E241: How to Build a Successful Ecommerce Business Beyond Amazon

From a Dublin-based seller, we now have an Under the Hood guest from the UK. Jamie Graham is a Premium member. I met him in person at the Million Dollar Sellers meetup in Cancun last year. He and his wife Kayleigh own a beauty brand that’s bringing over a million pounds in revenue, with a 30-40 percent growth rate.

In this episode, the majority of the discussion was focused on these three points.

• Figure out how to build a ‘real’ business that’s not reliant on him and his wife
• Developing a top-level hire
• Working with a sourcing agent

Jamie and I also went over how he was able to implement the principles discussed in the book Traction. It’s an excellent read, especially if you’re on the process of growing and organizing your ecommerce business.

Check out the full episode. I’m looking forward to hearing back from Jamie over the next couple of months. With a growing business and a new baby, he’ll definitely be having his hands full.

Under the Hood is a segment where we do an hour-long coaching call with one of our listeners. We take a look at their businesses, provide honest feedback, offer our best business advice, and answer whatever questions they have. In exchange for the free coaching, we will turn the call into a podcast episode so that our community can benefit as well. It’s a win-win!

Get more information about Million Dollar Sellers on EcomCrew.com/mds.

Need onsite and personalized advice for your struggling ecommerce business? Sign up for the EcomCrew Roadshow. Read more about it here.

Join this month’s giveaway and get the chance to win an annual Premium subscription for free.

Tune in to the 5 Minute Pitch. New episodes published weekly until the final round in May at the Sellers Summit 2019.

Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.

If you have any questions or comments, feel free to leave them below. Happy selling!

Full Audio Transcript

Intro: This is Mike and welcome to episode number 241 of the EcomCrew Podcast. So glad to have you guys along today, recording this from San Diego, California, back from a long road trip doing some EcomCrew roadshows and a bunch of other stuff. Definitely fun to be back but leaving in just a little bit to head to Asia for a few weeks and then off to Miami to speak at Seller’s Summit and then for a week vacation in Mexico City. So, a bunch of traveling coming up and trying to get a bunch of podcasts on beforehand.

Today I have Jamie on the show. He is an EcomCrew Premium member, someone that I've known for a while from the Million Dollar Seller forums. If you are a million dollar Amazon seller, I highly encourage you to go over to EcomCrew.com/MDS to learn more about that. It's a bunch of people that sell more than a million dollars a year on Amazon that talk about Amazon issues specifically in a Facebook group, private Facebook group, really great bunch of people over there. I encourage you to check that out again, EcomCrew.com/MDS.

So, that's where I originally new Jamie from. And he joined EcomCrew Premium and just been awesome watching his business grow, and he's about to become a first time dad, super exciting. We talk about that a little bit here in this episode. It was literally down to the wire whether or not he was going to be able to record the episode or have to go take his wife to the hospital to go into labor. So hopefully everything worked out Jamie and you have a happy little girl on your hands now and I wish you guys the best of luck. So if you want to get to the show notes for this episode, EcomCrew.com/241. And besides that, let's jump right into the conversation with Jamie about his business.

Mike: Hey, Jamie, welcome to the EcomCrew Podcast.

Jamie: Thank you very much. I am an avid listener of the podcast. Normally when I'm doing the housework or doing some shopping and sounds. So it's a real honor to be on the show. Thanks for putting it on.

Mike: That's probably why you like falling asleep while you're vacuuming and like run into the wall or something because it was like, it bored you that badly.

Jamie: Oh, not too bad, don’t worry.

Mike: Cool. And you're also EcomCrew Premium member, which you've been there since October, so about seven or eight months. And I know you also from the MDS forums, the Million Dollar Seller forums. I think there's a link at EcomCrew.com/MDS for people interested in that. So we've known each other for a bit and I'm excited to do this this Under the Hood segment with you today.

Jamie: Yeah, I am excited as well. So we had a bit of a chance. We met in person at the MDS meetup/seminar/holiday in Cancun last year. And I actually I was very excited because I started reading Traction, because you mentioned it on phone calls but I actually had a different book also called Traction.

