these sites. So, one thing that I’ve noticed with Amazon… I mean, there’s a lot of things we can get into some of the counterfeits and some of those challenges. But let’s start with this one, because this is one where the margins with some of the things with AMS, it seems like they’re chipping into the retailer, or to the brand margins. I’ll ask that question, but also kind of before I get there, another challenge… And everything about Amazon, their size and the volume, it’s all there. So it’s all great, but the challenge is also, it’s really hard to stay at the top sometimes in any of the competitive categories.

Luke Peters: Because there’s so many different ways that people can come in from behind whether they want to overspend or dump on price, or Chinese factories themselves come in there. So, kind of retaining that top position has become harder and harder and harder. And so curious to your thoughts on those two questions about margin decline, and also retaining the top positions and how brands should think about that?

Brian Beck: Great questions Luke, it’s funny I like to say Amazon has the perfect business model.

Luke Peters: Yap.

Brian Beck: You think about it, I mean, gosh they’ve got the transaction, the search engine, they make profit on a variety of services around it. And now advertising they are the, I believe third largest advertising channel behind Google and Facebook now digitally in the US at least. And so, you list your product there amongst 600 million others close to that number though. And gosh, and you got to pay to make it visible, wow. So, margin erosion, hundred percent. This is something that we work with all the time, and it requires a level of management on the advertising side. That is approaching what Google is in terms of, it’s complexity and tightness of management is all about the data.

Brian Beck: And what you’re seeing is, to be effective in Amazon, you need more and more expertise more so than you are used to. And managing campaigns within Amazon, has become very much a science, and a skill set. And it’s one that, you know, we obviously know, because we hire people that have it and will develop it, and train people into doing it. And so retaining your visibility, in someways it’s like Google. I mean, it is you alluded to SEO earlier, which is Search Engine Optimization. You’ve got the same concepts in Amazon and that existed in Google for years, which is you know you’ve got paid marketing, you’ve got SEO or Search Engine Optimization, which is showing up in the searches naturally.

Brian Beck: And there’s a whole series of things that you would pull and push in order to do this and when you’re a new brand, what we’re seeing is the sandbox is longer. It takes longer to get yourself into a position where you are becoming visible on Amazon. You have to establish your foundation correctly, make sure your content is excellent, generate product reviews, and then use paid search as a way to get there. Sometimes we’ll work with our clients to… A lot of our clients will have multiple channels they sell through. So we’ll work with them to use some of those other channels to help drive up the initial visibility on Amazon. Including, using email outside of Amazon, to send people to Amazon to buy. Letting people know that the product is available on Amazon.

Brian Beck: Again, if folks know they’re more likely to purchase it, you need to really start that volume of reviews coming to your products is one of the most critical things you can get on Amazon, to help you with visibility. So there’s a variety of tactics, and it’s looking even beyond what Amazon offers you, in and of itself. Because, what we find is as you build volume and brand recognition across all of your channels, your Amazon sales will lift. I have a client for example, that lists products with QVC, they go on air with QVC. Whenever they go on air with QVC their Amazon sales spike. Why, because even though QVC is helping them obtain the sale, Amazon as a preferred transactional method for many people. And so, they go on Amazon and make the purchase, even though QVC aired the product. QVC doesn’t like that too much.

Luke Peters: I can see that.

Brian Beck: Yeah, but it speaks to the consumer preference, and in terms of transaction. Amazon’s at 100 million Prime members, 110 I think million prime members. So, it is a vehicle for that. We think about it inside of Amazon, but also outside of Amazon, does that makes sense?

Luke Peters: Total, it makes perfect sense. And, I guess just directly because… I mean, this could be a hard question to answer, but I guess in general, do you think that brands now are going to have to settle for less margin or let’s say compared to three, four years ago? are brands going to just have to reset things? And they’re going to have to say, “Okay, we’re going to have to kind of raise our selling price, and Bill.” I mean, I know they have to do this to an extent, but are they able to raise their selling price, build in the AMS and in the different cost to sell on the platform. And still end up with an equivalent margin to a couple years ago? Or do you think the overall trend is that the margin is going to continue to be squeezed to the end?

Brian Beck: Well, a couple of things, I think AMS and amazon, marketing, advertising, is going to continue to become more expensive. We saw that with Google 15 years ago, we could advertise on Google for the brands that I was running e-commerce for and we would get a nice return, a 10 to one return. In Amazon, some categories you can still do that, but in some it’s becoming increasingly difficult to get those kinds of returns. Many cases, in three to one sometimes less, it depends on the strength of your brand. I think to some degree margin erosion is somewhat inevitable. But I would tell you that, and this is the reason that we believe that many product manufacturers, really ultimately will manage their own sort of Amazon presence. Through what’s called a third party program, versus selling wholesale to Amazon.

Brian Beck: If you’re a product manufacturer, you maintain it by selling to the end buyer and the consumer, you maintain a tremendous amount of margin. And, typically in categories like apparel or footwear, where we do some work and even others in the B2B sides. Margins can be 60, 70, 80%, from retail down to your wholesale costs. There’s room to move there, and what’s what’s called a Third Party Marketplace Program, where you own the Amazon account, you’re getting the entire retail price. Minus of course of Amazon fees, but you’re getting the entire retail price. And, you also control the pricing, and so we see a lot of companies shifting their approach to selling on Amazon versus selling to Amazon as a wholesaler, which is called First Party or Vendor Central Selling.

Brian Beck: We believe that a lot of folks will want a branded product, manufacturers will end up there. Now if you’re a retailer, or reseller with 20 or 30 points of margin, it becomes much harder and in some cases, you’re not making anything. That’s why it’s more of an assortment question if you’re in that situation where you’re reselling products. What assortment is right for Amazon and it won’t be the entire catalog most likely, that makes sense?

Luke Peters: Yeah, and that’s helpful that you threw the margin percentages out there, because you’re absolutely right. If you have really, really thick margins, and you’re in 60 70%, then, because Seller Central via FBA can be pretty expensive. But if you’re starting with that amount of margin, then you’re going to be just fine. Let’s talk about a specific case, a lot of the listeners, I mean, my brand included they’re larger products. So, compact appliances, in this case we can do Seller Central, storage becomes very expensive. Vendor Central can make a lot more sense because they’re taken on the inventory but then of course, they can disrupt the market. Any thoughts on that, or how people should kind of weigh the two different sides?

Brian Beck: Great question, I talk about third party and of course there’s cases where using Fulfill by Amazon FBA, becomes untenable because of the shipping costs. And I think you’re describing it, right. So, what appliances are compact appliances, and I imagine your shipping costs are enormously high. There’s a couple of methods to look at there, one is of course Fulfill by Merchant, in which case you fulfill the product yourself, from your own stock and inventory. You control the retails if you’re doing the third party program and CPA or Seller Central, is all the same thing. You’re able to manage your retails, you don’t have the markdown risk that you have if Amazon takes ownership.

Brian Beck: But from a shipping perspective, you manage it on your own account, and you can charge for shipping on Amazon as well. But, we do see that the issue there is you’re not prime eligible, if you’re shipping in your own account in most cases, or sorry, from your facility. You’ll need to account for that and you might charge for shipping or you can potentially offer free shipping. The issue we see is that non prime eligible products, do not convert nearly as well as prime eligible products do. So, three to four times less than a prime eligible product as the equivalent.

Brian Beck: And so, one way to solve that is by looking at third party logistics providers that participate in Amazon. There’s a program called Seller Fulfilled Prime, which prime certifies warehouses, either your warehouse or third parties warehouse, to ship products with the prime badge. And there’s certain criteria that have to be met. In fact, that program is in a bit of flux right now. And it may not continue in it’s current state but there are third party warehouses available to do that sort of thing. We actually have clients that have certified their own warehouses as third party as a Seller Fulfilled Prime distribution centers. That’s another way to kind of get around that issue.

Luke Peters: Yeah, and tell me more. What do you know about that? Because that’s, near and dear to us in some of our listeners. What could going away with Seller Fulfilled Prime, is there something that they’ve announced?

Brian Beck: Well, not really, they’ve announced that it’s not currently accepting new application, right?

Luke Peters: Got it.

Brian Beck: But, under the covers what we believe is going on there, is that they’ve had some issues with sellers not meeting their customers expectations. On dropping the ball basically on prime, and one of the things that makes Amazon, characters really remains core to the business. Am amazed they’ve been able to stay this focused but honest, but it’s the focus on the customer and the customer experience and making sure that delivering for the customer. I raised that because when a program doesn’t meet the customers expectations, Amazon looks at other alternatives. They’re not afraid to fail, but they’re but they do react to what’s happening and reality.

Brian Beck: Our belief is that there’ll be a significant shift in the way that program is approached, and it may not continue in it’s current form. In fact, it’s likely that we’ll see something that’s more similar to Amazon deploying it’s own physical assets into warehouses, of third party sellers. To get closer to what’s happening, to mitigate the risk of that, if the program does continue in it’s current… It’ll probably in a different form, again Amazon will prioritize that customer experience above just about anything else at the company, because that’s what’s made them so successful.

Luke Peters: Yep. Makes a lot of sense, and thanks for the insights there. Because for the larger products, there’s a number of ways one can work with the 3PL that’s certified is seller fulfilled prime. They can convert their own warehouse and like you said, I guess maybe they’re not accepting new applications for that right now. Or there’s other partners that, I don’t even know the right way to describe them. But other companies that kind of have a reseller model with multiple warehouses throughout the country, kind of like a distributor I guess. Where you would get your product in, and then they would run the equivalent. They wouldn’t be FBA but your product would be prime, because they’d be in multiple locations. So, those are the options I guess for the larger products.

Brian Beck: That’s right, yeah.

Luke Peters: Cool. Okay. Let’s talk about reviews. Reviews is super important across all platforms, across the Wayfairs.

Brian Beck: Mm-hmm (affirmative).

Luke Peters: And the Walmart’s, but obviously it starts on Amazon. And a lot of folks have used say Vine or they’ll just drive reviews maybe when they launch a product. It might be friends and family, or it might just be driving volume on that product so that you get a lot of velocity on it. But, Amazon has kind of pulled back on ability to solicit reviews, right?

Brian Beck: Yeah.

Luke Peters: There’s been a lot of changes there.

Brian Beck: Yeah.

Luke Peters: Let’s do deep dive in reviews it would be curious to hear the different strategies, and how people should think about generating reviews quickly on products.

Brian Beck: So first and foremost, we believe that you need to be quote unquote, white hat with reviews with what is happening. It means that, you need to authentically generate reviews for real business buyers, and not try to gain the system. We see sometimes sellers will opportunistically try to generate reviews and you’ve even seen bad actors writing bad reviews on competing products. I mean, there’s some nasty stuff that happens on Amazon and it happened on some folks we’ve worked with. So there’s no reviews and the reason of that is there’s incentive, right. I mean, with reviews comes volume, comes rank, comes volume and so, you get bad actors in their, hiring people to write bad reviews on competitive products, write positive reviews on their products, and they shoot up for a while.

Brian Beck: Amazon, of course hates it, but they also make it very hard for companies to remove reviews from products or there’s a report abuse button, but that only does so much. Now, Amazon’s aware of this, this is a big PR issue for them. So, they do take action and they have taken action for some of our clients in the past, when there has been clear evidence to the effect. So all that said, let’s put the bad actors aside for now, the Amazon really has reduced the ability for you as a seller to solicit reviews from customers. Like recently they’ve turned off the ability to email customers to ask them for reviews.

Brian Beck: There’s a whole variety of things that… What they’re trying to do is really make sure that the review content is authentic, that it’s not gamed. It’s like the Google the old days where people used the game, the search engine algorithms to get higher rank. It’s the same idea. And people have taken advantage of it, and Amazon is very sensitive to it. So, what’s our advice? Well, take advantage of Amazon’s programs and we do this for our clients. We are going to take advantage of Vine and take advantage of the early reviewer program, which will get you your first five reviews and we pay a fee for it. Those are things that you want to be doing as a seller. But really these days we find it is about driving volume on your products, and driving authentic review from verified purchasers on Amazon.

Brian Beck: And the way to do that is kind of the things you’ve been talking about. I mean, great content to start, it’s about using Amazon’s marketing tools to drive volume on your product, but also looking outside of Amazon. And it maybe counterintuitive to a seller, but sending volumes on Amazon, if you have other selling channels. I was on the phone earlier today with a seller saying, “Gosh, I’ve got this big email list and I’ve got an e-commerce site, but I can’t get my Amazon review content up. I say what, why don’t you think about sending some of your customers hundreds of thousands of emails, let them know you are selling on Amazon.” And it may be something you do for a while to it help you drive up the review challenge and get the sales up.

Brian Beck: It’ll cost you more than it cost you to sell it on your own website, but guess what, once you’re there with Amazon, you’re going to start seeing some more volume come from not that email list but from other places the native organic traffic. It’s on Amazon looking for your product category. The challenge of product reviews today on Amazon, you have to think out of the box, in terms of generating it and don’t think black box, but big white, and target that way. Particularly if you’re a real brand and a real company, and not trying to short change the system. Don’t try to cheat it, it’ll end up biting you.

Luke Peters: Yeah, you don’t want to get your Amazon account turned off, and then-

Brian Beck: No, you don’t, that’s right.

Luke Peters: I’m with you a 100%. It’s interesting, I think they’ve made a couple changes recently and I just talked to two guys about this. One of them is successfully using Facebook ads, and driving sales on Amazon. Another one I talked to said that Amazon, maybe they’re in Beta or maybe they approved it for sure I guess on the seller side. Where you can now track the ROI, I’m not sure how this works, but you’re able to, I guess, drop the pixel somewhere in the backend of your Amazon account. Or just whatever marketing platform you’re using, but in this case Facebook, you’re able to now measure the ROI. And in some cases, I’m not kidding they were saying, they were getting higher ROI from some of that targeted Facebook advertising than they were from AMS, I thought that was really interesting.

Brian Beck: Well, I mean here’s the big difference, right? I advertised on Facebook and Google and now Amazon for years. I was in Google in social media advertising 10, 15 years ago, Facebook wasn’t around that long ago. But the point is that I’ve done a lot of advertising in those channels. And I will tell you that the structure, and the tools that Google and Facebook give you to as in advertise you to be effective go beyond what Amazon provides. So I’m not surprised hear that, look Amazon converts at an extremely high rate. A Prime member converts 70% of the time when they go to Amazon. 70%.

Luke Peters: That’s amazing.

Brian Beck: When I was running e-commerce at Pacific Sunwear or Harbor Freight Tools, or these different companies where we had conversion rates of two and three percent on our websites, not 70. Gosh, if I could target the traffic the way Facebook lets me or even Google to some degree, but then send them to a page that converts at 70%, that’s a recipe for success. I’m actually not surprised to hear you say that, and Amazon’s introducing tools that will allow the marketer to more effectively use data, as you were describing to make those marketing decisions. They’re still more closed and some of the other networks are as it relates to AMS transparency, but if you combine those things, gosh, you can really be effective. I think it’s on the marketer now to start using those tools and, using Amazon together with some of these other digital channels to really drive results. You got to think beyond Amazon.

Luke Peters: Yeah, and thanks for getting so deep on that Brian because this is the most interesting stuff to talk about, and I think the most useful. So, kind of on that, we’ve gone through the reviews and talked about different ways to utilize Amazon in different trends and diverse seller, all of those things. Let’s try to kind of narrow it down something really helpful for the listeners, here.

Brian Beck: Mm-hmm (affirmative).

Luke Peters: What are three specific areas or things they could do right away or big takeaways, if we just had to narrow it down to three items, you want to kind of point the listeners to, on Amazon to sell their products where would you go?

Brian Beck: Well, I would first make sure… I always like to remind people that the foundation is really important. So first and foremost, I would recommend that there are… This assumes you’re selling on Amazon, but they take a hard look at, is the foundation really, truly Solid? What’s your conversion rate on Amazon, if you’re a third party seller, you can see that. And depending on your price points, if you’re not in that kind of 10 15% range, and you’re at a modest price point, you guys might be a little differently place given your price points. But, you need to take a look at are you presenting your content in a way that really connects with the customer? Merchandise in the old days in Amazon you could put up products with very limited description and not compelling images, and not compelling titles, and get away with it versions.

Brian Beck: But the marketplace has gotten so competitive, it’s really agreeing those merchandising approaches, and really making sure your content is foundational there. You have to now stand out and be competitive. So first and foremost is looking at the foundation of how you’re speaking about your product and the content. And in the way you sort of print out your pages and just look at them on your screen against the competitors, against the top sellers. There’s tools you can implement to see how good your content is. Just take a look at those things and look at the foundation first. Number one is that, number two, I would suggest that you’ve got to be looking at all the new tools that Amazon provides you to sell. For example, Amazon Business, if you are selling products that a business might buy, Amazon Business is one of the best kept secrets in Amazon. In the sense that a lot of sellers don’t know it’s available to them, and it’s over 10 billion in sales now.

Brian Beck: If your products have a business purpose at all, you ought to be making sure you’re listing your product on Amazon Business. I think that’s an example of a tool that you want to make sure you’re using. Amazon does not shy about sharing these things once they’re out of Beta, and so making sure that you’re looking for those tools. And then third, I think you’ve got to be looking outside of Amazon as we’ve been talking about. I think you’ve got to be thinking about, how Amazon not just as Amazon but how does it fit into your overall marketing program your other marketplaces. To describe some of the ones that you guys work on.

Brian Beck: And how does it fit into that overall program and then really making sure you’re using your learnings across those different tools as well. I think it’s a broader context, I don’t think you can think about Amazon in a silo anymore. It’s got to be like my QVC example, or like we talked about with social media. It can be a transactional channel that’s spread by other methods. Even if it feels a bit not intuitive to use Amazon versus your own site so hopefully that makes sense.

Luke Peters: Yeah, those are great points, just because they’re not the typical ones that everybody talks about, so you gave something… All of the content, and getting reviews and all those things are table stakes, and those are important but I think, thinking about the overall strategy. And then talking about Amazon Business is a huge one. All the other retailers are trying to do the same thing, I mean, they’re not at the scale of Amazon. Wayfair for example has the same thing with the Wayfair Business and then Home Depot has their professional side and they’re trying to compete with people like Grainger. It’s a huge segment out there for all of them and kind of like you mentioned, a lot of people aren’t aware of it. It could be low hanging fruit for a lot of folks who are not currently participating there.

Brian Beck: Yep, absolutely.

Luke Peters: And then, I guess, just really quick and I’m always… You always have to come into these things with an optimistic viewpoint in the sense that, listen businesses there’s always going to be challenges. And like right now a lot of the challenges with Amazon or two of the big ones there’s so many with the reviews you brought up, that we could have done a whole episode on fake negative reviews.

Brian Beck: For sure.

Luke Peters: It’s a huge pain point. But let’s talk about Chinese companies coming directly, selling on Amazon and then the second part is Amazon white labeling or just Amazon just serving their own brand, and then placing that obviously at the top of the listing. So those are two challenging areas for certain product categories, I don’t know if you’ve run across that or if you have any thoughts on those?

Brian Beck: No, absolutely sure. So well take the second one first. Amazon has somewhere around 400… It might be more than that now, private label brands that they are either sourcing exclusively or have brought under their own brand name. For example, in the apparel category, they’ve got about 30 brand at this point, walk and roll bunch of others, we got Amazon Basics. And in the furniture category of course they’ve got several too, I think Stone and Beam I think is one of them something like that. What does that what does that mean? Well, you got to remember where Amazon is. I mean, they’re after making sure they’re delivering the best product to their customers and so for a seller, it gets back to from our point of view. What are you best in the world at? Are you truly investing in your product?

Brian Beck: And it’s amazing that if you look at Bezos, I studied the guy and I really admire what he’s built there. And he has quotes about A, the power has shifted, right, now it’s no longer about shouting about your product. It’s about marketing, it’s about the product or the service itself. So get down to the fact that… What differentiates your product, and focus on your product and if you’re doing a good job focusing on your product. And bringing value to the customer through your product, you’re going to be okay if your product is a commodity it becomes much more difficult. So, batteries or iPhone cable, there’s ways to differentiate those categories as well but it’s harder, right? Amazon, we believe will continue to invest in products where they can feel like they bring a better value to the customer than the market currently does.

Brian Beck: Again I would challenge it, I throw it back to the seller to say, “Are you looking at your product? Is that where your differentiation is? And if it then it better be something else.” whether that’s the service level behind it or something else but before that the product is going to need to stand out. I think you’re going to continue to see that, Amazon will position its products if it believes it’s products with the best value of the customer. They’re going to continue to promote their products in ways that may be uncomfortable for sellers on Amazon. And unfortunately, for the seller if they’re not focused on their product, Amazon may win that business. That’s kind of our point of view, we see that when the product is differentiated, like a lot of our clients products are, they stand on their own. And if we’re doing a good job with the foundations of blocking and tackling marketing and content, it will show up and people buy it, and then they’ll write great reviews about it.

Brian Beck: The second part of your question loop was around Chinese sellers selling directly on the Channel. Yes, this is an issue in the sense that, sometimes those products are fake or they’re counterfeits. There’s not an easy solve to this in the sense that if they are in fact fake or counterfeit products, Amazon’s aware of it. They know it’s an issue, in fact, you may have seen the recent Wall Street Journal story about it. I think it was the Wall Street Journal, they found something like 4,000 counterfeit products on Amazon.

Luke Peters: I remember hearing about that.

Brian Beck: Yeah, it’s an incredible story and look Amazon, they don’t want that, not that they don’t want Chinese sellers, that’s not the point, they don’t want counterfeit or dangerous products on their site. They’ve taken some steps to try to eliminate it, but it’s a gargantuan task, think about it 600 million products almost on Amazon. They’re taking steps, and we don’t know what all the steps are, but they’re taking steps to, address that. I would say that if there’s some recourse you have Amazon has reinforced it. Amazon Brand Registry program with some additional tools to allow brands to recourse if they in fact, feel like there’s some counterfeit happening on their product. So there’s some avenues in Amazon’s, there’s a lot of process attached to that.

Brian Beck: It sometimes can be frustrating but absolutely, it’s something that I think one estimate I saw, was something like 10% goods and items are Chinese sellers, selling directly. Again, nothing against China or the way that those products are, the rights to selling them et cetera. It’s more just the… And a lot of those products are not counterfeit, but there are destined to be a trend there. It’s something that I think we’re going to see a lot of additional noise about in the coming couple of years. And Amazon trying to address it more aggressively, that’s my point of view on it.

Luke Peters: Yeah, and that makes sense, and it’s important to talk about it here because it’s a huge conversation. And like you said, there’s no easy solve for it but, in any CEO groups or meetings and folks start talking about this. And there’s two parts to it, it could be someone’s factory and selling directly, and in that case, maybe that brand helped develop a product, or brought a product to life. And all of a sudden the factory just kind of goes right to it, and in that case, you just got to have a strong factory relationship. And there’s a few other things that a brands going to have to do. But I mean, I think it starts with really partnering and having that relationship with the factory.

Luke Peters: But, to the other point with the counterfeit product and I agree, I don’t know an easy fix there. I do know that, just back to the reviews when negative reviews are put in their Amazon isn’t always helpful. And because sometimes there’s not a way for them to know I guess.

Brian Beck: That’s right.

Luke Peters: Yeah. Sometimes products can be killed that way because not only is a negative review come in, but then these people that do it will find ways to up vote it. And sometimes it’s so obvious from a brand’s perspective that it’s a negative one.

Brian Beck: That’s right.

Luke Peters: I don’t know, in that case is there no other option but maybe to relaunch that product? Or are you guys able to kind of work your way around it?

Brian Beck: Yeah, well, we’ve had some cases where we’ve been able to help companies, with Amazon address some of that. And Amazon will protect the customer reviews, in almost all cases unless it’s something that can be very fully documented, as abuse. They, they have a pro review steps. In other words, they start with the assumption that reviews is good, we want reviews even if they’re negative we want reviews. In some cases, we’ve had some success in talking, if we can document a very good case with some folks in Amazon, if they sense some occasionally some removal. But it’s very, very hard to do so, you may be better off restarting the product with a new listing and watching what your competitors are doing? It takes a bit of detective work, to be quite honest with you, some of these bad actors are really quite sophisticated in how they do it and it’s a battle. There’s no easy solve for it, I wish there was there isn’t. They don’t even necessarily tie to how big a brand you are, they’re talking to some sizable companies that we worked with giving a resolution to those can be difficult.

Luke Peters: Okay, great. Yeah. I mean, that’s part of the challenge. I guess, there’s challenges and all business, but they’re just new ones. These are ones that people haven’t seen in the past and so, it’s just finding new ways to get through it.

Brian Beck: And, listen, I do think Amazon is aware of this. And they are taking steps that we although don’t know about to try to address these issues. And Amazon doesn’t want bad actors on the site. Ultimately, consumer trust is an inordinately important to them, and so anything that threatens that is something they’re paying attention to.

Luke Peters: Yeah. And I think… I forget who it was. It was target that posted this, that somebody, one of the big retailers, it might have been, I can’t remember if it was Target or Walmart. But, they made a post about the danger of Amazon’s Endless Aisle. It’s Amazon strength and a lot of these other retailers that kind of like what I mentioned earlier, they have a lot of gates up actually. It’s hard to get all the products up. And there’s a few more filters on the front end before product gets listed on the site. And I mean, it was just kind of a jab at Amazon, I think because some counterfeit products got found, it’s so easy to get stuff up.

Brian Beck: Yeah, I mean, there’s there’s pros and cons for Amazon’s business model because, the pro is the 600 million products, the 600 million products.

Luke Peters: Yeah, exactly. It goes both ways, I guess, listen.

Brian Beck: It’s right, yap.

Luke Peters: Thanks, Brian. This has been a really, really informative deep dive in Amazon. I know there’s a ton of useful, actionable items here. I just wanted to thank you for coming on the podcast today, and sharing all these details. And I guess before I let you go, you just want to let people know how they can get ahold of you if you want to share that information. And also anything about when your book launch?

Brian Beck: Oh, sure. Yeah. Thanks for that Luke. Right, if you’re interested in finding out more about Enceiba, you can go to Enceiba that’s E-N as in Nancy C-E-I-B as in boy A.com, Enceiba.com. You can also reach out to me at Brian@Enceiba.com I’ll be happy to talk to you, we offer a free 30 minute consultation on your Amazon presence, if you’re on Amazon today. Be happy to extend that to any of your podcast listeners. And the book boy, two and a half years of work man it’s been a labor of love. But it’s all about B2B e-commerce, including Amazon I’ve a whole chapter on Amazon in the book. Amazon Business and all the things they’re doing and then just how to optimize e-commerce for your business if you to sell to other businesses. And you can go to the website for the book. It’s called Billion Dollar B2B E-commerce, forwards Billion Dollar B2B E-commerce, you put a.com at the end. And you can sign up for registration of, it’s release, it’ll be out soon. Maybe by the time this podcast airs, you’ll be able to order it on Amazon.

Luke Peters: And there you go, your first point.

Brian Beck: Yap.

Luke Peters: Awesome. Well listen, I think I’m sure the books can be really successful because I can tell you have a ton of knowledge. I want to thank you again for joining me on the Page One Podcast. And also just want to thank everybody for listening. The podcast is obviously sponsored by Retail Band. And if you guys want to grow your Wayfair or Home Depot presence and alternatively or in addition if you want to work with us on influencer marketing. And help products launch quicker, get reviews, get collateral, YouTube videos. And all of those things are going to grow the brand, grow your products reach to the consumer, and they’re going to help on every channel, they’re going to help on your website. They’re going to help on Amazon, they’re going to help on all these other channels we’re talking about. And at the same time, we can help with the review strategy and so that’s what we do, at retail band. You can run over to RetailBand.com and learn more there. Thanks, Brian. It was a pleasure interviewing you and learning about all these things about Amazon and hope to stay in contact.

Brian Beck: Thank you Luke. Great being here.

Luke Peters: Okay, all right. Take care.

Announcer: Thanks for listening to the Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about r-commerce? Check out www.retailband.com. To get more great tips and tricks on how to accelerate your e-commerce sales with the big box retailers.

EP9: Stories from sourcing products in Europe, and surviving Tariffs with global brand expansion | Atul Vir, CEO of Equator Advanced Appliances

What you’ll learn:

Atul Vir is resilient when it comes to facing adversity in business. Tariffs hit 70% of his product line. But that is just another story he will overcome. He tells us about the challenges of manufacturing a specialty consumer product company abroad, shares his strategy for bringing his products to the global market, and gets honest about trade tariffs.  

About our guest:

Atul Vir is a hands-on CEO, seasoned entrepreneur, inventor, business ethics thought leader, speaker and author living the American Dream. He’s lived on 4 continents, making his way from India to Europe to Africa and, finally, to the United States. His business acumen has been featured on CBS, HGTV, Oprah, Fortune, Popular Mechanics, The New York Times, and The Wall Street Journal. His company, Equator Advanced Appliances, has been listed as one of the Top 100 fastest growing companies in Houston for 3 years in a row. He also holds 18 patents for appliance technology. His award-winning products are sold in the home, recreational vehicles and marine markets. 

Key takeaways from this episode:

  • Sourcing products in Europe: challenges and global trade transformation – 7:20
  • Why strong product strategy is the key to competing against larger companies – 9:16
  • Manufacturing in India: what to expect – 10:00
  • Problem-solving your product line for consumers in developing countries – 11:09
  • Who are the major selling channels and why? – 12:59
  • How big-box retailers democratized marketing and sales – 15:33
  • No two retailers are the same: how to manage buyer expectations – 18:15
  • Biggest focus of growth for Equator Advanced Appliances – 20:46
  • Patents: are they right for your business? – 24:10
  • Patents: navigating the challenges that come with getting one – 29:50
  • Tariffs and the reality of its impact on your company – 33:31
  • Biggest learning lesson as an underdog entrepreneur – 37:25 

Podcast Transcription

Speaker 1: Welcome to the Page One Podcast a twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches and all the details about how to accelerate your E-commerce sales with the big box retailers or what we call rCommerce. Now, here’s your host Luke Peters.

Luke Peters: Thanks for joining us on the Page One Podcast. This is your host Luke Peters. This is the podcast where I bring the best and brightest leaders in the consumer products industry to share their knowledge and valuable insights and help us grow our businesses. I’m the CEO and founder of NewAir Appliances where I started about 17 years ago selling wine coolers, ice makers, portable air conditioner is actually first product was portable air conditioners, and we do a lot of heating, cooling and wine and beverage right now. And then since that time I’ve started a new company called Retail Band, where I share those insights and help other consumer product brands sell more successfully on online platforms like Home Depot, Wayfair. And then in addition to that, we do podcasting. And of course, also do influencer marketing, which is really incredible area right now for new brands to market their products and get the best ROI possible.

Luke Peters: And in this podcast today, I’m thrilled to have Atul Vir on. And Atul, has got an amazing background, and I’ll give you the quick bio right now. He’s a hands on CEO and the CEO of Equator Advanced Appliances, which we’ll get into more and learn about Atul, and his path to where he is now.

Luke Peters: He’s lived on four continents, from India to Europe, Africa, and finally here in the US. Has been featured on CBS, Oprah, Fortune, New York Times, Wall Street Journal, and a bunch of other places and he’s also his business, Equator Advanced Appliances has been listed as one of the top 100 growing companies in Houston for three years in a row.

Luke Peters: He holds 18 patents for appliance technology. And his award-winning products are sold in the home and recreational vehicle and marine markets. And again, thanks for joining us again Atul, I know we’re just talking kind of before I recorded this interview and you mentioned that you guys have a power outage over there in Houston with the weather.

Atul Vir: Yes we do. Thank you for having me on today. Yes, it’s a difficult day we had a Tropical Storm go through here and the floods all over Houston and power outages. But I know I had scheduled this one on my phone. So please excuse me, that I don’t have all the information but it’s wonderful to speak with you.

Luke Peters: Awesome and thrilled and honored to have you here, and you have an amazing background. So we’re going to dive into that. Did I leave anything out there? Hopefully I covered everything there in the bio.

Atul Vir: That’s good. That’s a lot. Thank you.

Luke Peters: Perfect. Okay, great. So why don’t we kind of get into a little bit like a breakdown of your business. And that way the listener can kind of understand … They understand the markets, but how about like a little bit of the scale, maybe the number of employees or the size of the warehouse? So, everybody can kind of understand what you guys do.

Atul Vir: Well, our company is one of the few boutique, major appliance manufacturers out there, and we have about 50 direct employees working for the company. Our warehouses are split all over the country. We have one in Compton, California, number one in Greensboro, North Carolina, a smaller one in New Jersey and another one in Houston. But there was a time when we had a large 60,000 square foot warehouse in Houston building, which we owned and everything was centralized. And we went away because Houston we had products coming to Los Angeles and coming by rail, took another two or three weeks to get here or things came through via shipments coming from the Panama canal and that delayed shipments.

Atul Vir: And so we decided to set one on each coast and close the ports where products are important. So we have one in Los Angeles for products in Asia and one on the East Coast for products from Europe.

