E101: Tips on Finding Profitable Products in a Saturated Amazon Market with Chad Rubin of Skubana

“So how do you win if you're doing what everyone else is doing? If we're all using Best Selling Rank or BSR, then everyone is always going to sell the same products and we're just flooding the market with all the same products. So we try to go where the puck is going and not where the puck is.” – Chad Rubin of Skubana

In our second 3 digit episode we have Chad Rubin of Skubana as our guest. “Chad Rubin of Skubana” is how I refer to him  but he is so much more than that. He co-founded Skubana, a multi-channel inventory management software that we have been using for over a year now. He is a 7-figure seller who also runs the Accelerate Workshop, an exclusive one-day workshop for high-volume multi-channel ecommerce sellers.

Like Kevin Stecko of 80sTees.com, Chad is one of those we jokingly call the “grandfathers of ecommerce” because he has been in ecommerce for a very long time. At the time there was an absence of good ecommerce tools, so to satisfy his own ecommerce needs, he created his own internal tools and shared them with the world, one of which is Skubana.

In this episode we talk about a topic that is of crucial importance especially for those just venturing in ecommerce–how do you find profitable products to sell in a market that is already saturated?

Many sellers do their research: they look at BSR and probably fire up Jungle Scout to judge profitability, and that could work, but people who do that usually end up selling “me-too products”. That saturates the market even more and buries their products beneath thousands of similar others.

Chad has a solution. He doesn't want to do what everybody else is doing; he instead focuses on what people are actually looking for but which Amazon does not have yet. He explains how he does this in detail and provides some examples in our conversation.

We also covered other topics, including:

• How to prevent being copied on Amazon
• How he had his business audited, not for selling purposes, but to increase profitability
• The systems he put in place to run his business efficiently with just one employee
• Lifetime value of a customer
• Amazon's A9 algorithm and ways to rank higher
• The importance of conversion rate
• The Accelerate workshop

This is a fully packed episode with actionable advice and lots of resources and software recommendations. We've compiled the links below so you can easily check them out.

Resources mentioned:

AsiaInspection
Stamped.io
EcomCrew Podcast Episode 35: Chad Rubin on the Development of Skubana
Crucial Vacuum
Think Crucial
Accelerate Workshop

Shopify apps he is using:

Bold Brain
Bold Tiered Pricing
Bold Upsell

Webinar:

International Selling Secrets Direct From Amazon For Maximum ROI on International Marketplaces

That's episode 101 guys! We hope you find Chad's valuable actionable advice useful in your own business. If you do and you enjoyed this episode, we'd really love it if you'd leave us an honest review on iTunes. That will help us in our rankings and discoverability so we can reach more ecommerce entrepreneurs out there.

As always, thanks for listening. Until the next episode, happy selling!

Full Audio Transcript

Mike: This is Mike and welcome to episode number 101 of the EcomCrew Podcast. You can go to EcomCrew.com/101 to get to the show notes for this episode. But the one thing I want to talk about real quick off the top here is episode 100, which I just recorded a couple of days ago. If you haven't had a chance to go back and listen to that yet, I definitely encourage you to do so. For me, it was my favorite episode of the hundred we've done, because I got to have all my friends on, and they mentioned some really interesting things.

We had a topic of what would you do if you can go back and start all over again knowing everything you know now starting an ecommerce business, what would you do? And there were some really interesting insights. Everyone had a little bit different opinion, but there was one common theme. I definitely recommend checking out episode 100.

But for today on episode 101, I have a special guest. Chad Rubin is with me. I always say Chad Rubin from Skubana, because that's kind of what he's known as in the market. But he's so much more than that, and the guy is one of the grandfathers of ecommerce. He has been around for a long time. He's been selling just like we have, but back in the day there wasn't any of these tools available to aggregate different channels. So he made his own internal tools which then later became Skubana.

So it's a tool that we've been using now for a couple of years. And since then now Chad is branching out and doing some in-person conferences, which are really interesting. I hope to be able to attend one in 2018. And Chad has some really great insights from things that came out of this last conference among some of the things that we talk about. So there's really like three key points that we get into in this episode.

So if the first or second one is interesting, maybe the third one is. So I definitely recommend listening all the way through. But Chad is just a really smart guy. He surrounds himself with lots of smart people and there’s such a lot of smart things that we’re talking about the podcast today. So we hope you guys enjoy episode 101 of the EcomCrew Podcast, and we'll see you on the other side of this interview.

Chad: So how do you win if you're doing what everyone else is doing? If we’re all using Best Selling Rank or BSR, then everyone is always going to sell the same products and we're just flooding the market with all the same products. So we try to go where the puck is going and not where the puck is.

