The E-commerce Leader

[00:00:00] MV:
[00:00:00] JM: A good brand is launched on the back of a good product. So, you’ve got what you’re looking for is, is, some angle in a niche where there’s a product opportunity. and so the 1st step is find that nature. I guess you could say topic or I would even say it’s not so much a topic or a niche.
[00:00:16] Smart e commerce operators know that net profit is the lifeblood of a business. Better a small and profitable business than a large one which earns no money. The Profit Habits Workbook by Jason Miles gives you 17 specific proven profit taking actions. For a limited time, we are sharing this valuable resource with our listeners completely free.
[00:00:39] Download your 60 page workbook and start making your business more profitable today. Just visit the e commerce leader. com forward slash profit habits. That’s the e commerce leader. com forward slash profit habits.
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[00:01:18] MV: Private labeling on Amazon was all the rage back in 2013, 14 and 15 particularly, and I should know because I started researching that in April 2014. How my first private label Product sells my own product by December, 2014.
[00:01:35] So I’ve seen millions in sales across my clients and friends, brands with their own products. Now you may have been selling other people’s products, or maybe you want to start online from scratch, but either way you may have dreamt of launching your own product, your own brand online in these episodes, we’re going to discuss how you choose, develop and validate your first branded product.
[00:01:53] In 2023 and beyond. Jason, you ready to plunge into
[00:01:58] JM: this topic? Oh, I love this topic. It’s so fun. There’s so much opportunity in e commerce still today. And I know this, strategy was maybe 10 years old now, but I would say that just means people have perfected it. And there’s writing that’s been done about it and mentors you can find.
[00:02:17] And I think there’s huge opportunity here. So I’m excited to talk about this one today. you mentioned a few phrases there in the intro, branded product, private label, that’s debatable as to what to call it. Exactly. I would just say launching your business with your own product that you would call, your own, on Amazon, let’s say as the, the gist of the conversation for today.
[00:02:39] Shopify is a whole nother animal in my mind. So I think just launching on Amazon is probably the, the, Area of emphasis we might want to be restrained to in this conversation, but whatever you call it, having your own business. Selling online via e commerce is, was the dream of mine starting in 1998.
[00:02:58] And I didn’t figure it out until 2008. And that’s a long old time ago now and seen a lot of different models. But the reality of it is building your own business online is available to almost anyone in the world now. And it’s fun to talk about such things. So yeah, let’s jump into it, man.
[00:03:16] MV: Absolutely. And just, just to say, before we, put the end at the beginning.
[00:03:20] So what can you gain from this? I think one of the reasons to develop your own product is simple run and reselling other people’s products. It’s more expensive and it’s more work, but you can. Millions, the most extreme version of which is Ben Leonard, a friend of mine who I saw right from the beginning.
[00:03:35] I haven’t seen him privately. He’s now becoming a big figure in the sort of training space. And he literally built a brand from scratch. I think he spent 14, 000 and he had a few thousand dollars in loans from his parents in total, and he sold it for several million dollars within three years, which is kind of crazy.
[00:03:51] I don’t want to set an expectation that’s unusual. Normally it takes a few more years than that, but that is the level of outcome that you can get from getting this right. So it is exciting stuff and that was sold. I think three, four years ago. So not an ancient story. So let’s get into this. So the most important thing I think is picking a market.
[00:04:10] And I think when it comes to market research, people plunge into using their laptop computer and software and overwhelm themselves with data. And I think the starting point is going to be you. And your needs and those of your friends and especially people who are into obsessive activity. For example, Ben was into CrossFit.
[00:04:29] And so that’s an ideal place to start because there’s sort of people that really, really care about their equipment and it lends itself to physical products. So I think that’s the most important thing I would say. Don’t start with the numbers. start with yourself. Otherwise, you’ll just be tasting the same big markets.
[00:04:43] Everyone else is chasing and you won’t have any difference in your understanding. So you won’t have a competitive advantage either.
[00:04:50] JM: Yeah, right. No, I totally agree with that. And the reality of it is, If you do all of this in your on your laptop and just in your mind, you’re probably making a mistake.
[00:04:59] It’s probably wise to get out into the real world in your life. Go to the stores. You like to frequent go to the places that you are, commonly find yourself wandering around and looking at things where you really know stuff about what you’re looking at. and and the ultimate reality is that yeah.
[00:05:14] A good brand is launched on the back of a good product. So, you’ve got what you’re looking for is, is, some angle in a niche where there’s a product opportunity. and so the 1st step is find that nature. I guess you could say topic or I would even say it’s not so much a topic or a niche.