Luke Peters: Awesome. I’m developing questions right now just thinking about that, because we often think of East and West Coast and it sounds great to be close to the customers on the East Coast. But it’s expensive to get product there from Asia, and takes longer and sometimes not much of a cost benefit, especially if you’re not paying for the shipping to the customer, which happens with some of the online retail channels. But it sounds like you answer that question and that’s where your products from Asia go to. So that’s smart and probably your least expensive Container shipping costs.

Atul Vir: Yes.

Luke Peters: And Atul, It’s interesting that you have the two different locations where products are coming into, one in the East Coast, one on the West Coast. Tell us, just for the listener more about your product mix, what’s coming into the West Coast, what categories are coming in, and which categories of types of product are coming into the East Coast. And this way, it’ll help everyone gain more insight into exactly the type of products that you sell.

Atul Vir: Yes. But perhaps I should give a little bit of history. Our company started in 1991. And I was an immigrant when I immigrated to the US, decided to get into the appliance business. And I started importing European products, which is washing machines from Europe and refrigerators, dishwashers, all of them were apartment size and compact and energy efficient, water efficient and so on. So we pioneered that whole concept. We actually marketed the second functional washing machine in America. The first was ASKO at the time, and we were the second a year later.

Atul Vir: So historically we were bringing products from Europe and so everything was concentrated on the East Coast. That changed about 15 years ago due to the Euro exchange and so on. It just became uncompetitive to import from Europe. So we moved to Asia particularly to China. And we set up joint ventures and manufacturing agreements, technology transfer agreements and so on. And most products shifted to Asia. I would say 70 or 80%, but some products continue to be produced in Europe. And so that accounts for the difference.

Atul Vir: So an answer to your specific question, which products? We have laundry. Laundry is our product. We pioneered the Combo Washer Dryer, the concept. And we’re on the ninth edition now since 1991, where each one improves on the previous one. We have washing machines, we have dryers. We have induction cooktops, we have refrigeration, all of them coming from China.

Atul Vir: And on the European side, we have remained with Range Hoods. Believe it or not, they’re very good ones, they’re good quality, field and engineering there. And we are doing some refrigeration from there. And we’re expanding our European line, particularly with the tariffs that have been imposed in the last year.

Luke Peters: Thanks for that, because that was an interesting point right there because that’s what I was going to ask. It sounds like right now you’re about 70/30 coming from Asia, so you’re paying tariffs on 70%. And now you’re expanding, which is smart and obviously 25% motivation behind that. What are you finding as far as the capabilities in Europe? Are they able to create the same products that you were previously or currently sourcing from China? Or are you having trouble finding the same product lines?

Atul Vir: When it becomes very difficult. I mean, historically, if you look at Europe since way back from the Industrial Revolution, appliances has been a pioneer in Europe, particularly the energy efficient, water efficient, space efficient machine, because of the small homes and so on. So they’ve had very good technology. And in the last century, they became very good at it. But unfortunately, over the time, let’s say, the early part of this century, they lost their edge. And I would say Europe lost maybe 70% of their factories, the plants that were making … Old brands that were 50 or 75 years old, they shut down because of the Euro exchange rate. And then the advent of China, which came in and essentially bought out a lot of the old fans from Europe and set up their own facilities and had no cost manufacturing.

Atul Vir: And so many of the plants I know well, that is the 10 companies or so we did business with in Europe, maybe only two of them are still around, eight of them were shut down. They were either large companies that shut down their plants and some of them are owned by entrepreneurs and they own factories and they shut down, they just couldn’t compete.

Atul Vir: So across the board, so now when we’re going back to Europe, we’re finding there’s very little left. You have some of the major companies of course, you have Electrolux and you have Bosch, and few companies like that. But the smaller companies are just out of it, they just don’t exist. So when we’re going back to find partners, needless to say, we’re one of the small independent companies here, it’s difficult for us to partner with large companies because our thinking in different.

Atul Vir: Large companies want to roll mass product out and work on high volume, low margin, but as we as a smaller company in order to compete, we work on innovative products, and features and so on that we need to develop, which is our core competency is, we develop products, we go to plants and we get them to make those products for us. And big plants are not able to do that. So there’s a disconnect, so we’re not able to find those partners from Europe, much as we would like to. And, of course, in the US it’s very difficult to set up those manufacturing facilities once again.

Luke Peters: Yeah. 100%. And I guess what I wanted to ask you also in addition to that, it’s just looking at just your career, and you’re born in India. And you’ve traveled all over the world and worked in different places. And I mean, even just looking at your profile, you have a CPA and an MBA, which is a unique skill set to have. But have you thought or have you tried to go back to India? I know India is a growing manufacturing power right now. And we’re definitely looking over there, by the way. And I know there are some great manufacturers over there, but the categories you’re doing in the kitchen electrics might be kind of tougher to find. Just curious if that’s also kind of on your radar. And I’m sure you have probably friends and family and more know how in India and curious your insights there?

Atul Vir: Yes certainly. We’ve been part of the India story for also about the last 15 years. But 15 years ago, China opened up for letting manufacturing and at the same time India opened up for technology and back office services and so on. So we’ve had our office in India, providing let’s say, staff functions and back office functions and analysis and so on that we need to get done. So we’re already engaged with India, but we don’t sell products in India. But we are going to start selling products in the next two months or so.

Atul Vir: So what we have done, we’ve got some core competencies, core knowledge of products that we’ve developed for the US market. But those products are being adapted to specific markets for developing countries and developed countries. And so with variation that they may need, and we believe that we’ve got a great product for India, which is they’ve got certain problems over there, which we don’t have here in the US. For example, they have electricity, the power outages that happen almost on a daily basis in many places. They don’t have running water supply in many places, in the sense that they have water for certain hours in the day and then it shut off certain places regular time and certain time they’re just shut down.

Atul Vir: So if you have an appliance that’s running there at the same time, well, the appliance also shut down. So we installed some of … I’m trying to understand this problem and in fact, solve them. And those same problems are not there in the markets we have. We have other issues.

Atul Vir: Using the machine, our main product is actually a Combo Washer Dryer, and we call it a Super Combo. And it’s called a Super Combo because it can fit many different applications, and many different markets using that one machine, almost like a template, and we adapted to certain situations.

Luke Peters: Interesting. And we’re going to come back to more about this because this is kind of the whole story around tariffs. And I want to get into that, because obviously there’s ways to handle the tariffs as far as price reductions, but also change more resourcing and even changing where we’re selling to, which looks like you’re already kind of headed down a few of those paths. So we’ll definitely circle back to that. But just to finish up the idea here about kind of gaining more understanding about your company, are you able to share … So we talked about the product mix. And now how about the sales mix? Are you able to share kind of percentages or how the different retailers rank versus, Home Depot, Lowe’s, Wayfair, Amazon, maybe direct to consumer, anything you can speak to their to kind of give an idea of where your major sales channels are?

Atul Vir: Well, I can give you some broad directions. And again, let me do it historically because I’ve got the … just one simple reason to put perspective in it, because I think listeners may want to know what happened over the years and how we’re transitioning. So when we started off almost 30 years ago, we were selling a lot to the mom and pop stores that were there in every city, every neighborhood had a neighborhood appliance store, and we had more than 1000 of them all over the country selling our products.

Atul Vir: And as time passed, and then the major companies got involved Home Depot, Lowe’s, Costco, Fry’s, all of them. And they started being able to step up and understand the problems and the challenges and how to merchandise those products. Then they started getting stronger and stronger, as a result, in the last 10 years or so are suddenly from being 80% in the mom and pop stores now it’s become 80% to the majors. So it’s shifted over, they’ve got the buying power, they’re hiring the people who … the old guard. The old guard, who was there who understood appliances, those are being replaced by what I would call young MBAs who are looking at the bottom line. And they’re really not interested in the innovation, or the widget that you’re bringing in. They’re saying what’s it to our bottom line, which is their bottom line that they’re concerned about. And their thing is that, “Well, fine, you invented this product, so you made this innovation, but if people don’t want it, then it doesn’t matter to us.” So people must want it. So it sort of shifted in that.

Atul Vir: So it was become very clear to us also that that’s the acid test, you cannot just invent an innovative product. I mean, it must have a use and customers must be wanted and customers must pay for it. So I mean, I’m not saying it’s good, it’s the way it is. But then it becomes very clear. In the old days, people used to marvel at the technology and say, “Wow! what a cool product.” But people are not doing that so much anymore. It’s just volume and moving up the door. So having said that, I mean, we do a lot with the major companies. 80% of our sales go to the major companies, and only 20% is left with the mom and pops and the independence and so on. And those of course, the mom and pops have also becoming less and less because they got succession issues and so on in their own situation.

Atul Vir: And then, of course, the third dynamic is Amazon, that got involved in the last few years with everything you can see in the world. And has become stronger and stronger. I mean, I would say just in the last 12 months, we have seen our sales with Amazon double, and we have been a key partner with Amazon in their prime program and in the warehouse program and partnering with with them and trying to understand we have people employed in our company. We just work on the Amazon account. Because I believe that they have democratized the process for marketing products. I mean, I know there’s a lot of criticism about Amazon, but I really believe they’re democratized. If you believe you have a product, you put it out there, you set the price, you set your marketing program, and if customers want it, they will buy it. Whereas with all the other companies, you have to go through a gatekeeper, you have to go to the buyer, you give them the price, you have very little control as to what the retail prices and what the programs are, which was the traditional way has been done.

Atul Vir: So in some ways you can say it’s good or bad, but from my perspective, I find it rather refreshing that companies have this opportunity to market this product, and you put your marketing program and if customers want it, then well, you get a good deserving chance to succeed.

Luke Peters: You just brought up a really interesting point, it kind of hit the nail on the head. I mean, it’s literally the reason I started this new agency, Retail Band where we help people sell on channels because of exactly what you just said. Whereas Amazon, it’s self serve, you can do it all for yourself. But then with the other retailers there’s a buyer involved. There’s gatekeepers, there’s approvals. It’s hard, it’s not as easy. And so a lot of products honestly just kind of skip those channels, a lot product brands, and they just go right to Amazon, because it’s so much easier.

Luke Peters: Did I hear you right, in saying that you guys are selling … Are you selling on the seller side? Or I’m assuming on the vendor side? Or maybe not, because you said about controlling price, or you guys kind of on both sides of Amazon?

Atul Vir: When on Amazon, we used to do a lot more on the vendor side. But now it has shifted onto the seller side, I think partly because they’re shifting it over to the seller side. And secondly, we also get more control of the pricing and the programs and exactly what we want to move on a particular day or month or whatever. And how we want to test new products and things like that.

Luke Peters: Yeah. Makes sense. It’s hard sometimes with the larger product because FBA becomes untenable sometimes on the seller side. But you can just fulfill out of the warehouse I guess. But then you gain that pricing control, which I know is really important, especially with all that product development you’re doing, you have to make sure that you’re out in front of that. Besides Amazon, what are, say, two other fast-growing channels for you guys?

Atul Vir: Well, we sell to pretty much everyone. We sell to Wayfair and they are good account and we sell to Home Depot, Costco, we sell to most of the big companies out there. I think we understand them very well, because we have a very good team. I mean, in our company’s case, we almost run like a military organization. I don’t like to use that word because we’re a business. But in some ways, we’ve been around a long time and we have the structure and the setup and it’s easy to understand. In some ways we have the mom and pop stores, for example. And it was almost an emotional decision, you’re going to take, we had our sales reps go in and take doughnuts for them and schmooze with them. And then you walk out with a fixed fees or trustees order, and that was the way it was done.

Atul Vir: But as of now, dealing with a large company, very professional. They want to know what the sales are? What the margins are? What the opportunities are? The advertising program? And so the question isn’t really to understand the way they think, I know you mentioned that the large companies are difficult, but I think it’s also incumbent upon us to try to understand what they want and then becomes very clear what they want.

Atul Vir: So basically, we need to have an understanding as to how each retailer thinks, they’re not all the same. We need to understand what is it they want and comply with what they want. And we sort of made our internal structure that we were able to do that. They all have large 50 page agreements that you go the spine before you do business with them. And I flip right to the last page, and I sign it. Because I said, whatever you want we’ll do it, tell us. And we study it and we comply with it. There’s no point having an argument and it’s because they’re in a stronger position. So, I mean, what’s the point of having an argument with that? Because they don’t need us, we need them. Just to put it plainly.

Luke Peters: No, it’s true. And they don’t like to change those documents. There’s some parts you can negotiate. But, but yeah, you’re absolutely right. And it’s really good insight. And I like your way of thinking, because I mean, it’s the world that we live in, if we’re selling products we need to work with these big guys and you’re making a good point, that understanding and learning about them and understanding their systems. I do agree 100% that’s the way to go on that.

Luke Peters: So kind of with that in mind, and now we got a great understanding of your beginnings, company beginnings, your channels, your products, and a lot of knowledge about you. What would you say is your biggest focus right now this year or maybe over the next 12 months on the company for growing?

Atul Vir: Well, as an innovative company, I mean, that’s what we do. We try to come up with a new model every year, at least in our core product. And then have new products also being launched, two or three new products every year. So as a company, our DNA is to do innovation. And we’re pretty much on track for this year to come up with new models and features that we believe customers may want and say, “Okay, well, I want to buy this brand.”

Atul Vir: We don’t have a monopoly on any single product, we’re a small company, we have an independent brand. We don’t have the resources of large companies to advertise and new brand marketing. I’m grateful for every single sale we make in the sense that a customer has a choice. They go to a retailer, and in every single product category, we have at least three competitors and their customers have a choice. And we realized that they have chosen our product for something and that’s what they’re trying to analyze and in most cases, we have large multinational, global, multi-billion dollar companies who we’re competing. And for a customer to choose that, I believe it’s because of the innovation. That’s something appealed to them that we have that our competitor didn’t have.

Atul Vir: So in our company’s DNA, there’s just innovation. And we have new products being launched. And as a result of the Super Combo, which I mentioned from a little bit earlier, we are now expanding to other countries as well. So we have a push into Canada, going to Mexico.

Atul Vir: And I just want to mention the result of Amazon, going back to that point, Amazon has got a new platform where you can export to other countries. And we are using their platform to expand into Australia, India, the Middle East and in Europe, all within the next six or eight months. Lets between now and the middle of next year. Because, they’re providing the platform to do that. The question is, Okay, whatever you want, we have a product. So how do we go overseas? Well, they’re saying, “We have the platform, we have the distribution, we got the warehouse, and we’ll help you process the approvals and all those things?” So as long as you have the product and believing in you can sell it. But I think they made it much easier again, I think it may provide a lot of opportunities for companies who want to do that. Clearly they’re doing it in their own their own self interest, but we’re finding a way for us to succeed as well.

Atul Vir: With those twin things of innovation and global expansion. I think that’s the course for, let’s say, the next 12 months.

Luke Peters: And exactly with the backdrop of tariffs again, you’re expanding in other countries, you’re going to minimize your tariffs footprint and excellent point about how Amazon provides a platform. I just attended the IBC, international Global Forum on sales and learned so much about selling into different countries. But it’s also so difficult for brands like ourselves, we both have consumer electrics, we have to deal with different voltage requirements and safety requirements and all of these things. And as you mentioned, Amazon is streamlining that and just making it so easy in helping you choose the different geographies that are going to make sense for the business.

Luke Peters: And, I guess on that point about innovation, you have 18 patents. Are you able to give maybe a specific example of a patent that you’ve used strategically to help you grow your business? And then also, we can follow up with questions about how you keep your patents protected? What specific documents or agreements you have to have with factories. I’d love to dive into that because it sounds like that’s kind of your DNA, is doing this innovation and creating these products with a competitive advantage. So would love to hear your thoughts on that.

Atul Vir: Yes. Well, those are very deep questions, but let me start with the first one, about the patent. So most of our patents are for our appliances and trying to solve problems for our customers. Some of them are for control panel and some of them are for knobs, some of them are functional.

Atul Vir: One of the key patents we came up with was about five or six years ago, where soon after the recession, maybe seven or eight years ago now. After the recession, everybody had, let’s say, was cash trapped. We all made it through the recession and we’re breathing a little bit easy. But now we have less resources. And so let’s say we had this combination washer dryer, so we had two of them actually. We had a vented version and we had a ventless version, which is also called the condensing technology. The vented version, you have hot air blowing in and exhaust hot air from the dryer part and the condensing version, is a water cooler system, where cold water comes in the dry cycle, sprays on the hot air and it goes up to the drain. So it’s ventless unit. We have two models. The ventless model was used in apartments and condos, older buildings where they didn’t have exhaust vents and because of the age they weren’t allowed to drill holes and so on. So it was a perfect example of that.

Atul Vir: And then on the other side you had our RV industry. We are quite strong in that industry and we acquired a brand some years ago to … that we got involved there. But the RV industry trailers, boats and so on, which don’t have that problem, they can drill a hole on the side. They use the vintage technology. So we have two models.

Atul Vir: So as we’re coming out of this recession we said, well we have these two models. The cabinets are the same, the drums and the controls and the pumps, and most 90% of it is the same except for this one issue on this dryer. One is the air vented, the other one is a water cooler system. And we went to the engineer and said, “We want to put this in the same machine. And we want to have a switcher or button that we can convert from one to the other, clearly one is air and the other one uses water, but the programming … the old days we used to have mechanical knobs and those are all gone. So in those days, we weren’t able to do this kind of technology. So we battled.

Atul Vir: So our company we define ourselves that we’re actually a marketing company that we invented or developed products that we know our customers want, whereas most companies they manufacture product and say we’re a manufacturing company. And we manufacture products that we believe customers want. It’s the opposite. So we say we’re a marketing company.

Atul Vir: So when we said … So we’re thinking of our dealers. Dealers only have to carry one sku, because they don’t know when a customer walks in, whether they want to use the vented or the ventless. They’re thinking of the customer, a customer is like a choice. For example, you have a smartphone, you have a million app, you download the app that you want, what you need, and everybody’s using their smartphone in different ways. So who are we to say that this is the product and you should buy it and this invented, and six months down the road, you moved from your RV to your home and you want it ventless and you can’t do that. Now it’s a useless piece of equipment. So to give the customer a choice. And so that was one of the key breakthroughs that we had. And we came up with that and that’s been a runaway success in the last few years, because customers like the choice even though I’d say most customers prefer one but customers like the choice.

Atul Vir: And then we develop further on the Super Combo. We had a customer in Washington DC, they were building a couple of hundred apartments. And they called us and said, they want to buy our machine that it needs to exhaust 50 feet. And we said, this machine can only exhaust 15 feet. I mean, it’s got a certain strength in the exhaust fan, and then this is in the venting cycle, it will exhaust 15 feet. They said, “Well, in that case, that’s the deal breaker because there’s another brand out there that … it’s not a Combo, it’s a separate product, but it blows the air 50 feet.”

Atul Vir: And again went back to my engineers and I said, “Well, we got to do something about this. We can’t just walk away.” Now I have to battle with my engineers, it’s not Slam Dunk, that they’re waiting for me and saying … They fight with me, they say, “Who is doing this product in the world? Is it do you see anybody doing it? Is Whirlpool doing it? Is you doing it? And why are you giving us these impossible projects?” And I say “No, I’m giving it to you because we know our customers want it and precisely because it creates an opportunity for us.” It’s not an easy discussion.

Atul Vir: Anyway, so we can up in a solution that we came up with a stand at the back of the machine that blows the air out, and we blew it to about 60 feet. And we got the contract and that is how we solve that problem. And this was an example of how we call it Super Combo, you can add different pieces to it almost like a legal system and make it work for different applications.

Luke Peters: Yeah, and and I love how you guys were able to … seems like close it really fast. Because I know these quotes don’t last forever. So your engineering team must have done a really good job there and created a solution that was easy and quick enough for the factory to implement. And then on the factory side. Talk to us a little bit … I mean, this is more for the listeners out there, if they’re thinking about patents and the cost involved and even the tooling oftentimes. And, just quickly how are you able to keep it protected and what type of conversations and agreements are you needing to have with the factories?

Atul Vir: It’s very difficult. I mean, we all from from a layman’s terms perspective. And I started off as a layman, and got into the industry, we believe you file a patent if possible, it’s very expensive to file patents. Design patents can cost maybe five to $10,000, depending on the complexity, and utility patents can go up to 20 to $30,000, depending on who’s writing it, and so on. And of course, there are the patent office always takes it back and you have to keep paying more and more money to get it approved. It’s never a slam dunk that you go in and the first shot it’s approved. It’s like getting into a black hole, and you’re sort of stuck in over there.

Atul Vir: So let’s say that you’ve got the patent, I know of story where patent … in there is a whole movement out there about patents and how it’s almost like a scam you can say. Because patents have the issue. And if you have a much larger company file a patent that conflicting, they have the resources to go and fight the case and say why their patent has priority over yours. And as smaller company, it may cost you about a million dollars to defend the patent that you have. And most companies just don’t have this kind of resources.

Luke Peters: Yeah, I’ve seen that.

Atul Vir: So I would say, it’s paper value. It’s there for marketing to show that you’ve done something, but realistically, if you get into an issue, it’s a very difficult unless it’s a slam dunk that openly violated or copied into something. How do we protect it? Well, we had a situation many years ago in Asia, where somebody just took the product and knock it off. And we saw it in the market. And we didn’t know whether our partners were responsible for that, or somebody in the open market copied that. I mean, we all hear about these stories about not being protected and so on.

Atul Vir: So when I had a change of partners over there, it was seven or eight years ago with the new partners on this now. I went to them with my new patents including the ones that just described. And I said, “Listen, this are my patents, I’m going to share them with you. I’m going to sign over half of them to you, because I need you to make good products. I don’t need you to go behind my back and finding it over here. And they were shocked. They said, “Nobody’s ever done this before.” And I said, “I’m giving it to you because I’ve been doing this, but I got burned the first time, because you have a patent and there’s no protection. What can you do? So I’m sharing it with you, so you have me protected, let’s work together and build the market.” And they love the idea, they got television stations and put me on TV. They said “Hear this person has come to me, see what he saying.” They were so happy about it.

Atul Vir: And eight years later, we are operating, and they’re happy and you’re happy. And we haven’t seen anybody knock it off in Asia or here. And so that’s the way where we are now. My lawyer said, you’re crazy. You’ll never survive. Everybody said you’ll never survive. And I said, You know what, you can have a piece of paper but it’s only so much valuable if it can do something with it. And that’s what I’ve done.

Luke Peters: Yeah, so I’m glad I asked the question. I mean, that’s the most efficient interesting insight actually. I mean, with all the experience you have, it’s a remarkable way of solving that problem and really is a business way of solving a problem. You partnered with somebody, like you said, kind of ignored the law or the legal advice you were getting. Which is is usually very black and white. But you found a compromise and formed a partnership over it so incredible. That’s a great story, and thanks for sharing.

Luke Peters: I guess, now, what I wanted to quickly move into was tariffs. You’ve got great negotiation experience and prowess it sounds like. And tariffs are massive disruptor, I guess we can start with that point. How have you guys been able to work through the tariffs situation. And then I guess from that, we can talk about if you guys have been made whole on the … been able to get the price increases and cost decreases that you’ve needed or if it’s still kind of a constant struggle?

Atul Vir: I’ll be honest with you, it’s a constant struggle. We have not been able to negotiate with the plants to get it down to reduce the prices sufficiently. Needless to say, I feel bad about asking them, I know there’s a lot of talk about the devaluation of the Yuan and so on. But I guess, people who are able to do that are large companies, over here American companies will have plant their own plants in China or will have a dominant relationship with the plant, they are able to negotiate and basically say, “We need this, all those kind of things.”

Atul Vir: We’re a small company and then I suspect most people are smaller businessman who don’t have the leverage that we’re talking about. So we have not been able to do that. And frankly speaking, I feel bad doing that because if you push your supplier to cut costs, and they’re going to cut the quality. And in our kind of product, electronics and appliances you need good quality, because … You can get somebody to save a dollar on a part and if it breaks down you’re going to take back $1,000 product. So, I’m not naturally inclined that way. I want to make good products that last that make people happy rather than nickel and diming the people who make the product for us. And push them into a corner that they are not going to tell you this is what we did, we’ll only find out a year or two later. And, when we sell a product, it looks nice and much later on you find out that it doesn’t last or whatever, it’s crud so burnt up or whatever.

Atul Vir: So I’m not gone down that route because we have strong relationships with our vendors, we have about seven or eight relationships with four different products. And I don’t want them to go down the road where I push them. I believe that relationship is is important. So we’ve tried to absorb some of it, the price increases, learning the character there, about 70% of our products have got tariffs on them to various degrees. And we’ve talked to the customers, some of them push back.

Atul Vir: I would say the larger companies are more understanding, they’re professionals and they say, “Well prove to us this is what’s happening, give us the code.” You give it to them. And they say, “Okay, fair enough, we understand. And if this is what has increased then, we know you should increase it so much.” For example, if the tariff is 10%, they will allow you to increase it by 6%, not far from the entire amount, which I think is fair. And they also take some and move the dots. So, I think we’re all trying to manage, it’s a moving target, where everybody’s in the same boat. Nobody really knows what’s happening next month. So I wish I had a better answer.

Luke Peters: I mean, it’s a real answer. So yeah, I mean, and you know how far you can push your partners and what negotiations you’ve done in the past kind of leading up to this point. So you know what your price points are. I think a lot of people are in similar situations and just like you said, “No one’s getting the full tariff increase.” But there’s a little bit of pain on everybody’s side, I guess.

Atul Vir: That’s right.

Luke Peters: Yeah. Listen, it’s really been interesting kind of getting to know the whole history of how you’ve grown the company, and the skills that it’s taken for you to get to this point. What would you say is something that you can share with the listeners is maybe kind of the your biggest learning that you want to share with the listeners that you think might be actionable or something that they could take away?

Atul Vir: So, I give you a lesson?

Luke Peters: Yeah. Your biggest lesson or your biggest learning. Words of wisdom or something that you want to share, over your years of business experience, a tool that you want to kind of pass on to the listeners, what would that be?

Atul Vir: One of the biggest thing I would say is that you got to be flexible, you can’t be rigid in anything that you’re saying. You never say never, never make it an ego issue that you cannot reverse yourself. You have things that you said, I said it yesterday based on certain circumstances yesterday, new information or new circumstances happen. And you may need to reverse yourself. So everything is fair game, you’re not too rigid that you’re boxed in, you should be able to move and be fluid and be flexible at all times, because as business your survival depends on that. It should never be an ego issue that you’ll stuck to a particular position.

Atul Vir: And it took me a long time to understand that. Just to let you know, I went to a military boarding school for my education. There we had order and structure laid down and strict timings for study and work and play and all that. So it took a long time to be so flexible, and to understand that this is the way the real world operate, took me 15 or 20 years. But now and even for my employees, sometimes they say, “Well, you told us this yesterday, why are you changing our mind today?” And yesterday was yesterday, I learned something new. I can even say I had a new thought that made me change my mind. And I know it sounds very weird that people say, they flip or something, but you’ve been saying that. But, no, that’s what you have to do to be ahead of it. Not worry about people’s feelings and just be ahead. Just be flexible, mobile, fluid if possible.

Luke Peters: Yeah. That’s great, actually. I mean, decisions are based on information that we’re receiving. And as you receive new information, you have to change those decisions, and that’s interesting. So you have quite the background. So you started in the military school and probably some of that organizational structure helps you, is running a business and I can tell that you’re very thoughtful and measured. I can tell you’ve held on to some of that and then add to that the creativity and that’s helped get you to where you are.

Luke Peters: And before we finish today, Atul, I know you are an author. And you’re the author of a book called Underdog Thinking. And why don’t you tell us a little bit about that book, what it’s about and where people will be able to find it?

Atul Vir: Yes. Well, my book is about to come out. It’s going to be available on Amazon. And it’s called Underdog Thinking. There’s more information on it on the website, which is underdogthinking.com. And I was asked by a few people, some years ago, some people close to me who knew my story, and my story is just not an up and up story, the ups and downs. And the ups have been very high and the downs have been very know. And they wanted to know what it takes to come out of those things and survive through all these experience.

Atul Vir: At the end of the day, I was an immigrant to the US, I’ve lived the American dream. I came here with $10 in my pocket 30 years ago and actually lived it. So I thought I’d put everything down right from day one and all the things … that considering I don’t come from a business family in the sense even though I studied business, but actually when you get into business, it’s something quite different. And I decided to put those lessons down. At the end of the day I was the underdog being an immigrant, first of all, starting off with only $10.

Atul Vir: Getting into an industry, the appliance industry where there was so many … and those days there were five big players. You had Maytag, Whirlpool, Amana, Frigidaire . And so, I went into that industry competing with them. And I think I was young and foolish when you do that. But, I decided to put those lessons down. And I think, I mean, one can even say the appliances it’s more like a vehicle for what I did. And the lessons out there on how to start a business, build a business, succeed in business.

Atul Vir: And there’s a whole chapter on innovation actually, what’s the definition of innovation and how to innovate? So how do you innovate? So, all those lessons that was which I didn’t know, I didn’t read any book, you can read the textbooks and the theory books and so on, but they don’t teach you. And in those days, there were very few entrepreneurs in this bricks and mortar kind of business.

Atul Vir: So I decided to write that. And hopefully, I’ve got some good reviews from few people who have showed it to. And those reviews are on the website. And hopefully when it comes out, I hope it will be useful in fostering entrepreneurship. And then we have some entrepreneurs. It’s lonely being an entrepreneur, because you don’t have too many resources to exactly understand your situation. But I think there are commonalities with all entrepreneurs face, and hopefully it will help some entrepreneurs to help them better in whatever they’re doing.

Luke Peters: Sounds like an amazing subject and we’ll put the link in the show notes. So all the listeners can hop over to retailband.com, and then in the show notes will have a kind of the key ideas and subjects from this podcast typed out. And we’ll have that link in there and you guys can check it out and again, I agree with you 100%. I mean, schools great. I have to convince my kids to go every day. I mean, they teach you kind of how to get a job, and not how to be an entrepreneur or oftentimes not how to think creatively. So it sounds like you’ve hit on a couple subjects. How do you find the time to write it while you’re running your business? And I know, it’s something I thought about as well. But it’s hard to commit that time. And I know it’s a labor of love. So did you just kind of have to cordon off certain days? Or where do you find the time?

Atul Vir: It was tough. And let me say it took a long time, it took me five years. So it took a long time to put all the pieces together. And over the years, I selected quotations and things that struck me and then how to put it all together and distill it in every word. It shouldn’t matter why is it this word or that word? It’s more like a product, like I was developing a product, and why does this machine do this or that? It became engaged with that product. It was a creative process but it’s like the innovative products I do. And so I hope the results will be good, will be everything from the color and the writing and whatever it is.

Luke Peters: Oh, can’t wait to see it. And sounds you’ve put a ton of time into it. So definitely going to check it out myself and I hope you do well with it and we’ll do everything we can on our end to help you out. And then before I let you go here, how can the listeners get ahold of you? How can they find you or reach out to you?

Atul Vir: Well, they can reach me through Equator. I have a direct contact over there to contact me or through my company. I have a website for myself, which is atulvir.com, your listeners can reach me there and also through the book website, which is underdogthinking.com, so maybe tell me what is it you need or what I can help with? I’m very accessible, I have a business card I have my phone number on there. And I can give it to you that it’s probably better if I hear what the listener wants first, before I respond. So my website’s available.

Luke Peters: Great, and then we’ll put that in the show notes as well. And Atul, I want to thank you for joining me today. I’ve learned a lot personally, I’ve taken a ton of notes. And hopefully you enjoyed it. And I know this contents going to be valuable for the listeners.

Luke Peters: And want to thank you the listeners for joining as well. And this podcast, Page One Podcast is sponsored by Retail Band, which is my new company. And as I mentioned earlier, if you guys are looking for help to grow your business on online channels, such as homedepot.com, wayfair.com and all the other online channels or if you’re looking for help with influencer marketing and how to quickly launch products, get reviews. It’s not just about influencers, but it’s about a better ROI than traditional advertising and a longer term evergreen ROI that continues to go and the water spigot never shuts off like it does with advertising. That’s how we help people.

Luke Peters: So if you’re interested, head on over to retailband.com check us out and you can get ahold of us there. Again, thanks, everybody for joining, and we’ll see you next time.

Atul Vir: Luke, thank you very much.

Luke Peters: Yep.

Atul Vir: Bye.

Luke Peters: Bye.

Speaker 1: Thanks for listening to the page one podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about rCommerce? Check out www.retailband.com to get more great tips and tricks on how to accelerate your E-commerce sales with the big box retailers.

EP8: How to Increase the Valuation of Your Consumer Product Company | Mark Dufilho, Managing Director, Houlihan Lokey’s Inc.

What you’ll learn:

We had a fascinating conversation with Mark Dufilho on how a business owners of consumer product brands can raise their evaluations pre-sale. He leads us through a crash course on how to bring a consumer brand to market and achieve liquidity for their business in the wake of China tariffs.

About our guest:

Mark Dufilho is a Managing Director in Houlihan Lokey’s Dallas office, where he is a senior member of the Consumer, Food & Retail Group. He has nearly two decades of experience providing transaction advisory and corporate finance services to small and mid-cap public and private companies and private equity firms across several branded consumer products segments, including branded apparel, consumer electronics, health & beauty, household & home products and retail. Dufilho graduated summa cum laude with B.B.A.s in finance and international business from Loyola University, and he holds an M.B.A. from Harvard Business School. 

