The E-commerce Leader

[00:00:00] Jason: If you’re competing, you’re surviving, but you see your competitor growing and scaling and they’re doing the digital. Then you’ll be a copycat, but you’ll survive
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[00:01:14] Intro: Hey folks. Welcome back to the e-commerce leader. This is one of our host Michael VZ. Jason Miles will be joining me in a second. We’re going to be talking about how to deal with geopolitical e-commerce challenges and how to waterproof your, the ship of your business to be proofed against store. That are now happening or will be happening soon.
[00:01:35] These are not easy challenges to meet, but we have some strategies which we feel from experience of working with our clients and our own businesses have a robust chance of giving you the ability to not only thrive, but potentially have the best possible years in your e-commerce business ever listen on for, to find out more and thanks in advance.
[00:01:56] Jason: So the simple question is where’s demand. Yes, exactly. To your point demand could be so volatile. I didn’t, I hadn’t thought about Germany, but I will tell you now, like I think that the Europeans think, oh, you’d better start selling them the us, but if you’re hearing that.
[00:02:10] You do the same thing, you just think, oh, the U S has cooked where else can I sell? And a lot of smarts jumping into the McCarter Libra and selling into the central and south American markets, which is because it’s a marketplace it’s really booming and they’ve opened.
[00:02:25] The process and systems for us, sellers to, to send into, McCarter Libris system. And, those products go to Florida and then they go to, central and south America, through their system. And but the underlying question is where is demand? And how can I, how can I put myself in the system where demand exists?
[00:02:44] As we all know, it’s near impossible to create demand. It’s so much easier to just fulfill, for, when people want something you’re there, ready to go. And yeah, I think that’s very interesting and I hadn’t thought about that, but that nimbleness, the ability to pivot, just that question of where is demand, I think is a foundational component of somebody who’s going to be weathering the storm effectively.
[00:03:05] Going forward as an e-commerce operator. I think
[00:03:07] Michael: the question of where is demand is an excellent question. You’re not wrong when in a more volatile market or markets or global situation. I think an additional question, which we have to ask now, which we have the luxury of not asking is the more speculative question of where will demand be.
[00:03:22] So what I was talking about isn’t where Germany is right now, because as at the time of recording, what I’m telling you. I was going to say the nucleus area, but suddenly that’s no longer metaphorical that isn’t an actual scenario. So what I mean nuclear scenario, the really bad, but not nuclear scenario that Germany’s demand simply falls through the floor.
[00:03:36] It’s speculation, but it’s not idle speculation because the underlying mechanics of the situation is pretty obvious. If you are sitting in a car teetering on the edge of a cliff, and you’re wondering what the physics is going to push you off the cliff or onto the. You don’t have to be a genius to know that it’s nevertheless, a substantial risk.
[00:03:55] So you should get out of the car. It’s not the greatest metaphor ever come up with in a business podcast, but you get the idea. And I do feel like people have a terrible tendency to think tomorrow’s going to be like yesterday for no particularly good reason except kind of habit. And that’s understandable.
[00:04:09] I’m not criticizing, but I think that’s dangerous thinking in a situation like this way. Where demand is a great question, but where is it? Good demand going to be all another way of looking at it is where could where’s the risk that it will stop is another way of looking at. So
[00:04:22] Jason: that’s the that’s on the marketplace side, which, we just, at the high level, 30,000 foot view, you have to say as e-commerce operators.
[00:04:31] Then it’s a beautiful time to be an e-commerce operator. There’s more and more, marketplaces, opening up all over the world, on the whole, it, so there are more options to, to pivot, even in tumultuous times and, thankfully those European e-commerce operators that are.
[00:04:46] Primarily into Germany right now could do the pivot. Instead there’s nothing that stops them from doing the pivot as needed to, to the U S or to central south America or to, whatever markets suit them. They literally can just boot it up, work through the details. And yeah,
[00:05:04] Michael: I would say when you said there’s nothing that stops them, it almost broadest.
[00:05:07] Perspective. You’re absolutely right. And I think, I suppose what I’m encouraging that people should do that I have to say, one note of reality is that the capital required to break into U S market might be five times what’s required with a similar product line in Germany. So that’s one thing I would say.
[00:05:23] And back to the point you were talking about with capital. If you have a good track record as an operator, and you can sell whoever your equity partners, your lenders on the idea that you’re going to make it big in America, then you might find the capital is reasonable, but you will need to raise that capital.
[00:05:39] And that is not a small thing. That’s all.
[00:05:41] Jason: Yeah, totally agree. Yeah. Many details are, provoked by such an idea.