Mike: Right. I remember that. That was funny. That was really funny. I was like, that's not the right book.

Jamie: But actually, since having got the correct book, it has made a massive difference in my business. So yeah, we can definitely talk about that later on.

Mike: Awesome. I'm glad that that's been helpful. And it's interesting. This is the first person I've interviewed that might need to leave the middle of the podcast to go take their wife to the hospital because you're about ready to have a baby.

Jamie: Yeah, exactly. So yeah, if she comes in that's pretty much the only reason why she should come in to interrupt us.

Mike: Well, good luck. Do you know if you are having a boy or girl yet or are you going to wait till…

Jamie: We're having a girl.

Mike: Nice. Well, congrats. And hopefully everything works out well. And you'll be able to listen back to this podcast as like one of the last things you did for work before you had a baby.

Jamie: Exactly, yeah.

Mike: Cool. Well, since you're a podcast listener, you already know obviously what we're doing here, and you signed up for Under the Hood. And so the whole idea is for us to spend 10 or 15 minutes, kind of interviewing the person that comes on, and get to know a little bit about their business, and then spending the rest of the show with things that we can maybe do to help improve your business moving forward which is always my funnest part of the show. But if you've been listening to any of these, you know my first question always is, how did you get started in e-commerce? I love all the variety of answers I get on this.

Jamie: So we heard about a course called ASM of some people that we knew did ASM free. And so we thought we would see how they got on and it seemed like it was a good opportunity. Now at the time, Kayleigh, my wife was doing — my girlfriend at the time was then doing some social media consulting and I was working in real estate. And so we thought it would be fun to have like a project that we could work together on. So we thought that this would be a good one for us to do.

Mike: Got it. And that was through — so through ASM you kind of — and then you thought, oh this could be like a work at home business and that's kind of how the whole thing started.

Jamie: Yeah, we got a few products going to see how it goes but continue doing on our main businesses. So we then we tried a couple of products out. Some of them worked, some of them didn't and then we started to build a brand. And eventually, it picks up enough sales that we both decided to focus pretty much exclusively on this business. And then we built it from there over the last four years. We kind of built it from there.

Mike: Got you. So what year was it, 2014 then when you first discovered…

Jamie: I think we did the course — maybe we did the course in 2014 and then we actually launched our first product in 2015. It's probably a bit embarrassing to look at like how long it took to launch our first product, it’s crazy.

Mike: I don’t know about that. I think it just goes to show you the real world of how difficult it is. Everybody always talks about how easy it is but it's not quite so easy. And if you're like a typical person out there that isn't from a trust fund baby and has access to unlimited capital, it's also scary when you're putting your life savings into your first product, 5,000, 10,000, whatever dollars, I know and it can take some time. So I run across that a lot. And I think kudos for you actually doing it and building a business out of it because a lot of people are never able to pull the trigger. So I would look at it from that perspective.

Jamie: Yeah, it was a really great learning opportunity. Really good for our relationship as well, because we had to really learn how to work together well, because sometimes being in a relationship is like you're only doing the fun stuff together. But then like in a business, you have to do the boring stuff together. You have to disagree, you have to plan, you have to kind of do it all. So we really came stronger as a result of it. And it brought us closer because we're trying to build our lives and work on our goals, mostly in the same way and really learned a lot about, like, communication and like, joint decision making.

Mike: My wife and I have really got that disagree thing down to a science at this point. So it's always interesting working with your spouse in the business. So it sounds like 2015 was the year you launched your products. And then by the end of the year, I mean, so that part got kooky. You were already looking to quit your jobs and do this full time.

Jamie: Yeah. And then, when we learned about Christmas on Amazon, that's when we started to think, oh, I get it because we had a couple of products that were like, popular for Christmas. And then we just saw how much it now spikes and we're like, okay, we could actually make enough money from this in order to live. So that's when we started putting more resources, putting more money in, and more time as well.