Mike: Hey Chad, welcome to the show my friend.

Chad: Thank you for having me.

Mike: No problem. Just so you guys that don't know Chad, Chad Rubin is a seven figure seller on Amazon. He does a lot; seven figure seller on Amazon. He runs Skubana or owns Skubana, which is a backend tool that we use, and have been using for over a year now. It does all of our inventory management and purchase order management, and a whole bunch more. It's a great tool to just kind of get all of your channels under one place, and it's been working really well for us.

And then on top of it since you didn't have enough going on, you also have this Accelerate Workshop going on as well. We’ll talk a little bit about that in the show today. But definitely happy to have you back on. This is the second time you've been on the show, so welcome back.

Chad: Yeah it's been a while.

Mike: Yeah, I think we go back and – we’ll check the episode number for that, we’ll put in the show notes. But definitely good to have you back on. And we were talking a little bit before the episode today, and we have a few topics I think that are going to be really interesting. The first one is finding products, and when you were kind of telling me about some ideas of things to talk about on the show today, this is the one that really popped out at me. Because we both agree that the good, bad, or indifferent, these are friends of mine that teach the stuff, and I think that it's valid, but it's gone to the point where it's just so saturated.

Everyone is doing the exact same thing. And you can definitely be assured that if everyone is using the same exact tools and the same exact methodologies to do something, at some point pretty quickly that isn't going to work anymore. So I'm definitely curious to talk to you about what you're doing different, and we can talk about also what I'm doing different to find products these days that isn't just a me too scenario.

Chad: Yeah absolutely, yeah I mean you nailed it, right? So how do you win if you're doing what everyone else is doing? If we’re all using Best Selling Rank or BSR, then everyone is always going to sell the same products and we're just flooding the market with all the same products. So, right now Amazon has what, 100,000 toilet paper holders literally on Amazon today. I actually think it's more than that. So or the garlic presses or silicone baking mats. And so, we try to go where the puck is going, not where the puck is.

Mike: Yeah, it makes a lot of sense. But it's always scary, like if you're trying to go where the puck is going, the data isn't necessarily there to support that yet. So how are you making those high level decisions to take the chance to jump off the cliff and go where the puck might be going?

Chad: Yeah, so a lot of people are using these shiny tools, research tools like Jungle Scout or Unicorn Smasher, which goes by BSR, maybe there's a few other inputs that that they're using to validate. So we do it a little bit differently. So we try to create a pull process versus a push process. Number one, we have a process in place right now that if there is a similar item on the market, similar or identical, we will not invest there. That's the first thing that we do.

But the second I think that's really, really important is that we're using keyword tools like Merchant Words for example. That's just one of the many. There's a lot of people out there that are using keywords that are — there's a lot of keyword tools out there. But I think they're using them very differently than what we're using them for.

So I'll give an example. So right now I'm very interested in the cryptocurrency space, am I invested? No, but I'm interested in it, and I was like, well how do I capitalize this and productize this concept without investing my money in it. Like let me just give people the shovels and provide that to them. So you can essentially take cryptocurrency, and put it into a search tool and see what people are searching for. And by the way, these searches are like astronomical.

So we create a poll process by using for example Merchant Words which gives us ideas of what the customers are already searching.

Mike: So you put something like bitcoin into Merchant Words and then see what items or keyword results come back at that, and then which one of those keywords might be a product that you can develop for that niche?

Chad: Yeah, like you want to build what customers want. You want to build what customers are searching for. And a lot of times there is not a match between what they're searching for and what's provided on Amazon, and that's where the opportunity is.

Mike: Yeah that makes a lot of sense, it's definitely really interesting. I guess the thing that would be hard there would be to find the seed keywords. Is there like a process that you have for that where you're able to say, okay these are the keywords I want to be searching for, because they're not represented or they're under represented on Amazon.

Chad: Yes, so a few things. I don't just use Amazon. I'm using Merchant Words is only Amazon. So there’s a few other ways you can find keywords. You can use Moz, it's free for Moz. I believe it's Moz.com. At the bottom left it's the Keyword Opportunity or Keyword Explorer I believe they call it. So I use eBay also has a search suggestion function, you can use that. On top of that even just speaking about Amazon, a lot of times I just use Amazon's A9, the search dropdown with the auto suggest.

Now, one of the things I like to do on the auto suggest, and I'm not sure if you're aware of this either is if you go to Amazon.com right now and you put in diapers, Amazon will show you all that in priority in packing order what are the searches for diapers, right? So when I type in diapers, it's diaper size four or five, three, one, two, six.

Mike: I'm doing it on the fly too, but yeah I see that now I guess, yeah.