[00:05:30] It’s a group of. Buyers who is the customer that you want to create a product for and, there’s a lot of nuance there, because as those of us who have worked in different industries know over time, some, niches have communities of people who. Aren’t nice to serve, they’re just not nice or, it’s an industry where you’re always looking for a better alternative.
[00:05:53] There’s no loyalty or it’s an industry where, it’s customary for it to be combative. a lot of unhappiness, a lot of returns, a lot of. people who just expect to get ripped off in a way. And so sometimes niches are tricky like that. And other niches are like the nicest people in the world.
[00:06:11] People who are just like, your nicest aunt or uncle who always are cool to you. and so you want to think through who you’re going to be selling to. as a first step. All right. So any thoughts on that? Or we want to jump into step number two. Yeah. I
[00:06:26] MV: think that, just to underline really being kind of centric on a particular type of customer is really important.
[00:06:31] And one rule of thumb is, could you find them used to be, could you find them by an industry magazine? I still, that’s not a bad starting point. And the reason that’s healthy is because it gets you out of the Amazon space. You’re going to end up being multi channel, go and talk to Jason. If you want to start yourself on a Shopify store, that’s a different animal as you say, but.
[00:06:48] You want to create a brand that is ultimately centric on a reasonably unified set of customers. So they’re all over the top. Like if you, people who like using Bluetooth phones at 9 PM, is that mothers, is that sons, is that older or young? We don’t know. That’s a weird definition of a customer.
[00:07:03] Don’t don’t do that. Find somebody who has some units. The about them easy to target. And as you say, people you would like to work with who are useful people. The second step after that has been much discussed, so I don’t think you need to labor it too much, but jungle scout or helium 10, you need to do some keyword research, not as a substitute for understanding your own consumers, but rather to check that your ideas are going to make sense.
[00:07:25] So it’s really idea validation rather than a substitute for your own ideas. And can I, whilst you should do your homework. I think getting obsessed with keywords when you don’t have a product is, is backwards. In the end, the only way to really know whether you’ve got a product that people want is to get the product in front of your customers or your would be customers or some form of it, even if it’s an image or whatever, and then you’ll have to do a test launch and really refine the keywords.
[00:07:51] But I think it starts with a match between a customer and a product first. The key was a sort of bridge between the two, if you like. So that’s the way I tend to look at it.
[00:08:00] JM: Yeah, I totally agree. I have a book I love on this whole topic. It’s called growing a business by Paul Hawken. And I’ll tell you one quick story.
[00:08:08] I know, Michael, you’ve heard me tell the story before prior podcast, but, he, he, founded Smith and Hawken by, he was a, a grocer, grocery store guy. And it was like a whole foods type, health store. And he would visit the farmers who would provide them with the food. And he got in the pickup truck of one farmer with him and the guy, they drove around and the guy grabbed a shovel out of the back of the truck and Paul noticed that there were like a dozen broken shovels in the back of the guy’s truck.
[00:08:36] And so the guy had to pick 1 that wasn’t broken and then they went out and they were in the field and they were doing something and they walked back to the truck and he threw it back in the back of the truck and he said when he was doing it, these darn these darn tools, The Americans don’t know how to make them.
[00:08:49] I wish we could, I wish we could get some tools from England. That’s where they know how to make them or something like that. And then, and it put this little splinter in the mind of Paul Hawken, like, why is this farmer have bad shovels? So then he goes to England for a vacation, and he’s going to these gardens, like a tour, like a Victorian gardens or whatever.
[00:09:08] And he’s looking at these [00:09:10] gardeners getting this tour and the guy has this, this spade. And he asked him, he said, that looks like a, rather hefty spade there. He said, well, this was my father’s, it was passed down to me. And then he was like, really? And then, so he started to look in this whole issue of high quality British gardening tools.
[00:09:28] And in America, you couldn’t get any of them, so his 1st business was to import a container of high quality bridge, shovels and spades and, all the various types. And that was his 1st business venture with Smith and Hawken and the ultimate sold that business for undisclosed amounts. But it’s currently a shelf brand at target.
[00:09:45] It’s a very, very, remains to this day a popular brand. so he saw a hole in the market because there was something missing, and it caught his attention. So I would encourage you all to. To think about those types of scenarios. What do you, what are you seeing out there? That’s not, being done well, that kind of thing.
[00:10:02] MV: So I love that story partly because, a bit, a bit of British pride is left. I don’t think I would go to Britain these days for quality manufactured goods. Frankly, although we do some stuff, well, I guess here we get a gardening, but, it’s interesting that he basically from his own natural experience found a need that was unmet or poorly met.