Mike: Got you. So I mean, over the last four years, since you've been doing this basically full time, you said you started with a bunch of random products and just kind of some worked, some didn't. But what has things evolved into now? I mean, what does your business looks like today? Is it one brand selling particular things? Are you still kind of a little bit all over the place? Has it evolved past Amazon or is it still all Amazon, just kind of curious where things stand in terms of all that.

Jamie: Right. So we had a couple of products that weren't as part of the brand that we had now. And so I think our third product is part of the brand that we had now. And I think what really helped is we decided to go for a category that at least one of us was passionate about. So we sell in beauty. So not only is Kayleigh had the marketing background, having worked for like big retailers in the UK, she also likes, she understands the demographic that we sell to because she's part of that demographic. And she's on the social media, she follows people and she just has a good head for like products.

So starting to pick a target market and an avatar that we understood and building a brand that we could kind of be passionate about, that kind of made the big difference. So when our third product, the brand that we created for that we were like, okay, this is the brand that we want to do. So since then all the products have been launched on that brand. So it's all beauty, it's all selling to youngish women. And we have our own website, but most of our sales are from Amazon, I think it's about 80 to 90%.

Mike: Got you. Okay, so any 80 to 90% Amazon and then 10% or so on your own website?

Jamie: Yeah, that's right. So we'd like to grow that more. But right now, we're not even optimizing Amazon to the fullest. So we're in the process of just like redoing our listings and our images, and our ads and all of that. So once we've got that sorted out, we then want to really do want to work on our website and all of that as well.

Mike: Got you, makes sense. And in terms of trailing 12 months revenue, where are you guys at with that?

Jamie: I think that we're just over a million pounds. So last year was a million pounds, and then I imagine then Q1 would have been bigger than Q1 last year, so at 1.2 maybe or something 1.1.

Mike: Awesome.

Jamie: Yeah we grow — we'd love to be one of these companies that grows, it doubles every year, we haven't quite worked out how to do that. But we're growing say 30 to 40% every year, which is great. And as a result, we're in a lot less debt than we would be. I'd like to say it was deliberate, but we just don't seem to be able to launch products quickly enough. And we're still learning about how to juggle so many skews, and also we sell in Europe, we have multiple marketplaces to worry about, as well. So we've been able to hit a good rate of sustainable growth. And I think that as we keep building our team, we train up our team, I'm confident that we can actually increase that rate of growth. But if we stay around 40% a year, and we keep making money and having fun, yes, fine with me.

Mike: Yeah, as someone who grew at 100% per year for three years in a row, I can tell you that in the future, I would probably be targeting more at the 40% rate. I can just again, from personal experience, doubling every year, especially doing it back to back years, you already mentioned cash flow, that just gets insane. The only thing that's cool about doubling every year and beyond that pace is you're talking about on the podcast. It's bragging, right? But I mean, the counterbalance to that is it is really stressful. And there's a lot of things, a lot of plates in the error, things fall through the cracks.

And if you want things to be more perfect, like I like them to be, these things are just not getting done to the best of their ability and it's crazy town. I mean, it was definitely — it worked out well for us in the end but I wouldn't want to put myself through that again. I think going at 30, 40%, you can grow organically with your cash flow, as long as you have good margin. If you're buying for $1 and selling for four, that means you have the margin to continue to self-fund that growth instead of having to constantly be looking for more money because anything more than that, it just there's never any cash and that part is stressful. So I think that you guys are in a more manageable space. And don't worry about what everybody else out there is doing. If it feels good to you, then I would keep in your lane.

Jamie: Yeah, precisely. If we can find a way to grow faster then we will but we don't really like working evenings and weekends. There are times when it has to be done so I'm sure maybe if we worked harder, we could do it. But instead what we're going to focus on is building our team, empowering them to make more decisions without us and building better systems. So if there's a way to do it that way to grow a bit faster, then we're happy to do it. Otherwise, if we keep along — I'm 34, Kayleigh is 30, if we keep along at this pace, then we've got too much to worry about. Plus we're starting a family. So we want to be able to have plenty of family time as well, it’s a big part of the reason why we got into this so I can be around more as a dad, Kayleigh has that flexibility. She wants to work, the work is there. She doesn't want to work, she doesn't have to go.