Chad: So now instead, I want you to take a hashtag and type in diapers.

Mike: So just hashtag diapers or?

Chad: Hashtag diapers.

Mike: Okay, let’s do that.

Chad: You may have to refresh.

Mike: No they came up like newborn diapers, adult diapers, baby diapers.

Chad: Yes, so exactly. That’s giving you everything before someone types in, so everything that's happening before the word is being typed in. So honest diapers, whatever comes up for you is great. So that's also giving me ideas. So I'm feeding all these ideas of what people are searching, and then finding what the problems are. So first, is there — when people are typing, let's just say — let's do another example, and I'm giving people on the podcast some ideas, that's fine.

Let’s just say you're searching headsets, and on headsets you're using an IP phone that's great, and you sell the microphone lapel for the IP phone, great. Now let's just say you type in headsets into Merchant Words right now. Well, the first — you would think that the first thing that would come up for Merchant Words would be Bluetooth headset, and that is correct. But if you scroll down a little bit even with massive volume, the fifth one down is Xbox One headset which is 727,000 searches on a monthly basis.

So now you're getting an idea, okay this is a gaming headset, and I bet you that if I read the reviews on some of these gaming headsets that they're missing, there's no place for them to find the windscreen, the microphone windscreen that goes on to the headset. And if you do more research and read these negative reviews, you'll find they're actually that big, that actually is a massive opportunity. It's not what I'm capitalizing on, that's just a freebie.

Mike: Right, so it's just a little like cloth, and I don’t know in which color that thing that goes over the microphone to keep you from like having that siss sound or whatever in the microphone.

Chad: Exactly.

Mike: Yeah, that’s definitely very interesting.

Chad: These are small things but I feel like sellers are not using their brain any more. They're just like, I'm going to use this tool to tell me what I should, and if the market share is enough, I'm going to also create a me too offering and push it to customers. And maybe I'll create a better listing, or maybe I'll just do a lot of PPC ads. And instead, my idea and the way that we've restructured now because there's a lot of people that will crack copy our product. And yes I do believe that that's a whole another conversation about people copying products. Let’s say you have a certain lead time when you launch a product. Nowadays is what I call the Amazon product death cycle.

Mike: Yeah exactly.

Chad: You have a certain amount of time till everyone copies you and I’m sure you've seen in your business.

Mike: Yeah, I mean we’re constantly trying to stay ahead of that curve, but there is no doubt. I mean I would say it starts about four to five months after your product launches and becomes even moderately successful, and pretty quickly after that it's just to the toilet, right?

Chad: Exactly, so you have to keep on pushing the boundaries. You have to keep on innovating. If the iPhone decided to stop with the iPhone 1, Google would have — they knew Google was going to copy them, and they created a touch screen phone as well and HTC and Samsung. So you have to constantly think like bigger companies.

Mike: So I guess the question I have here, I think that this is brilliant, and it's a thing we're going to start thinking about as well. So I’m glad that we had you on the podcast too here already. But I guess the thing I'm already thinking about on the fly is like what made you think to type in cryptocurrency or headsets into these searches, or is it just you just start brainstorming any word you can possibly think of then just start going down and applying this model to it?

Chad: Well, so I was just giving examples on the fly. But I do like to follow or do things that I'm passionate about. So it would be boring if I sold vacuum filters for the rest my life. I wouldn't consider that a great life. I think there's more meaning to my life, and I can have more fun with what I'm selling, because at the end of the day we're all selling a widget.

So if I really like coffee which I do, coffee was my next transition from vacuum filters. So I kind of like to go into areas that interest me, that I'm fascinated about, and then for example deejaying. I just started deejaying, and I've been having fun with it, but there's a lot of things that come along with learning how to deejay where I find problems, I'm like wow, I can do that. I could actually learn from what I'm learning recreationally and apply that in the business setting.

Mike: Yeah, I mean it’s definitely really good advice. My guess basically what it comes down to it's to summarize, it's taking things you got a personal interest in or know when your circle of life or problems you might be having and thinking of those things, and typing that stuff into Merchant Words, and Amazon and letting the A9 algorithm and or Merchant Words or other keyword tools like you said give you ideas of things that are just these pockets of opportunity within Amazon.

Chad: Yeah, let it come from the customer. That's why I'm saying using the search methods. Let it come from the customer versus coming from what the sellers are pushing down the customers’ throats.

Mike: Yeah, I love it. I mean I definitely think that's brilliant. And if you can add any type of IP to that which is some other thing that we try to do, it makes it harder to copy. All the better if you can and obviously that's a little bit hard to pull off, but it's something we've been definitely trying to do more and more if we can. Because like you said, it's only a matter of time. The more successful you are, the quicker it is going to get copied is basically what it comes down to.