Advisory and full service for MMA for middle market and private companies. Go to market “bankers only specialize in technology.” Focus only on consumer products… Help sellers achieve liquidity for their business

Key takeaways from this episode:

  • Background story of Houlihan Lokey, Inc. – 3:18
  • Biggest mistake business owners make when thinking about EBITDA multiples – 4:43
  • The true way to determine the value of your business – 5:00
  • General Breakdown of an EBITDA and a multiple – 5:11
  • The different types of investors and the types of return they expect – 7:07
  • How tariffs are impacting an investors evaluation of your company – 8:31
  • Are tariffs an appropriate Addback? – 10:26
  • Should you still take your company to market? – 11:27
  • How consumer product brands should approach buyer options – 13:00
  • Future analysis of our marketplace – 15:18
  • Which sales channel should you focus on to drive up your evaluation – 16:10
  • The benefits of building an ecommerce sales portfolio with big box retailers – 21:39
  • The most important 3 threes to focus on for a higher evaluation pre-sale – 23:34

Podcast Transcription

Speaker 1: Welcome to the Page 1 Podcast. A twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best-in-class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers, or what we call rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks again for joining us on the Page 1 Podcast. I’m your host, Luke Peters. This is the podcast where I bring you the best and brightest leaders in consumer product industry that will help you grow your products, launch new skus, and grow in the big box retailers like Home Depot, Lowe’s, Wayfair, and all of those other retailers that we call rCommerce. I’m the CEO and founder of NewAir Appliances where I cut my teeth for the last 17 years selling products online, and I’ve started a retail band where we can help other companies learn how to launch products, use influencer marketing to launch products, get reviews, gain traction, sell into Home Depot, Wayfair, Lowe’s, Target, Amazon, and all those other sites.

Luke Peters: And today I am interviewing Mark Dufilho who’s the Managing Director of Houlihan Lokey. Mark graduated summa cum laude with BBAs in Finance International Business from Loyola University and he holds an MBA from Harvard, and I have met Mark in-person, he’s literally one of the smartest guys that I’ve met. And thanks for coming on the show, Mark.

Mark Dufilho: Oh, it’s my pleasure. Thanks for having me.

Luke Peters: Awesome. And anything else that I might’ve missed in your background that might be important for the listeners to know about?

Mark Dufilho: No, you were certainly complete from an educational perspective, seems quite a long time ago now.

Luke Peters: Yeah, I know, it’s impressive though. And like I said, I had the opportunity to meet with Mark for about an hour a couple months ago. Learned quite a bit about how to think about my company, NewAir and how to position ourselves correctly. And so I thought that it’s really a special treat for you guys, our listeners, who’s mostly comprised of consumer product brands to kind of learn and get educated from Mark on how to think about correctly growing your business and positioning your business.

Luke Peters: So today I got a bunch of questions related to preparing the company and I guess before we get started, I was just talking to Mark about this, again, what’s interesting is you’re in charge of the consumer products side of Houlihan Lokey, which is a huge firm, the biggest right, in certain deal sizes. You guys are like the number one deal firm?

Mark Dufilho: Yeah. As far as the middle market goes, which is certainly deals below $1 billion in value, we execute on more than anybody else in the country, and actually within consumer products, irrespective of the deal size, our team handles more deals or M&A deals every year than any other bank in the country.

Luke Peters: Yeah, which is incredible. And also the fact that… Like you said, that’s your area of expertise and that fits perfectly into this podcast. So now that we’ve kind of worked through that part of it, why don’t we start with something obvious, which I think a lot of the listeners might know. But if you can kind of give us a general breakdown of how multiples are reached from an investor perspective, whether that’s a PE group or another firm that’s trying to roll up similar companies besides just EBITDA, what are the types of things that might fall into that?

Mark Dufilho: Sure, happy to. And maybe just to give your listeners a sense of perspective of where my experience or thought process is coming from. Our firm is a full-service investment bank, but all of what we do is advisory services, and within that most of it is in and around M&A and financing for middle-markets and private companies. And we go to market and deliver these services on an industry-specific way. So we have bankers that specialize only in aerospace and defense or technology or other industrial industries. Our team, which is about 70 bankers across the country and Europe are focused only on consumer products, in every sector of consumer. Whether it’s food and beverage, pet, health and beauty, home products, retail, restaurants, et cetera.

Mark Dufilho: And literally, what we think about day-in and day-out is the question you asked, which is EBITDA multiples and valuation. Because the vast majority of what we do is help sellers achieve liquidity for their business. EBITDA and EBITDA multiples is always an interesting topic of discussion. And what I found is the biggest mistake people make in thinking about that is that it’s simple math. If I maximize my EBITDA and I’m maximize my multiple, I’ll maximize my value. Well, there’s truth to that, but the real truth is value is determined by looking at what the longterm, sustainable cashflow of the business is, and value has always been determined that way.

Mark Dufilho: EBITDA and multiples are a simplifying language for people to very quickly try and ascertain value for a company, a group of companies or an industry, and then use that basis of comparison across those companies and understand why one business may trade at a higher multiple than another. What the multiple comes from is someone’s belief in the sustainability and defensibility of that EBITDA and then the growth opportunity inherent in that EBITDA over a three to five to seven year period over time. And then the third piece, if it is a financial investor and the idea is to eventually sell that business again, whether they believe that EBITDA multiple can be sustained three to five to seven years in the future or will that multiple contract or expand over time based on the growth opportunities for the business.

Luke Peters: Yeah, and that’s a great explanation. And I was taking notes here and I wrote down, actually what I think might be the key point you can tell me, but value is determined by the longterm cashflow. And I’ve heard and read that a lot of investors, a lot of it is all about risk, more risk equals you’re going to get lower multiples, lower returns, and more risk. And less risk is what investors are looking for. And that would feed into the longterm cashflow model, right?

Mark Dufilho: That’s exactly right. Every evaluation is an element or combination of the required rate of return and a cost of capital. Parlay it against what people expect those future cash flows to be. Which is why when people talk about debt multiples and leverage, and the higher the leverage, the higher the value. There is truth to that because what that means is that investor is able to replace higher cost of capital investments, the equity component, with a lower cost of capital, a debt component, thereby allowing them to pay more.

Luke Peters: Makes sense. And is there a certain return on capital that they also calculate in the bank? That factors into whatever the multiple ends up being, because they’re going to have to usually leveraging these companies up quite a bit or is that not-

Mark Dufilho: Sure that is a cost that an investor is looking for?

Luke Peters: Correct.

Mark Dufilho: Yes. It depends on the type of investment that you’re making. A venture-based investor is going to be looking for a significant return of capital and that tends to be a very high percentage return, 35%-type return, because they’re trying to make multiples of their money because it’s a much riskier investment, it’s an earlier-stage company, it’s an unproven concept, whatever the case may be. A more mature investor that’s making investments, a traditional LBO or private equity firm, that’s making investments in established and more mature companies is going to look for a lower return, because the lower risks that they’re taking. Traditionally, they looked for 20%-22% returns. In today’s market, you’ll see that number down as low as 16% returns, right above where you start to see junior debt capital start to look for returns. So think of the stack as senior debt, maybe looking for 5%-6%, junior debt or second-lien debt, maybe looking for 8%-12%, and then equity starts to look for 15% on up.

Luke Peters: Okay, awesome. And that’s super valuable. Those middle investors, that would be also termed as, mezzanine debt, is that another term for it?

Mark Dufilho: Correct.

Luke Peters: Okay. And then something really specific just because of the world we live in with tariffs. Some specific questions related to that. Just because everybody that’s listening here is probably in the consumer products, everybody’s going to be affected by tariffs or not everybody, but most everybody. And when investors now… What they’re having to look at isn’t what they had to look at a year ago. So now we have tariffs involved, which could be driving down net profit.

Luke Peters: So a couple of questions. Do you think tariffs could be, should be, will be, introduced as an add-back? Is that a legitimate add-back, especially if they go away in the future. But even if right now, would that be an add-back? And number two, how would those, could they negatively affect an investor’s opinion because they’re adding in some friction and some uncertainty?

Mark Dufilho: Sure. So I’ll take that in reverse order. Tariffs are absolutely a point of disruption in the market today. They’re disrupting people’s businesses and supply chains and pricing models and margin structures, no doubt, but they’re severely disrupting the M&A environment, because there’s so much uncertainty that they interject. If you’re a private owner and a seller of a business today, and you fundamentally believe that these tariffs are a temporary cost, you’re going to argue that a buyer should look past those and look at a more normalized view of profitability and assume those will go away. However, if you’re a buyer, you’ve got to be thoughtful about what that tariff, how long the tariff regime can stay in place, whether it can get worse, and what it means with respect to a short-term versus a longer-term disruption of business.

Mark Dufilho: And so what we’re finding at the end of the day is buyers are placing a discount on value to accommodate either tariff costs or tariff uncertainty on a go-forward and sellers have been less willing to accept that discount. They’re more willing to hold on to businesses and not sell at this point in time. We’ve not advised clients to try and add back the cost of tariffs. We don’t think that the sophisticated investor market is accepting that, simply because there is uncertainty around how long they will remain. We are, however, advising clients to add back some of the truly temporary costs that have come because of it, whether it’s a cost from excess warehousing or inventory carrying costs because a company bought ahead of a potential tariff impact, or if it’s the resolve of the cost of moving a supply chain out of China into a non-tariff country. Those are temporary and one-time in nature and we believe those are appropriate add-backs. But there’s far too much uncertainty around tariffs today. Just sort of wave a magic wand and say, assume those costs aren’t there because we don’t think they’ll be there forever.

Luke Peters: So and since the impact is so huge on first, a lot of companies… Especially in the 25% sector, does that mean or do you have an opinion on if companies should maybe wait it? Out because if they truly aren’t add-backs and all things being equal, that’s going to really hurt a net profit number or a multiple. Do you think most companies would be advised to wait it out or is it really going to be deal-by-deal and kind of up to the specific buyer?

Mark Dufilho: Great question. We’re generally advising clients if they material impact from tariffs to wait it out. Unless there is another reason why it makes good sense to look to drive liquidity today, and there’s any number of reasons why that may make sense, be it personal dynamics, family dynamics, shareholder dynamics, other company dynamics underway. All things equal, were advising people to hold off on taking a business to market if there is material tariff impact on their business because buyers are placing a discount against that. And I have a personal belief that the tariff situation will get resolved. However, I think we’re still looking at measuring time in terms of quarters and possible years, not months.

Luke Peters: Yeah. And that was going to be my next question. And I was really optimistic at the beginning and now, I got to put my head down and we just have to run the business and plan like they’re going to be here forever. And if they’re not then everything’s even better, right? Because a bunch of improvements will have been made by that point. But hopefully, for everybody they get resolved. Okay, great.

Luke Peters: Why don’t we move on to another… I know this is on a lot of people’s minds and probably something that you talk about all the time, but let’s talk about the, if you can kind of quickly describe how consumer product brands should be thinking about either working with a financial buyer, which is like a PE firm, right? Or a strategic buyer which might be another bigger brand. What are the different options they should be weighing when they consider those choices?

Mark Dufilho: Sure. A lot of it comes down to where company and the seller is, in their personal cycle and ambitions as well as where the company is in its life cycle. There’s sort of a general thought process that has held true generally by and large that a strategic buyer because of the strategic and synergy value that can be achieved in a deal is going to pay more than a financial buyer for a company. That thinking has actually been flipped on a ted a little bit. It certainly in certain consumer segments in the last couple of years as the private equity market has gotten more and more competitive and there’s more money available and you’ve seen valuations go up.

Mark Dufilho: What people have found is that, if they are at a place in their life cycle, in their company life cycle where they’re not quite ready yet to move on to the next project and they believe there is material upside in their business, they can actually maximize their longterm value creation by selling to a private equity fund today, selling a minority stake, selling a majority stake and holding onto a meaningful part of the business, growing that business, using the assistance in partnership with a private equity fund and then eventually selling it. Again, this is the proverbial second bite of the apple and finding that that’s far more value creative than simply selling 100% or something close that to a strategic buyer today.

Mark Dufilho: The flip side is, there are certain categories out there, be it certain branded snack and branded food categories, beverage, health and beauty where the strategic buyer appetite given some significant trends that are taking place with their core brands in the market. Strategic buyers are paying extremely high multiples for businesses that in some cases are still fairly small brands. So we do see that as an opportunity to take advantage of what’s happening to those strategic players and really capture some of that value early. But overall I’d say it comes down to the company’s specific situation and and what their real goals and ambitions are.

Luke Peters: Great. And also I’m kind of on that point in how buyers are looking to companies and given the recent drop or the cost of capital is getting cheaper, right? With the recent FED moves and also expected additional cuts, is that going to, you think push or drive the market higher even now that the rates might come down further and the lending might be cheaper or does it not have that much of an effect?

Mark Dufilho: So all things equal, it certainly has an effect that if the cost of capital goes down, values go up. The flip side of that is one of the reasons that the cost of capital may come down. So rate decreases is growth is slowing and there’s more uncertainty in the economic and the consumer environment. And so any value increase you may see mathematically from that is likely going to be offset or more than offset by a lower outlook for growth going forward.

Luke Peters: Yep, makes sense. Okay. And now let’s talk about channels and how much those… And before I get into the question, there’s been a lot of talk or at least conversations I’ve had or with friends and stuff about how driving the volume and value of direct to consumer channel within a company is really important because that portion of the company will get a higher multiple than say an in store portion. Investors are more excited about the consumer or the brand owning that direct connection and sale to the consumer and being able to not have to rely on the big box stores 100%. So the question around this is, if you look at three different revenue streams… And first of all, does this even matter? But the question is around three different revenue streams. Maybe a company is selling into Amazon, maybe they’re selling in-store and then maybe they’re selling direct to consumer on their website. Should that brand owner be focusing on growing that direct to consumer channel even bigger just for the sole purpose that he or she might get a bigger multiple upon exit.

Mark Dufilho: Sure. There’s a lot to unpack there. I’ll try and take it sort of one step at a time and do it efficiently.

Luke Peters: Sure.

Mark Dufilho: Channel absolutely matters. There’s no question about that. Whether you are selling to a general merchandiser, whether you’re selling to the grocery channel, whether you’re selling to a specialty retail, whether you’re selling to Amazon or Wayfair, whether you’re selling direct to consumer online’, channel matters very much. It impacts your cost of marketing, it impact your profitability and margin structure and impacts your growth, so on and so forth. I think one of the biggest miss normal that’s in the market today is brands and companies, particularly some privately held companies confusing a direct consumer strategy with an eCommerce strategy and then a traditional brick and mortar strategy. So a direct consumer strategy is one in which that brand is responsible for identifying, acquiring, communicating, and then closing a transaction with the consumer. That requires a marketing expertise, eCommerce expertise, customer service expertise, that requires many different facets of owning that customer relationship, cradle to grave.

Mark Dufilho: If you can successfully achieve that and have a model that is sustainable in terms of that longterm customer value outweighs the marketing cost of acquisition within your margin structure, you’ve built the most valuable form of business model because you own that customer relationship. You have that customer data and information and you can hopefully then repeat on a transactional level with that same customer over time. If you sell through Amazon, you don’t own the two most important aspects of a customer relationship. You are not acquiring that customer and you are not closing a transaction with that customer on Amazon or Wayfair or any of these marketplace sites, irrespective of whether it is an Amazon sale or a third party 3P marketplace sale. Amazon is acquiring that customer. Amazon is identifying how the product will be laid out, how the options for the consumer will be laid out in terms of priority and Amazon is closing that transaction because the consumer trusts Amazon. In that case that buy button is checked because they trust that prime relationship or that Amazon relationship.

Mark Dufilho: The reason why Amazon or Wayfair or any eCom relationship is more attractive than an in-store, only comes down to growth. That’s it. Amazon is attracting eyeballs and traffic conversion at 20% growth rates. In-store in some cases is able to drive a couple of points of growth. In many other cases it’s acting negative comps, but your concerns around customer concentration, your concerns around where power is and leveraging in the channel is no different with an Amazon or Wayfair relationship than it is with a Walmart direct target relationship. They’re just providing better growth and they’re providing better data and ability to manage your business on a realtime basis versus being tied to the old school model of change out your planigram twice a year.

Luke Peters: That’s super helpful.

Mark Dufilho: I just said a lot, Luke. Does that make sense? Is that helpful?

Luke Peters: That’s super helpful. Yeah, you’re educating me. So I’m taking notes. Saying that they’re the same, except for the differences that you kind of explained right there I think is really helpful. And just zeroing in on the growth and in addition the growth, but also the fact that there’s a huge learning curve. So a lot of… There could be the growth times two or three for some brands just because so many folks don’t know how to sell into the Wayfairs and the Amazons yet. So, that part’s really interesting. But the fact that you don’t own the customer either way. And so kind of a… And what else you mentioned was that the direct to consumer is 100% the best way to go. It seems like there’s less and less of those companies that are able to be successful and have a customer retention or lifetime value with how expensive customer acquisition is right now.

Mark Dufilho: It’s very difficult to get right. For every successful model that’s created, for every Harry’s that’s created and venture backed, I should say. Very few of these are actually bootstrapped or cashflow positive from the beginning. For every one of those that’s created, there is a litany of companies that are never able to make that model work. Establishing a direct consumer relationship is the hardest thing for a brand to do and there’s nothing wrong with a model that says go after an eCom relationship built on a portfolio of Amazon, Wayfair and the .com site of all of the other players, be it the Walmart or Target or Lowe’s or Home Depot. It’s a very valid and good strategy to tap into that eCommerce growth. And there is a skillset in understanding how to service that customer relative to selling to Walmart and Target.

Mark Dufilho: We talked about it a minute ago, you’re no longer going in making the trip down to Bentonville twice a year to reset the planigram. You are managing your business via their sites on much more of a real time basis. And the rules of engagement are changing rapidly versus an in-store experience where the rules of engagement change at a very slow pace. And that requires a distinct and unique skillset that a lot of companies that are used to selling on an in-store brick and mortar basis simply don’t know how to navigate.

Luke Peters: Yep. And we have seen that our direct to consumer business has comped with big gains year-over-year. Part of it, because we’ve got a great team here and we’ve got a really good strategy and it’s significant but it’s not one of the largest components of the company yet. But it’s been growing and part of it… And this is without even reducing prices because we don’t want to compete with our key customers or the Wayfairs and Home Depots. But I think just with the products all over, all of these eCommerce sites, there’s a lot of branding out there and it grows the brand. And so anyways, just something that we’ve seen on the newer .com site is a lot of growth. So it works hand-in-hand, if you work in all three channels, the more eyeballs are getting on your products and there’s quite a bit of a branding involved.

Luke Peters: Cool. So that’s a lot of information but it’s helpful in new information. So it’s great. Kind of leading into, again what brand owners should be thinking, what are maybe the most important three things that an owner should be focusing on pre-exit or pre-sale that’s going to result in the best valuation?

Mark Dufilho: Sure. There’s probably more than three things. What I would say is, if you are contemplating a sale of your business or hiring an advisor or entering into a a set of discussions. The first mistakes that that owners can make is, they try and maximize near term profitability in order to drive the value of the business up. Going back to the EBITDA and the multiple conversation we had at the beginning of this session. And what they do is they jeopardize the longterm health and the longterm growth outlook for the business. Making temporary decisions because a sale process is coming up to window dress the company or try and improve the profitability is always a mistake. Investors see through it and as a result they actually lose faith and trust in how that owner has been running the business. And they start to question everything that the owner may be presenting, which cuts against the very fabric of why transactions gets done and not at the level of trust that’s achieved.

Mark Dufilho: That’s the first thing I would say is, ensure that you continue to make decisions as if you are going to be the owner of the business for the longterm. You very well may end up being the owner for the longterm. Then make every decision that way. Don’t try and maximize short term profitability or otherwise continue to make longterm investments, continue to make longterm decisions.

Mark Dufilho: I think the second is… It goes hand in hand with this, is not to be afraid to make investments and bets on growth projects. Sometimes owners in preparing for the sale process will hesitate on investing in a new growth avenue. Concerned that it A, may be money wasted if it doesn’t return. Or B, it may prove out not to work, thereby taking that growth lever off the table, proving it not to work for the next buyer. Continue to do what brought you to the success at this point and continue to make those growth investments and run the business you always have.

Mark Dufilho: The third thing I would say is prepare. Running a business for your own purposes or your family purposes or with your couple of your business partners is very different than running a business with outside institutional capital. And there’s a level of financial process, a level of sophistication, a level of financial control and accountability which is expected. And it’s always very helpful to go through that process in advance of having a sale discussion versus having someone point that out to you halfway through the sales discussion. And it causing you to lose momentum or lose the the buyer altogether. You cannot prepare too much in that respect. You have to ensure that your data is reliable, it’s transparent, it’s visible, it’s compliant with GAP and it’s going to make intuitive sense to whoever the investor is.

Luke Peters: Those are super helpful. And piggybacking on those questions… And I’m going to ask you for an estimate here. It might not be easy, but for deals you do say under 100 million or under 150 million, what percentage of those companies are going to have… Already coming into the deal, have audited financials savers, reviewed financials… In other words, the question is, how important is it for brands to kind of step up their financial reporting on their end?

Mark Dufilho: Sure. An audit is incredibly helpful. As an audit signifies a level of financial control and reliability that an investor can look to. I would say the vast majority of deals that we do… And by vast majority, at that size range, I’d say probably 80% plus have audited financials. There certainly still is 20%, 25% that has some level of reviewed financials. Those deals tend to be smaller high growth businesses that are getting outside the multiples, thereby the deal value is higher, in which case an audited… The company has grown so quickly and so fast, that an audit is truly not helpful to the course. Because next year’s revenue is twice what last year’s was and the investors is looking at this as an entirely different investment criteria. Then if it was a slower modestly growing business.

Luke Peters: Cool. That makes a lot of sense. And I’ve heard that advice, a very similar advice, it’s good to hear that’s on point. What type of consumer product categories are you seeing that are really hot and have a lot of attraction?

Mark Dufilho: There’s a number of different categories that we’re still seeing a lot of activity and so. So certainly on the food and beverage side, we’re seeing interest in activity both in branded products, but also in private label and contract manufacturing. As people sort of think up and down the supply chain. Brands have separated from production almost entirely in many facets versus being vertically integrated. And so there’s opportunity both at the brand level as well as if you take a step back in the supply chain. And we see a good amount of M&A activity there. There’s a lot of growth and a lot of activity in the beauty space, whether you’re talking about skincare or haircare, whether you’re talking about direct consumer concepts, whether you’re talking about digitally native brands that have been fueled through social media and Instagram campaigns. There is a a fundamental shift underway from the traditional lifts they Lauder department store consumer, to one that is exclusively purchasing online with the occasional visit into a Sephora or an Ulta. And there’s been a lot of M&A activity and growth that we’ve seen in that segment as a result.

Mark Dufilho: Within the broader… What I characterize his own products segment, most of the growth that we’ve seen in excitement has been around either particular categories like pet, which remain very interesting with the humanization of pets and all of those trends that we see through in the kitchen. We still see very good growth trends in terms of the better for you aspects around a home cooking, pre-prepared meals, kitchen gadgets and tools. All of which I’d say are on the loop in an eCommerce growth environment. We are seeing more activity and more deal activity around companies that are either very positioned in an eCommerce environment via Amazon and Wayfair and others we’ve talked about or those that have been able to curve out a direct consumer presence and in many cases a combination of both. And what I’d characterize as the next generation Omni channel, which is your own direct to consumer as well as third party eCom. But look in this consumer market, there’s growth in any pockets. So long as a company has something unique and differentiated to say, I mean it resonates with the consumer.

Luke Peters: Cool. And that’s super helpful. You have specific categories there and the listeners can see if they fit into any one of those categories, but overall the market is still really hot, right? Is that what you’re seeing on your end?

Mark Dufilho: Apart from the tariff dislocation we talked about a little bit ago, I would say the M&A market remains as robust as it has ever been. And that’s entirely an issue or a result of there being so much capital out there in search of returns.

Luke Peters: Yeah. And just to be clear, so this recording is on September 11, 2019. Because I know these things change all the time. And when listeners might listen to this podcast in the future or when we eventually launched this podcast. But it’s good to get that pulse right now of how things are going. Unfortunately for those of us in the tariff segment, those are the challenges. But just like a couple of my friends have said, they’ve just flipped the whole conversation and said, the tariffs have ended up being a good thing for them. Because it forced them to look at their supply chain and restructure their pricing and are paying a ton of tariffs. But their company’s coming out strong on the backend. So we’ll have to take that positive approach to it and kind of do things the same way.

Mark Dufilho: That’s right. I agree with that statement.

Luke Peters: Cool. And Mark, listen, I know your time is super valuable, so I just want to thank you for coming on today. Is there a way that the listeners can get ahold of you or anything, contact you on LinkedIn or what would be the best way?

Mark Dufilho: Yeah, so I don’t know what sort of access there is on the podcast to contact me through you, but you’re more than welcome to contact me via LinkedIn. It’s Mark Dufilho, D-U-F-I-L-H-O or through our firm. And my firm is Houlihan Lokey. You can easily find us, we’re in 24 offices around the world. So I welcome questions or comments from any of your listeners and happy to try and be helpful if appropriate.

Luke Peters: Yeah, I’m not sure what interaction we have in the podcast, but for any of the listeners out there, happy to make an introduction. Just find me on LinkedIn and then I can intro you to Mark. So thanks again. I really appreciate your valuable time Mark, you’re super insightful. I learned a lot. I took a lot of notes and for all the listeners there, we’re going to have these notes in the podcast notes. So we’ll have the podcasts and below it we’ll have a bunch of written notes that’ll hopefully give you guys some valuable information. And I just want to thank everybody for joining us today. On the Page 1 Podcast sponsored by Retail Band. And if you’re a brand that is maybe focus on in-store and your eCom portion isn’t as strong as you’d like it and you want to grow more on Wayfair and Home Depot, we can help you with Retail Band.

Luke Peters: We can do all the things that we’ve done with a newer brand. We can help you understand the algorithms for each of those individual sites and bring you up to page one. So you get the most eyeballs on your products and drive your sales. And in addition to that, we can do something really unique on the influencer marketing side and we can help you launch your products. And we call that speed to sale. Meaning when you bring that inventory in, we can work with influencers to get reviews and marketing collateral and buzz and videos and really cool content that you can re-use. But also drive that inventory quickly, especially on new ski launches. And we can do that with micro influencers and we have a whole program set up for that. And we’d be thrilled to work with you on either one of those fronts. You can contact me for more information and I just want to thank everybody for listening and thank you, Mark for your time and hope you have a great day.

Mark Dufilho: My pleasure, thanks Luke.

Luke Peters: Great. Thank you.

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Want more information? Related post: How to Survive China Tariffs

EP6: Tariff Price Increases – From Product Supply Chain to Retail Customers; How to Get Your Price Increase and Become Whole

This past May, the U.S. raised tariffs from 10% to 25% on $200 billion of Chinese goods and Chinese businesses aren’t the only ones feeling the pain. This was then raised from 25% to 30% in recent weeks. If you manufacture your products—or even just components of your products— in China, the new tariffs will hit you square in the bottom line.

Fortunately, there are ways you can spread around the costs to keep your margins healthy. Host Luke Peters goes over how to survive these China Trade Tariffs through practical ways from going to your suppliers to helping pass along costs to your buyers. 

Podcast Transcription

Thanks for joining us on the page one podcast. I’m your host, Luke Peters. And today we’re going to be talking about tariffs. And as you know, I’m the CEO and founder of NewAir appliances and we are right in the middle of this tariff situation. So today I thought it would put out this small podcast, but show you guys exactly how we’re handling the tariff situation and hopefully bring you some valuable, insightful information that you can utilize in your own companies. And for those of you that are not having to deal with the tariffs, give you just some better insight of these challenges that the tariffs are creating, which, which are huge today, I’m going to show you how we have a three step process on how we handle tariffs. At NewAir and with our new company Retail Band, you can learn more about hello@retailband.com where we can bring these services to other companies that need that help.

We can show you guys how we handled the process the same way we do it here at new era. So let me just hop right into it. First thing about the tariff is to think about the three areas where you can drive the revenue back to your company. So first you want to renegotiate the factory cost. That’s an obvious one. I’m going to get into actually how we do that and also even talk about results that we’ve seen. Next, you’re going to go into logistics. There’s tons of areas in logistics. We’ll talk about ocean freight and domestic freight and a bunch of examples in between. And then finally you’re going to renegotiate with your retail partners. And that can be tough, sticky, uncomfortable, but it’s something that has to happen. And in this quick podcast, I’m going to jump into all of those. So first before I do let, let’s talk about what everybody is saying and what is reality.

Okay. So if you’re watching the news you’re going to hear that the factories are going to eat the cost and that all the product brands are going to be able to pass this on to the customer. And I can tell you that for the most part, that’s not correct. Some of it is going to get passed onto the customer. It’s going to be delayed and being passed onto the customer. It’s happening right now for a number of reasons, which we’ll go into. But I mean, these, the large retailers, they don’t want these price increases and everybody can understand why and who’s really getting squeezed or the brands themselves because the factories in China are also not taking on this full increase. They’re not able to, PR prices were probably already negotiated down. The RMB hasn’t really moved as much as the, like to make it seem like it’s moved on.

The media move maybe 5% from last year. And I mean, it’s up and down all the time. So just depends on when you listen to this podcast and if you look at the past trend, so you’re able to get a price increase in a factory and the factories definitely are, you know, in a partnership or helping out, but not to the extent that you might, you know, see on CNBC where everything is immediately getting passed onto the customer. So there’s a big difference between what everybody is saying and what is reality. And I’ll give you some specific numbers. I’ve talked to a lot of friends and everybody’s pretty sensitive on, you know, kind of saying how much they’ve been able to get from their factories and also sensitive on saying how much they’re average increase in the retailer end is. So what I’m going to do here is I’m just going to kind of aggregate those together and just give you a general feeling.

And then with your company, hopefully you fall in this range. Okay. So we’re not going to name any names here, but what I’m hearing is on the factory end, and this is probably a sampling of over 10 companies that they’re seeing about five to 12% of a decrease. Okay. Some might see a little bit more than that, but what I’m hearing is about five to 12%. Most people are not getting as much as they thought they were going to get. Okay? That’s just the general feeling is that they’re not getting as much. And a lot of times because they had it, you know, pre tariff, they already had prices negotiated down. Who knows, maybe the factories are better negotiators. It’s hard to say and it does change depending on the type of product. I’ve noticed that for products that are made outside of China as well, that the price decreases more significant.

Meaning if there’s manufacturing capabilities in Southeast Asia Cambodia, Vietnam, I just in those product categories then just a small sampling of companies I’ve been speaking to, I’m seeing a little bit of a larger price decrease. Okay. Now let’s talk about the retailer. And so what we’ve been seeing and just again aggregate because it’s pretty sensitive information, is that most companies are getting about an average of an 8% increase. Now this is going to be totally different across product categories. Okay. And so in the categories we’re just a lot of my friends are in, that’s kind of the increase that we’re seeing now. Some in some areas they might have more control, but we’re talking about if you’re, if you’re passing this on to a big box retailer that’s about the, you know, the extent of the amount that they’re taking. Keep in mind though, 8% on a wholesale price is more than 8% on your cog.

I mean, I know I’m stating the obvious here, but we have to keep that in perspective. So that may be equivalent to let’s say you know, 12 or 14% on the COGS. So you’re getting a significant part back, but you may not be whole. And that’s the key thing. And, and I think a lot of the retailers think that the brands are whole. They’re not, you know, and I know recently just target, you know, there was an article where they’re not accepting any price increases and and it’s difficult. So, so I just wanted to kind of give an overall feeling of, of what I’m seeing, what I’ve heard and I think hopefully we’ll put some of you guys at ease if you’re not getting the increases and decreases that you would have hoped for. Now on the flip side, one thing I have seen is I’ve seen some companies and they’ve gotten their increases right away.

We’re talking months ago and then others it’s taken longer. I mean, you know, even with my own company, it has taken us longer and it’s a big frustration and we’ll talk about that. So I’m going to get right into all of these details. Okay, cool. So let’s start with the sourcing side. Obviously you’re going to go get factory price reductions. That’s the first thing you’re going to talk about. But there’s a couple of other things that may be less obvious that this is a great time to go communicate to the factories. The first one I’d say is, is probably your net terms, whether you’re getting terms or not from your factories, you can probably get longer, more extended terms and you can kind of just increase your credit or AP by doing that. And while it’s not a price decrease having an increased credit is valuable and you can quantify it some value to that.

I mean, if you’re dealing with the bank or have an ABL or you’re paying a certain interest rate for a line of credit, now you can kind of push some of that, a significant amount actually off to your factory partners. Okay. So that’s the first thing that I would work on. And definitely the feedback I’ve had and in our own personal experiences that you should be able to move the needle pretty good right there. The next thing to look into our volume rebates. So again, maybe you’re able to get a certain distance with a price decrease with a factory, but then you can build in a volume rebate. And this is a great win win. It’s a great partnership idea in the sense that, you know, if you’re doing X million, but now you’re doing, you know, X plus two or whatever it is, you know, 10 20% or 10% increase that there is a rebate and everybody kind of shares in the success.