Mike: Yeah, makes perfect sense. Cool. And so in terms of margins, on the million pounds, what's your take home then on all that?

Jamie: I think it's in the region of about 20%?

Mike: Okay, those are definitely really good margins.

Jamie: So not too bad but it's very easy for the ads to get out of control. We're really trying to really take control of the ads so that we don't have situations where we're like losing money on certain products, because we just slightly lost track of what's going on. And we're trying to make sure — we're trying to be stricter about the new products that we go with.

Mike: Got you, makes sense. And in terms of channel breakdown within Amazon, are you — I know you're from the UK. We didn't talk about that but you're in the UK. I have a cheat sheet now. We’ve improved the Under the Hood segments. We were doing like a pre interview with our staff in the Philippines. So I have I have some notes and I already know that you're from the UK anyway just because we know each other, but is all these sales in the UK, or are you also selling on Amazon US?

Jamie: So I think about 15% of our sales are on Amazon US at the moment. So that's probably one of the biggest opportunities that we are missing out on. So I think with Amazon EU, it's easier to have not a successful product, but a worthwhile product, a product that will make you just about enough because you'll spread it out over five marketplaces, there's less competition. But America is really where you can make the big money, but it's just a lot easier to have a dud, because sometimes if you just don't break, if you don't make those page ones, your ads aren’t converting, you're just left in a situation where you just have to reduce the price and just set it out at a break even or a loss, it's a lot easier for that.

And you have to go a lot more aggressive on the launches. And it's just difficult to give stuff away for free or really cheap, it’s designer, it is psychologically very difficult to do. But I think really, that's our big area of opportunity is to try and drive a lot more sales on dot com because we really should be doing double or triple our European sales on America, that's the way around it should be. But this is just the natural tendency for people to focus on where they live. It's funny.

Mike: I think it's actually good in a lot of ways because you already covered a lot of the reasons but the competition thing is real, and it is much more difficult to get into the US space. And with that, it's not just the giveaways and the lower margins and stuff to begin with just because there's so much competition there. And then a lot of people that are in those markets are willing to do a lot of unethical things that make it even more difficult. I mean, you launch a brand new product, and they see you catching steam, and it's just like you get carpet bombed with one star reviews, and they stop before you can even get started.

And it's really difficult now to be focused on a pure Amazon business that doesn't have a big brand behind them, which I think will be some of the things we talk about is like how do you get there over time. I think you guys can do it because it seems like you're working on developing a brand rather than just selling individual widgets.

Jamie: Yeah, yeah, exactly. So I think as our Amazon skills improve as well, we can work out what's a realistic product for the states. And I think also if we do a simultaneous launch in the US and Europe, we can then put in bigger initial orders, which I think that's really helped with factories and suppliers. And I find that with coming in around the MOQ or putting in slightly smaller orders, they're probably not taken as seriously as they are some of the bigger players. So if we can come in and start ordering 2,000 units, we can order like three and a half. So this is the sort of thing that I hope is going to make a difference.

Mike: Yeah, no doubt. And I mean, it's the whole chicken and egg problem with business. I mean you have a great idea but until you're producing a volume, nobody wants to talk to you, and you can't get anybody to talk to you until you can produce the volume. It's a constant struggle. So I get that for sure. Cool. So let's switch gears to the part where I'm going to try to help you guys and give you some of the best advice I could possibly do. Again, we've been trying to improve these segments. We've been doing some pre interviewing, where our awesome assistant back in the Philippines Abby, has been interviewing and she has some notes here of three things that you want to talk about.

I'm just going to mention them real quick and then we'll dive into each one, one at a time. But the first one is, you want to try to figure out how to build a real business that isn't necessarily relying on you and your wife, as much. So I guess that would be the goal there is to either be able to sell it one day, and if it's too reliant on you and your wife, then it makes it much more difficult to sell and or be able to free up more of your time to spend with your new family. So that's issue one. And the second one is developing a top level hire, which I think definitely coincides with this first one here, but just getting someone that can help take some of the reins of the business for you moving forward. And then the third one is working with a sourcing agent. And we'll talk a little bit about that.