[00:10:21] And that is really a great story because that it’s exactly really what you should be looking out for. And I think this to that point, it has to grow out of your life a bit. If you want to start a business and you really have no idea what to do, I don’t think you should start by creating your own brand.
[00:10:36] I think you should resell other people’s products and discover something on the way, rather than starting with, I’ve got to create a brand, but I have no idea what to do. So I’ll just be led by the numbers. I don’t think that’s a very great, it’s got not got much future to it. And I’ve seen a lot of people do that and I’ve tried it myself and it doesn’t really work.
[00:10:51] Veteran e commerce operators know that net profit is the vital lifeblood of a business. Better a small and profitable business than a large one that earns no money. The Profit Habits Workbook is designed to give you 17 actionable, specific, and proven profit taking actions. You can implement them at your own pace and let the power of this trusted framework revolutionize your company.
[00:11:18] The Profit Habits Workbook makes profit improvement, a fast and efficient achievement. For a limited time, we are now sharing this resource with our listeners completely free with no strings attached. To download your 60 page workbook and begin your journey to a more profitable business today, just visit theecommerceleader.
[00:11:39] com profithabits
[00:11:40] JM: Sure. Okay. So that’s step one. Is that finding that niche, that idea? What’s step two in the process?
[00:11:47] MV: So step two is product design and validation. So people tend to want to skip straight to that sell something, but I think getting a design of some description that. Even a handful of people in your target market, really, including you probably think is actually an improvement and what’s out there already is really important and it takes time.
[00:12:06] This is the bit that can take a few months. And if that’s the case, I think that it’s such an important keystone is to kind of cornerstone to your business or keystone. If you will, in the art of your business, your first product, you’ve got to work on it, but you don’t want to be working a vacuum and that’s the art.
[00:12:21] So really it’s a bounce between, it’s a dance between you working on your own, late nights maybe with an industrial designer with a manufacturer get some samples sent to yours or or a which kind of prototype and then taking it to people who use that kind of product and say hey jason use my spade is it going to break and then you go in the garden you go mike i’m afraid that the head broke off the first time i tried to move some heavy soil and you go back and fix that and then come back with version b so you have to be willing to to do it through that dance i think that’s the taking pains That makes the difference these days between a product that works and one that gets sort of meh reviews.
[00:12:57] JM: Yeah, totally. I, I get products sent to me as an influencer for the Happy Gardening Life brand. And frequently I don’t ever do any kind of reel or video or anything like that because it’s garbage products. it’s sort of awkward, but these people have made these and they’re in the process of launching their, on to Amazon and they want influencers to do videos and reviews and that kind of stuff.
[00:13:23] Frequently, I’m like, this isn’t even a good product. I can’t even, what am I supposed to do? so there’s a little bit of awkwardness there. What you really want to do is kind of do the prototype, send it around a bunch of influencers and say, is this really better than anything else is already out there?
[00:13:37] and. Get feedback. I will also say as it relates to product design and validation. The other thing that you want to try to look for, which is very hard to find is an unfair competitive advantage. And if you look for a product that has a low barrier entry, like, for example, a low what they call minimum order quantity, that means anyone can do what you’re doing.
[00:14:01] And, you want to think through what is it that you can have a barrier to entry for competitors to not be able to do what you’re doing. Here’s a good example. I just looked for looked at a business that’s for sale and it’s a seed company and I almost bought a seed company like 6 years ago. So I kind of looked in this space.
[00:14:20] This seed company is available and it’s a good going enterprise. And 1 of the comments they said in the, in the description was. As seeds are not permitted to be imported from China or any other country, this business has natural competitive advantage because you’re only competing against Americans on amazon.
[00:14:45] com. And I thought that was very smart copywriting. Most people wouldn’t understand that, but there are things like that. Paint, for example, can’t be shipped. That’s why Amazon doesn’t sell it. There are many things like that where. there’s an unfair competitive advantage that if you just don’t know about it, once you start to look into it, you want to look for things like that, um, and, and really factor that into your, your search process.
[00:15:13] MV: Absolutely. Yeah. I love what you’re saying. So I think the competitive advantage can come from knowing your market better than other people. I think that’s really important, but I think anything you can add to that is great. And especially in your case, the example of the seeds, if the government is reinforcing Your competitive advantage.
[00:15:28] That’s fantastic. So you got people with millions or billions of dollars in resources helping defend your business is brilliant. I totally agree with that. And just on that point, I think the natural thing, and I’ve got loads of experience of sourcing from China and most of my clients for certain types of, on the cheaper end of consumer products, mostly.