Their rebates can be huge motivating factor and you know, they can be pretty significant. And a couple additional percentage points right there. Other areas that might not be super obvious is packaging refinement and volume rebates. So depending on how you’re working with your factories and how you’re placing orders and how far out in advance you’re placing them, if you go further out, you can probably expect some volume rebates on that end. There’s a lot more you can do at a factory, but those are the couple of significant items that I wanted to point out. And of course just meeting in person, right? I mean don’t go out there once a year. The more that if you have a team out there that’s even better. But the more you’re joining a dinner together and meet in your factories, you’re going to get further along. So make sure your teams are getting out there.

Now let’s move on to logistics. So we’re going to go through several different categories here and hopefully this will give you guys something to think about and where you can either do some cost cutting or refinements or increase efficiency then your operations. So the first, the biggest one I think is go re-quote your ocean freight. I mean depending on how large your operation is and how many containers you’re bringing across. There’s been a lot of changes recently. There’s new companies, we’ve had some big success there recently and if you email me happy to share kind of suggestion or puts you in touch with who we’re working with right now. Definitely the ocean freight’s a huge one. You can also work in your drayage costs. Even your domestic shipping costs. I mean the, these are just obvious things, but you should always be re quoting these and, and getting the best rates. And then very obvious things is like on the operations side, of course you’re going to go look at all your, your expenses. That’s an obvious one, but how about this? Do you have a metric of efficiency for every single department? Meaning similar or akin to a P&L, but are you measuring efficiency to making sure that just because you were doing things a certain way last year, is that really the best way that you should be doing it? In example, would be this, like in customer service, are you tracking the cost that it takes you to handle every single call and every single email? These things are not that hard to set up. Once you put it together, you can select targets and then you can just make sure that you’re running each department the way it should be and you’re tightening it up. And also at the end of the day, what happens is you end up getting better customer service because you can measure plenty of other things.

I want to go off on a tangent, but that’s a good example right there. Okay. Quickly moving along. Marketing. Are you measuring your ad dollars? When you spend your ad dollars, are you measuring them at the SKU level? Again, sounds obvious, but most people don’t do that. Okay. If, let’s say you’re working with Amazon and you’re spending AMS, I know agencies after a while, you know their feet are up on the desk, you got to make sure that you’re looking right down to the SKU level, not letting it go out too far with the ACOS. Don’t getting tricked into just looking at the, at the TACOS, which is the total advertising spend and making sure that you’re profitable and all that ad spend and I mean that that’s going to go for your Google advertising or any other advertising that you’re doing. And then we’ll quickly move now down to sales. So in sales, obviously this is the items I went through were obviously operational and sometimes people don’t think about those when they think about the tariff increase. And I just wanted to touch on those quickly. But now we’re going down to sales and usually in the tariff conversation it’s just talking about how much can I say from my factories and then how much can I pass on to our retail partners. And again, this model is more of like a, this is the B2B model, so it’s if it’s a direct to consumer, you can just raise your price right away. So this is, you have another partner, another big box partner. They’re valuable to you and hopefully you’re valuable to them. The first thing I would say is none of the big partners want to take a tariff increase.

It’s a challenge for everybody. The second thing I would say is you might have to stop shipments if they’re not going to work with you. I mean you just going to have to look at your profitability and often they’re not going to react well unless you show them how important it is to you that you have to pass this tariff increase along. And we’ve seen this with experience and it’s in all of the different businesses and friends that I’ve talked to. It’s the same exact thing. So you can probably expect delays in getting that increase in. And this is another thing that isn’t talked about on the news. You know, they, the tariff increases go in and immediately, you know, they’re advertising that they consumer prices are gonna go up right away. Now it doesn’t work that way. Usually the brands eating that cost for months as it’s trying to move it across to the retail partners. So anyways, I think that’s one thing I, I just wanted to say is that this stuff, it can take a long time and it can take just a lot of back and forth a lot more than you might even expect. So whoever’s managing the team is going to have to expect multiple calls and meetings sometimes with retailers, because I’m just, what we’ve seen our end is, you know, they say the price increases in and then you go and you check your actual POs and it’s not, and so you have to go back where is the price increase? And then, you know, usually get a story about how, you know, there was something wrong with one of their systems and they got to go do it again. And this happens two or three times before you actually see it on your end. I don’t know what the answer is on their end.

I don’t know why it’s not going through the first time, but this is just the experience and the experience of multiple people. So I guess it’s just that stickiness of making sure you go back. A couple of things is in order to get the increased through, remember these guys are your partners. They have to be making money and the retail prices have to go up. So you may have to pull promotions along. The way you may have to submit new MSRPs to retailers. A lot of this has to happen in concert. So what it might look like is that you’re going to have to find a way to get your retails up. You’re going to have to make sure that the bad actors aren’t lowering the prices. You’re going to have to probably hold off on promotions. And then through that you can make sure that your partners are making money, which trust me is very important because they’re going to come back to you if they’re not. And then hopefully you can get that price increase along the way. So, and the other thing is no one’s going to accept the 25% it’s, I know the tariffs had been happening in a while, and hopefully this is obvious to most of you guys, but it’s funny how when they first came out, you know, some people want to just pass on the full 25 no one’s going to accept that it’s never going to happen. And that’s why what a lot of brands are doing is they are creating new products. They’re creating more valuable products for the consumer with, you know, extra features and, and other value adds like that. And then bringing a new product into the market. And when they do that, obviously they can factor in that extra cost and the tariff. And I think pretty much every single brand is doing that same thing.

And so we’re gonna see a lot of new innovation, new products. I mean, this’ll be good for everybody. Unfortunately, they’re going to have a 25% increase in the back end, but there is no way to get around that. Okay. And then, and then just to kind of finish off here, just a couple of things, is that the buyers are smart enough to know exactly how much tariff you should be passing on. Remember, they’re dealing with so many brands, they’re getting these calls all the time. They can compare how much your competition is increasing the price. And I think that’s why it is really important to partner with them and understand where the individual per skew margins are for you and for them. And then create that Excel spreadsheet yourself, put that together, and then you know how large the tariff increase is going to be as you pass it on. So at the end of the day, they have a P and L that they’re going to be managing all of their lines by. So they still have to be profitable. And of course, that’s why it’s called the partnership. So everybody’s gotta be profitable at the end of the day and you can’t pass it all on. But hopefully kind of these strategies that I talked about and a mix of ideas from the different companies that I’ve talked to interviewed will help you guys kind of understand different strategies you can utilize in your companies. And while most of these are, some of these might be obvious in the big picture, I think when you get down to the skew level or you get down to the different operational ideas, hopefully you got one or two ideas out of here that’s gonna save you some money. And I guess what we’re all for is that by the end of the year, these tariffs are gone.

But I can tell you personally that we’re just planning that they’re not going to go away and who knows how long it’s going to go on for. But that’s how we have to run the business so that we’re still in business in a couple of years from now. Anyways, hopefully this podcast was helpful and these ideas are helpful. We’d love to hear back because it’s such a fluid topic, so it would be awesome to get some feedback on this in, in what’s worked for you. Anyways, thanks for joining the Page One Podcast. Again, if you guys need help on your product launches, influencer marketing, growing B2B retailers like Wayfair or Home Depot or any of those other big box retailers, that’s exactly what we do. We focused down at the SKU level and we can help you get speed to sale where you launch a product and you have reviews and influencers talking about it and you have sales in philosophy a lot quicker than you normally would with the traditional ways of putting products up there and kind of waiting for them to sell. Thanks again, have a great day.

EP7: How to grow your online sales + Tariff pricing strategies | Jamie Libregts, Direct of Sales and Marketing at Reliable Company

What you’ll learn

We asked Jamie Libregts to share the tactics that drove online sales to be 60% of revenue, how and why he differentiates SKUs across all retail channels, and what social media advertising channel he’s using to drive sales to B2B sites.

About our guest

Jamie Libregts is the Director of Sales and Marketing for Reliable Corporation. A leader in the Garment Care industry since 1955. He has strong heritage in the B2B market working with organizations like Men’s Warehouse, Indochino, other alteration, dry cleaning and garment care manufacturers. Jamie helps leveraged the company’s experience in boilers to introduce some top-quality steam cleaners in the market. Reliable is a fairly new brand to the Housewares market, but is growing strong with a ecommerce focused strategy.

Key takeaways from this episode

  • The Story of the Reliable Company –
  • Map strategies for protecting margins on Amazon – 6:45
  • Channel differentiation strategies – 8:11
  • What you need to know about product information software’s (PIMs) –14:57
  • How to integrate PIMs into company roles – 16:02
  • Top advice for working with PIMs – 17:05
  • Tariff pricing strategies for new and existing products – 18:57
  • The process behind a successful product launch – 22:17
  • Strategies to drive sales once a product is launched – 21:46
  • Strategies to get more reviews for products – 32:17
  • Final piece of advice – 34:17

Podcast Transcription

Narrator: Welcome to the Page One podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page One podcast. I’m your host, Luke Peters. This is the podcast where I bring you the best and brightest leaders to share the consumer product insights. And today we have Jamie Libregts from Reliable Corporation. Jamie’s got an interesting background. He’s been working with a lot of cool brands that you guys are going to recognize. Worked with Dimplex Company, which does a lot of heaters, has worked with brands like Crockpot and Oster and Sunbeam, has a degree in computer science and 15 years experience in sales and marketing. Jamie, welcome to the show.

Jamie L.: Pleasure to be here, thanks for having me.

Luke Peters: Awesome. We’re just going to jump right into it. Well, before we get going here, why don’t you tell us quickly what Reliable sells? I’ve got some of the products in front of me, some sewing machines and other cool products. If you want to give us a quick background, what you guys are selling.

Jamie L.: Reliable Corporation’s a family run company. It’s been around since 1955 and it’s really got its roots in the garment care industry. Servicing those back rooms where you get your suit and you get it all done and tailored and when they go into that back room where the people that are servicing them and helping them out on the back side of it. And we’ve developed some great products over the years that have allowed us to expand into different industries. We have some of the best Italian made boilers in the industry. And these same products have allowed us to move into some different areas in steam cleaning and jewelry and dental. And then just with all of our experience on the garment care side, we’ve really moved into the houseware side of the business. Selling anywhere from household irons to steam cleaners and some really nice ironing boards.

Luke Peters: Yeah, and what I find interesting in the product mix is you go from like you said, household and entry-level, but you have some expensive products, some higher end and higher quality products, $2,500 range, $700 range, $500 range. You guys span the customer segmentation there, I guess.

Jamie L.: Yeah. And that’s been very important to us and I think the rise of eCommerce has really helped us as well because we can get out that information to that customer. When you have those premium products, one of the real tricks is to really explain to them what it is and why you’re buying something for $700 versus something that comparable is $50 down the street at your local place. The ability to tell the people our story has really helped us out for the past few years.

Luke Peters: Yep, and we’ll get into that. Before we go down that road of talking about the strategies and tactics, let’s quickly break down the company at Reliable Corp. About how many employees are we talking?

Jamie L.: Oh, we have about 30 to 40 employees.

Luke Peters: Great. Then talking about the customers that you’re selling into, in the consumer products industry it’s a lot of the customers you might guess. The Amazon’s, the Bed Bath, Best Buy, Home Depot and so on. You want to give us your top three or four so we can have an idea of what you guys are focused on?

Jamie L.: Yeah, we do really strongly, obviously Amazon. They are obviously the leaders on that side of the world. So really strong with Amazon, Bed Bath and Beyond, really starting to grow with Wayfair as they continue to expand. And then really the other half of our business is in that B to B side with direct to the customers.

Luke Peters: Direct to the customer on the B to B or B to C side?

Jamie L.: Both. It’s been really exciting for us. A lot of these being able to drop ship to the customers as your drop ship capabilities have grown, being able to drop ship to a B to B customer so they don’t have to bring it into their warehouse, you could send it right to their customer, has been a really for us.

Luke Peters: Awesome, okay. Then just so I got this straight because it’s interesting. Amazon, Bed Bath, Wayfair they’re going to be larger than say a Home Depot or Lowe’s because these products may not be perfect for the home improvement side of the business. Is that how you’re seeing it?

Jamie L.: Yeah, we’re strong with Home Depot and Lowe’s in our steam cleaners, in that segment. But where you get into the garment care, they’re not as strong in Home Depot and Lowe’s on the garment care side, where somebody like Bed Bath, Amazon is across the board strong everywhere.

Luke Peters: Yep, yep. And then Wayfair makes a lot of sense. And especially with all the initiatives that they have going on. What percentage of the sales are online versus in store?

Jamie L.: Online is probably about 60% of our sales now. We’re really focusing on the online. In store comes with a whole other set of attributes and inventory, inventory ramp ups and stuff like that. Where being able to tell our own story online, especially with all of the enhancements that our retail partners are coming out with, to be able to tell a story and play a video, or do a comparison chart and really be able to sell our products. Versus sending somebody a $200 ironing board and having it sit in their store, hoping somebody can understand that message.

Luke Peters: Totally makes sense. That’s about 60% online, about 40% in store. Then in store it could be a lot of smaller companies or industry specific companies, or also into some of these larger ones we’ve been talking about?

Jamie L.: In some of the larger ones as well. We’re really strong in the independent channel as well. We’ve been able to do leveraging our strength here to be able to get into those independent channels. But as well as traditional like Bed Bath and Beyond and Home Depot and stuff.

Luke Peters: That’s awesome, congratulations on that. Because I know that’s not easy but that’s great business to have. And that’s good, it keeps you guys pretty diversified because you have a good mix online and in store. Then with all of the other channels that you talked about, so you’ve got that part covered, which is a lot. It’s an area that a lot of companies aren’t able to work out. And in this podcast specifically, we want to talk about how companies are growing sales in these online channels that we mentioned right there and even outside of Amazon. The Home Depots, the Wayfairs and the Bed Bath. We’ll dive into that and before we get to that, what would you say is your best growth channel right now?

Jamie L.: It’d be Amazon. It’s growing really steadily. They’re doing well there, so Amazon will be our biggest there. Probably followed by Bed Bath. We’ve had a good success at Bed Bath on the premium side. I know as a company and a corporation they’re going through some changes, but we’ve been pretty steady with them over the last couple years.

Luke Peters: That’s awesome. And then piggyback on that with Amazon, because Amazon incredible company to work with, but always a lot of challenges, especially on margins. Are you guys seeing the same thing or do you guys have any map strategies? Are you able to protect your margins when you’re working with Amazon, and if so, how?

Jamie L.: Yeah, we made a decision a few years ago to go away from being an Amazon seller and on Amazon seller side and moving to an FBA where we manage it all ourselves. I know they’ve forced a few companies lately to do that. But it’s been really helpful for us because we’ve been able to chart our own destiny and do our own thing. It is difficult, price is a battle everywhere. We do enforce a map strategy and we spend a lot of time with unauthorized sellers and all those things that a lot of the other vendors are having problems with and other people out there. Anybody on the street can put anything out there. But we’ve been really forcing our map strategy and working through that.

Jamie L.: Then the trick then is to make sure that you have skus for everybody that you can leverage to drive sales. Because pricing really drives sales and promotions, but ensuring you have that product for everybody that you can use that doesn’t have everybody angry in the same sandbox.

Luke Peters: Yeah, and let’s talk about that. First of all, having and holding a map strategy in today’s day and age is a major accomplishment. It’s good for the brand because obviously you’re ensuring that your partners are making margin as well, so that’s awesome. But you made the comment about making sure that you have the right product for everybody. That might lead into our channel segmentation or channel strategy. Does that mean that you guys have separate skus that you’re able to then offer to different groups of retailers or is it the same skus being offered across the board to everybody?

Jamie L.: A couple of years ago we looked at our assortment and we had the same products everywhere and everything was going across all of our channels. We weren’t promoting, we weren’t getting out there, we weren’t leveraging the promotional opportunities that these retailers were giving us. Especially online because once one person goes off price, then you have a whole price war. I like to call it the staring contest between Walmart and Amazon, where one matches the other and then it takes six weeks to get one of them to blink to change the price back, so the other one will change the price back.

Jamie L.: But what we have done and created is some exclusive bundles, maybe a color variation, maybe a product variation or even specific skus just for online for customers that we can drive, we can leverage their abilities to promote and advertise it. And then you get into that flywheel, you get into that opportunity where you move up in their search range and you get more reviews and it starts to become a really strong sku online that is self-sustaining. Versus fighting over that same model at both places. So we have our core skus that really drive our business, but then we create channel specific skus, skus that’ll work for them.

Luke Peters: Great, and just so I can better understand. What you’re saying is before the pricing conflict, it was having a conflict with your in store skus and therefore to overcome that, you have skus that you might just sell online and skus that you might just sell in store. Or do you even go further and online have even different variants for the different… If we’re just talking about your online business, which is 60% and Amazon is mapped already because they’re a seller central account. Then you have a bunch of other solid accounts, do you even there go deeper and have specific skus online just for the different accounts?

Jamie L.: I guess a good example is that Amazon, one of our top skus is a steam mop that we’ve been selling for years. One of our other top skus was the accessory pads that went with it. We took the two and we created a bundle exclusively for Amazon. And three months later it’s now our top sku there. And it’s only there, it’s not anywhere else. It’s the value is still $10 more. You can buy them separately for the same price, but we took those two skus and put it together and you get a a bundle pack with a couple of extra pads and it’s a sku listing there. So people when they see our base listing that everyone in the world has, you can go into retail, you can go find it anywhere. On Amazon you see this unique exclusive sku that is a great $10 added value, $10 more at map and it’s something that when we do promote, it’s only at Amazon. So it doesn’t create those conflicts that you see in the market.

Luke Peters: Super smart. And how many total skus are you guys managing across the business?

Jamie L.: Somewhere in the 200 skus or so.

Luke Peters: Okay. I mean that’s a lot. I mean it’s not 2,000, but these are high end products. So that can be a challenge to manage that and inventory it and to do all the FBA and then your in store. Demand planning must definitely be strong on that end.

Jamie L.: Yeah, exactly. Yeah, we have a great team here with that and we’ve really invested over the years in a lot of great software. I think when you’re a smaller organization, in that 30 to 40 range, you can’t just put a body on it. Where I think when I was working in some of the larger corporations, we’d always just, okay, get that person to do this or get that person do this. Because you had enough people and you would assign them. We don’t have enough people to do it so we had to really invest in different softwares and different technology to help us do these things. Whether it’s a product information management system that has all of our data in it, that automatically uploads to our vendors, to a really good CRM software so we could track all our vendors and everything. To a really good ERP backend system that we use today.

Luke Peters: And speaking of PIMs, just because I interviewed Paul Casora the other day. Offline we were talking about a PIM that he’s looking for. Are you able to share what product information management software you guys are working with?

Jamie L.: We’ve actually moved forward with Plytix, which is one of the smaller ones, but they had a nice price strategy. They were a good cost, affordable for us, and they offered us a lot of great opportunities. I think they were growing and we were looking for something, so it was a really good partnership at the time. It’s a very good system, it holds all of our data. I think they’re growing and developing. It doesn’t have some of the tools that some of the larger ones have, but as a base place that we want to hold our data and create a database of all of our product and our images and everything, it works really well for us that way.

Jamie L.: We can extract from that the basic files that we need to upload to our vendors, whether it’s a CSV file or whatever. And we can also use some other software that other people offer like Venzi to do automatic uploads so we don’t have to do anything. It just fills out the form for us in the back end. We don’t have to look at a form and it uploads directly into a Bed Bath and Beyond. When we do skus for Bed Bath and Beyond now we don’t have to actually fill out the form. It’s done in seconds, which saves us a lot of time and money.

Luke Peters: No, this is a great topic to dive a little bit deeper into. So it’s called Plytix?

Jamie L.: Yeah.

Luke Peters: And then Venzi was the-

Jamie L.: P-L-Y-T-I-X, yeah.

Luke Peters: Yeah. P-L-Y-C-I-X, okay. And Venzi was the bolt-on that allows for the connectivity and automated uploads?

Jamie L.: Yep, Venzi, they offer great ability to do that with Amazon, Bed Bath and Beyond and a few other companies, a lot of them.

Luke Peters: Who out of the group of these retailers is the most difficult to automate or are you guys not able to automate with? Are you able to do these same uploads to say Lowe’s right now?

Jamie L.: Yeah. Yeah, we’re able to do with most corporations. There is a process to it. You do have to do an initial setup and you have to do mapping to all your fields. I know that we all know all the retailers have a lot of their own custom fields and different things. So it can be very difficult if you have a product category with only one or two or three items. But when you have a larger category like irons where we have a full selection, it makes a lot of sense for us because we can upload everything and map it. And it’s worth that extra time where then you know something where you may have only one or two items, it is just easier to fill out the form.

Luke Peters: It sounds like it’s like EDI where you have to map. Everybody’s got different forms or different EDI vendors that they’re using as well. How long did it take you guys start to finish to get a PIM actually in place, and then all the testing, and then all the information to the point now where you guys sounds like mostly are able to seamlessly update pricing and content on your products?

Jamie L.: The initial PIM creation was actually fairly quick. It only took maybe about a month to get all our data uploaded in there. But what we found is it took another six to eight months to get all the vendors online because every vendor form had a different field. And when you start mapping it, you just start to see your PIM database really start to grow. And you thought, “Oh, we only need these 90 fields or so.” All of a sudden now you have 200, 300 fields because every vendor has a specific need and you have to have that information in your PIM. So it really starts to grow and then when you do new products you have to fill in that PIM. So really creating those base forms and being able to automate and upload anything through all these softwares, very key because it can get very tedious having to type stuff in all the time.

Luke Peters: And did that end up being a sales function or did you guys have other parts of operations or elsewhere in the company help with that integration?

Jamie L.: It was an all hands on deck kind of thing. Whether our marketing team was working on marketing copy, because one of the things that I think is most important using a PIM is to ensure is that you have that common data. When you’re filling out different forms all the time, you can really start to see who filled out the forms and how they write things differently. Then you don’t have that consistent message across all of your channels and all of your information. So we really took our time to update all that information from our marketing team, sharing our sales team. Went through all of the other customer forms and had all the fields and information that we had there. And then obviously whether it’s our technicians or our operations team, helping to find some of that missing information. One thing wants a cord length, the other one wants the cord and something else length. You need to go find that information.

Luke Peters: One hundred percent. And now looking back at it, and thanks for walking us all the way through this. But looking back at it, is there anything you would change or do differently as far as how you guys set up the PIM or planning with the PIM vendors that you’ve worked with? Just your thoughts after going through this process.

Jamie L.: I think we would have been better prepared for the amount of changes and variations. We really wrote the PIM very basic right out of the gate. And I think we could have done a better job of planning. We didn’t take into account right off the bat that we had to do all these other fields for all these other vendors and I think it created a lot more work down the road. Where if we would have done a little bit more pre-planning and created a database that was a little bit more robust and flexible right out of the gate, I think we would have been stronger in the end run.

Luke Peters: That’s great feedback. I know a lot of companies are looking at a PIM to use. Some don’t even know what a PIM is. Just finishing up, maybe we should’ve started with this, but quickly do you want to just explain the overall reason you went to a PIM so the audience understands what exactly this software handles for the company?

Jamie L.: I think there’s a lot of companies out there that when you’re filling out a form for a customer, you’re going to that Excel spreadsheet that has all the columns and all the cord lengths and all the information and all your marketing copy. But what we really found was that we were starting to get different messaging and different information across the board. Then when you make a change at one, how do you know you’ve made the change everywhere? Being able to say, “Okay, we’ve changed this cord length, we’ve increased it from nine feet to 12 feet. How do we ensure we get that information out there to everybody?” Having a PIM and having that ability to do updates really made sure that okay, now the information is correct and everywhere versus a lot of legwork and groundwork by people having to follow up directly with anywhere you had to update.

Luke Peters: That’s great. Let’s move on to pricing strategies and how you’re leveraging pricing. Of course we have the tariff challenges and it’s always interesting to hear different guests and how they’re overcoming those challenges. Why don’t we start off and let me pose the question this way. Just start to finish, if you’re launching a product now is case one, and then case two would be for an existing product. How are you handling pricing launching as far as when you’re looking at margins and then you’re looking at having to cover tariff. Then for existing products when you’re having to go back and get a price increase, would like to hear, walk us through how you guys handle that?

Jamie L.: I think what you’re starting to see is there are a lot of the retailers are understanding the tariffs better and they’re being better prepared. I think the tariff conversations, they’re getting a little easier. Telling people that you’re changing a price or increasing and it’s why you’d give them the tariff information and completely understand. There’s always that bit of a push back and they don’t want any end up push off the entire tariff. But we’ve been okay successful with that. We haven’t been hit with the larger round of tariffs. We were a little worried September 1st when that was supposed to happen. A lot of our items have moved to December 1st so we’re getting a little concerned.

Jamie L.: But when we’re looking at our product assortment, we’re launching a lot of products right now. So we’ve put in some different pricing on them already just to be able to prepare for that. It’s always easier to go down, so some of the new product that we’re launching, we’ve taken that duty into account so we’re ready for it. Where down the road we’re going to be potentially facing some challenges with our current products.

Luke Peters: And how many products are you launching over the next 12 months? You mentioned your catalog’s about 200 or so. How many skus are you launching now?

Jamie L.: We’ve got about 15 to 20 new products launching in the next two to three months.

Luke Peters: That’s a lot.

Jamie L.: We’ve ensured our pricing is protected. Yeah, exactly. And we’ve also had very good success going back to our partners or vendors for our products that do come from China. Working together to offset a bit of that. So if it’s a 10% increase, we offer to split it with them, they get the 5% decrease and we absorb the other 5%, or we pass on the 5%, or absorb. Work together to try to figure out how we do that. We’ve also been a little bit insulated because a large selection of our product is either made in Canada or made in Europe. Actually a lot of our product comes from Italy. We got a little bit safe that side on the the tariff side, but never know when a tariff from Italy could come up the next day or two.

Luke Peters: You just got to wait for the next tweet. You never know what’s going to happen these days.

Jamie L.: I stopped following him because I didn’t want to see that.

Luke Peters: Yeah, it could be in the next round. What percentage of your products are from China?

Jamie L.: About 55%.

Luke Peters: Got it. Wow, you are very, very diversified. I mean who you sell into and who you’re sourcing from. That puts you guys in a nice position.

Jamie L.: Yeah, we’re not really big anywhere, but we’re really insulated everywhere. So when one industry takes a little bit of a hit, we’re still okay, which is nice.

Luke Peters: Let’s walk through, I wanted to get into product launches and from start to finish. Because I know you guys have a lot of strengths in your content and assets that you’re creating and premium products that you’re creating. Then obviously you’re growing your online channel. And I know these are all things that the company’s working on. But they can be all encompassed in this one question, which is you guys are launching 15 to 20 products in the next couple months. Start to finish, just pick any product and walk us through the product launch. Meaning the product is landed in your warehouse, and then talk about how you guys think about assets, how you guys think about product reviews. Is that product going out to all of your retailers or it sounds like you’re segmenting it to certain retailers. Then also even the SEO side of things if you guys are doing anything about that, I’d love to hear about it. So start to finish, that’d be an interesting one.

Jamie L.: Yeah, not a problem. I think it goes right back to the planning and when you’re developing that product is really ensure that the channel it’s going to go into and how you’re going to manage those channels. Give you a good example. We’re launching three brand new irons into the market, but I developed four. So there’s an extra little iron that’s sitting there for me that it’s not going to be in the core of the assortment. The core assortment goes out, it’s filling all our channel needs. But hiding that one little iron in my back pocket that when you’re talking to that specific retail, or something’s going on that way, I have something that I can offer them that would get them intrigued. Versus, okay, is this going to be everywhere? Why would I get excited by that? I like to call it my back pocket iron that I have the ability to go out and sell.

Luke Peters: Let me interject. What does that mean as far as inventory goes? If you have that in your back pocket and these are all coming from Europe and China, are you actually bringing that in and sitting on a small portion of inventory?

Jamie L.: No, I’m just paying a little bit of money, extra money up front to develop it so I have the product ready to go. The packaging, everything’s ready to go. All I need to do is place that order with the vendor. When I’m ready to go we place an order, 60 days later we get stock into our warehouse.

Luke Peters: Okay. Then Jamie, that’s great. That’s helpful to understand that part and then the product lands and then walk us through the next steps.

Jamie L.: What we like to do is really in the planning stage, understand what kind of product we’re launching and have a checklist ready to go. Whether it’s a full blown product launch where we’re doing a larger marketing campaign, doing maybe a Facebook ad campaign, videos, all those things. Or it’s more of a simple product launch where we just need to make sure we have all of our ducks in a row, all of our marketing materials ready to go right when the product lands.

Luke Peters: Okay, you have all the content assets and you’ve done some advertising. How quickly when you have everything done and then you push your button in the PIM to get it uploaded to your retailers, how fast until they actually have it on their site and it’s ready for sale?

Jamie L.: Every retailer is different. Some are like Amazon, I can have it the same day. Or Bed Bath and Beyond, it takes a little bit longer. Everybody’s systems are different. Once you understand those systems, where Bed Bath, we’re probably going to start pushing the button in the next week or so for stuff that’s going to launch four or five weeks from now so it’s ready to go. We just won’t activate it on the inventory side so it won’t show up on their site till we have inventory in the building. But every retailer is different.

Jamie L.: I think one of the key things is asking a lot of questions, understanding. A lot of them have a lot of great training materials and videos to watch. Just sitting down and understanding those and just sometimes it’s trial and error because all those things, those little hiccups that come up are things you can’t always expect. But making sure you have the data and the information available to you so when something does happen, you can turn around and really activate quickly is really what retailers like.

Luke Peters: Great. Now the product is on the retailer site. How are you driving sales then at this point? Are you doing any influencer marketing or any other promotional or sales strategies?

Jamie L.: I think every product launch is different. If you’re developing something and you’re putting it on and it’s an Amazon sku, you need to go through your Amazon and handbook and see, okay what are the things on Amazon that’s going to drive it? Making sure you get reviews on that product. Reviews really drive your search and your rating. So getting reviews and getting strong reviews, ensuring that you do have a video. Then you got to look at the Facebook and the marketing side of it. We’ve had really strong success with Facebook marketing ads. Really targeted ads that go out to people that are interested in those subjects and as well as tying those ads back in directly to the retailers. When you go on Facebook and you see a little ad or you watch a video, it has that click that takes you directly to Amazon for instance. Or it takes you directly to Bed Bath.

Jamie L.: It’s allowed us to create a strategy that we can actually see sales results. Because I think a lot of the time when you do a lot of marketing, it’s very difficult to see that ROI and understand that oh great, we get all these impressions, but what do they really turn into in sales? Doing a lot of this targeted advertising has been really strong for us because we’ve been able to turn it into ROI that we can measure very easily.

Luke Peters: This is very unique actually. You’re using a Facebook channel to drive sales on your retailers, not in your direct to consumer website. And it sounds like you guys are getting good results. I mean, would it did even compare to the ROI that you’re getting from say AMS or is it not comparable but it’s still worthwhile and it’s different? And also it’s probably hard to measure it, right? You can’t measure this because you’re sending a customer off to Home Depot, or Bed Bath, or Wayfair, or Amazon and you don’t have a pixel on their websites. You’re not able to measure the ROI, right?

Jamie L.: Yeah. Depending on the retailer, you do lose the chain a little bit. I will tell you that little Amazon logo on an ad where people can click on has been very strong. People love the ability to get it right away from Amazon. So when they see that ad in the corner and it shows Amazon and they just click it and it goes. When they see the ad on your website, people will buy from our direct to consumer sites very strong. But I really think having that logo recognition from whatever retailer site you go on has been very strong for us and just really created that attachment to the customer. They see it and they go, “Oh look, this is a great advertising for an iron and this is really cool. This is what it does.” They click Bed Bath, they go right to that part at Bed Bath because they recognize Bed Bath and they want to buy it from Bed Bath.

Jamie L.: We know through data that this consumer is a Bed Bath consumer and this consumer also likes irons. That’s where all that data really comes in. And it may not be that specific of data, but really understanding who the customer is and what their interests are. The sites they go to, what they’re searching on, all that data that’s on people and that data’s out there. It’s a little scary when you think about it sometimes, but using that data you can target audiences and then if you know they’re a Bed Bath shopper and you have a Bed Bath ad, that’s really strong.

Luke Peters: It’s an amazing strategy and really interesting to hear how you guys have it working. Are you using an outside Facebook partner to help you with the advertising? Are you guys able to do all that targeting and set up in house?

Jamie L.: Currently we’re doing it all in house. I won’t lie, it’s a lot of work. We really do smaller specific campaigns. We do have a lot of good software to help us create that data and find that data and that information. Facebook’s actually very good at that as well. But the one thing with Facebook is it changes weekly and daily, their rules and everything. We are in the process right now of searching for a strong partner to manage all that for us. And with that, what I think you’re seeing out there is content is king. Anyone can do advertising with bad content. But I think we’re really trying to find a partner that will also create content for us.

Jamie L.: When you look at optimizing your social budget, not just that they’re managing your account and doing these posts, they’re also helping you create content that you can reuse and have and leverage across all kinds of different channels. Whether it’s on your own website or things you developed for retailers on the side. So the ability to generate content as well as manage that Facebook side or the advertising side is something we’re down the road right now. Got a couple of partners we’ve been talking to and we’re really close to making that decision.