So let's circle back around there on the first one. And maybe in your own words, talk about your goals and the reasons why you're looking to develop a “real business,” what that means to you and what you in a perfect world moving forward like how much time would your wife and you be spending in the business?

Jamie: Yeah, so the business started off, it's the Jamie and Kayleigh show and we're just sort of hiring people to assist with various different parts. And then we're giving people more and more responsibility. But the problem is that even though we're having staff that are taking on more and more responsibility, as the number of skews grows, and the number of orders grows, and number of all — we're trying to do new products. In fact, even though we have taken some jobs away, there's more stuff going on. So there's still like a bunch of like really important stuff that I just haven't had time to get to.

So at the moment, our team, we've got Jack a full time VA in the Philippines, we've got Harriet who's a sort of like a local assistant that does about 30 hours a week for us. We hired her a couple years ago, and she's taken on a lot of responsibility, she has been fantastic. We have Lucy who we hired for sourcing and new product development. And then we have Isabel, who we hired recently too as a kind of sort of managing director role. As you remember in one of the Premium Q&A sessions, I asked you a few questions about hiring someone to be a kind of supervisor role.

She has been around for a few months and is doing good but she didn't have any Amazon experience. So good marketing experience, had e-commerce experience but Amazon is quite a lot to learn in like a short period of time. And we've had the baby deadline to work too, but she's picking up a lot of it. So it's going good. But at the moment, like there's still a lot of Amazon stuff that she doesn't fully know. So I can’t quite step away like completely. So yeah, that's kind of where we're at in terms of the team. What's really helped is I listened to the episodes that you did about Traction, I've read the book.

And it's been great. It's been it's been amazing what we've actually done, because I know you said the same thing, you never really wanted to like block out two hours to speak about your company values or to all these kind of jobs that they would make you do like at a seminar, or they try and make you do during books [ph], it's kind of a bit painful, because you know your backlog of work is going to get bigger and bigger. But for us it has been really amazing. So we've written out like our company values. And that's really helped to inform the kind of people that we want to hire, the kind of atmosphere that we want to promote, what are we about as like more than the business, our core focus, quarterly rocks.

I had some for last quarter, and then we've just set them for all the team for this quarter, weekly scorecard we're working on and I'll ask you about. And then the meeting structure and the data is coming along. But it's really gotten us to have conversations where we're really talking about the business. And I feel that I'm actually doing some work, real work on the business about trying to shape the business to the kind of business that we want to run that we can be proud of. And it's also going to run better as well. So I feel that the EOS system is going to really help.

And I feel like it's also a good idea just to implement one system from one offer on one set of books, rather than trying to mix and match from different places. So just picking one guy and like Gina Whitman, I'm going with you. So it's been really helpful for me. I actually had a day — because he mentions in the book, you should have a day with your team to sort of unveil EOS to say this is what we're going to do. So we called it our vision day, we got everyone in, we got everyone to put up like a fun picture about themselves and some fun facts about themselves.

We talked through the values, people suggested some quarterly rocks for themselves, we talked about KPIs, and it was just — we did out of the office, it was just a really, really fun day. And it also gave me accountability chart together. So people understand how the company works, listening to all the amazing ideas that everyone had, we had them do some preparation, which is really excellent. So we're about halfway through the EOS, but it's already made a big difference. I need to form this into a question here. What sort of next steps do you think we need to take to sort of go all the way to get the business really well set up?

Mike: Yeah, I mean, it sounds like you guys have laid a tremendous groundwork, which is great. I obviously, I love Traction, I had been in business for 15 years, myself and always like never really quite put my finger on what was not working. I read other books, but as you say, you start reading a bunch of other things, and I didn't relate to a lot of stuff I was reading and it didn't seem real world practical at the size business we were at. And then I found Traction. And it was just, the aha moment for me was the whole implementer versus visionary roles. And just being like, realistic of the fact that I am the visionary and I am a horrible implementer.