And it's frustrating, but it's something that I've dealt with in everything that I've done in business. When we were doing affiliate marketing and SEO stuff and doing incentivized marketing, we were the first ones to ever do that type of marketing for affiliates. And it only took a matter of weeks before somebody was copying us. And my feeling is that if you're the first one to do it, and someone copies you and you let them beat you, then it's your fault not theirs. You need to be the one that constantly improves and stays ahead of the curve.

Chad: Now let me just piggyback on that where you were saying you're adding some IP to it, I thought of the second piece. So yeah you find some wide ocean opportunity with doing it this way that I'm suggesting to those that are listening today in the audience. But the second piece is, and that I'm very focused on is, okay fine, how do we prevent people from copying, or how do we grow, sort of stop being on the defense and go on the offense, or maybe even make it so we don't have to go on the offense?

And that is we're investing in products where it requires a molding and a tooling, and there's a capital injection that's required. So somebody that's operating out of their garage and works, has a day job can't just come in and buy something off the shelf from somebody on Alibaba.

Mike: Yeah, I think it's really important. We do have the same thing.

Chad: That's where there's a massive long term opportunity.

Mike: Yeah and I also found out like when we invest in those molds, we have our name in the mold. So it's impossible to use our exact mold to copy, because Chinese manufacturers are pretty rude about stuff like that, or are slimy I would say. They will use your mold to produce someone else’s stuff even though they tell you they're not going to. So if you actually have your brand name into the mold, then you can really protect yourself because if they use that and it gets up on Amazon or somewhere, especially in the US, you can put an end to it really quickly if your name is trademarked.

Chad: But hey Mike, there is a workaround for Chinese manufacturers. They could like scrape that out in the mold.

Mike: Yeah, but then they can’t produce it for you again, right? So I mean like if it's somebody that you're – if you end up with a bad end of relationship, they will definitely do something like that. But if you have a continuous relationship with somebody, they're not going to do that because they can't produce for you again.

Chad: Yup, one other way to prevent that, or just to double, to cross your T, dot your I, and double check and ensure that no one is going to use your mold is you can — I don't know if you do this at all, but we have a tooling agreement, and we have a supplier agreement. And we enforce both.

Mike: Yeah, I actually – it’s something that we're looking at doing this year especially after going to Global Sources Summit, and this is something that comes up there quite often. It's something that it's like really high on our list to get that kind of document put together.

Chad: Yeah it's really, really, really important.

Mike: Cool. I think that we kind of hit on that topic. Let's move on to another because we have a couple of other things in here that we talked about discussing. And this is completely shifting gears, but it's interesting we're also talking about how you just kind of recently went through an audit. And we've had someone like Joe Valley in a podcast before talking about selling your business.

But this wasn't really necessarily done from the perspective of “I want to sell my business today” so much as I might want to sell my business one day, what do I need to be thinking about? Can you also maybe give me some suggestions the way I can improve my business in the short to mid-term? And I’d love to talk about what came out of that, like what precipitated first of all going through that process, and then what were the findings and what changes did you make to your business to make it better?

Chad: Yeah, so number one is I had a natural curiosity just to find out like where we are in this market, for ecommerce, for Amazon specifically, and even just off Amazon one of the valuations that people are seeing because we are in a bull market right now in ecommerce. The second reason why I decided to do this, I decided to reach out to a few different bankers and brokers, and I just wanted to get a sense of how they saw my business.

Like I can see my business a certain way which is very subjective because I'm like in it, I’m in it constantly, I'm looking at the numbers, I'm looking at the financials. And my accountant is also in it and they can provide some feedback. But when you have an outside perspective come in and say, hey, this is what it's valued at. This is what it's worth, and this is what you can do to essentially prep it for an acquisition. Not that I need — not that I necessarily want to be acquired at all, but just tell me, what do I need to do? What are the fundamentals I need to do to improve? That's what started me on the journey.

Mike: Okay, so like I mean as you went through that, what were kind of the findings and what actionable steps did you take in your business at that point once you found that stuff?

Chad: Yeah, so a few things. So they asked a lot of interesting questions. The first thing about Crucial the business I had created which started in 2008, so nearly almost a decade is that I've set up an entire system. And so I have one employee now. I'm down to one employee; everything else is outsourced or automated with technology with Skubana. And so the system that we've created is really plug and play.

But on top of that, what’s happening is a lot of the buyers that these brokers are working with kind of want low hanging fruit fixes, where they want to buy a house that's already broken that may need some fixes to it, and my house isn't broken. My house is really strong, built under foundation and gives you a system that you can now acquire and add more companies to the equation, and it all flows to the bottom line, because you can find inefficiencies in other businesses and add them to the system that we've already built.