Luke Peters: And Jamie, how big is the team that you manage? You’re managing all of sales and marketing?

Jamie L.: Yeah, it’s about 10 people total.

Luke Peters: You’re getting the most out of that team it sounds like. Because you’re doing a lot of very technical strategies here. And most companies aren’t able to manage this many things in house. Thanks for sharing that strategy with Facebook. I know we’ve looked into that and we’ve actually done some of that, but not as far as you guys have gone. Part of it is just because it’s hard to measure that ROI. But on the flip side, I’m sure it helps with the product launch because when your product first launches and you have no sales velocity, it’s not going to rank good. So I’m assuming you guys can now drive Facebook ads and sales to that product. You’re going to get some sales velocity, it’s going to move up in the rankings on your retailer partner sites. Is that along the lines of the same thinking you guys are using?

Jamie L.: Yeah, exactly. We understand that when you launch a product those first few months, we’re not making money. We’re really using the money it’s generating to advertise more of it because you need to get that sales velocity. You need to get the sales, the reviews, all that stuff up to really move up with all these retailers. And the only way that you’re going to do it is to advertise. Amazon does have a great advertising platform, but everybody’s there, everybody’s fighting for that space. We haven’t seen great return on those ad spends. So finding a different avenue that has been successful for us has been really exciting.

Jamie L.: We really started with a test method. What I like to call the weekend test where we just picked current items and we tried to weekend test and we tried some different things to see what works. Well, I’ll tell you that the adage that bad creative doesn’t work is true. If it’s not engaging creative, it’s very difficult to get customers excited about it. We’ve done some new videos that are really a little bit more exciting and get people behind it. Versus the typical hey, this is what the product is video. But getting that engagement is key for whatever you do.

Luke Peters: Then finishing up on the product launch, let’s talk about product reviews. Are you guys doing anything interesting that you can share with the audience here to get more reviews on these products? Especially with your price points, I’m assuming reviews are going to be really, really important.

Jamie L.: Again, going back to the software side, we’ve invested with Bazaarvoice, who’s a great partner to do the reviews on our own website. And one of the exciting things they do, and I’m sure you’ve talked about, is they syndicate out to other websites. So any reviews that are on our website is going out to Bed Bath and all these other sites. They’re able to syndicate all of these reviews to all these retailers except Amazon of course. Because they have their own platform. So if I get 10 reviews on my own site, those 10 reviews are going to show up on everybody’s site. So I don’t have to try to generate reviews at Home Depot, Lowe’s, Bed Bath Beyond, Walmart. That can be very difficult and can also just get to be very expensive when you start to get down that road.

Jamie L.: Being able to focus on just our own website, getting customers on our own website, whether you incentivize them to buy the product and give them 100% off coupon to buy the product. You can’t incentivize them to say, “I’ll give you for a five star review.” But I want honest reviews. Bad reviews are good too because bad reviews tell you what you need to do better on the product and how you can market it better. Or how even your customer service can get better. As a brand, one of the things we really see on reviews is a lot of it just comes back to your customer service. It’s a great product, the product worked great, but how that customer interacted with your company and how that customer service side didn’t meet their expectations really affects the reviews. Being able to clean up your customer service and that channel is really what reviews help you drive. So not all reviews are good, but the bad reviews are the ones that can really help your company the best.

Luke Peters: We’re using Bazaarvoice as well and I have a lot of experience with it. It sounds like on a product launch you’re going to be driving sales on your direct to consumer channel as well. Because that’s obviously the added benefit, is getting reviews that are going to syndicate out. Yep, makes a lot of sense.

Jamie L.: Yeah, yeah. Local community.

Luke Peters: Yep, exactly. What is something actionable that the audience can take away from you in the sense that over the past year, maybe share the biggest win or the biggest strategy or some nugget that you think is really going to be helpful for our audience here.

Jamie L.: I think Facebook’s of top of mind for everybody. What we did was create a product offering at Amazon that was just for Amazon. I’m sure there’s a lot of people doing that, but then created a marketing approach to generate reviews and everything right around that product. Whether it was from a software that sends out emails to our customers asking them for reviews, to doing campaigns on Facebook on that product, sending them to Amazon, to even just how you manage that product and do your backend. We’ve invested in some other software. Helium 10’s a great company everyone should look up. The information that they have at their fingerprints on your different products, being able to optimize your search for optimization for Amazon, and being able to see where your product ranks. Being able to see what products are in the top ranks and how you can target those products. There’s some really great information out there. I think the key for everybody is just to look for that product information, find out those product software suppliers out there. There’s so many of them and try to leverage them the best can.

Luke Peters: Thanks for that Jamie. And yeah, we’ve used Helium 10 as well, so great suggestion. But we haven’t gone to the extent you guys have on Facebook and trust me, we’re going to be testing that and I hope the audience gives that a shot as well. Part of it is Facebook has pulled back, or at least their platform has become a lot more competitive over the years. But it sounds like you guys are running small super targeted campaigns. It makes 100% sense to me what you’re doing here and you’re targeting people who in their profile, like you said, might be Bed Bath and Beyond customers or whatever the case may be. So you’re still able to get to them and it sounded like you were alluding to the fact that it even has a higher ROI than even AMS, Amazon’s own system. So super interesting. I’ll make sure I put some of the software that you’ve listed here in our show notes for the audience and yeah, thanks. That was really, really helpful.

Luke Peters: Jamie, just want to thank you again for joining us today and walking us through everything from product launches, to Facebook advertising, and the different channels that you manage there for Reliable Corporation, and talking about your products. It’s been a lot of fun.

Jamie L.: Awesome, thanks for having me.

Luke Peters: Thanks for joining us on the Page One podcast sponsored by Retail Band where we help companies like yours launch products faster on Home Depot, Walmart, Wayfair, and even Amazon. If you’re launching products and not getting reviews and sales fast enough, we can help you. We can help you with influencer marketing, videos, Instagram, YouTube videos, getting your product out there and helping with the SEO of the product. If you’re interested to learn more, you can take a look at retailband.com

Narrator: Thanks for listening to the Page One podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about our rCommerce? Check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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Want more information? Related post: How to Survive China Tariffs

EP5: How to Sell with Wayfair Sponsored Products + Best Sponsor Ad Practices | Host Luke Peters, President & CEO of Retail Band

Welcome to Page 1:

Marketing programs are a necessity when it comes to selling on online retail platforms. Without them, the competition is too fierce and your products run a higher risk of falling by the wayside.

However, if you’re hesitant to use these programs then look at the success NewAir had thanks to the Wayfair Sponsored Product program.

What you’ll learn:

In today’s episode, Host Luke Peters shares his personal experience using the Wayfair Sponsored Product (WSP) program and gives listeners tactical ways to increase important sales metrics, such as ROI, ACOS, and ROAS.

About your host:

Luke Peters, President and CEO of Retail Band, has 17 years of sales and product development experience in the home appliance space. A self-made entrepreneur and founder of 5 companies, Luke is skilled at taking a product from concept and bringing it to high-volume sales at Home Depot, Lowes, Walmart, and Amazon. Retail Band, Luke’s new venture, is a rCommerce agency that works with brands to manage and accelerate online business through retailer platforms. He is also your host of the Page One Podcast, a twice-weekly Podcast featuring interviews with thought leaders on topics ranging from channel strategy, tariffs, influencer marketing, product launches, and eCommerce growth on big-box retail sites.

Key takeaways from this episode:

  • What is a Sponsored Product? – 1:59
  • History of advertising platforms – 2:53
  • What makes WSP unique? – 3:51
  • Tips on how to manage your WSP’s – 7:19
  • How WSP will benefit your business – 8:02
  • Best WSP practices – 8:55

Podcast Transcription

Welcome to the The Page One Podcast. A twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call our commerce. Now here’s your host Luke Peters.

My name is Luke Peters, your host for The Page One Podcast. I have 17 years of online experience in sales and product development. And my goal in this podcast series is to dive deep into really tactical areas where you can improve your business. So today we’re going to be talking about Wayfair sponsored products. And it’s an interesting thing because back in the day there was Google, of course, that’s where everybody started. And then Amazon came out with their AMS advertising platform. And the first thing I think a lot of people thought was they’re just pulling more margin from our products. Hopefully, you know the smart brands out there had to bake some margin into their product margins to kind of catch up with what ends up being probably at least a 3% margin dilution and can even go to 10% for your Amazon listings or even higher. If you’re looking at the tacos the total spend instead of just the A cost.

So in this episode we’re going to talk about how Wayfair has kind of jumped into the arena there with their version of way for sponsored products, how it’s different than Google, how it’s different than AMS. And then I’m going to talk a little bit further on how more retailers are going to probably join. I mean, I’ll give you my guests and if as we finish up this quick podcast, but why don’t we just kind of start back at the beginning. Sponsored products, why would somebody want to do a sponsored product? What even is a sponsor product? So we’ll get really basic here. When you’re launching a product, I guess before a lot of thought was put into it, you might launch a product and let the market react to it and it could take a long time before the product got reviews and the product got sales and then it got velocity and most ranking algorithms, whether it’s Home Depot, Wayfair, Lowe’s, Target, whatever. They’re all going to be based in some part on sales velocity, sales margin.

I mean there’s even got to be other things like returns are going to be built into it, but there’s a formula and algorithm that they’re all using and that’s helping your product rank. And if you’re just putting a product out there in the world and not doing anything, it’s going to take a lot to get up in the rankings. And if you’re not on Page One, you’re not going to be found. And thus the reason for the name of this podcast, Page One Podcast. So talking about the different ways that this has happened in the past, obviously people would use ad words and that was the Google and still is used on Google with text based advertisements. And then that kind of went over to product listing ads. And I think a lot of things started happening at the same time. You could advertise in different social mediums and YouTube even in Facebook and hopefully everybody kind of has some experience in that area.

And then Amazon brought out Amazon sponsored listings and they had a different program I think for vendor central and seller central. And there’s different ways that you could advertise. And then even below that you can go deeper and do all kinds of special deals within Amazon or different promotions. But the idea was this gives you control over where and how your product show up. And if you smartly, you can then drive your products to the top of the organic search results. Okay. So that was the philosophy that the smart marketers were using. And now Wayfair has come into the game with a Wayfair sponsored products. Now Wayfair, incredible company to work with, the nicest people on earth. Hopefully you guys all get a chance to meet them in person out there in beautiful Boston and their program is a little bit different. A couple things that stand out to me having experience with pretty much all of these different platforms is that Wayfair’s platform, I guess in a nutshell I would say it’s new and it’s really simple in a good way.

It’s simple and from my understanding they try to make it as fair as possible. Meaning that just because you’re outbid, your advertisements are still going to cycle through and you can get a slice of that advertising pie at least. And because what they want to do is I think they want to prevent one company from dominating the whole category. And so I think on a macro level that’s a key differentiation that Wayfair has. The other thing about Wayfair sponsored products is, and just starting at the base here, you set up categories, you put products into those categories, you create daily caps, you have start and end dates. And one thing I noticed is at the end dates, at least in the versions I’ve seen are like really quick like a month.

So make sure you extend out your end dates because the last thing you want to do is set it, forget it and then stop advertising after a month when you’re not looking at it. But you know you put in your bid and then it’s going to give you all of the standardized outputs that you’re going to get from any other program or most other programs. You’re going to get your row as your click through rates. You’ll know what your cost per click was, you’ll know what your revenue was from this program. And I can tell you it’s one of the best platforms right now to be advertising with. And the reason is because it’s new and all of the other platforms, just like when AMS came out, it was incredible. You could get a cost well under 10% that was driving your products to the top.

But now it’s gotten a lot more competitive. Advertising is taking a large share of the margin now and Amazon, everybody knows that and feels it, but it hasn’t happened yet with Wayfair. I’m sure that’s part of the plan over there, but it hasn’t happened yet. So for the next year or so I expect this to be like an amazing platform. I mean I can just tell you that our ROAS is over 1500%. That’s an incredible place to be and you can be very specific down to the sku level like I mentioned. So one important thing to think about with Wayfair sponsored products is that they look a lot more organic. The way that they’re placed in the Wayfair page I think they’ve done that really tastefully and you guys will have to just kind of judge for yourself. But I think from a consumer facing standpoint it really helps your brand because it looks great.

It’s not off putting. And when you’re getting those sales, like I said, pretty much all of the backend algorithms are going to be driven by sales philosophy along with a few other components. So that’s a definite reason to jump into this. Another thing is that it’s part of the Wayfair scorecard. I mean Wayfair is so transparent about this, they want to help all of us brands succeed on their platform and it’s a key component I think to be successful and your category managers probably talking to you about it. So when you hear all of those, when you hear them talking about it and the way that I’m explaining it and you put two and two together, it’s an obvious decision to jump into it. Okay. Now diving deeper into the platform, you definitely have to keep an eye on it. Wayfair’s changing it quite often.

I think one of the recent changes is that products can be disabled if certain parameters are not met. Maybe a damage rate is too high or something like that. And I know on AMS you’re going to have a similar type of situation where maybe margins are too low, so you’re not able to, especially on the vendor side, you’re not able to advertise in a product that Amazon is going to be losing money on. So Wayfair is going to have those similar protections built into their plan. And you’re going to want to know all of them and there’s a lot of detail that I could get into, but I wanted to kind of give you an overview and then strategically how to think about and why to use Wayfair sponsored products. Okay. And the next thing I wanted to talk about is your cost per click.

So the cost per click from what I’ve seen on the Wayfair sponsored product listing is going to be lower than a corresponding CPC for say, a PLA or an AMS, AMG, whatever Amazon’s calling it these days. It’s going to be proportionately lower on Wayfair. And that might sound good. It’s actually even better because I think your conversion rates and click through rates are going to be a little bit higher. The Wayfair pages are cleaner than a lot of the competition. And since the competition hasn’t all jumped into the sponsored products yet your results are going to be better. And that’s how you’re able to achieve these extraordinary ROAS numbers and they’re not going to be there forever. And that’s kind of the reason why it’s so important here in August of 2019 to jump into this program. So now that I’ve kind of explained the program, why don’t talk about like a very obvious way on kind of how one might use it.

So let’s say you’re selling 100 skus on Wayfair. There’s a lot of different ways you could think about how you want to apply sponsor products. It’s done at the product level, you could apply it to every sku. I tend to want to apply it to the skus that are most important to our partnership and new sku launches. I think if you apply it to every sku then in the background Wayfair is going to have to figure out which sku to serve to the consumer on the consumer level. And if you have so many skus, they’re going to kind of rotate through that process. So what makes more sense to me is to choose a product where you and your partner, in this case, us and Wayfair are both going to have strong margins where it’s going to be something that’s going to strengthen the partnership and also be an important sale for new air. And that way you focus your intensity on less skus rather than distributing it over all of the skus for the brand.

So we start there. You go through, let’s say you have your 100 skus. You break them into categories. Let’s assume five categories, 20 skus per category, and of course you’re not going to put all 20 in. So you might put in five skus into the five categories and then you’re going to apply your cost per click per sku at the sku level or the category level. And then what’s going to happen is after these run, Wayfair’s going to give you all of the data that we talked about earlier, the ROAS, the click through rate, the CPC. The interesting thing about this though that you’re going to have to think about on the brand side is hopefully you’re running a customer P&L. so in this case that would mean all of your inputs and costs and cogs and all of the expenses on your end that might go in castle gate.

Everything that’s going to go into the Wayfair business to make sure that it’s a profitable business for you. And one thing is that the payments for Wayfair sponsored products are coming out of a credit card, not out of the remittance. Meaning you just got to make sure that your accounting department is tying these into that P&L. So everything is accounted for and you really understand your true margin. So you know how hard you’re able to push on your Wayfair sponsored products. And I highly suggest that for everybody, for every customer that they have. And probably a topic for a later podcast.

Okay. And so just to finish up the process, so you’ve got your top skus, that’s column and you’re often running. And then now you have a new sku launch. And this is a great area to introduce Wayfair sponsored product ads on that new sku.

And maybe you pull back a couple of your other skus because you want to get more focused on this new sku, but it’s going to give it prominence. It’s going to help you get it ranked properly. And then of course there’s other things you could do with your account manager that you can also probably lift your product rankings. And again we can talk about that and the relationships you should be building in a later podcast. But from start to finish, it’s about focus. It’s about selecting your key products, making sure that the images are beautiful, the copy’s beautiful. Spending the money proportionately in a way where you’re still getting a good ROAS. Tracking your results, launching new skus the same way and making sure that you give them that rocket lift where you’re getting sales and reviews within a month instead of waiting months and months and months like it was before you kind of had a hand in this.

And that’s how I see a successful use of Wayfair sponsored products. And hopefully this has been helpful for you. So thanks again for listening. Again, Page One Podcast is brought to you by retailband.com. We’re not an agency, we’re not a distributor, we’re just awesomeness. Basically got to go to the website to find out how we can help you, but we can help you in… We can essentially become your sales and marketing arm. All the things that I talked about today are just a small part of what we do, and if you’d like to learn more, we’d love to hear from you. Thanks for listening.

Thanks for listening to The Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about our commerce, check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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Want more information? Related post: 2 Reasons Why Wayfair Sponsored Products Is The Best Advertising Platform

EP4: How to Survive China Tariffs + Best Product Launch Practices | Paul Cosaro, CEO of Picnic Time

Welcome to Page 1:

As we mentioned in episode one, China trade tariffs rose to 25% in May 2018. These tariffs have been a big topic of discussion on the show because, from working with consumer product brands, we know that this profit margin squeeze is hitting everyone in the bottom line.

We want to hear from as many people in the consumer product industry as we can. No two brands are the same and so no two strategies will be either. But with new information comes new insights and we want to share as much expertise as we can on the subject to help those who are still finding their way forward.

What you’ll learn:

We sat down with Paul Cosaro of Picnic Time to discuss how he got into eCommerce, what his best product launching practices are (as well as pitfalls to avoid), and his advice for navigating the China tariffs. 

About our guest:

Paul Cosaro is a millennial father of 2 who was born and raised in Southern California. He is a USC Marshall School of Business graduate and worked as a management consultant in the Media & Entertainment sector for 3 years. Paul has owned his own eCommerce business, Truin Retail Group, from 2006-2011. During that time, he built and ran 3 eCommerce sites within 3 niche targets: tailgating, picnic, and camping. In 2011, Paul was given the opportunity to join the management team at Picnic Time, where he then sold his eCommerce business and jumped headfirst into the world of outdoor entertaining.

Key takeaways from this episode:

  • Why it’s a good idea to diversify your retail channels – 7:57
  • The most important skill Paul developed as a Business owner – 15:41
  • Best product launch practices across multiple retail channels – 21:34
  • How to convert sales on Big Box retail sites – 24:29
  • The lost art of launching a product – 24:52
  • The importance of D2C sales – 26:41
  • China tariffs success story – 28:29
  • The final piece of advice on how to scale your business – 33:51

Podcast Transcription

Speaker 1: Welcome to the Page One Podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call our commerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page One Podcast. I’m your host, Luke Peters. This is the podcast where I bring you the best and brightest leaders in consumer products. We’re going to be talking about Home Depot, Wayfair, Amazon, and a bunch of these other retailers. A lot of them we call our commerce, all of those retailers outside of Amazon. I’m the founder and CEO of Newair Appliances where I cut my teeth selling products online. Now I’ve started Retail Band where I hope to share my marketing and sales insights and help companies launch products, achieve better results on websites like Home Depot and Wayfair and Lowe’s and Walmart, and get better rankings. Today I’m excited to have an in person interview with Paul Cosaro from Picnic Time and we’ll get to learn all about Paul in a quick bio. Paul graduated from USC Marshall School of Business, worked as a management consultant, owned his own business from 2006 to 2011 eCommerce business.

Luke Peters: In 2011 he joined Picnic Time as a managing partner, works with another managing partner, Danny Corbucci who I know both of them from these quarterly meetings, business meetings that we all attend. Paul is an IHA board member, father of two and is part of a business group that I just mentioned called Core. So great to have you here, Paul.

Paul Cosaro: Thank you. Thanks for having me.

Luke Peters: Awesome. So Paul, why don’t we just get a little bit of background just for the listener today and kind of describe the products you guys offer over at a Picnic Time.

Paul Cosaro: Okay. Yes. So Picnic Time Family of Brands. We’ve been in business for 37 years now and essentially our mission is to sell products that bring family and friends together to make memories and we’re basically selling happiness in some way, shape or form. But we started with picnic baskets, fully outfitted service for two, service for four, very romantic. Then we expanded over the years into multiple different categories. As of now, we have four different consumer facing brands. We have Picnic Time obviously for picnic products. Oniva, which in French means let’s go and that’s all of our outdoor products, so camping, tailgating, beach, coolers type of stuff. Toscana which is our indoor entertaining and serve ware, cutting boards, cheese boards, things like that. Legacy, which is our bar ware so beer, wine, spirits, accessories, wine totes and tabletop bars, things like that.

Luke Peters: You guys are also into licensing?

Paul Cosaro: Yeah, so we do a lot of licensing. We started with Coca-Cola back in the late ’90s and that kind of expanded as our products expanded into when we started doing more coolers and chairs and folding chairs and started getting more into tailgate, which went hand in hand with both collegiate sports and the NFL, which was kind of the white whale for us back in 2010 when we picked that up. From there we’ve gone into multiple other ones. We do Harley Davidson, we do MLB, NHL and then some of the bigger ones which is Disney and Star Wars. Those are our most recent ones and our most exciting ones right now.

Luke Peters: Awesome. Then just to give the audience a little bit of scale on the Picnic Time Family of Brands, and we’re just talking about this over lunch. So can you reshare just the size of the business footprint as far as warehouse or office size and then approximate number of teammates that you have?

Paul Cosaro: Yeah, so we fluctuate obviously with seasonality but we’re usually around 100,000 square feet of warehouse space because we pick, pack and ship all our own products. Then in terms of staff, we fluctuate between 100 and 150 depending on if it’s the holidays or not.

Luke Peters: Yeah, I hear you. We were just talking over lunch and Paul and I have a ton of similarities in the business, it’s a lot of the same customers that we’re selling to, very similar setups that we probably have to have on our EDI side and on the content side as well. So talking about the different brands and different customers that you’re selling into, why don’t we just get a quick split if that’s all right and talk about customer concentration. Do you want to run through maybe your top five and just give the listeners a basic idea of kind of how the revenue or the sales are split?

Paul Cosaro: Yeah, absolutely. So it’s pretty much what you would expect. I mean Amazon’s obviously big, Wayfair, Overstock, and then the big, what we now call omni retailers, which is Bed Bath, Macy’s, Kohl’s, target. Those are some of the majors that we deal with.

Luke Peters: Cool. So Overstock, which is one … We’re trying to figure out Overstock. So you guys do pretty good with Overstock?

Paul Cosaro: Yeah, we’re always trying to figure them out. But they’ve been a work in progress as well I guess you’d say.

Luke Peters: Yeah. Heavily promotional, which can be a challenge, but a lot of people have some great success with Overstock. So maybe we’ll dive deep into that a little bit later. Then out of those that you talked about there, who is maybe your fastest growing channel or maybe the biggest surprise that’s showing you some good growth and opportunity?

Paul Cosaro: Oh, good question. I think it all depends on who’s successful at the time. We were struggling with Wayfair for while, because I think they were still trying to figure out whole approach, right? So but now it’s kind of turned a corner where I think they’ve kind of settled in and a lot of the big investments that they’re making over the past few years have kind of, they’ve kind of hit the ground running. So we’re trying to piggyback off that. So Wayfair’s one that’s growing pretty quickly? Yeah, I mean Amazon’s always a beast. There’s lots of little ones. The new, as you probably know, it’s always fun to find that next kind of big player who you think is going to kind of reinvent the game or shake it up, what do they call them? Disruptors who are going to come in and say, “We’re going to do this a different way, a new.” Jet kind of did that for a while and then they got sucked up.

Paul Cosaro: So we’re always keeping our eye out for those right now. I don’t think there’s any that are … It’s a tough climate to kind of jump in right now. But I see that in the future there’s going to be some room for new players.

Luke Peters: Yeah. But at the same time you guys are really diversified. So I mean, you’re in it all day. I don’t know if you think of it that way. I had a lot of friends who only have Amazon, maybe one or two others.

Paul Cosaro: Yeah, I mean, that’s the goal, right? I always use the Mad Men, I don’t know if you watch Mad Men, but the Mad Men analogy where they had one huge account at the ad agency, Lucky Strike, and they walked away and they literally all looked at each other like, “What the hell do we do now?” So you try to avoid the Lucky Strike problem. So we try to diversify as much as possible.

Luke Peters: Okay, awesome. That’s super helpful. So that’s good. We got a breakdown of the business and the types of products. So why don’t we kind of go back really quick and just start with you, how you got into this business. You were running your own business. You’re doing management consulting afterschool, then you’re running your own eCom business and then you joined.

Paul Cosaro: Yeah. My father is one of the founders of Picnic Time. So he came over, immigrant from Italy. He had nothing, trying to live the American dream. He came over and they, him and his business partner who he met when they were working on Royal Caribbean Cruise Lines in the ’70s which I’m sure must have been a bunch of fun, but they met and they would always talk about, “We got to open our own business. We got to live the American dream. We got to get off the ship.” They finally got an opportunity to come and open a little wine and cheese shop in Southern California. They opened it up and they were selling gourmet wine and cheese back when you couldn’t buy wine in a supermarket. So it was kind of a good time for them. People started coming in and saying, “You have everything perfect for a picnic, just not a picnic basket.” So they said, “Ah, it’s an opportunity.” So they went and looked and there was nowhere that they could source an outfitted picnic basket that wasn’t a ridiculous amount of money. I think there’s one other company at that time based out of the UK.

Paul Cosaro: So they bought a couple of those really expensive ones, put it in the store and it attracted a lot of attention. But people once they saw the price tag said, “No, thanks.” So they did it themselves. They went overseas. I think it was probably at that time it was the Philippines and sourced empty baskets, woven baskets, and then like all great companies, they backed a container of empty baskets into my dad’s garage and started acquiring the help of friends and family to stitch the backings in and put the elastic in and forks, knives, plates, spoons and napkins in there and they started selling them out of their store and it became popular. So they brought it to trade shows and then now here we are. So that’s the background of the company. I know probably a little bit off track from the question, but this was all while I was growing up that I saw this happening.

Paul Cosaro: So obviously kind of ingrained in me the desire to own my own business. I was always intrigued by business and the opportunities and the limitless opportunities that there was. People with friends would say like, “Oh, I’m going to get into … I want to become a physical therapist.” I’m like, “That’s great, but if it doesn’t work out then what are you going to do?” Where business just kind of flows through everything. So I went to USC right on and got into the undergraduate business scholar program, which was exciting for me. So I met a lot of people there and decided that I wasn’t going to start a business right out of college because that’s difficult to do. I mean some people definitely do it, but I wanted to kind of cut my teeth a little bit and learn about different businesses and the best way to do that was in management consulting. So I got to work for tons of different companies and learn different ways that they approach problems and obstacles.

Paul Cosaro: I did that for a while and then I worked in the entertainment industry, Lionsgate Entertainment for a few years and that was on the retail side. So that gave me some good understanding of how these big businesses deal with big retailers. So my accounts were Best Buy, Target, Walmart and a little upstart called Amazon. So I had a lot of experience dealing with them going out to Minneapolis and Bentonville, Arkansas, beautiful Bentonville, Arkansas and up to Seattle. At that same time on the side, what I started doing is in 2005 I wrote a business plan to start my own eCom business and it was kind of based on Wayfair, which actually bringing it full circle.

Luke Peters: You could have been those guys.

Paul Cosaro: I could have been.

Luke Peters: So close.

Paul Cosaro: I actually was a competitor of theirs for a very brief time before they blew up. But when they were CSN stores-

Luke Peters: Yeah, I remember that.

Paul Cosaro: I took a similar approach to their model. So my whole goal was to create … So they were doing super specific like Adirondackchairs.com.

Luke Peters: They had like 200 domains and Google is ranking all of those domains.

Paul Cosaro: Telescopes.com, yeah. So I thought, Amazon’s trying to do everything. CSN is trying to do everything but in a different format, super niche specific. I saw that there was an opening in the broader niche, so I wanted to give people one stop shops for specific categories or hobbies. So I started, and my first website was nationaltailgate.com which was everything for tailgating. I worked with all, I had hundreds of different products from grills to TVs to everything. Then shockingly, I got into … I started a picnic website.

Luke Peters: A competition to your parents.

Paul Cosaro: I had a connection there.

Luke Peters: They must have loved that.

Paul Cosaro: Yeah. Then I opened a camping website and that’s where I was at. I brought on a partner there who was a web developer. So that worked out perfectly. So it was growing pretty quickly. Then that’s when my dad’s business partner, Mario, he … Because I’d never expected to take over the family business. So my dad would always say, “You’ve got bigger fish to fry. You can do bigger and better things.” His whole thing was, “I’m going to sell this company because I don’t want to have to worry about it and I just want to sell it and go to some beach and drink a pina colada.” So I always had that in my head that’s like, “I’m going to do my own thing.” Around the big recession, 2008, 2009, that’s when they started realizing like, “We might not be able to get what we want for this business that we built and we put so much blood, sweat and tears into Picnic Time over the past 30 some years.”

Paul Cosaro: So my dad was still against it for the same reasons that he didn’t want to have to worry about it if I took over. But his business partner was adamant. So he started, what we like to joke now as stalking me to come work there. Yeah, I was always deferring to my dad and then finally in 2010, he finally gave in and it was a huge … It was an honor.

Luke Peters: Yeah. You put your time in already, so it’s not like you came in right out of school.

Paul Cosaro: Exactly.

Luke Peters: You probably had a lot to add.

Paul Cosaro: Exactly. It’s hard. I mean, I’m sure people can understand, but it’s hard coming into a business that’s already thriving and there’s a core of people and then all sudden who’s this new guy? He’s just the son of the owner. You still have that feeling now where it’s like, “Okay, well. Oh, well you just took over for your family business.”

Luke Peters: He’s got to prove yourself everyday probably.

Paul Cosaro: Exactly. It makes you work just as hard, if not harder, to kind of prove that like you said and earn people’s respect and trust and so I don’t think I’ll ever stop doing that. Even now, eight, nine years later, it still motivates me, so.

Luke Peters: So that’s awesome. That’s a great story. So second generation then.

Paul Cosaro: Yeah. Second generation. Yeah.

Luke Peters: That’s cool. Your dad?

Paul Cosaro: Yeah, my dad is … He comes in to give me a hard time every once in a while. It’s funny.

Luke Peters: Yeah, miss his job.

Paul Cosaro: He does. His one job a couple of days a week. He comes in for a few hours and he calls people for money. So he is the head of the AR department, I guess you could say.

Luke Peters: Yeah, old school.

Paul Cosaro: So with an Italian accent, you can imagine how fun that gets sometimes.

Luke Peters: There you go. That’s the best collections team. That’s awesome. Okay, that’s a great story. Awesome family business story. So talking about that and looping back into kind of what the audience might be able to take out of it, what do you think is your number one thing for management consulting? You learned a lot of things. You were with a lot of companies. But sometimes people who are just building a company can be narrow focused, because that’s all we know maybe. Then you had this nice broad view of things for management consultant. So what could you maybe suggest is the best thing you learned there that you bring to Picnic Time right now?

Paul Cosaro: I think, I had to pick a best, it would probably be attention to detail and I think that’s kind of broad, but when it comes down to it, when you’re dealing, no matter what company or companies you’re dealing with, if you don’t have your ducks in a row and you don’t put thought into it before getting into something, it’s going to come back to bite you. So I learned that on multiple jobs. You go in and you pitch these … I came in at the end of when consulting was that. It was just time and expense then you can just bill them for, you go out to steak dinners and bill the client and they’re like, “Whatever.” I was at the end of that and it was the beginning of now fixed rate jobs.

Paul Cosaro: That was a huge shift because it’s like now you really have to do your due diligence ahead of time, know what you’re going in, what job you’re going to do and how long it’s going to take you. Because if you get the customer to sign off and you don’t have your stuff together, you’re going to end up eating that. It’s going to eat away at the profits immediately.

Luke Peters: Yeah, makes sense.

Paul Cosaro: So having that preparation then and then maintaining that attention to detail and not just kind of letting it fly is kind of that’s kind of what I learned with the management consulting is you have to be on point. Otherwise, you’ll get chewed up and spit out.

Luke Peters: Yeah. Good advice. Going back into the products, we talked about channels and we’re at the exciting channels, where and how diversified you guys are. What would you call your best product category?

Paul Cosaro: I mean, I always say this is not our biggest category by a long shot, but picnic is our, it’s our thing. Our tagline for that brand is we know picnic and we’re determined to be the leader in picnic, to be the trendsetter, to be the trusted brand there. I still think we’ve got a ways to go. I mean, there’s not many others out there just because it’s not a massive business. Like I said, it’s not our biggest category, but it’s something that we pride ourselves on and we want to be the best at and we should know the most about, so.

Luke Peters: Well, it’s in your name, so it’s got to be the one.

Paul Cosaro: It helps.

Luke Peters: It helps. Then talking about licensing, what is the share of licensing to total business percentage wise? How big of a segment is it?