[00:05:45] Michael: So other types of pivots, I guess we could talk about product category pivots. What are you, what are your thoughts
[00:05:50] Jason: about that? Sure. Yeah. I think the general consensus of, recession based.
[00:05:58] Product presentation versus, boom time product presentation is something to think about. Some product lines are just built for recessionary period. We own one of those pixie fairs, sewing patterns and sewing patterns are for people who, so things rather than by things. Who sells things rather than buy things well, hobbyists do or people who are financially constrained do.
[00:06:20] And we’ve done our business since 2007, 2008, we started on eBay. We were power sellers originally. And then in 2009, we got into the sewing patterns, not just the manufacturing or making. And what we learned through all of these years as, if it’s easy to buy something as a giftable thing, people will do that.
[00:06:39] It’s harder to make something as a giftable thing, but if you’re in the business of helping people make things, then in a recessionary time, You’ve got what people want more than in a non recessionary time. And I guess if you can follow that logic, then you get my point. There are products that work well in recessions, and there are products that work well in boom times.
[00:07:01] And you want to evaluate what you’re selling in light of that concept and think through, okay. If people are constrained financially, are they still going to be buying my Birkin bag? $40,000 or my, Rolex watch. Now the answer might be, yeah, because I sell it to billionaires and I don’t really care.
[00:07:19] But the answer might be, oh, this is a luxury item for the middle class. And in a recession, they’re not going to be buying my luxury item. And that’s the kind of thinking you want to bring to it. And then the question is, if I’m selling an item, that’s in jeopardy of being out of favor, w how could I be nimble enough to pivot and see, is there a product that’s similar that actually works well for a recessionary period, as my current product line does for a boom period.
[00:07:46] And that line of thinking is you’re playing out okay. What’s worst case best case, and what product fits in both of those cases. You might have a product that hasn’t done well at all for the prior, 6, 7, 8, 9 years, boom time period. But, as soon as recession hits, that product will be your new golden, much loved product that you’ll want to scale up stuff like that happen.
[00:08:08] And so I think that’s an important thing to think through, just in terms of what you’re offering and whether it fits the times, would be the way to express it.
[00:08:16] Michael: Yeah, I liked that a lot. I think that’s very important. And I guess that’s, a specific version of the kind of message to market match.
[00:08:23] And th I suppose what we’re talking about, the people stay the same, but their mentality changes because their situation’s changed or. To be more sophisticated, their perception of their situations changed. I guess that’s what actually drives is, in motivation, what drives action, right? What drives behavior is perception of what’s happening while then actually what’s happening.
[00:08:38] But yeah, interesting that the demographic hasn’t changed, but their experience of life has changed. And so their behaviors change. The other thing I’m in. The other thing I wanted to say is this is a perfect example. Again, you don’t necessarily have to go from one thing and pivot to another. You may find you have to do that over time, but the starting point for me would be also always to diversify, to have some products that as you say, you believe should behave well in a recession, some products that behave well in a boom.
[00:09:05] And then to see what the market actually says. And if you are forced to pivot, then at least you have a foot in two camps as it were. Whereas if you’re trying to start from zero, you have to pivot in a hurry, then that’s going to be very hard to do. And relative to the competition is already established in those markets as well, I would say.
[00:09:23] Jason: And you said. A few minutes ago, message to market match is one of the elements here. And it could be as simple as retooling all your copywriting. Maybe you’ve got a set of benefits and features that emphasize the exciting upside having your product, but maybe, in recessionary times you want to retool your copywriting so that you have an emphasis on.
[00:09:44] How it saves money, how it lasts longer, how it, is indestructable, all of those elements that would satiate someone’s need or desire for the product not being necessarily repurchased quickly, which is. As e-commerce operators, not what we want to have happen, but if the, but obviously it’s in the best interest of the customer, planned obsolescence is the phrase people use for many products that, you just have to turn them away after three years because they don’t work anymore.
[00:10:12] In a recessionary time, you better not be making that claim or even presenting things in that fashion because people are going to want to lean into a good value for money. Long-lasting all of those types of things. And that, that copywriting, it may, and it could be all true. I’m not saying Ben the truth, I’m saying just what you’ve presented, what you put out there as your first selling feature point, in your copy might need to be adjusted.
[00:10:37] In, in light of these hard times. So that’s, it’s an interesting angle as well. It might not even be a product change. It just be, a product retooling, yeah.
