Show notes
After dropping a few hints here and there, Dave finally asks Mike the big question: what are you looking for in your next business? After getting into the mindset of selling all of my brands and getting back to the part of Amazon FBA that I really enjoy, I realized that it's not as fun as it used to be with my current business. I am trying to build it for the eventual sale, and after start a new business that's still within e-commerce. As most of you have probably noticed, I've dropped a few hints here and there about starting a new brand, and what better way to do so than discuss it with Dave on today's podcast! In this episode, we'll discuss a few criteria on what I would want my next venture to be, and whether Dave thinks they're unrealistic, or downright wishful thinking. Here's some timestamps to get you started: Introduction - 0:00 How was BFCM for you, Mike? - 0:53 The next project for Mike - 3:56 Struggles that Mike's trying to avoid in the future - 5:24 Mike's checklist for his next business - 12:17 Priorities with higher margins - 12:56 Increasing repeat business - 18:27 Products that work multi-platform - 24:47 A defensible moat around the business - 30:31 Making complexity an opportunity - 34:30 When is the new business getting started? - 36:39 I hope this is super helpful for those out there who are thinking of expanding their brand portfolio or starting a new business. If you are, leave a comment below on what you think your next business would ideally look like! As always, if you have any questions or anything that you need help with, reach out to us at support@ecomcrew.com if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. If you have any questions, send us an email at support@ecomcrew.com. We'd love to help you in any way we can. Full Audio Transcript Mike Jackness: This is Mike and welcome to this edition of the Ecom Crew podcast. How's it going, Dave? Doing good. We're doing some recordings here after American Thanksgiving. So I feel I feel full and thankful, I guess. And yeah, we're doing some podcasts today. DJ: This is Dave. DJ: I'm doing well, how about you? DJ: How was your Amazon balance though? Is that full and thankful after Black Friday? Mike Jackness (00:28.134) Not really. It was not a real great Black Friday, Summer Monday for us, but it never really is with the brand that I kept. I didn't really expect to have a huge Black Friday, Summer Monday. In fact, I didn't even open up my app over the weekend because I was like, I don't want to see it. Just because we didn't run any Black Friday deals. I mean, we talked a little bit about this on the podcast over this year. And so, I mean, hot and cold therapy packs are not giftable items. They're not the type of thing that people buy and gift them. There were lots of people in my space running Black Friday, Supper Monday deals. I imagine they just got crushed in terms of paying a lot of fees and giving up margin. I don't even remotely see how it's feasible. I mean, I see all these deals running. I mean, they're paying $300, $500 or more per deal, giving up a bunch of margin. DJ (01:10.195) Yep. DJ (01:15.27) No, I don't either. Mike Jackness (01:23.182) I can barely make it without even doing that. I just assume that they're losing money just to have an ego boost and that isn't interesting to me. We just go in a little bit of hibernation for this part of the year for this business. From late November to early January is just a dead zone for us. Early January things have to really pick back up. Going into the spring becomes our best months. Just roll in with what we have. When we had other businesses, we focused a lot on Black Friday and Summer Monday. We sold our baby brand this year. I'm sure they had a really great Black Friday, Summer Monday. We've sold color. That was always my favorite time of the year, although it was stressful. Black Friday, Summer Monday, huge for that. But for a hot and cold therapy brand, it's like, oh, you got me a ice pack for my back. Thank you so much. Maybe there is someone out there looking for that, but I don't think it's exactly the giftable thing. DJ (02:21.985) Yeah. DJ (02:26.573) Well, it is kind of a scenario of rising tide raises all boats and sure people aren't on there to buy hot and cold therapy pack, but they're on there to buy a toy for their daughter and hey, oh, by the way, I need to that ache on my back. I need to get something for that too. So you do get that. So I know for like our off-roading brand, it was up, I guess, about 30 or 40% over a typical Friday. So nothing crazy, but it was up. And I think that's just a case again of that rising tide. The craft brand that we have, that looked like it was up about Mike Jackness (02:40.098) Right. DJ (02:56.209) two and a half X, which I guess was kind of within my realm of expectations. And this is my first time really running a brand that is heavily dependent on Christmas. And that was one of my motivations for actually wanting to start this in the first place was to get a little taste of that Black Friday and Christmas madness. And