Paul Cosaro: Yeah, it definitely fluctuates because it depends on certain orders and stuff like that. But I would say of our eCom business directly, I mean I would say it’s probably like 30% of the business. It’s a majority of the work,

Luke Peters: Yeah, I bet.

Paul Cosaro: It’s a huge majority of the SKUs.

Luke Peters: Hopefully bigger margin because of all the work involved.

Paul Cosaro: Yeah, hopefully until, yeah, they-

Luke Peters: They pay your royalties.

Paul Cosaro: Yeah, the royalty.

Luke Peters: Minimums and all that stuff.

Paul Cosaro: Exactly. So it’s a good thing. I mean, licensing is one of those things that is a beast. I’m sure you have experienced in it too, but when you get into sports licensing, especially, where you got teams and you got logo changes where like they’ll send out a logo change for the Baylor Bears and it’s literally they’ll show me the old version and the new version and I’m just looking at it like there’s no difference. But they’re passionate about their logo, their school, their colors. Colors is another thing where it’s like if your printer doesn’t print the right shade of orange for University of Tennessee, you’re in big trouble. So it’s little things you don’t think about, but-

Luke Peters: A lot of compliance.

Paul Cosaro: Oh yeah. But it’s fun. It’s a fun thing. Employees rally around it, people are passionate about their sports team or their favorite princess or whatever you, what have you. But it’s a fun business to be in. It keeps it exciting.

Luke Peters: Yeah. On our end, we seen a big movement towards licensed products. I mean, it’s always been a trend, I think. As companies get bigger and they can afford to get into these licensing deals, but definitely I can testify it’s a lot of work. There’s a lot of, even on the back end and the accounting end and on the marketing and marketing assets that are involved and we could probably do a whole episode just on licensing, but definitely worth it. I mean, some companies just build themselves around a licensed brand and they run things that way. Let’s talk about product launches. What I kind of want to understand is from start to finish, and I guess what I want to pull out of here is I want to kind of really focus this around valuable nuggets that the audience can get.

Luke Peters: So as you guys have decided on a new product, maybe we can … It’s a certain kind of a seat or a picnic basket and you bringing it in, you’re having to presumably make marketing assets and then taking it to market. Why don’t you walk us through that whole process and where you guys feel you’re adding the most value along the way? We can break that down as well.

Paul Cosaro: Yeah, for sure. Definitely still a work in progress. I mean, this sounds like we can use your help too the more I talked to you about it, but it’s difficult because you’ve got to cater to a bunch of, like you said, we’re diversified so you got to cater to a bunch of different customers who need different things and want different thing. So product launches are tough because as we were talking about earlier today, you spend so much time focusing on the product and making it perfect and making sure the consumer is going to want it and is going to value it and they’re going to want to part with their precious dollars and then all of a sudden you get it in, it’s beautiful and it’s sitting on your shelf in your warehouse.

Luke Peters: Yeah. I’ve seen that.

Paul Cosaro: It is collecting dust and that dust is expensive. Getting it to the consumers’ eyeballs is the biggest obstacle to me. I mean, once they see it, now all of a sudden you have an opportunity for them to buy it. If they don’t see it, if they don’t know about that product, you’re in big trouble, right? It happens all the time. It used to be if it’s not on the shelf in Target or Walmart or Bed Bath, no one’s going to buy it. But now the internet’s come around and it’s expanded people’s choices. But at the same time, I think now it’s become, if it’s on the first page of Amazon results, then you’d see it. Otherwise you still don’t know about it. So instead of the fight now to get Target or Bed Bath or whoever, Walmart, to buy your product, now it’s a struggle to get it in front of their eyeballs and the competition’s fierce.

Paul Cosaro: So that’s the hard part. I think launching it is there’s so many things involved. You’ve got the marketing aspect. You’ve got just the product aspect. There’s that funnel that everybody talks about that takes it from getting them to see it first then getting them to convert and pay for it. So the first step is obviously to make sure that once people do see it, because you don’t want to spend a ton of money driving people to a product page and then saying, “Well, what does this do?” Or, “How do I use this? Why should I spend money on this?” You want to make sure that by the time they get there, they know, “Okay this is what I’m getting. This is why it’s worth this much.” And assets, assets, assets. We put a lot of emphasis on our images and video and I know you do too.

Luke Peters: What we’ve seen is that certain retailers, it’s easier to get that up with and some of them take forever.

Paul Cosaro: Yeah.

Luke Peters: So are you guys launching first with Amazon because they’re kind of the easier, Wayfair’s really easy to work with. Are you seeing the same thing?

Paul Cosaro: That’s just how it turns out. They’ve made it easy for us to get as much as possible. The thing is this podcast is a lot around non-Amazon. I think there’s a huge opportunity there because Amazon’s figured it out. But the others haven’t. They’re trying to. I mean, Wayfair’s desperately trying to and I applaud them for it, but there’s other ones where, I mean, you’re looking at Bed Bath & Beyond today. I mean, they just struggle.

Luke Peters: They make it hard. They make it very hard.

Paul Cosaro: Exactly. There’s such a lesson to be learned there and I just think they’re trying not to. It just seems almost like they’re running in the opposite direction and they don’t have to do everything the way Amazon does, but learn the key lessons. So when we’re talking about getting the person to convert and buy the stuff, it’s like let us put as many images up. That’s how people touch and feel these days is with their eyes. Start driving people to write reviews because that works. putas much content on there and put the right content on there. That’s what’s important. I always tell people this in my office, it’s they’ve got to … Once they get there, they got to buy it and then they’ve also got to get there. I think a lost art is even the description of a product.

Paul Cosaro: I think that’s something where you could have the perfect product, perfect images, everything like that. But if you’re searching for something and you can’t find it, you’re not clicking on it. So that’s the next step. It’s like first is making sure you have everything so that once they get to it, they’ll buy it. The step before that is getting people to see it. Which it’s the constant struggle.

Luke Peters: Yeah, I think everybody has that struggle. Then along that road of launching a product, you guys have to think about reviews. So do you guys do any specific review programs with any of the retailers?

Paul Cosaro: Not really. I mean, I take that back. We don’t do any of the third party stuff, but we’ve definitely dabbled in the review programs that they have like it’s called Hey, Bullseye on Target. What’s the HD?

Luke Peters: They each have their own.

Paul Cosaro: Yeah, they have all their fun names. So we do do that. Yeah. Because it’s important.

Luke Peters: They can be expensive.

Paul Cosaro: They’re expensive, they take time.

Luke Peters: Almost disincentivize them in a way, right? Because the reviews are good for them and they’re kind of some of the retailers are turning into like a profit center in a sense when-

Paul Cosaro: Yeah. It’s dangerous too. I mean, it’s risky. Like you said, it’s expensive, but hopefully you’ve done all your QA and everything. But every year there’s always a situation where a product goes to market and it’s like, “Oh, that, we should have double stitched that strap instead of single,” or something like that and then all of a sudden you’re paying to get bad reviews, which, not that that’s ever happened to us, but-

Luke Peters: I could, it just hasn’t.

Paul Cosaro: It could. So it’s risky. So it’s not only you’re forking over a ton of dollars, but it’s for somewhat of an unknown.

Luke Peters: Yeah. Then what percent of your total sales are direct to consumer from your own website?

Paul Cosaro: Very small. We’re very passive when it comes to that. But we find it important because, like I said, we have so many SKUs and so many products that even though Amazon and they probably in some way shape or form do, whether it’s because somebody is selling it on a marketplace, have all of our products, there’s a lot of people out there who find comfort in being able to go to the source to get their products. They feel it’s trustworthy. They feel like if there’s a problem they can come back to us, which they can. So we’ve definitely picked that up over time. That’s something that’s more important to us.

Luke Peters: Since you’re doing that, there are definitely some good review hacks, and not even hacks, but they’re just legitimate reviews syndication from your own website to avoid having to do the individual retailer review. I know the programs you’re talking about, they can get expensive so yeah. So we can jump into that in another episode as well. But that’s all about if you are doing, this is for the audience, if you are doing some direct to consumer or if you’re not doing any, you should. Because number one, you’re not competing with your biggest suppliers because they’re so much bigger. So it’s not even a competition. You don’t have to beat them on price, therefore they won’t care. You’re just offering the product to the consumer directly, but you’re not promoting it as deeply as they might.

Luke Peters: But the thing is those orders can turn into reviews that you can manage and you can have a direct connection with that consumer. Then when you get the review through a few different review networks, they can be syndicated out to retailers. So it becomes a big advantage and this is specifically for product launches. It can be a big deal for … Just want the audience to know that side of it. Cool. So that takes us kind of to the next topic that I kind of wanted to quickly jump into and that’s tariffs. I know that’s on everybody’s mind right now.

Paul Cosaro: My favorite.

Luke Peters: Yeah, everybody’s favorite. We’re just talking about tariffs and I don’t know if you just want to quickly walk us through your experience and I guess focus it maybe around the one biggest thing you learned that made you successful through this tariff situation that we’re in right now.

Paul Cosaro: Yeah, it’s been a wild ride so far. Something that really came out of nowhere. Didn’t think that, I don’t think anybody expected it, but-

Luke Peters: We all thought they were going to go away.

Paul Cosaro: Yeah, I didn’t even think they were going to come in the first place, but it’s been crazy. You think that things are crazy before stuff like this happens and then you realize that you haven’t even scratched the surface. So it’s been fun dealing with it. But I think to answer your question, what … The biggest thing that jumped out to us in terms of dealing with them is just circling back to that attention to detail. It’s like whatever you choose to do, and everybody’s doing something different, I don’t think there’s a silver bullet at all, but whatever you choose to do, you got to do it and you’ve got to push your resources behind it. You can’t dip your toe in the water because there’s no right answer.

Paul Cosaro: I think a lot of people at the beginning were a little hesitant. There’s a lot of wait and see. I think that that is not the right approach because that wait and see just turns into more wait and see, and you got to pick a path and attack it. I mean, just like everything else in life really, you just can’t, you can’t half ass it. So I think that’s was I learned is like, you got to make your decision and make it happen. People will see that and respect that and whatever obstacle you run into, which you will run into obstacles, you just got to be quick to deal with it.

Luke Peters: Yeah. I think that’s great advice. We were talking about that and I guess summing it up is just you’re really decisive and you guys acted really quick and protected the brand.

Paul Cosaro: Yeah.

Luke Peters: It’s a tariff. So it’s not like it’s people are just going out and trying to get extra margin. All of us brands are just trying to protect ourselves and it’s kind of literally a war going on. Awesome. That’s a great nugget for the audience. You’ve shared a lot of things about the company, so kind of here I want to talk about what your biggest win was in the past year. If you could sum it up into one thing, I’d like to hear that.

Paul Cosaro: Oh man, I’ll be a contrarian and I’ll say our biggest win was the tariffs. As weird as that sounds.

Luke Peters: It sounds weird.

Paul Cosaro: I just think how we dealt with it in terms of the approach we took and how … It magnified the importance of your relationship with your customers, your relationship with your suppliers, the grit and determination of your company as a whole, your employees. Everything really kind of gets magnified, like I said, when that adversity hits. I was just so impressed with how we kind of banded together. It kind of became this us versus them, them being the tariffs, and you learn to kind of work with what you’ve got. That to me, looking back over the past year, and again I have no clue what’s going to happen in the future, but where we’re at today versus where we were at 11 months ago when we found out, I remember walking into my general manager’s office and he looks at me, he’s like, “You know those tariffs they’ve been mumbling about? Yeah, that’s going to hit about 65% of our products.” I said, “Oh crap, what are we going to do?”

Paul Cosaro: From there to here, it’s mind blowing what we’ve accomplished in terms of dealing with it. Because going back to your previous question, the money side of it is obviously huge. We’re paying ridiculous sums of money to the government every practically day when things come in. But it’s the amount of work. You have to, if you’re going to change prices, you got to focus on changing those prices. If you’re going to source in new areas, you got to do that. This is all time that you would have been focused on developing new products, selling more stuff to your customers, building those relationships. Instead, it’s like now I’ve got a job on top of a job. So it’s amazing that what you can accomplish when you really try to, when you face that adversity and you just face it head on. So that’s what I would say is our biggest win is dealing with this.

Luke Peters: Yeah. You bring up an excellent point. It is a huge disruption. It takes everybody off their game. I mean, a lot of relationships can go negative when you’re trying to have a great relationship with your business partners and retail partners, and then it’s about tariffs and price increases. That’s actually kind of an untalked about part of the tariff situation. I mean, everybody’s fighting for prices, but you bring up … It’s huge disruption within a company and everybody’s having to kind of change and it’s a bunch of fire drills and every time a tweet comes out there’s something new and now you’ve got another 5% I guess happening in October.

Paul Cosaro: Yeah, yeah.

Luke Peters: So yeah, we may have to go back out and get more on that because every … It’s a lot. All this is adding up. So that’s a excellent comment there. What is something actionable that, for our listeners here, that leaders could try to implement in their business? This could just be overall, just how you think about business, something you think that you’re skilled at or maybe you’ve learned along the way and just looking for that actionable tip of advice here.

Paul Cosaro: Nothing mind blowing that I’m going to say that other people haven’t said, you can’t read a new book, but just knowing from practice and the years that I’ve had doing this is focus on the people, the people side of it is critical. Your company is only going to get as far as the people who are manning the ship and we focus on that big time at Picnic Time. It’s all about the people. Having the right people and the people focused on why you do what you do because you could have the smartest demand planner or controller or marketing person on the planet. But if they’re not bought into what you do and who you are as a company, you’re in trouble.

Paul Cosaro: So focus on the people. Make sure you’ve got the right people and make sure that people are on board and you’ve got to relentlessly make sure that they’re appreciated, their mentored, they’re trained, they’re given the tools that they need to be successful, because that’s how you get where you are. I mean, if it was me as a one man show, I mean, I’d be burnt out long, long ago. I know you understand that too. It’s about the people that you put around you. So that’s what I would say.

Luke Peters: Yeah. Yeah. I mean, it’s a big family and we both liked sports, so it’s kind of like you want to have the best team, you the best team then us as the coaches, we can still be lousy coaches and the team will do good.

Paul Cosaro: Yeah, no. Well, that brings up a funny point because I always get … I see you looking at my LinkedIn print out profile there.

Luke Peters: Yeah, yeah. I got it right here.

Paul Cosaro: Always, everybody get it every single call and I did it kind of as a joke about three, four years ago where I put my title in my email.

Luke Peters: Captain Picnic.

Paul Cosaro: I post Captain Picnic. Everybody takes what they want from that. It’s been made even better by the Captain Morgan commercials. But a lot of people think like, “Oh, is that like your superhero alter ego Captain Picnic?” But what it really is, I came up with it because I was goofing around, but I’m like, “I’m the captain of this team. I’m not the coach because I’m on the field. I’m playing. I might have C on my jersey or whatever sport you’re playing, but I’m in there. I want to be part of it, especially now in baseball where the manager is just like basically they say is useless these days because of all these sabermetrics and whatever. But no, that’s the impetus behind my Captain Picnic name is I’m the captain of the team. So I like that sports analogy cause that’s how I look at it.

Luke Peters: Yeah. I mean, it’s real life and yeah, so definitely something that I think about and it’s always about the people. So yeah, that’s a great answer there. Cool. This has been a lot of fun. It’s awesome having you in person here.

Paul Cosaro: Yeah, it’s great.

Luke Peters: Great chatting at lunch and learning about all the things you do and how similar you guys are to us. Just for the audience, we’re talking about we’re using the same ocean freight companies and then Paul’s looking at a PIM, which is a product information management tool and these are things that we are looking at. His ERP is similar as like the final two of the … Right now we’re using NetSuite and his solution was the other one we were looking at and on and on and on. Just about EDI and there’s so many different cool things we could have a whole show on, technical show on each of those individual things. So it’s great having you here. How can listeners find you, contact you, learn more about you? Anywhere you want to point them, LinkedIn maybe or?

Paul Cosaro: Yes, you can probably find me on LinkedIn but follow Picnic Time on social at Picnic Time. Yeah, I’m easy to track down. If you shoot us an email info@picnictime.com, I’m sure they’ll know where to find me. Yeah.

Luke Peters: Awesome. Thanks for that, Paul. It’s a lot of fun. Thanks everybody for joining us on the Page One Podcast sponsored by Retail Band. If you’re interested in launching a product or you need help launching a product or you need help with product reviews, or you want to get involved with influencer marketing and see how we can help you guys take a product to market quicker, syndicate reviews across these retailers, contact me. This is what we do. We’re passionate about it, and we can do something that we call speed to sale, which means when that inventory comes in, as we were talking about earlier, it’s not collecting dust and we turn that into cash. Anyways, that’s it for today. Thanks very much.

Speaker 1: Thanks for listening to the Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about our commerce, check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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Want more information? Related post: How to Survive China Tariffs

EP3: How to Sell on Lowe’s Digital Platform + Online Sales Growth Tactics | Brandon Schmidt, eCommerce Account Manager of VCP

Welcome to Page 1:

Thanks for joining me for another episode of the Page 1 Podcast.

Today, my guest and I focus on a challenge most consumer product brands face when entering the eCommerce space: increasing sales on big-box retailer platforms.

We all want to figure out the online advertising equivalents to creating in-store endcap displays and product call-out cards. This digital disruption–eCommerce–has begged the question: what are the best online sales strategies to get your product positioned perfectly in front of consumers?

Each retailer, from Amazon to Wayfair, has its own set of product profile rules that vendors must follow and platform ranking algorithms that determine how consumers find your products. Managing these two elements for your own business can be a lot. Plus, it also doesn’t help that both of these factors are evolving at a rapid pace.

In this episode we focus specifically on Lowe’s, giving you the ins-and-outs of how the eCommerce platform works, along with sales tactics to improve the search result rankings of all your products.

What you’ll learn:

Our guest Brandon Schmidt, eCommerce Account Manager for Visual Comfort Products, helps us understand Lowe’s online digital platform, shares online selling strategies, and gives us tactics to manage product conflicts across multiple sales channels.

About our guest:

Brandon Schmidt is an eCommerce Account Manager for Visual Comfort Products, which is the largest decorative lighting manufacturer in the world. He was formerly an ATG Stores/Lowe’s account manager and has taken this knowledge to Visual Comfort Products and is sharing that knowledge with us on this podcast.

Key takeaways from this episode:

  • How Lowe’s works with in-store brands vs. online brands – 4:41
  • How Lowe’s decides which products are sold online – 7:49
  • How PIMS can help you upload SKU’s into Lowe’s online portal – 11:37
  • The top sales strategy Visual Comfort Products is focused on in 2020 – 15:45
  • Tactics for getting product reviews – 20:05
  • How to manage products on multiple online sales channels – 23:26
  • The number one missed opportunity for online sales growth – 28:19
  • The number one cause of online returns – 31:24
  • How to create digital assets – 31:39

Podcast Transcription

Speaker: Welcome to the Page One Podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers. Or what we call rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page One Podcast. I am your host, Luke Peters. This is the podcast where I bring you the best and brightest leaders to share their consumer product, sales and marketing strategies that will help you grow your business. I’m the founder of NewAir appliances, where I cut my teeth selling products online and now have started Retail Band, where I hope to help other brands succeed in product launches, influencer marketing, and B2B online sales strategy.

Luke Peters: Today we have with us Brandon Schmidt. Brandon is currently the account manager for Visual Comfort Group, the eCommerce account manager. And previous to that he has worked at Lowe’s as a digital category analyst, which is going to be fun to get into. And previous to that at ATG stores. Brandon holds a BA from Marketing Foster School of Business, University of Washington. And he has 10 years of experience in the online home decor space, as mentioned earlier, working with ATG and Lowe’s. So today we’re going to talk about Lowe’s. We’re going to talk about some Amazon strategies, channel conflict, tariffs, and even kind of compare companies like Visual Comfort selling into Amazon, but also having to think about the channel conflict strategy with their traditional retailers. Welcome to the show. How’s it going, Brandon?

Brandon Schmidt: Thank you. Thanks for having me, Luke. Things are going great, so I really appreciate this opportunity and look forward to talk with you today.

Luke Peters: Okay, awesome. Why don’t we just get back into it. I kind of gave a quick bio and I’d like to start with your time at Lowe’s. For the audience here, if you don’t mind, if you can go ahead and kind of talk about your day-to-day, and what were you doing at Lowe’s? And from that, I’m sure the audience, many of us are working with other buyers at Lowe’s. So just kind of understanding that relationship and where you fit in over there.

Brandon Schmidt: Yeah, definitely. So as you mentioned, I was at ATG stores, The Mine, which was a online retail company based in Kirkland, Washington, just outside of Seattle. And I’d worked with them for about five years and then Lowe’s came in and purchased us. And as they kind of came in and looked to grow their digital strategy and learn a little bit from us, and to also kind of help manage our business, grow our business. So it remained separate entities for quite some time, about four years. But then the last year I was there with them we rolled up that entire platform into Lowe’s platform. And so my main job was to work on the brand transitions, so I was the account manager for our writing industry and then I worked with our plumbing as well, and hardware. So kind of a different kind of mass background moving through the home improvement space there.

Brandon Schmidt: But yeah, my day-to-day activities was really working with the brands, how to grow sales on Lowe’s, and integrating their platform. One of the biggest struggles that we see in working with Lowe’s, and I’m sure I’m not the only one that has had this struggle, it’s just kind of understanding their digital platform in getting products in front of customers. The traditional model for eCommerce has been something that they’ve struggled with a little bit in the past. Just the way that their original strategy of having 2,000 plus stores throughout the country and trying to get foot traffic in stores and then coming onboard with a digital strategy to compliment that, but not hinder a sale. So that was I think the thing that I add the biggest day-to-day involvement in was working with manufacturers of product and, how do we get their skus onto Lowe’s in front of customers to sell? Because it’s not the easiest platform to work through.

Brandon Schmidt: They’ve seen tremendous strides in the last couple years and there’s been some turnover in management that has had a huge digital focus. So we’re starting to see some of the fruits of that labor within the last year specifically with them. But yeah, that’s kind of my background with the Lowe’s, working with manufacturers, getting onto the platform. And now I’m kind of on the other side of it, I’m working directly for a manufacturer, as you mentioned, Visual Comfort Group. So I kind of have a little of ins and outs on both sides now that I’m kind of learning from the manufacturer’s side as well.

Luke Peters: And Brandon, that’s actually what I really thought would make this an interesting interview is that you’ve worked on both sides, and kind of to get your take on both sides. And so sticking with Lowe’s, before we go to Visual Comfort, talk to us a little bit about how you worked with brands. So was there a buyer working directly with the brand, and then you were helping with certain parts? Or were you literally that buyer and working with the brands and then kind of helping them on their day-to-day uploading products and that type of stuff?

Brandon Schmidt: Yeah, no, that’s a really good question. And we’ve seen it a lot with Lowe’s. In particular, it’s kind of understanding who the buyer is for a category. Is it the merchant that’s overseeing the store? Is it the digital merchant? That was always the most difficult thing for our manufacturers that we’re working with is kind of, who’s the contact in that transition? When I was still there, we had direct communication with the buyers through the ATG side. So we had traditional relationships set up with them that we were working to move over onto the Lowe’s platform. That’s right when I was leaving Lowe’s and moved on to my new role. But yeah, so that was kind of our thing is, it was nice to have is with our ATG background, we had a lot of relationships, close personal relationships with the manufacturers.

Brandon Schmidt: They had a contact, they can contact us, we can help them. And so we’re kind of liaison during that transition period of getting set up on Lowe’s. Because that is something that’s always difficult when you’re working with kind of all large Fortune 500 is getting on contact to, is versed in your product, isn’t changing roles, is going to be there for a while, and is actually a person you can call and have an honest conversation on how to grow the business, how to grow sales. So while I was there, it was really nice to have that relationship. When you’re working directly with Lowe’s, like I said, in the past from the digital side, it’s been tricky because you have to go through the store merchant has the final decision on what products are going to be brought into or an SOS type product.

Brandon Schmidt: Sorry, for the acronym, SOS is basically anything that’s not in store but you can buy online or special order. So it’s special order sku is what the SOS stands for in Lowe’s system. And so it’s always been kind of a tricky environment to work with on the Lowe’s side. I think they’ve made really great strides, like I said, specifically in my space, in the lighting industry, fashion fixtures. They’re really starting to invest in actually the people on the digital asset side. I think they’re bringing in a lot of good talent and I’m starting to get a lot more of an actual buyer that we can talk to just on the digital side, as opposed to a full entity when they’re looking at top down from overall. There have really been a focus in the digital and so I think that’s been really good to see.

Luke Peters: And I’m taking notes here as you’re talking here because I think this is valuable for the audience. So just sticking with this concept, because we’ve seen at our end too, we love Lowe’s, incredible company, and we’re working with them right now currently with our newer brand. But there has been a lot of hiring and some turnover. But who should brands, what specific role should they be working with to get products uploaded? Because I’ve heard the same thing from other companies and friends. It’s difficult right now, and I know you’re not with Lowe’s right now, but it’s difficult to get products uploaded on Lowe’s. And I’m curious, you mentioned a product that’s online but not in store is an SOS product. And then you mentioned a store manager. Is there, a store manager is actually making the decision on the product getting uploaded? Or maybe I’m saying it wrong. But was there certain individuals making that decision on the product being uploaded?

Brandon Schmidt: So it’s not a store manager, it’s the store merchant. And so from kind of a traditional structure of the company, each vertical and division would have a merchant that would oversee planning and buying for the whole category throughout the entire company, through all the stores. I mean these are obviously huge decisions on when it comes to inventory, what to bring in. And that’s kind of the traditional mall they had. When they started to expand their digital space and bring in a lot more of the SOS items, that merchant was still kind of involved in the conversation even though they are pretty much all driving force of their decisions was in store product.

Luke Peters: Got it.

Brandon Schmidt: They’ve kind of realized over the last few years, specifically, that they need to invest in just a digital space. So what they brought on with these new hires over the last, I’d say 18 months or so, is really focus on the digital side. So now they have a corresponding online merchant that’s going to be making these decisions. And those are the type of people that it’s really good to get in contact with because they’re dialed into the eComm space and they’re working solely on that, and not worried about in store sales.

Brandon Schmidt: In store sales are still, I think it’s still over 95% of the business at Lowe’s, something like that. It’s pretty astronomical how much of that is. I mean, that’s always what they’re going to be driving for. And they brought in a lot of new managers, a lot of new executives with a lot more focus on digital. I know they’re trying to get extremely aggressive with that, playing some catch up with Home Depot in that space. And if you just listen to any of their financial calls every quarter, there’s a lot more talk about digital and the efforts they’re doing to invest in that space.

Brandon Schmidt: So like I said, what I’ve seen over the last 18 months, 18 to 24 months with them, it’s been a lot easier to get in touch with digital merchants, online merchants, to actually work on growing product and understanding our template products set up and all of that. It was a very rigorous process, and I’m sure you’ve seen it when you were working with NewAir and getting that product up with them of how intensive their product setup is, and how many different hoops you had to go through, and how many different people you had to talk to just to get one sku online. What we’ve seen as they’re kind of grown, they’re starting to cut back on some of that and have some more traditional templates that we’d see with other retailers. But it’s still not the easiest process going through Syndigo to go to get your products up with them.

Luke Peters: Yep. And we’ve seen the same thing, so thanks for that explanation. It’s interesting because you point out, I want to make sure the audience caught that. And because we’ve seen these parallels at other retailers as well, if your buyer is in charge of in store and online at the same time and you’re focused on online, you’re not going to get a lot of attention, or not nearly the same attention. Because just as you point out, I mean that buyer probably has a P&L, and that P&L is made up of 95% of their business is in store. But you made an excellent point there in how Lowe’s is transforming and how, I think you’re right, they do have online specific buyers.

Luke Peters: I think there’s still a lot of transition happening. I love the company though, and I think it helps to have the diversification with them and Home Depot and all these other great companies that brands can sell into. Thanks for that thorough explanation there. And I guess one more question before I move on. Does it help companies if they have a PIM, like a product information management system, to upload products into Lowe’s versus doing it one by one? Because we found the same thing, one by one can take a lifetime to get a product in sometimes. You aware of any shortcuts there with systems that plug directly into Lowe’s backend?

Brandon Schmidt: We have seen some, and they’ve kind of gone through some new transition on their side with their integration of Syndigo, purchasing EdgeNet, and in that transformation. So that’s kind of the only route that we’ve seen be successful is the commerce hub route for the traditional side of the business. And then going through Syndigo. What we’ve seen with the Syndigo platform that they’ve moved on to, we’ve seen a lot better information, easier tools, better interface. So getting versed in Syndigo, it took us a little bit of time to catch up to speed. But once we got in there it’s really helped us. And so, I mean we kind of just are able to upload our traditional product template into Syndigo and then just make a few tweaks here that they do a pretty good job of highlighting exactly what you need to get into the Lowe’s system. So that’s been a definite plus for us to see that change over the last six months or so from the EdgeNet to the Syndigo platform for product integration.

Luke Peters: Perfect. Okay, thanks again for that. And so now let’s move right into Visual Comfort Group. Can you explain a little bit more about the products? I’m looking here, I have a couple screen print outs from online and it looks like you guys have some really cool partnership with, maybe with Kate Spade, maybe if you can talk to that. But some cool lighting products. And if you can share a little bit about Visual Comfort Group, what the brand’s about and what you’re doing for them.

Brandon Schmidt: Yeah, definitely. Yeah, Visual Comfort Group is the largest decorative lighting company in the world. It was a merger between Visual Comfort and Generation Brands, that’s in the works for last few years. But we kind of rebranded as of 2019 as Visual Comfort Group. Just kind of give a better understanding of our company as a whole. Visual Comfort has a long history of high-end design products in the lighting space, gone to market traditionally, working with high-end designers, brand names that you hear and know, like a Ralph Lauren for example, Chapman and Meyers, some real big heavy hitters in the home decor space. Whereas, Generation Brands just made up a Peck lighting, Monte Carlo fan company and the traditional Spice and Seagull lighting companies. So we kind of have a full breadth of products from high-end designer products, individual comfort side, to builder grade product in our Seagull side, which is known for our recess cans and on our bath vanities.

Brandon Schmidt: So we kind of span the spectrum when it comes to decorative lighting, but that’s kind of our bread and butter of where we’re at. For me personally working with them, I’ve been onboard for almost a year now, but I’ve had 10 years experience working with them in my old position at Lowe’s. I’ve come onboard to basically be the opposite side of what I was doing previously when I was at Lowe’s and being a retailer. I am now working with retailers on getting our product up, how to improve sales onsite. How do we improve clicks? How do we improve product views? All that kind of ins and outs.

Brandon Schmidt: And now I’m basically working with my counterparts where I was last time, so at my old role. So it’s been exciting. It’s been really fun. It’s been really cool to be a part of a growing company like Visual Comfort Group that is still growing even though we had such a large merger here with Visual Comfort and Generation Brands not too long ago. So to see the continued growth, it’s been really cool. And just kind of seeing this side of the business after working nine years on the retail. So I have a pretty good insight of what the managers over at the retailer needs, so I feel like I can sympathize with them from our end when working together and how we can kind of strategize on how to grow sales for both of us.

Luke Peters: Great. And so on kind of a more macro level, what is say your number one strategy element that you might be working on? Is it growing sales in Amazon on a specific category or channel? Or if you had to really dial it in something specific, what would that be?

Brandon Schmidt: Yeah, from a macro standpoint, I think we’re at the point of, we’re looking to continue to grow market share. We’ve seen market share growth the last two years, and we’re just going to continue to do that. The biggest initiative for us and this year as a company is it’s kind of getting our brand name out there as Visual Comfort Group. Traditionally lighting manufacturers have done a poor job of branding, to say the least. Your average consumer doesn’t really know any lighting brands, even though there are hundreds of decorative lighting companies out there. They basically see your light and they like the aesthetic and they purchase it, not really knowing the brand. We’re trying to change that a little bit with our designer focus. So we brought in a couple of the designers from Visual Comfort into Generation Lighting.

Brandon Schmidt: We have a huge partnership with Ellen Degeneres. She has helped design product and it has aligned with us in Generation Lighting. So we’re kind of finding that balance of consumer well known brands and trying to play off that. Just because traditionally brands have been non-existent for the most part when it comes to brand equity in the lighting industry. And I mean, you can see that just throughout the space currently with your Wayfairs, your Amazon, private labeling products, white labeling products, bringing house brands and utilizing just that so they can pick and choose different manufacturers, put in all in one of their brands and then that can be kind of compared to other products across the board in the online space because they’re the ones that have that brand. So we’re trying to find that balance of how to do that, of building our own brand, but also playing in this space where we know white labeling is such a huge part of the business.

Luke Peters: Yep. And 100%, it’s a huge part, and you brought up the companies that are really good at doing that. And it’s probably a challenge, I would assume, for brands like yours and companies like yours. Although I guess you guys can participate in the white labeling if you want to. There’s probably more value and more margin on growing the brand, so it sounds like that’s what you’re working on. And before we jump into some of the tactics or strategies you’re using on growing the brand, are you able to share with the audience what the split would be with eCommerce to in store sales as a percentage for Visual Comfort Group?

Brandon Schmidt: Unfortunately I can’t disclose specifics, but I can give you a little bit of a roundabout answer.