[00:15:45] Sort of thing that sells on Amazon do tend to still source from China, but I would really encourage anyone who’s starting from scratch, especially, to start, if you’re going to sell in the USA to consider sourcing in the USA, it does soundum, rather expensive and it can be, but the prices are coming down to a degree.
[00:16:01] There is so much of a build out in infrastructure in the US. there is the cheapest electricity really in the developed world and much cheaper than China. Now China has poured money into the infrastructure build out. So it will be cheaper for a while. But if you can even better find something like seeds where you can only source some US or maybe supplements where you would be well advised to source a new us.
[00:16:24] it’s a really great, advantage for multiple reasons. And one of the competitive advantages you have is you can spend your money quicker. You can source something, it will get to Amazon within a month. Mm-Hmm. instead of three months. And then you sell that inventory through, you reinvest the cash. so that’s also something that is worth thinking about.
[00:16:38] JM: another example, if you want another example of very clear thinking, there is, sales territory rights. So, we have a client who has the North American distribution rights for a whole line of products, so he doesn’t have to worry about anybody sourcing it and selling it on amazon dot com because he has the rights to do it.
[00:16:57] From the manufacturer who’s not in, it’s not in China. It’s not in, in the U S it’s, other, other country of the world. And, there are brands in Germany, even if you think through like brands in England, brands in Germany, very sophisticated operators, maybe they have a territory rights, arrangement where North American rights could be extended for one product.
[00:17:18] And then you really have that again, unfair competitive advantage, which just safeguards you from. Competitors coming in and undercutting on pricing and, the whole nine yards. So think through stuff like that, because I’ll tell you one thing. Most people that I’ve seen fail, failed because they didn’t spend enough time and energy thinking through a really, really meaningful product strategy.
[00:17:41] And they just went with a quick and dirty and the quick and dirty can be copied. and so this is where, for my thinking, this is the most important of all the steps. because it’ll set you up for success, quick
[00:17:52] MV: and dirty can be copied. And also, I think that these days the expectation is higher.
[00:17:57] I mean, back in 2013, 14, there was a huge surge of customers on Amazon. Amazon was really trying to sort of shovel in more supply to fill up the demand. And they become, they became the de facto biggest link between the Chinese factories on the East coast of China and the West coast of the U S and then the whole of the U S consumers.
[00:18:16] That is not new anymore. And that may even start to break down. [00:18:20] So what people really want now is fantastic products with great branding. They’ve always wanted that. But I think that the market for mediocre goods with a decent kind of image and some aggressive marketing is gone. So what you’re saying is even more important now.
[00:18:33] And I think, yeah, having a real strategy is important. So let’s keep going through the steps. So the next thing we’ve touched on.
[00:18:40] JM: Can I, can I, can I pause us for 1 other, important commentary there before we move on to step 3, there’s a whole nother layer of product design and validation. And that’s the financial component of product design and validation.
[00:18:54] And this is where a lot of, new ecommerce operators get tangled up and and that’s really the basic unit mathematics. Required for success, and we can’t we can’t blow past this 1 without talking a little bit about that. In my view. I mean, I think that’s a key 1 if that’s all right, Michael. so, the, the, the thing about it is at the base level of an individual per unit basis.
[00:19:17] What you’re selling has to have a markup or a margin that will float the whole boat. I mean, it is the oxygen in your system and a lot of people will find items that they can. Manufacturers resell, that they might have a one times mark off the buy it for 5 and sell it for 10. Maybe they have a two times mark up, buy it for for 10 and can sell it for, for 30 or whatever.
[00:19:46] But the reality of it is, if you don’t get to the point where you have a really, really healthy margin. Then you will not be a profitable, small business. You can be a profitable, large business and make it up in volume as they say. But, like, Walmart, for example, they have very small, per unit profit, but they make it up in volume.
[00:20:11] That is not what we’re doing as e commerce kitchen table entrepreneurs. We have to have margin in the things we sell, or we will look at the end of the period, whatever it is, a month, a quarter, a year, and we’ll be like, where’s the money? And it won’t be in your bank account. and so you just have to think through the math.
[00:20:29] We have, various clients we work with, various, Shopify sites we manage, Amazon accounts we manage. We have our own businesses, and I can just tell you, you want to be looking for five times markup. Or more for a product or two. Now you can sell other products that have lower markup, but if you can find one that has five or even 10, you can even get products sometimes that have 15 times markup, you’re making a bunch of money.
[00:20:58] For every unit you sell, those are what you’re looking for. And I’ll tell you, they’re not easy to find, but, anyway, enough said on that. I know you probably have strong opinions as well. Michael.