[00:10:45] Michael: So repositioning it, if you want to put that, we’ll return the copy. Another type of repositioning that you’ve implied, which applies to a couple of my clients actually, is that you guys have a, with the downloadable patterns for setting, it appeals to hobbyists, but it also appeals to people who.
[00:11:00] Might in a recessionary situation, turn their hobby into a work, and I’ve got another client who’s got, helps people with baking products. And again, quite a lot of people to judge from the quantities they order and some of the, product photos and feedback that he gets are doing this as a kind of micro business and actually in a recession.
[00:11:17] Those sorts of things I guess, are very likely to grow because traditional employers may be downsizing. And, people will be, rather like in the pandemic when those sort of spikes in interest in e-commerce marketing and stuff, because people go, oh my goodness, I need to make an alternative source of income.
[00:11:31] And I think that’s interesting that for certain products for you, it happens to be for my clients and some clients that could be a micro pivot. And again, it’s a repositioning rather than the whole full-on pivot that you S appeal more strongly. You tweak the copy to say this could be a business kind of thing, or a hobby becoming a migraine.
[00:11:49] Jason: What you just put your finger on is an interesting pivot in itself, which is, and we have clients that do this. They start with a B to C product and they’re trying to find individual consumers to buy for personal use. And then what they discover is that there’s actually commercial use of the. Schools, restaurants, offices, things where people will buy in bulk and you’re not really set up or, productized packaged for bulk purchasing, but you realize, oh my gosh, people will buy this in 50 or a hundred count package.
[00:12:20] Rather than just in a two-pack. And that B to B business, switch that pivot. Sometimes people don’t do pivots or switches like that because in good times, yelling I’m good. I’m selling to the individuals and yes, I probably could make some money. If I, switched to selling bulk for B2B, but we’re busy, but in hard times and the recessionary times, and you’re like, how do we survive?
[00:12:43] It’s yes, we now have a product line. This designed exactly for the dentist office or the doctor’s office or the schools or the churches, or the, of the restaurants, whatever it is. And, those, the hard times force you to lean into something that was there all the time. And packaging and customer type of customer pivot, I think is one that’s maybe there for people and they haven’t taken advantage.
[00:13:06] And it will just be emphasized because of the market conditions. Yeah.
[00:13:11] Michael: All the way. That’s a tweetable. I really liked that three people from Jason Miles, not myself, hard times, full sheet to lean into things that were there all the time. I really liked that because I think it’s absolutely true. There’s another praise on the other side of the ledger.
[00:13:22] If you like that is, Bad habits, breathing good times and, ignoring opportunities because you’re, fat and happy, as a business is not great practice. Anyway. Yes, in the short term, maybe you’re too busy to focus on it, but in the medium term, it probably should be something you’d exploited and put a team member on to.
[00:13:36] The other thing I’d like to say about that, Simple pivot is actually can be very simple, but profoundly good for your bottom line. And I’ve got, another client in the mastermind. Who’s selling products to that in the social catering space where he’s realized, like you just said that there is a mass market for schools, restaurants, offices, and, actually you can get Amazon to just fulfill by the content.
[00:13:56] So literally the cartons you sent in shipping cartons, they just send them back out again.
[00:13:59] So another thing we ought to talk about and you are the man to talk about digital products. Is the pivot from physical products to digital or rather again, is it a pivot or is it a diversification and addition rather than a, a change?
[00:14:12] That’s something that I find. Very little adoption of amongst my mass, my members so far, and I always feel that’s an incredible opportunity that we’re missing. And again, to your point, the hard times may force them to lean into things that were there all the time. If you spent 30 years selling a product line or serving a particular type of customer, then you probably have incredible expertise that you could package into multiple different types of information products, or books or training.
[00:14:36] And so you guys are the expert at that because you did that very thing. Yeah.
[00:14:40] Jason: Yeah, it is one of those things where it was there all the time and what the reason people will pivot to it is because they’ll look at their cost structure and they’ll say, my goodness, we can’t afford to spend this much money acquiring customers by, having a loss leader product.
[00:14:57] And then, then someone will say, what else could we give the, the. The customer to, get them in house. And you’re like, oh, how about a how-to guide? How about a digital product? There’s zero cost of goods. Wait, it’s free to us. And that kind of line of thinking because of the stress and pressure of finances on the lead side, the lead acquisition side, finding new customers that will lead people to digital.
[00:15:23] And depending on the marketplace and the, how, customers operate in that space and whether they have a demand for information that’s obvious, and it can be fulfilled with either a free item or with a paid item, the business will then explore those. I would call them a modality shift from physical to digital.