Luke Peters: Sure.

Brandon Schmidt: So apologize if it’s not a direct forward answer for you. But-

Luke Peters: Yeah, I understand, no problem.

Brandon Schmidt: In store is still a majority of our business, those are our largest customers. They are between big box retailers and lighting showrooms, that still is a very large part of our business, a majority of our business working with them, and then working with builders across the board. But the eCommerce channel is definitely our biggest growing and where we see the future going. We understand that. So it’s been, yeah, it’s been tricky to find that balance of maintaining sales with our largest customer and protecting those channels while still taking advantage of the growing in commerce business.

Brandon Schmidt: Because lighting, in particular, it’s been behind the eight ball when it comes to online. They were a slow industry to get online in the first place. There’s still a lot of opportunity for growth there as opposed to some more saturated online market. So we know that’s where the growth in the future is, but we want to work with our longstanding partners in the other spaces on how we can work with them to continue to maintain those relationships and go about our business with them. While we kind of all know the elephant in the room is the online sales is what’s really driving any future growth.

Luke Peters: Yep. And obviously to be successful online one has to make sure the product reviews are done well, and the products obviously high quality and is getting and garnering good reviews. Would you mind sharing any strategies you’ve worked on with product reviews that might be helpful to the audience?

Brandon Schmidt: Yeah, no, that’s a really good question. Product reviews are exponential to grow online. There’s so much product flooding the market, and from the limited pictures that the customers get online it’s hard to tell what’s quality lighting product and what’s cheap knockoff product. So we’ve really focused in on building reviews. And we know from the kind of Amazon model they have, I think it’s first five to seven reviews grows your product exponentially in sales, then there’s the next step, and then it kind of falls off after that. So we understand the importance of that, and we’ve done a lot of different things. Obviously making sure first that our product is high quality, and when the customer receives it they’re receiving exactly what they’re seeing online. So the first thing to do is just make sure that you have high quality photography, as much information data you can provide to the customers, A+ content, all of that.

Brandon Schmidt: So when the customer receives the product, it’s exactly what they wanted. So that’s the number one step obviously is that leads to negative reviews is it’s not what they expected. So that’s always top of our list. But we’ve also then participated in different programs of working, of giving… There’s partnerships you can have with like a bizarre voice, for example, where you can partner with them and they have a Rolodex of basically professional testers of product. And so we can work with them on getting product sent out to them. They give us open honest reviews of the product. And so we’ve kind of been proactive in those types of spaces of, how can we go about encouraging reviews? Because we know the traditional thing with Amazon was send an email or put something in the packaging asking for reviews. And then that’s kind of frowned upon from Amazon’s perspective.

Brandon Schmidt: Now they don’t want you contacting the customer. The customer has already said that they are receiving too many emails. So as a manufacturer we’re kind of limited to how we have these interactions with the customer when they’re purchasing directly from Amazon, and we’re not involved in that. So what we’ve done is just making sure that we’re sending out high quality products, our digital assets are on point in exactly what our product is. And then trying to be proactive where we can with partnerships of getting product out to other people for reviews.

Luke Peters: That’s a great answer, and some great insight as well. And very similar to kind of how we’re handling things. I mean, just like you separated Amazon from the rest of the retailers, we’ve seen the same thing. So there’s platforms that will syndicate out to the rest of the retailers. Sounds like you guys are doing that. It’s a huge advantage and you can drive great legitimate reviews and make sure that the consumer knows what other customers are saying about the product. With Amazon it’s separate. Used to be a lot easier a couple years ago, but there’s a couple ways to get around that, but in a legitimate way of just making sure that the velocity is really high at the beginning so that the product’s getting into the consumer hands and that you’re kind of getting more reviews instead of having to wait so long, which can sometimes happen with a lot of new product launches.

Luke Peters: But great, thanks for breaking that down. How about on the channel strategy? I think that would be really useful for the audience. So as far as the channel strategy goes, you guys traditionally were selling more into, sounds like, more in store, and that’s still the largest segment of the company and definitely something I’ve seen with a lot of good brands. But as far as now that you’re working with Amazon, and if the sku is the same, or the ASIN’s the same, and then you’re also working in store with these other partners, and that can obviously create a channel conflict. So how are you handling that? Are you having to launch unique skus for Amazon? Be interesting to hear your thoughts on that.

Brandon Schmidt: Yeah, definitely. No, that’s definitely one of the biggest challenges we face is channel conflict and working through that space of understanding that the online channel is still growing significantly. But we don’t want to just necessarily cannibalize on our other sales. We want those online sales to be new and growing sales and still work with our traditional retailers. So yeah, it definitely is a struggle, I will say that. But I think the biggest thing from our standpoint, from a strategy side is, yeah, we’ll definitely look for her unique skus for Amazon. The good thing for us, in particular, is kind of our traditional retailers, their customer has a little bit different style preference, price point preference than a traditional Amazon. So we can kind of diversify in that standpoint of kind of understanding the customers that are going to different retailers and making sure that we’re getting a product mix that fits that retailer specifically.

Brandon Schmidt: So some products that will sell really well on Amazon, might not be traditionally well with our retailers. And so we kind of look at our product mix and we’ll sku what we’re offering to Amazon based off that to protect some of the channels as well. Because we want to find that balance. We want a good presence online, but we also want to protect our biggest customers as well. So that’s kind of where we’re seeing it. It’s kind of sku mix. It’s the biggest opportunity there, kind of differentiating. I mean, it takes a while. It takes a little bit more work on our end. Obviously we would much rather just give everyone all of our skus and they would just sell it. But we know that’s not how it works. So what’s kind of our rebranding, we’re kind of been targeting specifically sku mix and which one would be good for those customers.

Luke Peters: Awesome. And then can you talk if, and I know you’ve been at the company just for a year, but curious if you guys have had success with Wayfair. I know you mentioned earlier about Wayfair white labeling. But from my experience Wayfair is really strong in this category, and obviously Amazon is the king online right now. But curious if you guys have had some wins with Wayfair or if that’s something that you guys are working on?

Brandon Schmidt: Yeah, definitely. No, Wayfair is a very big part of our business. And actually within our space, they’re a bigger market for us than Amazon at this point. Amazon is quickly playing catch up and putting a lot of resources behind it to get into this space and get to where they see their dominance in other categories. But Wayfair has been extremely aggressive. And I mean you can just see it with how much advertising, how much spend they’re putting into their company, reinvesting into the company. They’re still being extremely aggressive in that they’re kind of pulling a play out of the playbook from Amazon from 15, 20 years ago when Amazon was getting going. Just reinvesting in the business and worrying about profits later. So we think, I mean Wayfair has been a really strong company. They’ve done a phenomenal job of rebranding since the days when they were CSN stores and see where they’d come now of being such a strong market player.

Brandon Schmidt: I mean, they’re doing phenomenal. So yeah, no, we are very heavily invested in Wayfair and understanding how we can continue to work with them as their strategy shifts a little bit more towards the white labeling. They’re making a really strong push with that, and product line reviews with them are as strong as tough as ever when it comes to picking product to get into their house brands. And it’s just amazing to see where they’ve come just in the last five to six years, the company. They have all their subsidiary websites as well, and I mean they’ve really invested and it’s been great seeing.

Luke Peters: And I’d second that and third that, Wayfair is an amazing company to work with. And you kind of hit the nail on the head, they’ve got that their preferred brands are working as one of their white label brands. It’d probably be a huge opportunity for you guys. I could see that being a big deal for Visual Comfort Group. And you shared a lot of insights as far as going back into your time with ATG and Lowe’s, and now your current role. And it’s obvious you got a ton of knowledge with Amazon and across the whole eCommerce platform.

Luke Peters: So what I want to hear now is something that you think could be actionable for our listeners. And kind of the way I want to frame that is, you’ve worked on both sides of the industry, so our listeners are going to be leaders in brands that are trying to sell into these retailers or online, but also in store. And in your role working on both sides of it, what is something that stands out, is something really actionable but maybe often missed that brands and leaders in the industry should be doing?

Brandon Schmidt: Yeah. Now that I’ve kind of worked, like you said, almost a year with Visual Comfort Group and working directly with the manufacturer, the biggest thing that I can’t stress enough is just data and digital assets. And how important that is for online retailers, and how it differentiates from a traditional home decor retailer. If you think any store, a higher end home decor company, they have in their catalogs beautiful pictures which we need online as well, but then they have a lot of fluffy writing, beautiful pose on that. And what we’ve seen online is that’s not what online retailers care about. All they care about is shipping dimensions, product dimensions, the real data of it. And they want short descriptions that have keywords in it, so it’s keyword driven, not adjectives that kind of romanticize the product. They know exactly what their customers are searching for and they want to see that type of product, or that type of data in the descriptions in that type of product.

Brandon Schmidt: So I think that’s the biggest thing is having digital assets, having multiple angle shots of products, giving scale to the product. That’s something that from working on the retail side and then coming back on the manufacturer side as well as that’s the number one cause of returns is scale. People don’t realize how big something is until they get it into their house and it doesn’t fit. Even though you have the product dimensions on there, people are visual so it’s the more angles you can have of product, you can have it in home style shot as well. That’s where we’ve really seen that really taken off. And so I can’t emphasize that enough, just coming from the retail side of being frustrated when I literally can’t put a product onto the website because I don’t have enough data. And the manufacturer coming back and saying, well we don’t have that.

Brandon Schmidt: We haven’t traditionally tracked that information. So that’s been the thing that I’ve sympathized the most with retailers. And working with them directly now from the manufacturer side is, I understand how important that is and how integral is in how their hands can be literally tied for not being able to put product on site because of that. So I think if you’re going to invest in your company in the online space, that’s got to be your first thing. And then from there, then you can worry about your marketing spend, your marketing strategy. But if you don’t have that basic product data, you’re just not going to get on the website anyway. So there’s no point in investing in the marketing side. So that’s kind of where I see it just from my traditional background of working with a retailer for so long and having those pain points.

Luke Peters: 100% agree on that very sage advice. And something that stood out was that you said, not showing scales the number one cause of returns, so I just wanted to call that out for the audience. I think that’s really interesting. We’ve seen that with ours, and I can just imagine in the lighting industry it’s probably even trickier. And just one more question into that is, can you talk a little bit how you guys are doing, creating your digital assets? Do you have an in house team? Are you shooting your own products in house? Or do you have a contractor that does that? And to kind of second that is, how many products per month, how many new skus are you guys launching into the market? If you’re able to answer that. And the reason I ask though is more centered around how much work has to go into the digital asset production.

Brandon Schmidt: Yeah, no, definitely. Kind of all the above when it comes to sourcing digital photography. We do most of it in house, but then we will source from partners as well, retailers that have product displays. Also when we get installation shots, working with contractors to get them to give us photography as well. But yeah, a majority of it is in house. So yeah, it takes a lot of time to curate our catalog. We have two major releases typically every year. The lighting industry traditionally is release product in January and June in the Dallas market.

Brandon Schmidt: We started to see that change a little bit with a lot more product in January and then a small supplement in June, but we still key on those points as well as the high point market in the fall. So we try to balance out our product offerings and a new product offering. But a majority does come at that January lighting show. We can introduce to anywhere between 500 to 1,000 skus at any given show across all of our different lines. So yeah, getting those digital assets takes some time and it’s frustrating to see a prototype of a product and see how beautiful it is, and then not be able to get the data for another month or so. But yeah, that’s kind of where we’re at. But yeah, the majority of it is in house and we’re doing all that photography.

Luke Peters: 500 to 1,000 skus released at one show, that’s a heck of a lot of work that your marketing team is doing. And the types of photography that’s needed for these products, I mean, this is intricate, high level photography that’s needed. So that’s got to be quite an effort to launch that many skus. That’s awesome that you guys are able to do that.

Brandon Schmidt: Yeah, I mean they do an amazing job. And it’s hard work. Yeah. Because they have to do a traditional catalog as well as our digital assets that we need for online as well. So they’re the ones that are dealing the most with a traditional customer, a traditional catalog, but then getting us digital assets that we need. So the work they do is great, and we’re so thankful for all the hard work they put in.

Luke Peters: Awesome. And on that note, Brandon, I really wanted to thank you for joining on the Page One Podcast today. And super insightful and awesome to hear your background with Lowe’s, and then moving on to Visual Comfort Group, and then sharing some of the marketing and sales details. And just how this amazing company continues to grow. How can the listeners find you or learn more about you or connect with you?

Brandon Schmidt: You can find me on LinkedIn if you’d like, be happy to communicate with people that are interested and want to connect and have any more questions. I love growing my network and getting some insights. I think it’s all learning and it’s evolving industry at all times, so I think it’s really cool to connect. So feel free to find me, Brandon Schmidt on LinkedIn if you want. Feel free to message me. But Luke, I really appreciate you having me on today, this was really fun.

Luke Peters: Awesome. And I just want to thank everybody today for joining us on the Page One Podcast sponsored by Retail Brand. And just want to make sure everybody knows that if you want to launch new products, quickly gain sales, reviews and buzz, instead of waiting around for months, we can help you at Retail Band. We can literally be your sales and marketing arm at Wayfair or Home Depot, Lowe’s, and experts in getting your product listed there. We can help with influencer marketing. Do you need a product to launch quickly? Do you need awesome reviews and YouTube videos and Instagram content? We can make that happen at Retail Band. We’re experts at it. We’ve already done it for our own brands and now we want to bring that to other brands that need these services. And if you’re interested, let us know. Contact me, contact us at retailband.com. You can learn more over there. And Brandon, I want to thank you again. Hope you have a wonderful day over there in Seattle. I know the weather’s nice. Take care and hope to stay connected with you.

Brandon Schmidt: I appreciate it, Luke. Thank you so much.

Luke Peters: Okay, thanks. Bye.

Speaker: Thanks for listening to the Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about rCommerce, check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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Want more information? Related post: 5 Steps to Increasing Sales on Home Depot

EP2: How to Globally Expand Your Brand + Solutions to China Tariff Channel Conflicts | Jim Hyman, CEO & Chairman of Hyman Inc.

Welcome to Page 1:

Welcome to episode two of the Page 1 Podcast.

This past May, the U.S. raise tariffs from 10% to 25% on $200 billion of Chinese goods. And there are talks of that number increasing another 5%.

This most recent round of Trump Trade Tariffs hit a larger group of consumer product brands. Even though this wasn’t the first raise-rodeo for some of the businesses, it made it clear that waiting for a negotiated outcome was not an option.

But who better to discuss trade tariff strategies than Jim Hyman? The Honeywell provider has been in business for over a decade and knows what it takes to survive financially hard times.

Take a listen to this episode of the Page 1 Podcast to learn how you can win back your profit margins.

What you’ll learn:

Today’s guest is Jim Hyman. He shares the wealth of knowledge he’s gained as a 3rd generation CEO and Chairman. Jim outlines the path he took to bring his brand to the global market. Plus, you get a new approach to product distribution in this new China Tariff world.  

About our guest:

Jim Hyman is the 3rd generation CEO and Chairman of his family enterprise, Hyman Inc.—a global marketing and distribution company. In today’s fast-changing world, Hyman leveraged assets and networks to transform a small company—servicing big box stores—into a multinational enterprise. He is the exclusive provider of Honeywell Home Security products, which is a provider for 85 countries worldwide. He has a passion for growth and through collaboration and value creation he continues to drive business expansion across multiple enterprises. He remains closely involved in the creative process, product development, global e-commerce, and platform expansion of his companies. He successfully reinvented and rebranded his company, built a second company and founded additional concerns, which has led to a passion for investing in series A start-ups—the most recent one being “Ring”. He is also a Porsche, contemporary art and Chinese antiquities collector.

Key takeaways from this episode:

  • How Jim got started – 2:21
  • About the company product line – 3:43
  • Hyman’s most challenging business story – 5:54
  • A business hit during the recession – 7:47
  • Company share of eCommerce sales – 9:48
  • The company focus on product segmentation – 10:59
  • The Pros and Cons of developing a consumer-facing app – 12:55
  • How to create a consumer-facing app – 14:01
  • The largest area of focus in the business currently – 14:41
  • Percentage of products sourced from China – 19:02
  • The tariff timeline – 20:17
  • How to manage online channels and retail prices – 24:25
  • Biggest business win in the last year – 29:45
  • How to pivot at the most difficult times – 31:02

Podcast Transcription

Speaker 1: Welcome to the Page One Podcast, a twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers. Or, what we call rCommerce. Now here’s your host, Luke Peters.

Luke: Thanks for joining us on the Page One Podcast. I’m your host, Luke Peters. This is the podcast where I bring you the best and brightest leaders to share consumer product sales and marketing strategies that’ll help you grow your business. I’m the CEO founder of NewAir Appliances, where I cut my teeth selling products online. And have now started Retail Band, where I hope to help other brands succeed in product launches, influencer marketing, and B2B online sales strategy.

Luke: In this episode, we’re going to dive deep into how Jim Hyman is leading Hyman Industries by partnering with Honeywell, and a licensing strategy to grow the brand into 85 countries. Learn how being diversified has helped Jim survive the terrorist situation. We’ll talk about how Jim leverages supply chain and retail partners to grow his business. And Jim’s got an awesome story, third-generation business, so we’ll dive into those and hopefully get you guys some valuable nuggets that you can use in your business.

Luke: Quick introduction on Jim, third-generation CEO and Chairman of Hyman Inc. He’s the exclusive provider of Honeywell Home Security Products in 85 countries. He was an early round investor in Ring. And is a Porsche collector, sits on multiple boards, graduated from Princeton, which I didn’t know about, and is also a Ram’s season ticket holder. And I was going to share with you Jim, that I’m a big Raiders fan from childhood, so you can’t count that against me.

Jim: Not at all.

Luke: Not at all. All right. And Jim and I are part of a once monthly digital marketing group, where we meet in person for a few hours and with other CEO’s in beautiful Newport Beach. And I’m thrilled to have Jim with us sharing your wisdom. Thanks for joining us.

Jim: Luke, thanks for having me. I’m looking forward to it.

Luke: Cool. Did I cover everything there in the intro?

Jim: It was more than generous.

Luke: Awesome. Okay, great. So Jim, why don’t we just start back, just because I find that really interesting, that you’re third generation, which is rare for a company to survive that long. So I’d love to know how you got started in the business, and just quickly walk us through how you got to where you are now.

Jim: I started working in the business at a very young age and I worked in the warehouse during high school, which was a terrific opportunity to really learn about what was going on in the warehouse, and how our business was running, and how things worked. And then after I graduated college and I came right into the business and actually did every job in the company. So I started out servicing stores, and I worked in the marketing department, and I worked in the literature department, and then I worked in the new product department, and I had a chance to go to Asia. I first went to Asia in 1979, which dates me. But I’ve been to China over 100 times. And I’ve really done every job in the company. I had a wonderful opportunity to work side by side with my dad for about 25, 30 years. And then he passed away. And so, I’m the sole family member left and running the company.

Luke: A hundred times in China. Man, you must be really good at sleeping on an airplane.

Jim: I love sleeping on an airplane, and it’s very easy for me. And I really have enjoyed all the time I’ve spent in China. It’s been a great education and we’ve made great partnerships over there.

Luke: Great. So we’ll dig into that. Jim, before we go on though, you want to give us a brief explanation of the product line and the company so the listeners understand that side?

Jim: Okay. So we actually have two businesses. Our original family legacy business, which is Lewis Hyman Incorporated. And in that business, we supply basic home furnishings, window treatments, door locks, garden products, and shelving to people like Home Depot, Lowe’s, Target, Walmart, every single day to every single store.

Jim: And then the second business, which we started in 2009, which is a big part of what we’re going to talk about today, we were able to secure the Honeywell license exclusively worldwide for safes, door locks and paper shredders; basically security items. We started a new business called LHLP, Lewis Hyman Licensed Products, to house that business and to start acquiring licenses to help grow our businesses domestically.

Luke: Awesome. And what prompted you to seek that licensing deal? Did you have previous experience in licenses? Honeywell’s an amazing brand. So how did you approach them or get to that point?

Jim: So it’s the perfect example of the harder you work, the luckier you get. So we were out in the marketplace looking for licenses. Our first one was Kathy Ireland for our decorative shelving business. And we kept asking all of our representatives and all of our partners and all of our retailers, are you aware of any great licenses that may be available? And one of our representatives sent to us, the gentleman who had the Honeywell license.

Jim: And he said to us, “I want to sale you part of it, just the door locks. And I’m going to keep the part for safes and we’ll work on that.” He said, “What do you think?” I said, “Well, it sounds like it’d be great for you but not so great for me. What I’d rather do is take the entire license and have you come run that business.” And while it took a long time and he had other commitments that did not work out during the recession, we had the ability to fund the new company and he eventually came here to be our managing director and he’s still here today, 10 years later.

Luke: That’s awesome. Along the way, before we get into the nitty-gritty of what’s working for you, so we can share some hot nuggets with the audience here. Along the way, and I know you just talked about 2009 when you pick this up, this licensing deal, what would you share as maybe your most challenging business story, your darkest hour, and how you came around from that?

Jim: So in 2006 my dad started to have tremendous challenges for a third time with cancer, and finally passed away in 2006. In 2007 as a corporation, we had our best year. And by 2008 the recession started. And by 2009, Home Depot and Lowe’s businesses were in tremendous trouble. And so is ours, because 80% of our entire business was Home Depot and Lowes. And as that started to decreased dramatically, in fact, they were even leaving bays open and just not ordering goods because they weren’t getting any traffic.

Jim: We decided that we needed to start new revenue and new channels of revenue for our business and new verticals. And so we started out looking for licenses, new products, any new opportunity we could to help drive our business. And the other issue, which we were in the middle of where many of our Chinese partners and suppliers were coming directly to our customers and cutting us out and just going to them directly, because they needed the production as the U.S. economy slowed down dramatically.

Jim: And we realized that if we had licenses, and Honeywell is a great example of that, we could have a world-class license that gave us great global entry to the rest of the world. It has a 93% consumer recognition rate worldwide. And it would give us a chance where even if Chinese suppliers or suppliers from India or Mexico or wherever came into the U.S., they could present similar products, but they couldn’t present Honeywell products because we had it exclusively. And that gave us the opportunity to approach many different markets throughout the world, which helped us start our diversification and help us grow the business that we now have today.

Luke: And during that period, are you able to share how much percentage of the business was lost during the recession? Was it like a 30% drop? A 50% drop. How challenging was that time?

Jim: It was the worst time of my business career, which was extremely frightening for us and for our company. And as a third generation owner, I didn’t want to be the person who lost the family business on my watch. And our business went down by more than 60%.

Luke: Wow. And how long did it take? You guys had to struggle through the recession. You had to get the Honeywell deal, you had to diversify. I’m guessing that’s a continual process, that is even continuing to this day. So it’s a multi year up trend from that down period. Does that kind of describe it?

Jim: It’s taken us 10 years to climb back to a place where we are now. Where number one, we’re now shipping goods to 85 countries. So our diversification has become really robust. Number two, 20% of our business is now e-commerce, which is a terrific percentage based on our business with the big retailers. And number three, increase our new product pipeline to a place where we can no longer be commoditized. And start to create more value and more opportunity for our business as we go forward to these new products.

Luke: Great. And then in speaking of those 85 countries, are you able to share what percentage of your sales are U.S. versus the rest of the world?

Jim: Sure. So let’s take the Honeywell business, and I would say that that business is 50-50.

Luke: Wow.

Jim: Versus the rest of the world.

Luke: That’s amazing. So that helps with the tariffs because you’re not paying tariffs on 50% of your sales, at least in that category.

Jim: Yes. And in addition to that, many of our big U.S. customers are direct import customers. So the tariff responsibility falls on them and not us.

Luke: That’s perfect. And then breaking down the numbers on your e-comm. So you’ve grown that presumably from zero to 20%, which is really great. Can you break down the share of the e-comm, as far as talking about each HD online, Lowe’s online, Amazon, or anybody else that’s in the mix. So-

Jim: Right. So I can break it down for you very easily. First of all, with our, let’s take a brick and mortar company, like Home Depot. Our business with Home Depot overall is 75% in store and 25% online. So that gives you an average breakdown of how we’re working with our clients to create an omnichannel where they can do everything from buy directly online to us, to do BOPUS where you buy online pickup in store, where they even fulfill themselves. So we’re participating in all three of those avenues. As far as the ranking of our customers and the larger players, that’s Amazon, Home Depot, Walmart.com, Wayfair.com, Staples.com. So we have some nice diversity as far as our clients are concerned.

Luke: Great. Thanks for that. And then just within the product segment, where is your area of focus? Where are you seeing strong growth? I know you’re in several different product categories and I guess we can make this specific to the Honeywell line that you have.

Jim: So in the Honeywell brand specifically, we’ve created a base with basic Honeywell safe, and door lock, and paper shredder product. And we’re selling that globally and we’re selling it dramatically online as well. However, the part where we see the most amount of growth right now, which is important for us to share with you, is we’re taking our products up the continuum. Because smart products have really taken over the security business; Ring is a great example of that and our strategic alliance helped us to understand how important a connected product is. So to have a connected wifi enabled Honeywell digital door lock has been a great thing for us. And our smart products and connected products, whether they’re safes, door locks, or other products connected with your phone, connected with our own app, connected with Alexa, have become the fastest growing part of our company.

Luke: That’s super interesting. Because we’ve looked into that as well. And the question is, “Will the consumer download an app to connect with it?” And I guess with your products they may not need an app, right? It’s just wifi direct to it? Or do they need to have an app, or do they just use Alexa? Or what’s generally the mode of connection?

Jim: So interestingly enough, we did our beta testing in a private label situation, which we’re allowed to do. And found out that the consumer would indeed download an app. And so we have our own private app for our Honeywell products, which is approved by Honeywell. And so all of our Honeywell products use the same app, which we’ve created and own.

Luke: That’s awesome. So that creates a stickier customer and probably I’m sure a much better user experience. Has that been a challenge, developing the app and maintaining the app along the way?

Jim: Developing the app and maintaining the app has been a tremendous challenge, especially in the beginning. Because it was prohibitively expensive, which we didn’t want to do. It’s extremely challenging because technically we like to outsource most of the work we do, because there are experts out there who are much better at this than we are. And so we collaborated with our factories in Asia, and their resident experts, and our own application partners. And so we created all of this together at the same time. And everyone has collaborated with each other beautifully, and it really works well. We’re really proud of what we’ve accomplished. And this collaborative effort is something we do in everything from new products, to how we work online with our retailers and customers, to how we work online, and how we work in our company.

Luke: And how long was it start to finish from conception of the idea to make an app? Then you had to go find an app developer. And then create the app, and then test the app, and then get approved licensing approval, which I know is a challenge. We work in licensing deals as well. So just start to finish. How long did that process take?

Jim: About 24 months.

Luke: Wow. Big investment, but big pay off it looks like.

Jim: Yeah. And then as you know, it’s changing and being developed and still is every moment now, every moment, every day, every input you have; the customer from the consumer, from the factories. We keep making corrections and changes and improvements every day.

Luke: Great. And then I want to move on. I want to segue over to tariffs. But before we do that, finishing up the points we’re talking about right now, and maybe outside of smart home, what is your current largest area of focus on the business? Just maybe on the macro level or strategically, where’s your time and energy going?

Jim: The direction of the company or my personal time and energy?

Luke: Well, I would say strategically, where are you trying to drive the company growth in the future? What’s your biggest area of focus right now?

Jim: So strategically, when first started the Honeywell Company, and I’ll go with that. We wanted to go international because the U.S. was in a great recession. So by coincidence, by the time the U.S. started coming back from a recession, we had already established ourselves all throughout Europe, the Philippines, Latin America, Australia. So we had lots of experience and momentum coming back in the United States. And now our strategy has been to grow our business even more in the United States.

Jim: We’re focusing on three different things. Number one, we have to create new products because new products are the best way for us to share value with our clients. So we’re focusing on number one, growing our business in the United States through these new products. Number two, we continue to drive our eCommerce business. Number three, we are going directly to the consumer through Amazon and through other platforms. And number four, we are now going to the largest global platforms in the world and starting to sell our products globally.

Luke: Awesome. And just one more question in that area is can you share how you did expand globally? It sounds like you went from 100% U.S. sales within, it sounds like a couple of years being all over Europe, South America, that’s a challenge for any company. How are you guys able to do it successfully and so quickly?

Jim: You know, Luke, that’s a great question. And a lot of it came from the desperate need to diversify. And it was difficult to do it in the U S because the economy was so poor at that time. And the gentleman who helped join our business, who’s now the managing director and had some international experience. And I had international relationships all over the world from YPO that helped me dramatically.

Jim: And so every new territory we wanted to go into, I would send messages into that territory, either through YPO, or through our shipping partners, or through Honeywell and find out if we could locate distributors that would want to handle the Honeywell brand. And normally when we went into a new territory, we found two or three people who were really interested in handling the Honeywell brand. And we would have interviews and meetings and talk with them and see what was the best fit. And so we started setting up these distributors all throughout the world. And they not only became great distributors, they also became great friends and great partners.

Luke: Perfect. So the distributors are carrying some of the inventory risks. They’re obviously your partners and you want them to sail through that and succeed. But yeah, exactly. Because if you’re going to expand into that many countries, you need to have that partnership. And I’m assuming, they’re taking containers or-

Jim: Yes, they’re buying containers directly from Asia into their distribution centers and they have their own teams on the ground. And then the last part is that many of the key retailers we went to, we went to the top 20 global retailers throughout the world, and they had distribution partners who they recommended during the meeting. “You know, Jim, we’d like you to try this and this is who works well with us. And please go and have some meetings and see if you guys can do something that will create value for us.” And so they gave us great introductions, which helped us grow our business, which we’re really grateful for. Because when we first met, we were strangers and now we all have great relationships, and we’re friends and we’re providing value.

Luke: So it sounds like you used your network, you traveled a lot, so you’d built a network and then you were inquisitive and asked the right questions, and follow those leads. That’s a great story.

Jim: We told the truth that we were a start up. We asked for a lot of help. We asked for a lot of guidance. We had a wonderful brand to share, which gave us an opportunity and we also had three generations of stories to share about how we knew that we could make things work if we were given a chance. And also when we told them that we were already a supplier with Home Depot USA, or Lowe’s USA, or Target, or Walmart USA, it did give us some legitimacy to have a conversation with them already.

Luke: Okay, great. Thanks for sharing all those details. So now let’s jump into tariffs. I know this is on everybody’s mind. It’s a big challenge for us. We’re not as diversified as you are, so I’m sure that that is definitely helping you on the tariff front. But let’s talk about tariffs. Are you able to share the percentage of products sourced from China?

Jim: 85% of our products are sourced from China.

Luke: Great. And then the other 15%, where might those come from?

Jim: We’ve been doing business in Vietnam for quite some time, so many of our Honeywell products are manufactured in Vietnam. We have also been manufacturing in Thailand for 30, 35 years, so we have great partners there. And we also have great partners in India where we’ve done business for a long time. And we did not go back for many years, and have recently spent more time in India reestablishing those relationships, and we’re starting to source two different lines of products out of India right away.

Luke: I remember just a couple of months ago in our group, where you were talking about you’re traveling to India, you’re excited about that. And I think you returned and had a great experience over there. So that’s pretty quick just in whatever that maybe three or four months at tops.

Jim: Exactly. We developed product while I was on the ground there. I had the first sample sent in right after I came back. We’ve work with those teams collaboratively to get the first products going. And we’re just beginning to new programs with those suppliers.

Luke: That’s great. And let’s talk about the tariff timeline. Going back, I guess they started a year ago, pretty much in September with the first 10. And then I’m presuming your products are now on 25%.

Jim: Yes.

Luke: And maybe 30, depends on, we hang on the edge of the next tweet.

Jim: Exactly right.

Luke: But walk us through that timeline. So what I’m looking for is, the tariffs hit at 10%, and a lot of companies would go back and try to tighten their supply chain to pick that up so they didn’t have to pass much along to the customer. But then, later on we got 25%. And I’d be curious to hear from you just on a basic timeline of how you handle that both internally with supply chain and then with your retail customers here in the U.S. as far as price increases go.

Jim: So as you and I both know that tariffs are tremendously disruptive and difficult for any business. And when the first 10% came, we tried to work with our factories and see what they could do to help us, and nobody knew how long it would last. So the factories did jump in and started to share it with us immediately. But nobody knew how far they would have to go or how long this would last. As it became worse and worse, after the first 10% we had to go directly to our customers and say, “We have a tariff issue.” And the nice part, even though it’s difficult, is that it’s in the newspaper every day. So it’s not a mystery. And they knew that we weren’t making anything up. They knew exactly what was in the news every day and what we were facing.

Jim: So with a direct import customer, we went and we collaborated with them right away. And we had strategic meetings with them on pricing. And we used analytics on their margins to help focus on their retails and how we could help them still achieve the correct margins, and give and take together so that we could both survive and get through this together.

Jim: And those meetings required a lot of preparation because you wanted to make sure that our partner retailers remained whole and were successful through this. And when we prepared that way, it was much easier to have collaborative meetings because they knew that we had their best interests at heart.