So on top of that, they took a look at my — so they were giving me feedback along the way saying, hey Chad, here's another one is like lifetime value is very important to people. So where are the opportunities? Perhaps there's opportunity for increasing my lifetime value of my clients, meaning putting them into a recurring model. What can we be doing to increase the lifetime value of our clients? And those are things that we think about, but like I don't think I've spent enough time really thinking about them.

I'm so focused on SKU expansion verses digging deeper into our customers’ wallets.

Mike: And I think that it's a little tougher to talk about lifetime value of a customer if you're Amazon centric, because you don't get all the customer data and can't remarket to them in the same way that if you're doing it on Shopify.

Chad: That is correct. I mean Skubana does give you lifetime value of your clients on FBA as well.

Mike: Right, but I mean you're not by TOS allowed to actually reach out to those Amazon customers to say, hey, we have a new product, or it's been three months since you've ordered, do you want to order this widget again and this vacuum built again?

Chad: Absolutely right, and so that's why I actually–I just got accepted for the Subscribe and Save program. So that helps us on LTV and I have some visibility in terms of recurring purchases as well. I don't know if you're qualified to get into the program. We can talk offline of how I got into the program. But that's something that I think that you could definitely implement in your business.

Mike: Yeah, they've actually been begging us to come into it, but I don't really feel like our products are conducive to it. Maybe I’m stupid for not doing it, and I’m more worried about people like ordering once, and then canceling the Subscribe and Save, because like a lot of our products are not things that people legitimately need to order on a schedule.

Chad: Yeah, I get it. So yeah I don't know enough about your business or how they order, but something we implemented because we couldn’t create recurring. We also added some Shopify apps to our own business. We have two different Shopify apps, we have a recurring subscription app, but we also found that people would order and cancel, which I thought was fascinating because they get 5% on my Subscribe and Save on Shopify. But if they actually join my newsletter, they get 10%. That is so silly.

Mike: Yeah people are so stupid when it comes to stuff like that, it cracks me up. It really does, it's really unbelievable. We could probably talk for half an hour about just those things, but let's stick to the meat and potatoes but it is funny.

Chad: But in terms of the me, what I learned from that was actually why don't — for me I came from Wall Street, so money now is worth more than money later. So yeah okay Subscribe and Save is not a guarantee. They can subscribe and save 5%. But then we did a stock up and save on our website. And I was like how can I increase my average order value, because I guess another lever you can pull is your AOV and extract more money out of the people that are already committed to going to the site.

So we started offering this bulk up and stock and save, which has dramatically changed the game for us in terms of AOV.

Mike: What app would be used to drive that?

Chad: I would have to go back; I think it's a Bold app.

Mike: Bold app, okay we’ll just if you can email me later, we’ll throw them in the show notes so people know which Bold app that is.

Chad: Yeah, again I don't get anything for recommending that application at all, but we found that our AOV skyrocketing with this stock up and save, and it requires somebody give us their money now versus letting it happen over time. And it's just shaking what our mama gave us, taking the people that are coming to our site and just making more money, squeezing more out of that berry.

Mike: Yeah that makes a lot of sense. I mean if you have the types of products that you can be doing that with. And just so everybody knows, and I wouldn’t have mentioned this if you don't talk so much about it publicly, but Chad runs a vacuum parts supply business for the most part, at least as far as I know. So, many people that are ordering a vacuum bag or vacuum belts or whatever, that's a great time be like, okay, I'm going to just order more of that, versus somebody that might be selling a pressure cooker. You're probably not going to stock up on say one two or three pressure cookers.

So it does matter what kind of business you have. But if you have the ability to leverage selling the same thing more to the same customer, it's definitely something you should be looking at for sure.

Chad: Yeah I have two sites actually. So Crucial Vacuum is my legacy magenta site, and then I have a Shopify site called Think Crucial.

Mike: Okay.

Chad: They are replacement parts for all related replacement parts.

Mike: So replacing parts for just all kinds of things?

Chad: Coffee, vacuums, pools, spa, you name it.

Mike: Got you.

Chad: We do make replacements and accessories. The other thing, the other app I think is cool that we just implemented, I think it’s Bold Brain. It's also an app and essentially automatically will give suggestions of what people order. So it’s mining the data and looking to see what other things people ordered in your Shopify site and pairing them together. So when people check out, they can say, hey, other customers also bought this, it’s kind of like Amazon's frequently bought together. And that's also been having a nice impact for our AOV.

Mike: Cool, very good, cool. So from the audit process, is there any other things you can think of before I move on to the next thing that was meaningful that came out of that whole exercise?