[00:15:43] And that shift is it is there for everyone. And I’ve just beat this drum and no one dances around the fire, but I don’t care because I’m going to keep saying the same thing over and over. If you’re an e-commerce operator and if you’re not using digital goods to acquire and grow your customer base, then you were leaving a lot of, energy on the table.
[00:16:06] And that is a mistake. And you will discover the error in that. And the pressure of our times, and you’ll be grateful that you made the change and I’m not to be too antagonistic about it, but it is there it’s there already, and people just don’t want to do the work to figure out how do you rig up a digital.
[00:16:26] Good. How do how do you make this work through your Shopify site? Or can you do this on I’m an Amazon seller? I can’t do this on and on the excuses go, but under the strain and pressure of. The crush of a down economy, you will find the gym in the digital goods and you will love it.
[00:16:46] And, it just will happen if you really lean in that direction. And, I guarantee it, just, it, it will happen the more you spend time exploring how to create and sell digital goods either again for free or for money. They and how they benefit your business. The more you’ll see the economic advantages of near zero marginal cost and instant deliverability, and the whole host of benefits of digital.
[00:17:10] So you can tell I’m on my soap box right now. I call him all fired up about it, but it’s just because I just, there’s just, it’s such an obvious thing once you’ve done it once you’re there. And, we built our whole business around this for, 12, 13 years now, 14 years. And there’s so many other people who could.
[00:17:27] Build a business around digital that don’t and they don’t because they can sell the physical items and make a decent margin. Driven into a cul-de-sac that they’re hanging out in and they haven’t had to buy pressure, look for other options. So there you go. That’s my soapbox sermon on digital goods.
[00:17:47] Michael: No, I’m all feed banging that drum. I try and do it on your behalf amongst. For your sake, but for their sake amongst it, the most of my members, I haven’t really bind the gym hard enough, because as you say, partly to be fair, we’re all very busy owner operators of any business, but also, there is, again, we talked about mentality shift and this brings this nicely full circle.
[00:18:08] The sunk cost. Comes in lots of ways. Like you’ve learned a lot about physical products and then you come up with the idea of maybe creating a book or a physical course or whatever other modality it might be and people think, oh gosh, now I can’t be bothered with that. I’ve learned a lot about physical products and I don’t want to pivot.
[00:18:24] And that actually is a very common sensical reaction in the sense of sticking to your knitting as a strategy decision, if. If it makes sense economically, but as you say, near zero marginal cost is critical. When the actual cost of raw materials, transports, fulfillment, everything is going up. And then the deliverability piece has gone from always being a difficult thing with physical goods to being really not only very difficult, much more delayed.
[00:18:50] But not certain you’ll ever get the goods. There are people in 2020 who ordered goods in February and got them in December, which is crazy friends of mine. And that meant obviously just a monster hole in their cash flow. And in there the money was tied up for months and. In an era when we had locked downs in the west, but actually not much in China weirdly enough.
[00:19:12] That ability to bypass that whole nightmare is for me, just incredibly profound
[00:19:17] Jason: with you. And I would also say that’s why in times of economic recession or big down economies, this is why some companies will leap forward and take market share because it’s a very simple story. Recession heads hits every player in a niche, the player that can lower their cost of acquisition or their operating costs and still generate a good margin or revenue.
[00:19:46] Wins and they win on a daily basis. They went on a margin percentage basis and then they start out spending on advertising. And what you’ll see is in the down economy, those businesses that have not incorporated digital into their strategy will have such a tremendously costly business that they’re operating, that they will grind to a screeching halt on the obvious things like advertising.
[00:20:13] Staffing, investment in new products and those that have more margin because they’ve introduced digital into their product suite and acquisition strategies. We’ll just have more gas in the tank and they’ll be able to spend more on a daily basis on ad-words and on, social media.
[00:20:30] To acquire new customers and there’ll be like a screeching halt for the one that doesn’t have a digital game plan. And it’ll be like a tailwind or a lift for the other that does have the digital strategy. And there you go. In every niche and industry, you’ll see players that just didn’t embrace a digital strategy.
[00:20:49] Wind down, maybe they’re close all together. Maybe they go bankrupt. Maybe they just are hurt with. And those that do have the digital strategy will take, share, and, and grow and flourish and survive. And, it, it’s not rocket science understanding that it’s just, it’s obvious. It’s plain as day.
[00:21:08] And when you understand the economics behind physical product business versus digital product business. And, so I do think that we’ll see more and more of that adoption by force or adoption by requirement of digital products and digital, resources for customers because.