yeah, it seemed like Friday was up about two and a half X. It seems like Monday's going to end about that too. So it was nice. I don't know how that compares to a typical Black Friday and Cyber Monday though. I really have almost no reference point because like you, Mike, most of my brands have always been, uh, not very dependent on Christmas on the holidays. Mike Jackness (03:34.474) Yeah, I mean, I think that sounds about right. You know, two and a half X seems to be what we've seen in the past. I think that that's a pretty good, pretty good result. DJ (03:44.017) Yeah. So on to today's topic, I guess, uh, as we're talking about our brands, uh, I think today's topic is what you're looking for in your next project and your next business. And I, I'm not sure if we're going into this totally as a blank slate. I'm not sure if that is actually e-commerce related, or you're looking at starting a coffee shop. Uh, so I'll let you take it away. And what exactly that next business, Hey, you're doing some competitor research. Mike Jackness (04:05.576) I've got my coffee right here. Yeah, I don't think it'll be a coffee shop. And I do think it'll be an e-commerce. I really do enjoy e-commerce. There's a lot of really good benefits to it. I also think that no matter, I've learned my lesson in terms of like the grass is greener type of thing, right? And so it's easy to start daydreaming about some other thing that's out there that can potentially make you more money. But the reality is you often forget about all the work and effort you put into what you're already doing And oftentimes that even though you know, there is a potential It's just potential and something else and the chances of success aren't as high And so I don't know. I think that I've got my ten thousand hours and then some into Indie ecommerce, so it's something that I would definitely like to stick with but yeah, I mean I I think everything's an evolution and I think it'll look wildly different than that what I'm doing right now. It'll just still be sewing things online. DJ (05:10.625) Okay. So that's, uh, that's Clara's mud e-commerce business. It's going to look different. All right, guys, that's a wrap. So what are the qualities in all seriousness? What are the qualities that you're looking for in that e-comm business? Mike Jackness (05:14.978) Hahaha Mike Jackness (05:19.435) Well, let's. Mike Jackness (05:24.918) Maybe we should look at from the other perspective of where we're at now and what the struggle is right now and what I'm trying to mitigate against, which is that we're in this situation right now selling the same thing that everybody else sells. There's really just absolutely no differentiation to our product versus the next guy. And the gap continues to close between where we've been able to have success and where we're heading to, which is that we've had success because we've had really high quality listings with good copy, good images, good customer service, lots of reviews, et cetera. But what I see is that the competition is accelerating quicker than the platform. Maybe at one point, the platform, you know, being Amazon. DJ (06:16.765) Mm-hmm. Mike Jackness (06:18.442) was growing quicker than there was competition. So even when there was competition coming into the market, your sales would still grow because there were so many new people coming onto the Amazon marketplace. But I just, by the raw numbers, I actually don't know how many prime members there are in the United States. I probably should know that number off the top of my head, but 100 million, 150 million, whatever it might be, it's let's say 30% to 50% of people in the United States. you're never going to get 100% saturation. And at some point, you're kind of hitting peak saturation of just potential shoppers on Amazon. And you know. DJ (06:54.361) Yeah. And I think the way to look at it actually, objectively, you're right. Like there's only, you can't have 400 million prime shoppers in America. There's not enough people. But all you have to do is look at Amazon's P&L and you can see that their retail sales last year were basically flat. They had revenue gains from advertising and other services, but their retail sales were essentially flat. Mike Jackness (07:04.839) Right, there's not enough people. Mike Jackness (07:11.635) Yeah, exactly. Mike Jackness (07:18.31) Exactly. And so when you look at the dynamics of that, where Amazon's, let's just say their revenue is flat in the United States, I do think that expanding out of the United States is an opportunity. We're also still pigeonholed a little bit again, because the types of products are selling. We're FDA registered in the US, trying to get other nationalities to approve these products and go through that process. I just don't think it makes sense for us right now. where we have done that in the past for other brands. And so, you know, if Amazon is hitting peak saturation in the United States, and competition continues to grow, and margins continue to erode, because when you have more competition, there's always somebody there that's