Chad: Let me think. So I mean obviously there was feedback like dependence on Amazon is not great. Where is the growth coming from? How can we grow further? If we bought this business today, what are the five things we can do to increase the business? And when I was able to think about that on the fly, I was like, well I can just implement these now. I can actually just keep growing the business and keep adding more value.

The other thing I found that was interesting was just the multiple. So valuations of ecommerce businesses are a lot different from software businesses are a lot different from service based businesses. But in ecommerce at least if you're only on Amazon, if you're just an Amazon seller, you're looking at about 2X EBITDA multiple. It’s earnings before interest tax depreciation and amortization. So 2X multiple on EBITDA, two to three for business as diversified. You're looking at a 4X multiple.

And if you have a system in place, it's plug and play, roughly about a 5X multiple. So anywhere from 4 to 5X if you're diversified across 20 different channels. And we're on Amazon, eBay, JET, Wal-Mart, Sears, Groupon, have I said Groupon already?

Mike: No.

Chad: Now there's 20 other channels, there's Wayfair, so there's a lot of channels that we're on that help just our growth story valuation.

Mike: Got you, yeah it makes a lot of sense. That's something that we're definitely pushing for as well. Certainly we don't want our Shopify or our Amazon income or sales to be over two thirds of our business. And we work really hard to make sure that that doesn't ever get that way. It's tough because Amazon just grows on its own, right? So you do all this extra work to try to eke out a few extra points on the other side, and Amazon is just as like this beast that just never stopped growing.

Chad: Yeah, I mean but at the same time, Amazon can show you and you know this, Amazon can suspend you overnight, there's been horror stories. But for me, even if Amazon is 50% of my revenue, I'm adding 50% incremental revenue and profits to my business selling off Amazon. There is no reason why I shouldn't be on every channel I possibly can.

Mike: I agree, yeah I can’t agree more. So just real quick, one thing that you said that really intrigues me, you kind of mentioned as you were going through this audit, the thing that was really appealing as these people were looking at is that you have the system where people can plug and play other businesses under what you've been able to get this seven figure business down to one employee. If you were able to kind of give our listeners a Reader's Digest version of that real quick on what that system is, that seems intriguing to me as someone who has a lot more than one employee.

Chad: So a couple of things. First thing that we did was we outsourced our warehousing. So no longer a part of the pick and pack process. So on top of that FBA prep and fulfillment was taken care of as well. Then with Skubana, so we are a system, that's really what we are. We're pretty much an operating system that operates and automates your business. So algorithm and purchase orders, forecasting, demand planning, all the thinking that has to happen, all the manual intervention that has to happen is now removed from the equation, and we have technology working on our behalf instead of having to use manual labor.

The third thing that's worked out really, really well for us, and I just made a switch. I just saw the guy from Basecamp, the CEO speak. I’m in this entrepreneurship organization in New York City, and I just saw the CEO of Basecamp speak, and he blew me away. The stuff they got and the guy Jason Fried was talking about, I was like wow, okay really, really good stuff.

And right now, I was using Slack, I have Trello, I have outsourced employees in the Philippines. And we immediately migrated to Basecamp. And I think that's been a massive game changer, because Basecamp is combining Slack plus Dropbox, plus project management tool like Trello, all in one place and nothing falls through the cracks now.

Mike: Interesting. We've been having the Basecamp/Trello debate. So as my podcast editor listens to this, you can pass the message along to the Philippines team. And Chad is definitely in the Basecamp camp.

Chad: Well, actually the funny thing is like if I was just dealing with blog posts and doing content calendars, I would say that Trello makes a lot of sense like to do, doing, done, that whole flow and backlog makes a lot of sense. But when you're working with customer support, and you're working with maybe legal issues, and you're working with marketing issues, and you're working with all these different pieces that are actually projects in themselves, Basecamp unifies that entire experience. Basecamp is pretty much the Skubana of project management.

Mike: Got you. I mean we've been using Basecamp as well, so I definitely — and we're trying to use it more and more and get better with it. But it's obviously a big learning curve, and not in the terms of learning the software but in switching your habits to get everything in there and communicate better.

Chad: Do you use the ping function?

Mike: We do yeah.

Chad: So I don't know if you have this happen, but we do this with a lot of our outsourced — our customer support individuals. We have these questions to go out on a daily basis that are required to be answered, did you do this, did you do this, did you do this, just to ping them to make sure. And then of course to my employee, my one employee internally is like, hey, what did you accomplish today?

Mike: Right, so we have that question goes out to everybody, what did you work on today just so everybody can kind of keep an eye on everybody else, and what they are working on a high level.