[00:21:09] MV: No, I agree. I mean, I, I guess it’s, how do you fit a quarter into a pint cart here? Because, I mean, I’ve done the entire course with 300 and.
[00:21:17] 30 videos on this at one point, which is excessive as courses go. But really that was kind of, when you really get into the detail, you need to get into it. And I agree with the unit economics. I think one of the things you can do is buy your market choice, influence that in a generic way, in a general way.
[00:21:34] Before you get into the numbers, which is to say, if you pick up very, very niched down, there’s less competition, which does means that you’ve got less price pressure and you really solve a problem. Well, that other people don’t, you can charge that little bit of extra money relative to that market as well, both of which keep the price high and then a low competition niche or lower petition will keep the advertising spend a bit lower.
[00:21:55] So again, yeah. All of which contributes to your profits per unit. So no disagreement with me. I mean, you have to spend hours. so there’s tons to get into here. I think this deserves, plenty of time and we’ve talked about the basics of this. Jason, should we pick this up in our next podcast? Cause we, we’ve only got through the, First two or three steps and they are really important to get right. So, so we get, let’s do that manufacturing.
[00:22:19] JM: Let’s do that. Yeah. Let’s go slow and do it right, man, on this one. We’ve got stories to tell and details to talk through. So yeah, happy to do a break and then pick this up as a, two parter episodes, if that makes sense.
[00:22:31] So
[00:22:32] MV: just to recap a couple of things from my side of the table, and then Jason, you, you recap what you think is really important takeaways for me, people remember one thing from this episode or take it seriously. It’s really differentiating yourself from the very beginning by your one competitive advantage, which I think is, critical understanding your target market.
[00:22:51] If you don’t have a group that you feel you understand, go and start with that. And, start with reselling other people’s products. But you should only really start creating your own brand and products, in my opinion, once you really, really understand the group. And you’ve taken the trouble to get really deep into the customer needs.
[00:23:06] There’s a very, very good book on this, whose name I forget. I’ll put it in the show notes over at theecommerceleader. com. But I use the first two chapters of that. One of them is just about validating your product, your customer’s needs by interviews. And that’s really great. And it’s deep dive work. And most people don’t do the trouble.
[00:23:20] The second one is Going to the same trouble with the actual product design as well. And I think those are the two most important things. If you really do those well, you’ve got a solid basis. If you skip over them, I don’t think you should be creating a product. You can just resell other people’s products
[00:23:33] JM: after all.
[00:23:35] Yeah, I totally agree with this. Another book that comes to my mind about these topics that really does a good job of summarizing them efficiently is the four hour work week by Tim Ferriss. He’s got several chapters in there about finding your muse. As he calls it, and, suggestions and tips for how to do that.
[00:23:51] it’s old at this point as a book, but it came out in 2007, something like that, but it’s still fantastic, content around these two first topics. So I think it’s a good first, kickoff of the topic, in general. And, we’ll keep grinding out as we continue the conversation next time. One other
[00:24:08] MV: book to reference, just, just to be clear, I’m, I’m…
[00:24:11] An affiliate for this, but then the reason I am is because I like Ben. I think he’s a really great guy. I’ve known him since the beginning of his journey. So I’ve seen it for myself. before he was well known, that’s Ben Leonard and he’s just brought a book out called quit stalling and build your brand.
[00:24:23] You don’t need an MBA to crush it in e commerce. And he’s a living example. And as I say, because I knew him personally before there was any kind of publicity around him. I know how sharp and fantastic business man. He is so If you want to pick that up you go to quit stalling book. com forward slash amazing Fba and the reason you’ll want to do that rather than just picking up on amazon Because there’s a bunch of bonuses if you do it that way as well So a quick plug for ben because I really think he is a living example of everything we’ve talked about and His obsessive crossfit crossfit is often are his obsessive relationship with his target market and really great product design really paid off.
[00:25:02] JM: Love it, man. All right. Good times, everybody. If you like this episode, of course, check out the next one where we continue the conversation. And as always, your highest and best reviews on Apple podcast player or Spotify would be fantastic. Thanks, everybody. We’ll see you.
[00:25:19] Veteran e commerce operators know that net profit is the vital lifeblood of a business. Better a small and profitable business than a large one that earns no money. The Profit Habits Workbook is designed to give you 17 actionable, specific, and proven profit taking actions. You can implement them at your own pace and let the power of this trusted framework revolutionize your company.
[00:25:45] The Profit Habits Workbook makes profit improvement, a fast and efficient achievement. For a limited time, we are now sharing this resource with our listeners completely free with no strings attached. To download your 60 page workbook and begin your journey to a more profitable business today, just visit theecommerceleader.
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