Luke: That a great description of success right there. And we’ve done something similar, but we’ve heard just in the industry, just in different categories and different competitors, that some of them just went direct to their partners and asked for the full 25% or whatever the percentage to make them, the brand whole. And immediately it would get rejected from their retail partner. So it sounds like you guys took a very partnership approach in this to ensure that both parties won. And also that you talked about the numbers and not about the emotion to get through that part of it.

Jim: We wanted to make sure that they knew that the issue was real. We wanted to make sure that they knew that we were on their side to help them continue to be successful. And we wanted to make sure that no matter what we did, we could leave the door open because we didn’t know how long this was going to last, and we needed to keep being able to have these conversations. Every night on the news with the currency changing, with new tariffs, with the stock market having a challenging time. This was a time when we felt we had to show up in person and spend time together to make sure that we were on the same path.

Jim: And many of our retailers commented that we were one of the first ones to show up. And that was extremely helpful for the partnership because we gave them real opportunity to take action and keep their business going forward. And I’d be lying to you if I didn’t tell you that still some of our customers are extremely challenging and are not helping us as much as we’d like and we continue to go there in person, and have meetings with them to help try to make sure that they work with us as needed.

Luke: And we’re experiencing the same thing. So I think a lot of us are in that boat, but at some point everybody finds out who the best partners are. And in some categories 25% can’t be absorbed by the brand. So I think the whole industry is feeling that and understanding that part.

Luke: As far as the channel goes, so let’s talk about the online channel and retail prices, and getting a price increase across. And some retailers taking it and some not; some working with you and some not working. And then it hurts the retail prices, because those taking it, the retail prices with the 25% tariff, they have to go up there, at least in my industry. It’d be interesting to hear on yours. But there’s no alternative. And so, there can be some channel conflict created with companies that are okay to work on helping out and others that are not. How have you guys been able to succeed there? Or what are your challenges in that area?

Jim: So I think we’re experiencing maybe the same challenges you are, since you and I both have licenses that are wonderful tools and help us create great value with our partners. But number one, we’re creating more and more new product, which will help us to include the tariffs in those new products. So when we take it to market, not only does it enhance our margin, but it also helps us to not have to have a conversation about the tariffs on this new product.

Jim: Number two, on the products where there are tariffs, we are going back and having constant conversations about where we need to raise the prices to, where we need to help them raise their retails to, and what the playing field looks like, so that they can understand that there are certain retail prices out there in the marketplace, that are the expected retail for the product.

Jim: And then number three, if they aren’t willing to help change the prices or to take the price increase, then we have to have a discussion on, “Can we get you some alternative products or some new skus that would be different than what we’re currently doing in the market?” Because you’re right, otherwise it ruins the retails for high quality products with great brands and we don’t want to do that.

Luke: And on the supply chain and the factory side, are you able to share how you guys have shared costs, cut costs all the way from ocean freight back to the factories, maybe percentage that the factories are able to take in on their own? I always hear different percentages. It seems like every time I might hear a friend or hear from somebody else about a competitor who was able to get more back on their end in China than maybe what we’re experiencing. And then others are getting less. So it seems like it’s different with every industry. But curious your experience there, and how much of the increase you’re able to recoup before the product landed here.

Jim: So we’re asking our factories to share with us at least 50-50 on these tariffs and to absorb it with us, half and half, where they take half and we’ll take half and we’ll work on it together. That’s the first step. The second step is because of the currency and what the Chinese government is doing, it’s helping us to recoup another several points simply on the currency. And that’s a totally different conversation. And then the third part is we’ve gone back to our freight lines and our logistics teams and said, “Listen, we’re all in a tariff situation here and we all need help. And how can you help us?”

Jim: And every nickel and dime helps and we’re searching for it every single step of the way to keep our costs competitive while protecting both our customers and ourselves. It is really challenging. And with the news that we all just got last Friday, it’s even more challenging, and it’s forcing us to consider going to newer countries and different countries for some of the products we’ve been buying in China for a very long time.

Luke: And I think everybody’s looking in that direction. The challenge is the time it’s going to take to find a new country, if the supply chain isn’t set up, to get the parts that are needed, the factory to have all the tooling. And unless it’s already being made, it could be more than a year process. Are you seeing the same thing on your end? Or are you finding it solutions that move a little bit quicker?

Jim: So we’re definitely finding the same issues, especially in a technical project, or one that has wifi or Bluetooth, or something that has something that’s complicated. So we are taking the longterm view with China, and we’re trying to work with our partners to make sure that we stay there and we keep production there. And at the same time we’re searching for new production and studying new projects all throughout Asia and Latin America. And then finally what we’re doing is we’re even bringing in new product categories, which will help us boost our margins or maintain some margins during this phase.

Jim: So it’s forcing us to start some new businesses that’ll at least help us to keep the margins we need to be successful and add value as we go through this transition process. And most of our Chinese factories are working very closely with us. Because coming into Chinese New Year right now, and with what’s going on in their economy in China, they definitely don’t want to lose the production. You and I have to be careful that if we push too hard and we’re unfair in China with our suppliers, that we create competitors who just want to come here and take their own market share.

Luke: Yep. Those are good words of wisdom about tariffs. Thanks for all of that. I guess thinking about, we started talking about your brands, your company, the different channels you sell into. And then we went into tariffs, and I’m sure there’s been a ton of accomplishments, and we already talked about a few of those. But what would you categorize or say is your biggest business win in the past year?

Jim: Our biggest business win in the last year, was that we became the national supplier for all Target stores in America for our Honeywell brand.

Luke: Wow. Congratulations. That’s awesome.

Jim: That’s been a big win for us. It’s a great national platform. Target and Honeywell are both Minnesota companies. And it’s the perfect sort of brand that Target wants to have in their stores, and Targets the perfect customer that we want to have. And I actually have heard their CEO talk at a Shop Talk convention. And he was talking about how important brands were. And I went up to him personally right after the talk and introduced myself, and shared with him the story of the Honeywell brand and asked for his help. And he asked me to send him a presentation and he passed it on. And through that experience we were able to get the right appointments, get the right meetings. And while it took us a year and a half to get it done, we were able to begin our journey as a national Target supplier with them on our Honeywell product.

Luke: That’s an amazing story. My follow up question was going to be, was that done internally or was that with an outside rep? And you answered my question there. And I actually remember a part of that conversation I think from months back or even a year back. That’s an amazing story right there. So congratulations on that. So what is something actionable, just from your years of business experience that you want to leave with the listeners?

Jim: Luke, that’s a great question. We’ve had some tremendous challenges here in our corporate history and some tremendous opportunities. And the thing I think that helped us the most, and saved us during our most difficult times, was our drive to never give up, the relationships we had established with all of our friends and customers throughout our years of being in business, and our ability to pivot and embrace pivot at the most difficult time.

Jim: If I look back and see what it is that we accomplished in our darkest hours, we started a new business. We got a world-class license, we funded it ourselves. We put up our own money. We went and hit the road and made relationships. I guess the best guidance or advice I could share is that nothing is impossible if you believe it can be done. But all of it was based on the platform of us having great relationships, which meant that we always took the view that we needed to help our customers and bring them great value.

Jim: So we could go back to anybody and talk about our new business because we were always welcomed. We had wonderful relationships in the industry and a wonderful reputation throughout the world, and so when we went to have these meetings, we were welcomed as a realistic opportunity and something that could bring value, because we had always given our word and kept our word, made sure that we performed and made sure that we did what was best for our clients, which in turn was great for our company.

Luke: Thanks for that, Jim. That’s sage advice, especially in these times that are challenging times that we have right now. How can the listeners find more about you? How can they get ahold of you, and anything else you’d like to share?

Jim: So one of the things I’d like to share is that we’ve spent the last 10 years building this platform, this eCommerce platform, and we’re always looking for new products and new partners to expand our product offerings and drive our business and help us continue on our global march. If you have a new process, if you have a new product, if you want to be part of our global pipeline, we looked forward to hearing from you. You’re welcome to contact me personally. J Hyman, H-Y-M-A-N @Hymaninc.com you’re welcome to call our offices at 310-532-5700 extension 3405. And I welcome the opportunity to grow our business and to always continue to expand our offerings, and the way we learn about our business, and the way that we go to market. So please feel free to reach out to me directly. I’m always happy to learn and to help.

Luke: Thanks Jim. That’s very generous. For the audience, we’ll have all of that in the show notes written out so you guys will have the phone number and email address. And I just want to thank you for coming on the show today, Jim, it’s been a pleasure. It’s awesome getting to know you, reading your bio. I’ve known you for a couple of years, but I didn’t know all these details about you, and really just the true extent of how far you’ve taken the business. It’s amazing. It’s a great accomplishment and I really enjoyed the interview today. Thanks for coming on.

Jim: Luke, you’re a great friend and I admire this new venture you’ve started with Page One. And I think that it’s exciting to be one of your initial podcasts, and your ability to grow your business during these challenging times, is really something that I admire and I’ve come to respect. And one of the things you do, which I like so much and has made us closer, is that you’re quick to collaborate and quick to share and quick to help. And I think in today’s world, many of us who handle our businesses that way, can accelerate each other’s businesses by doing that. And so I applaud you and I thank you for the opportunity and congratulations on this great new venture and anything all of us at Hyman can do to help, we’re happy to help.

Luke: Thank you for that; very nice words and have a great day. Thanks Jim.

Jim: Luke, thanks a million.

Speaker 1: Thanks for listening to the Page One Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about rCommerce? Check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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EP1: How to Market Your Small Business + Benefits of YouTube Influencers | Andrew Stephenson, VP of Marketing at NewAir

Welcome to Page 1:

Thanks for tuning in to the first episode of the Page 1 Podcast.

I’m your host Luke Peters and every week I’ll be bringing you two new podcasts about the consumer product world. My guests and I will cover topics like channel conflicts, tariffs, product launches, and online sales tactics. But what will our main area of focus be? rCommerce. We will talk about how your consumer product company can increase sales on the eCommerce platforms of Lowe’s, Home Depot, Wayfair, Walmart, Target, Amazon, and other big-box retailers. All you have to do is tune in each week for tips and tricks on how to get your products to page 1 of search results from though-leaders in the industry.

What you’ll learn:

Today’s episode digs deep into how you can market a small business with limited resources.

Our guest, Andrew Stephenson, shares his marketing success stories and his strategies for marketing a business on a tight budget. His heavy-hitting tactics? YouTube Influencers and Social Media. We also talk about what makes for a successful product launch and the dos and don’ts of product asset creation.

About our guest:

Andrew Stephenson has been Vice President of NewAir for the past 2 and a half years. A 20-year industry expert, Andrew brings a unique combination of digital strategy, entrepreneurial vision and an unwavering passion for delivering tangible results to his current role. Prior to joining Newair®, Andrew held key positions at top North American agencies including Mosaic Sales Solutions, where he served as vice president, designing and executing award-winning campaigns and thought leadership for Fortune 500 clients such as Samsung, Starbucks, Microsoft, Royal Bank of Canada, Bayer Pharmaceuticals, Virgin Gaming, P&G, Clorox and many more.

Key takeaways from this episode:

  • The brand benefits of YouTube Influencers – 4:24
  • How to market your small business with Instagram – 6:01
  • How to capture key data insights on Instagram – 7:38
  • What to consider when you create visual assets for your products – 9:25
  • The types of images you need to market your products on big-box retail sites – 11:50
  • The process behind a successful product launch – 14:48
  • How and where to use user-generated content – 17: 34
  • Inspirational brands to watch – 20:40

Podcast Transcription

Announcer: Welcome to the Page One Podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best-in-class product launches, and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Hi, my name is Luke Peters, your host for the Page One Podcast. I have 17 years in online sales and product development, and my goal is to bring in the best leaders to talk about growing rCommerce sales. That is sales at Home Depot, Lowe’s, Wayfair, and Walmart and all of those other forgotten retailers that can account for more than 50% of your company’s online sales.

Luke Peters: Today, I’m thrilled to have Andrew Stephenson, VP of marketing at NewAir Appliances, with me. How’s it going, Andrew?

Andrew S.: Hey, Luke, thanks for having me.

Luke Peters: For all our listeners out there, Andrew and I worked together at NewAir, and he’s been instrumental in bringing this podcast to life, and we’re excited to kick this thing off. So today, Andrew’s got in a really interesting background, worked in a lot of interesting roles. And today we’re going to focus on influencers, photos, generating amazing content for your products and brands. So how’s that sound?

Andrew S.: I’m excited to talk about it.

Luke Peters: All right, cool. So, Andrew, why don’t we just start back with your Canadian roots?

Andrew S.: Yay.

Luke Peters: Working as a fireman, saving the world in Canada, but I guess take it from there. Why don’t you kind of kick off, on the professional side, what was the experience leading up to your role now that kind of got things going for you?

Andrew S.: Yeah, for sure. So, yes, Canadian, moved to the U.S. About five years ago. My background’s actually in agencies, so I’ve been fortunate enough to work at a variety of different digital marketing agencies with a whole wide variety of different clients. So everyone from small businesses up to some of the largest brands in the world, i.e., the Cokes and Samsungs and Microsofts of the world. So in those experiences, I was really fortunate to be able to really understand how they’re doing their marketing.

Andrew S.: So yeah, I mean, I guess with 20 years marketing experience at a variety of different marketing agencies, working on everything from small businesses and small brands up to some of the largest brands in the world has really opened my eyes to how to really best market a wide variety of different types of products and services.

Andrew S.: And so taking those learnings, that’s what I’ve been using at NewAir for the last two-plus years as we continue to evolve the brand and the different products that we’re bringing to market.

Luke Peters: That’s great, and I think a lot of our listeners would be interested to know you working from an agency background, and now you’re working directly on a brand. If you can kind of compare and contrast those, how it’s different for your role.

Andrew S.: Yeah, for sure. I think one of the things that I got really excited about with starting a new era was being able to actually just focus on one brand. Now, there’s a whole bunch of different products or skus underneath there, of course, that we have to think about, but it’s really being able to focus on one brand.

Andrew S.: The one thing when you work at an agency is that in the morning, you know, you might be working on a marketing brief for one client and then, two hours later, have to completely shift gears to something else and work for another few hours on something else for another client. And so it’s a little disruptive, and I think being able to focus on one brand at one time allows me to get a lot deeper in terms of the real learnings of the brand and understanding who the consumers are and then how to best put assets together around that.

Luke Peters: So why don’t we just dive in? Thanks for that background. And what’s most important here on the Page One Podcast is that we’re giving actionable information, okay, that the listeners can really follow up on. And our listeners are probably going to be business owners or executives at these consumer product companies selling into these large, big-box retailers like Home Depot.

Luke Peters: You and I have worked together and had some really fun success in that area. And personally for me, marketing is something I really enjoy. And that’s why I think I enjoy working with you in these areas. So why don’t we start off by talking about influencers, because I think that, in our category, we feel it kind of sets us apart. We’re working with influencers, where usually that’s done in the fashion industry, but we’re doing it in the appliance industry, which is super sexy, and it’s been a lot of fun.

Luke Peters: So, Andrew, why don’t we start at the beginning? Let’s talk about the influencer marketing program from the beginning, just to give everybody a baseline understanding of kind of what we’re doing.

Andrew S.: Yeah, so we launched our influencer marketing program around two years ago and with a real focus on YouTube as our main platform for how we’re going to reach out to influencers in our space. So the whole goal was, we have a team in-house that literally reaches out to people on YouTube, asking them if they’ll put one of our products into their YouTube videos.

Andrew S.: Of course we ask them to do a variety of different things within that, but the whole goal out of that is that it’s to get other people talking about our brand, talking about our products, talking about how great they are, what they like or don’t like about them, sharing that with their network. But we also use it from more of a search engine perspective as well.

Andrew S.: So we make sure that all the videos are tagged properly with the proper title tags, proper descriptions, proper links, things like that. So that as someone, a consumer, is in their buying purchase-decision cycle, wherever they are in that life cycle, you know, when they start a Google and they start Googling around, looking for different products or specific products, the goal is that our videos come up the top of the page so that we have other people talking about our products and how great they are before someone’s making that purchase.

Luke Peters: Yep. And YouTube is just a massive search engine. So, I mean, that’s the place I wanted to start. And knowing that, you know, a lot of consumer behaviors are shifting off of Google per se. They’re going to YouTube, they’re going to Amazon, they’re going to a lot of, you know, Instagram.

Luke Peters: So YouTube was the first mountain we climbed. And then I guess now, Instagram has become another success story. So you want to kind of briefly go into that one?

Andrew S.: Yeah, for sure. I think, you know, it’s interesting because the YouTube… Just to touch on the YouTube thing for a second, in terms of, it’s the second largest search engine to Google. And obviously Google owns YouTube, so the two work really well together. So from a marketing strategy perspective, when you’re doing things in YouTube, it just sort of naturally and inherently helps you rank better through Google when people are doing searches for videos and things like that. So that inherently helps, kind of kills two birds with one stone, then, that we’re getting a lot of YouTube videos, but we’re also the ability to get our stuff higher up on the search engine rankings when people are looking for different products or brands.

Andrew S.: So on that side. And then on the Instagram side, what we did was, we started… I think when I first started, we had about, I don’t know, maybe 200 followers on Instagram, and we decided that… It’s really hard as a brand and especially as a small brand, we have a smaller team to do everything. So we decided back in the day that we were going to focus on a couple of key channels, and one was obviously YouTube for influencers, and then we decided that we wanted to use Instagram to really help build the brand and the brand awareness. And the Instagram channel for us is all about aspirational and inspirational photography using our products. And that’s, really the whole purpose of that is to help build brand awareness with that audience. So we put a lot of goals and measures in place.

Andrew S.: And over the year we built out our followers to be over 10,000 followers within a year. So we’re really proud of the work we’ve done there. I think we’re close to 13,000 now.

Luke Peters: Exactly. And then, and beyond just the followers, there’s other metrics. For example, why don’t you walk me through kind of how we’re working directly with influencers and how they’re sharing that content? Because a lot of that’s not captured in the follower number because that’s happening on so many other influencers’ pages, where there’s a lot happening out there, and you can’t just capture it just by looking at the follower list.

Andrew S.: Right.

Luke Peters: So talk about that.

Andrew S.: Yeah, for sure. I think our baseline metrics are, obviously we’re looking to see how many followers we have, but I think obviously it’s all about engaged followers. So on our count, where we want to make sure that we’re always posting content that people want to engage with and comment on and we are asking for their feedback on different products and things like that.

Andrew S.: And that’s really important, but as part of our overall Instagram strategy, we also work and collaborate with other brands and larger influencers on Instagram. So the whole goal of that is that we’re now reaching new audiences through their accounts as well. They obviously have… we try to work with accounts that are Instagram accounts that are a lot larger than ours because it gives us access to their followers.

Andrew S.: So we do a lot of collaborations where it might be a giveaway, where people are following our account and following their account so that they can have their chance to win something. So it helps build our followers, but it also allows us to reach a whole wider range of audience. And we use a platform to measure all that stuff so that we have a really good line of sight of how much content is being posted about us and then how much reach it actually has and how many people are actually having their eyeballs on our content.

Luke Peters: Awesome. Okay, so hopefully we’re providing some valuable content here for you guys, the listeners. And so at this point, we’ve had some collaborations. We’re getting images created out of this. These images can be used on our product pages. They can be distributed out to our network of retailers that we’re partnering with that are selling the products.

Luke Peters: And then I guess what I wanted to do to add maximum value here is also kind of loop in a little bit about our process on taking photographs. And I know this whole thing is changing quickly because a lot of it is just becoming 100% digital almost, at this point, from the factory level. But why don’t you just walk us through a little bit about that pro? I know there’s a lot of things that have happened where we’ve worked with different photographers to get just the right quality images and some of the value adds that you’re putting into these images.

Luke Peters: Because I think that, combined with this Instagram content, will give listeners a good understanding of the potential out there for their brand.

Andrew S.: Right. I mean, there’s a few different pieces to it. And so I think the approach we take for any of our product launches and our new products that we’re about to launch, with photography and the different types of assets we create for our product listing is that we want to surround the consumer with visual assets that will help kind of answer all the questions they’re thinking about as they’re going through their purchase decision.

Andrew S.: So there’s always, of course, every platform you’re on, whether it’s Home Depot or Walmart or Wayfair or any online retailer or Amazon, obviously every product needs a hero shot. And so as a baseline for us, our bar is that every single product has to have the best-looking photo you can get.

Andrew S.: And so we work with a specific photographer. We have an in-house studio where we do all of our photography, and we make sure that we’re getting the best-looking shot out there. And I think you touched on this, but a lot of… if you put your consumer hat on and you go look through Amazon and our other channels, a lot of brands are using 3D-generated imagery that always, like, obviously perfect.

Andrew S.: And for us it was really important that we actually used our products in the shots. And so we can honestly say that that’s our product. That’s our shot. And the photographer taking it is unbelievable. I think one shot, that hero shot we take, I think there’s like five different angles that we stitched together to make that one photograph, and it looks spectacular. It looks like a 3D render, but it’s not.

Luke Peters: Yeah, the image quality’s unbelievable. And I used to do it back in the day. I was doing our own images, and I’m happy I don’t have that job anymore.

Andrew S.: Yeah. It’s not easy.

Luke Peters: No. It’s so hard with the stainless steel, with the glass, with the reflections. Yeah. Amateur hour wasn’t working for me. So. But it’s funny, ’cause as you were saying that, I was going to say, I was going to get a little… I sure would’ve drawn a laugh from you, but our favorite word or favorite phrase is “best in class.” Everything’s got “best-in-class.”

Luke Peters: So, okay, great. So we have the images. Talk a little bit about the value adds and how you come to that. So the value adds meaning, obviously we got the white background images, but you may want… if you can go through the different types of images that a brand owner or marketing or sales executive might want to think about with their brand.

Andrew S.: Yeah, for sure. So every one of our product launches kind of follows the same formula. So we have obviously one or two standard hero shots, which are, like you said, just your standard, your really great-looking product shot, white background, cropped properly and everything else.

Andrew S.: And then, when you get in a little bit deeper in our product listings, we have kind of a series of different images that we create. So we have a features image that basically gives you… And we use, again, it’s really important that we show a part of the product in that image, but then we use text with it as well to help support that. So we blend in the lit text plus iconography. So, really, that’s all about, What are the top three features you want to tell someone about for that product?

Andrew S.: And, of course, more details are in the product descriptions, but these are just quick visual representations using an icon and a bit of text, just to help someone understand the key things they’d need to know about it.

Andrew S.: And then the second image we do is more of a benefits-based image. So that’s, again, using more text. We call it our checklist image because it has little check marks to basically say, “Here’s the three benefits of this product that you’d want to know about.” So it gets down to, you know, “Our fridge gets down to an icy, cold 34 degrees that no one else’s fridge can get down to.” You know, and things like that. So those would be two other images we create in addition to the hero shots.

Andrew S.: And then we create some other standard shots, which would be, you know, your dimensions photos. So obviously someone’s, if they’re doing a built-in wine fridge for their kitchen, it’s really important that they know how wide is the fridge, will it fit within a certain countertop height or width. So that baseline photo’s put in.

Andrew S.: And then we do some other lifestyle-based imagery. So that’s where we’ll take, back to your point around creating user-generated content, we’ll use maybe one of our user-generated content photos as well and then include it in there to show how someone else has used our product in their situation or their home and can show how beautiful it can be. So it’s more of an aspirational type of approach.

Luke Peters: That’s perfect. So hopefully everybody can kind of understand a clear view of how we’re putting the product together and thinking about the product from conception to actually launching that sku.

Luke Peters: One thing I wanted to add, just kind of what Andrew touched on, was about adding words into the image. And I know this is done quite a bit now, but really doing it right and thinking about that. The consumer doesn’t always want to read text. Sometimes they want to look at an image, and that’s your opportunity to put in those key decision-making points right there for that consumer, so that they understand everything that product can do for them. I find that to be super important.

Luke Peters: And we’ve seen that specifically on some product launches, where putting in the right image, and we almost can kind of AB test it because a similar product that doesn’t have maybe that benefit or feature doesn’t get the same sales lift. And so, I know Andrew and team have put a lot of thought into that. Why don’t you talk a little bit about within your team or within the company, what type of conversation has to go on when a product is launched and you’re thinking about what those benefits or what the USP is going to be for that product?

Andrew S.: Yeah, no. We actually have a pretty defined process for that now, which has actually been really helpful for the team. So obviously creating all these assets internally is not a team of one. It’s you know, a team of many, working internally with our own team plus a bunch of external vendors that we work with in terms of photography or videography and all the other things that we create.

Andrew S.: So it’s really important that we set the direction properly for that product early on and make sure that everyone’s on the same page with respect to what’s the unique selling proposition for that product, what are the key features, what are all the little details that need to be known and ensure that we’re capturing them in all of the different assets that we’re creating.

Andrew S.: And that’s everything from the carton art work through the product manuals or the product descriptions through to all the great imagery and the value-add imagery that we create. There’s a lot that goes on.

Andrew S.: So we actually have… I believe it’s three meetings that we set up. So we call them, or jokingly called them our Dirty 30, because they’re 30-minute meetings. There’s three of them. And the first one is with myself and Murray, who leads our product marketing initiatives. So he’s the one that handles all of our product launches. And so what I do is, I meet with him, and I kind of set the direction for that product. And we sit down, and we go through all the different aspects of it. We literally have the product in front of us in the room and open up the doors and push all the buttons and go through it. And I sort of help explain and help him understand what are all the unique selling propositions for this product, and what’s going to make it different or better than what else is on the market?

Andrew S.: In that, we also go online, and we look at what our competitors are doing. So we do a bit of a competitive audit to see what reviews are like around similar products, what are customers saying about those other products or similar products we have in the market? And we’re looking for little insights around what’s working, what’s not working. And that’s what we help use to inform our marketing decisions.

Andrew S.: And then, once we have that first kind of what I call our Dirty 30 meeting, we have our second one, where Murray has it with the actual whole team. So that includes everyone who’s going to be handling product photography, videography, our designers, everyone’s in there, copywriter, and they all are briefed on that project based on all the stuff that I gave him in terms of the direction.

Andrew S.: And then they have a third meeting down the road. Once all the assets are created, we do a final team review, where we all sit down and go through all the assets that are created and make sure that it’s all consistent from start to finish.

Luke Peters: So you turned it into a science, and I’m guessing that comes from your agency background and all the experience doing that.

Andrew S.: Or working with you.

Luke Peters: Or that. Awesome. So, okay, so now, so we’ve talked about the process. You have all the images, they’re all done. But you also kind of have, you know, you can have some images from social media, you’re going to have some Instagram images from influencers. So talk about how and where on the web you can use the different images besides just our website and even our partner’s websites. What other options and configurations have you thought about and used?

Andrew S.: Yeah, for sure. So getting, you know, really authentic user-generated content’s really important for us, and it’s actually part of our strategy in terms of part of our product launches in that we’re actually working with influencers earlier on. Sometimes even before we even got the product into our warehouse where we’re shipping them pre-samples of our product and getting them to create content for us about that product.

Andrew S.: And so the best part about that is that we then syndicate that content through all of our channels. So if you look at some other brands, there’s other brands that, a lot of the bigger brands are actually starting to put this into their strategy in terms of, creating user-generated content is a really important part of what they’re doing.

Andrew S.: So if you go to living spaces.com, the furniture store, almost every product they have on their page, they have a piece of user-generated content that someone has created and submitted to them that they’ve posted because they want to show how that product can fit into someone else lives without them having to say it.

Andrew S.: And so that’s kind of the same approach we took, and that’s what we do. So we basically get, we have a central repository with all of our user-generated content, and that’s what we use to pull from. So for a certain product, we can go in and say, “Okay, here’s 10 pieces of user-generated content. Let’s post a couple of these on our website with the product listing so we can show how someone’s using the product. Let’s take maybe these other ones.”

Andrew S.: And we’ll use them in an email marketing campaign, we might use them for Pinterest or our Instagram. A lot of our interests in Instagram account now is mostly actually just all user-generated content. It’s not even us creating content anymore because we’re getting so much of it. But it’s really important, because obviously there’s a cost involved in creating this content. Even if you’re getting it free from an influencer, there’s still a cost to giving them the product and shipping it to them and all that stuff that happens. But it’s an invaluable because you’re getting really great content that someone else has created for you.

Luke Peters: Awesome. Okay, that’s super helpful. That kind of ties it all together, gives the listener an idea of, start to finish, what they can do with their content. And before we finish out this podcast, I just wanted to mention that this podcast is sponsored by Retail Band. Retail Band isn’t a distributor, we’re not an agency, we’re just purely awesome.

Luke Peters: And to give you an idea of what we do at Retail Band, talking about images right now, Amazon is kind of easy, because everybody understands what happens on Amazon. But with Home Depot, Lowe’s, Wayfair, and everybody else has their own way of running the website and their back-end platforms and literally the SEO per each website. And there’s different rules about how images can be used on the site, what types of backgrounds you can use, what the number two image should be, but then also what hacks you could do to improve your product ranking, your product listing, and how it markets and looks forward-facing to the end consumer.

Luke Peters: So in Retail Band, we’re experts in all of these areas and more, but I think it ties in good to this podcast. So just wanted to give that explanation about what Retail Band does. And you can learn more at retailband.com.

Luke Peters: And I guess to kind of finish it up here, Andrew, oh, I want to put you on the spot here. So I’m going to ask you, so we’re talking about… you actually brought up a really nice brand, though, with Living Spaces and kind of what they do. What is a brand in our space or not in our space that you kind of look to for inspiration?

Andrew S.: Oh, wow, good question.

Luke Peters: Tough one. I had the advantage of writing mine down in advance.

Andrew S.: You did. No, I mean, obviously there’s a lot of brands in different sizes and forms doing really great stuff online. And so, you know, for us it’s important that we’re looking within our category and then, also, what are people doing outside of our category for additional inspiration?

Andrew S.: So, I’d say in our category, maybe not directly in our category, but I love Traeger. Traeger’s doing amazing stuff on the website. They have amazing content, visuals are beautiful. Yeah, they’ve got some really nice stuff. So we kind of use them. Yeti. Again, when you think about Yeti products, it’s an insulated box, kind of like our stuff. It’s an insulated box with a compressor. So how do you sell that?

Andrew S.: And so, when you look at their stuff, I mean, they’re very focused on selling. It’s a lifestyle. I mean, that’s what they’re selling. So other than that, they’re just a box that’s insulated and keeps your drinks cold.

Luke Peters: And costs a lot.

Andrew S.: And costs a lot.

Luke Peters: Yeah.

Andrew S.: You’re paying for the lifestyle.

Luke Peters: Yeah.

Andrew S.: Like Traeger. Traeger’s expensive too, but that’s what you pay for. I mean, these guys are all like the Starbucks of their categories. And so those are the guys we look to for inspiration for some of our stuff.

Andrew S.: And, you know, I think the one thing that I love about us and our team is that there’s kind of no ego about this stuff. We’re continually looking to see who’s doing something differently or better and then how can we maybe adapt that for what we’re doing.

Luke Peters: Cool. Those are great, great options right there. Great brands, great companies.

Luke Peters: I was going to bring up, from the very beginning, I’ve liked Vernetto. They’re just, you know, it’s a heating company. We’ve run into them a lot. We’ve looked at them. They have a beautiful website. They’re different than us in kind of the ways they do things. And even their website, just because it’s international, it’s got a couple of extra clicks until you kind of get into it. But the way that they market and really, really focusing on the product with all the visuals is pretty awesome.

Luke Peters: So all three of those brands tie in really nice to this podcast when we’re talking about photos, content, influencer marketing, and that’s awesome. This has been a great interview, and I kind of just wanted to end it with, if you could sum up maybe a starting point for another brand? So another brand’s listening to this, but they don’t really know where to start. Maybe they’re just shipping their products out, but they don’t really have a team built around it. I don’t know, it’s a tough position to be in. Do you have any suggestions on where somebody could get started there?

Andrew S.: Yeah. Obviously, I think it needs to start at the base or the core, which is just having even just some really good basic product shots. And it can be a little bit more expensive, but it’s worth it because it’s going to help with your conversion rates online. So I’d say start by investing in either an internal photographer or an external photographer and someone you can either, they can take the products to their studio or build a little studio at your office and buy some lighting, and for a couple thousand bucks, you can have a pretty good studio where you’re taking some really great photography.

Andrew S.: And just start with just the core product, and get some really good hero shots. And then you can use that. I mean, that’s what we use for our value-add imagery and our checklist imageries, the same shot. It’s just, we just add some text around it and some icons, and it’s the same imagery over and over again.

Andrew S.: So I would start there, with just getting an, even externally, get a vendor to help do your photography for you and make sure they… look at their portfolio, obviously, first to see what quality work they do. And I think you touched on this earlier, a lot of these products, especially ours, are shiny, very shiny. You get stainless steel, glass. Air fryers are notoriously almost impossible. I’ve had photographers actually send them back to us and say they can’t do it.

Andrew S.: So almost give someone a test, and give them your hardest product to shoot, and if they can shoot that well, they’ll do anything well.

Luke Peters: Great feedback, and it’s been awesome doing our podcast here and talking about these things. Even though we work together, we’re not always kind of talking about these types of ways of thinking about the process, so thanks for that, Andrew, and good day.

Andrew S.: Yeah. Thanks for having me. I really appreciate it, and looking forward to hearing the podcast.

Luke Peters: Awesome.

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