Chad: The other thing we do is we put our SOPs in every project, every team that we have. So within there is all the SOPs docs and files that we use to run each core component of the business.

Mike: Interesting okay, because we have that in a separate system right now, like in our intranet. But maybe moving that in the Basecamp is the way to go.

Chad: Yeah.

Mike: Cool, all right so we're already a little bit over time, but I still I want to go over on this episode because there's one more question I want to ask you just real quick here, because you run this new Accelerate — I guess it was a conference, and you have also [overlapping 00:30:18] one coming up this year. Say that one more time, sorry.

Chad: It’s really I'm considering a workshop [overlapping 00:30:23]. There's no trade show, it's just very tactical, no one's trying to sell you, we're all just trying to collaborate and learn from each other.

Mike: Cool, so I mean there were a few things that you said that came out of it that were pretty big for you. One was like offsite traffic for Facebook; one was ClickFunnels driving funnel traffic or things outside Amazon. And that's something that I've talked a lot about on this podcast, and will continue to talk about. So we'll have other episodes about that because that's something that I've been really focusing on and trying to specialize myself.

But you mentioned two other things just kind of some things you kind of discovered about Amazon's A9 algorithm and ways to rank better and stuff like that. I'd love to just talk about that for a couple minutes, because it's not something that we've really talked a whole lot about on the podcast in the past.

Chad: So that's a very, very long conversation. Amazon has a separate incorporation under A9. So they have a pattern actually tracks your searches and tracks your conversions. So I mean I'll just give you one little tidbit which is, I don't know if you're aware of this, but when you do a search on Amazon, Amazon actually assign – Amazon is aware of the shopper behavior that happens, and you can see that in the URL, it’s been called the QID.

Mike: Yes, I am aware of that yeah.

Chad: So they have a QID, they also track based on the QID the keyword that you are searching, and then of course it's kind of like a crumb or a tag that stamps exactly who made the search, what keyword was searched and then they see if they actually bought on that search. Now, one of the things I think people were talking about at the conference was super URLs, right? And so certain people are using super URLs and actually using them incorrectly because if you're using a super URL and you are using the same QID, that's a huge problem, because there can never be the same QID ever.

The QID is essentially tied to Unix timestamp which is the number of seconds that happened that passed since January 1st 1970. So how Amazon is cracking people, why are my reviews going missing, what's happening? Or why am I suspended? Well, they are misusing the search and browse TOS, which is a violation of Amazon's terms of service. And so there are other approaches to creating that super URL, but certainly not using the QID is one of them.

But I mean there's a lot more that happens. So I even did a webinar that I think not a lot people listened in. People weren't so interested because I think they thought that Amazon — so I had a guy from Amazon on, his name is Tuma [ph] and he's the head of the international Amazon Marketplace. And I said, what is the algorithm for Amazon A9? And he literally answered it right on this video, very, very clear.

Mike: Cool, so we definitely will get that in the show notes. We'll talk after the show here and get that in the show notes your webinar there.

Chad: The last thing I want to point out for ranking outside of — like there’s two things to rank right? One is traffic and one is conversion. So there's a lot we can talk about on traffic, but I want to point out one last thing that I think is extremely, extremely important, which is your conversion rate. And I don't know if a lot of people on this show or even yourself, you maybe — you correct me if I'm wrong, but are using the detail page sales and traffic by paring summary in the reports on Amazon.

Mike: I actually look at it and I look at this number quite a bit actually, but I look at it through Sellics, because it reports it through there.

Chad: Sot they're reporting your conversion rate on PPC or organic as well?

Mike: Both.

Chad: Both okay so I look at — I just — we do it ourselves. We just export on a month by month basis. We export our sessions and the total order items including B2B orders to find our conversion rate. So we benchmark ourselves to find out are our sessions going up, are they going down. We also exclude and include the PPC sessions as well included in that. And we look at it on a month by month basis. I look on a SKU by SKU basis to see if our improvements are actually working.

And then on top of that I send this benchmark to all my friends in the space or ecommerce sellers as well, and I have them blindly put in their own conversion rate. And so I can see how I stack up versus the other people in the Amazon World. So why is this important? Why is conversion rate, why would anybody care about conversion rates, why would Amazon care? Well Amazon values — Google values cost per click, they have a cost per click model. And Amazon cares about not only the intention of the click, but actually the actual conversion, because that's where they make the most money.

So when you're even utilizing sponsored ads for example, Amazon has something called a win rate. And so if suppose sellers are spending the same amount of money and you're both have the same bid, and you both have the same amount of clicks that are offered to you for that bid, and someone has a 10% conversion rate, and the other person has a 5% conversion rate, Amazon tends to reward the person who has a higher conversion rate, because why? Because Amazon nets the most money.