[00:21:25] If you’re competing, you’re surviving, but you see your competitor growing and scaling and they’re doing the digital. Then you’ll be a copycat, but you’ll survive because you’ll be like, oh my gosh, everybody in my industry started doing digital goods. I therefore did them too. I was dragged into it by, by requirement.
[00:21:41] Or it will happen so fast that you go bankrupt. And the other people who had pivoted and it had a layer of. Fat, I guess you can call it and their profit loss. They survive healthily through the winter and, and you’ve run out of, energy and there they’ve continued on for prosperous times,
[00:22:00] Michael: so just to make sure we’re crystal clear for anyone listening to digital strategy, meaning digital products I E informational base products or. Products made of electrons, not atoms as they put it. Yeah, exactly. So his one thought about this is, I was reflecting on the phrase it Springs to mind from what you’re saying is necessity is the mother of invention.
[00:22:19] When the pressure’s on you get creative because you have to, which I think is very healthy. It’s the opposite of bad habits breeding good times. But what I. Very interesting. You just flagged up what I think I see most people actually doing, which includes myself. We’re higher order primates monkey, see monkey do that’s how monkeys work.
[00:22:35] That’s how humans work. It’s what in our genes. But we can go beyond that because we can think and plan and act the great human ability if we choose to embrace that. And so I think necessity is an interesting word because. That’s a perception question, isn’t it? I think a lot of people right now don’t perceive the necessity of doing something until the competition does it.
[00:22:53] And then they even, they don’t know why they just think, oh, I better do it cause it’s not working anymore. Whereas I would with you, which is to say it’s necessary in the environment we’re in and all the factors we’ve put in, recession, supply chain issues, et cetera, et cetera, to.
[00:23:09] Pivot. For me, the simple question is, are you going to wait till everyone else has realized that in your talent, Charlie, to your point, it may be too late by then because they’ve taken market share. It could happen very fast. Where are you going to anticipate and do it now being a person that moves first.
[00:23:22] And I think that first mover advantage accrues in mechanical, huge amount of stuff, have you follow up on it? And I hope that what we’re doing today is encouraging everyone to be the leader literally of their market. Be the person that examines the dynamics thinks through their supply chain thinks through the demand side is really consciously forming a strategy and they may have the courage then to make those bold moves.
[00:23:45] Jason: Yeah, no, totally. I think that’s the right way to approach it. Wonderful conversation, man. You want to give us the overview recap of the, the show here at rapid.
[00:23:55] Michael: Yeah, I’ll try and summarize the best I can. So I guess the problem with dealing with is the demand side and supply side problem.
[00:24:00] It is global in scope. I’m probably not going to go away, which is really the background for why we’re going to do this. We talked about preparing to pivot and the next stage being possibly diversifying, and then actually pivoting. Metro strategies that go across everything else. Being nimble, being willing to change your mentality and, get a mental and emotional gas in the tank.
[00:24:19] As you put, it is really important. That should be a trademark for small businesses. That should be something we can lean into this ability letting go of sunk costs as quickly as possible. And, yeah, preparing yourself for that sort of pivoting thing. Being aware of when market changes happen and on the demand side, staying attuned to that.
[00:24:35] And as you say, maybe retaking your messaging to meet the resolve recession mentality of the consumers, possibly changing out your product mix. If you need to have, gives them a more recession proof. You may wish to consider, business to consumer things and some products lend themselves to becoming business to business and depends how you find business.
[00:24:55] It could be a micro business. And then not least, as you said, I’m utterly with you and this, the modality pivot that you may wish to consider adding digital products to the mix and adding, as you say, that digital fats to your profit and loss. And if you get in there first and you’re the person with more money to spend on.
[00:25:12] Gaining market share through being able to afford more advertising and outspending or competition, then you can be in a beautiful place to take market share. So it could be the best possible time to be in business, which is a strange thing to say, but I think you’re right. It is when the wealth is transferred and it could be you that gets to benefit.
[00:25:28] While Jason’s just dealing with the tech issues suicide. Let’s just first of all, so thank you very much to everyone who’s watching and listening. Don’t forget that if you want to find us on Spotify or apple podcasts or any other place that you just look for the e-commerce leader, where I on all the podcasts, medium media, I should say.
[00:25:49] If you want to join us live on calling. We have the, hot take show on Tuesdays at 8:00 AM. Pacific 11:00 AM. Eastern 4:00 PM. UK time, 5:00 PM central European time where we have a panel discussion with Chris green, Kyle Hemer and Jason and myself thank you very much for listening everybody.
[00:26:09] And, we’ll wrap up. And, look forward to speaking to you seen on the e-commerce leader.
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