willing to sell it for less. They're doing it for whatever reason, right? They're breaking into the market, and so they're stowing at a low price to try to get traction. They are... living in a lower rent, lower cost of living jurisdiction around the world, and they don't need to make as much money as I do to pay for my lavish Vegas lifestyle. There's always someone willing to do it for less. When there's more people that are in that category, it makes it more difficult for me to price my products and make the margins that I need to. to justify the risk that I'm taking by running these businesses because there is a risk, right? I mean, at any point your account could get shut down or you could get sued or Amazon could tumble and fall. There could be a recession. There's always things that happen in business. Over 19 years, I've experienced a lot of them. And so I think that you need to make enough money to justify the risk. You're holding hundreds of thousands of dollars in inventory at any one time. It feels like a hot potato. And so... Just trying to think through all these different things makes me want to shift into a very different environment where we're making products that are maybe a one of a kind or certainly much more difficult for somebody to just grab off of Alibaba or at the Canton Fair or through a sourcing agent from someplace in the world. DJ (09:35.525) Yeah. So I guess your first two points, if you want to boil it down, number one is you're looking for a product that has opportunity for international expansion. And with the products you're selling right now, they're basically a health product. And that makes expanding internationally a bit of a barrier and a bit of a difficulty. So looking for a product that is a little bit more easily expanded internationally. So running shoes don't have any international regulation around them into expanding into Australia or the UK or Canada or wherever. Mike Jackness (09:57.888) Yup. Mike Jackness (10:04.354) Yep, exactly. So, yeah, so I think, you know, shift and, okay, go ahead. DJ (10:07.425) So on that note, just before you go there, so our products are, most of our brands and most of our products don't face any international regulation in terms of import restrictions. The barrier that we've always had is, you know, you wanna expand to Luxembourg, but how do you justify getting that inventory in to serve the 12 people that live in Luxembourg? And that's always been the big barrier for us is that you need to hit a certain scale before you can warrant that international expansion. Mike Jackness (10:28.938) Right, right. DJ (10:36.253) And for us, Canada is about 25% of our sales. It works out well because, you know, I'm Canadian and geographically Canada and the United States are close, but expanding to a lot of these other countries, it is a big logistical issue. So, do you think that will be an issue? Do you think that you can overcome that, especially as you're starting up with a brand that's, you know, doing low thousands of dollars a month in sales in the very beginning? Mike Jackness (10:36.31) Yeah. Mike Jackness (10:40.994) Yep. Mike Jackness (11:01.898) Yeah, I mean, I think it all depends on how you're getting your sales and the size and weight of the product. Are you shipping individual orders from here to overseas via some of these lower cross programs or are you having to land inventory in an NOAA jurisdiction first? So I think that there's still quite a bit that remains to be kind of figured out because I think there are certain criteria which we're going to go over here next that I am looking for. Being able to expand internationally, I look at as a long-term thing. I don't look at that as month six, I need to go expand internationally. I look at that as in year six maybe, after I've hit saturation in the US and now I have enough of a war chest or my logistics and manufacturing has spun up to a point where it makes sense to where I can efficiently break into another country. logical choice, as you said, is geographically close. It's same language. There's a whole bunch of huge benefits. You can even get started by just shipping stuff across the border, onesie twosies at a time to customers versus having to get inventory landed to test things. It's much easier. And so, yeah, I think of that as a longer term thing. It's just one of those things where I think it's a natural thing for a business to hit a point where... your business or your SKUs have hit saturation in the US and you'd be looking to expand internationally. DJ (12:34.333) Yeah, interesting. I am totally with you where I think that is where the profit centers are in smaller markets and smaller marketplaces, even though the bulk of the sales may come from the United States and that justifies the orders. Ultimately, it's the smaller marketplaces and smaller markets, which really move the profit needle. So, okay, you talked about customization too, and I know you're talking about a few other things. I don't know if you want to riff on t…
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