Amazon if they're taking 15% commissions on a — let's just say it's — I don't know, let’s just say it's a one dollar item. Well no, let’s just say it's a $25 item. Amazon commission, 3.75 versus if you're 5% it's a 1.88. So that's a huge focus for — that's what I found that at Accelerate a lot of people were talking about was, okay, so why is this happening, what's going on? And that's where Amazon is diving most is conversion rate, what's making them the most money.

Mike: Yeah, I mean like I said something that we've been looking at now for months and like I’m curious if there's anything that you've been able to do to try to get that conversion rate up other than like the standard craft better titles, put better imagery in there, make sure you have like really tight enhanced brand content? Are there other things you can be doing, or is it just kind of you just got to really focus on that stuff and make sure that you're getting it done right?

Chad: Well, certain people are in the video beta program, that's important. Reviews are extremely important as well although there is a diminishing point of return for reviews based on analysis that I've recently done. The other thing that you can utilize, you have to just be first to everything on Amazon. You have to do what others are doing which is the whole idea of this podcast is essentially Amazon just launched coupons. I don't know if you heard the news?

Mike: Yes we've already started testing it, yup.

Chad: So most people aren't, and actually it's loading a lot of flaws. There are people that are starting to get the hang of it, but putting coupons on everything which is increase your click through rate and of course increase your conversion rate as well. I think that's extremely important, and I'm trying to think what else. Now with the coupon stack, so the coupon stack in the middle of the page where you can say, buy this and you buy this together, you get 10% or 20%.

From the chatter that was happening in Accelerate, Amazon is also looking at the unit session percentage, which is why Amazon gives you that. Unit session percentage is the amount of units people buy per order.

Mike: So you get people to buy a second or third of one at the same time, so you get a 5% discount if you buy two or 10% if you buy three kind of thing.

Chad: Exactly, and people were showing proof at the events. These are very, very big sellers that that is working with their coupon stack that it’s propelling their rank.

Mike: We even instituted that for a lot of our products. We probably need to go through and do it for everything.

Chad: And that's I think within the time limit, that's enough for people to digest.

Mike: Yeah and I think that's also perk people's ears up and go to the next Accelerate event, it's obviously a lot of really good stuff being talked about there.

Chad: Exactly, it's Accelerate.Skubana.com, and we're just setting up a retreat in Austin with about 15 sellers. We're going to bring in some surprise people as well to sharpen the events and help people achieve the mountain tops. But it's really actionable around sellers. We are really tired of all these events that are happening, and there is too many used car sales people, there's all these affiliate links, and we just why a room full of honest practitioners, and how you can make more money.

Mike: Yeah, I think that's very much needed in the space for sure. So very cool and also check out Skubana.com. Again we've been using Skubana for a year and a half. It drives our entire backend. We are frustrated about it sometimes, but for the most part, it's been absolutely amazing running our entire business. We are multi-channel, multi warehouse, and we haven't been able to get down to one employee yet by using Skubana, but we have definitely stopped the need to hire probably three to five more people, because that's kind of the path we're on, and just having to constantly do all the stuff ourselves.

And the thing I love about Skubana more than anything Chad is the order bots. We set up a bunch of those, and just let things kind of automatically fly to different warehouses. And it's been a big benefit for our business. So definitely thank you for getting that software out and helping us so much in that way as well.

Chad: Appreciate the love.

Mike: Cool man. Well, have a great day and thanks so much for coming on. Again we’ll get those links from you to get them in the show notes, and let's make this a tradition about once a year to get you on the podcast again.

Chad: For sure, happy selling.

Mike: Thanks.

Mike: And that's a wrap. I hope you enjoyed this episode of the EcomCrew Podcast. If you want to go to the show notes, you can go to EcomCrew.com/101. That will get you to the show notes. You can leave a comment there, we respond to every comment that we get, and we love getting comments on the blog, so please do that. And this is also our shameless opportunity to ask for a review.

If you have a chance to go to iTunes.com and leave a review of the EcomCrew Podcast, it helps us more than anything else. That's the number one way that helps a podcast like ours get discovered. iTunes uses reviews as like their number one SEO mechanism. So we really would love to get a review from you, and love to hear from our community, people that leave reviews there, we read them all.

And it's definitely touching to see the comments we've gotten to this point. We have all five star reviews except for one was a four star review. I think that's a pretty good track record. So thank you everybody that has left reviews so far. Again they're really awesome to read and we enjoy them. So episode 101 is in the books folks, EcomCrew.com/101 again to get to the show notes and leave any comments you want. And until then, happy selling and we'll see you at the next episode.