I'm a good implementer when it's just me, like when I'm a solopreneur stage, it works great because it's like all of my head and I don't need to communicate with anybody about what I'm doing. Just have conversations with myself, which some people have been put in a padded room for. But when you get to the point where there's more than one person, or in our case, 13 people, they all want to know what their goals are and what the company's goals are and the vision you're kind of marching towards. So, I mean, the fact that you've been through that and done that is awesome.

I mean, I would say that the next step, which has been tough for me personally, is just sticking with it because I just again, I'm not the implementer person, I'm more the visionary. So it's hard to nail me down and get me to spend the time to help with the quarterly rocks and get that stuff done. But luckily, we have Jacqueline that helps with that and Mia, and that stuff gets done largely in part without me because I want it to get done like I mean well, and I want to let something get done. But I’m just again off in the clouds in the visionary role. I'd rather be doing stuff like I'm doing right this minute with podcasting or the roadshow thing I've been doing, or going out and speaking or whatever it is, or coming up with the next business idea.

And so that's where I end up with the squirrel syndrome spending my time and it's just a matter of making sure that you stay on track and get that stuff done. And also, I would say the other thing that's important is to be able to pivot. I think that when you write down, Traction has you do a 10 year plan. I did five; I think you got to adapt all systems to be more realistic to your business. And for me 10 years is just longer than I can get my head around because in the type of businesses that we're doing in the tech world, Amazon might not even be the leading e-commerce platform anymore 10 years from now. There's a good chance it won't be. So you got to be able to write down I think, a reasonable timeline. In your case, it might be 10 years, maybe…

Jamie: We did five.

Mike: So you did five as well.

Jamie: Ten is crazy.

Mike: I think 10 is crazy. But because the book is written from a fortune 500 boardroom philosophy, right but luckily, it adapts well to these online businesses. So we did five years as well. And then the other thing I said like it's key to be able to pivot. I mean, obviously, we just sold one of our businesses, which was not a part of our five year plan. But we made that pivot because sometimes market conditions change. And I think it's important that you have a north star that you're pointing towards, but you don't get so caught up in the fact that you wrote it down that you can't make a change if that's what's best for the business. So, it's probably my biggest pieces of advice based on the stuff that you said so far.

Jamie: Great, we are working on those goals. And we hired a freelance finance director to help us sort out some of the data stuff. So hopefully working alongside her, we're also going to be able to come up with some good goals.

Mike: Perfect.

Jamie: The thing about the quarterly rocks, it's really interesting is so for quarter one, my quarterly rock was to hire a sort of operations manager person that could help, hire and onboard. And she's on board and maybe 50% by the by the end of March, so a pretty good success. But it really made me think that it's okay for all the other stuff that I didn't get done because I know that I focused a lot on my rock and I spent a lot of time sitting down with her, training her up, having meetings with the other team.

So there were things I wanted to do. For example, I wanted to change our currency exchange provider, because I had a better quote, but that didn't get done. And that's okay, that will happen because I knew that by focusing on my most important tasks, that's what's going to move the needle the most. So yeah, that's what I like about the rocks is that even though I know some stuff is slipping, I know in the long term, I'm focusing on things that is going to move the business forward the most.

Mike: Yeah, absolutely. I mean, you can't do everything. So I mean, that's what the quarterly rock thing helps with. And the example you just gave is probably like one of the best where it's just like you know you can save some money with your changing a currency conversion provider, maybe it's a shipping provider, or one of the other dozens of things that are in your business. And what I try to always explain to people is you can only really focus on one thing in terms of, are you in growth mode or are you in profit mode? And growth mode, you're going to make the decision to hire that person you just made as a hire and get that in place to take on a bunch of responsibility that takes up a bunch of your time right now so you can go focus on other things to continue to grow the business.

It's all a growth mindset, versus at some point you're going to be focusing on profit. And instead of going out and making new hires and launching new products, and all the other things that are in growth mode phase, you can then go through and look at those quotes of your shipping providers and currency conversions and all these different types of things. And I find that it's way easier to work on the profit thing later than the growth thing later, because the growth part takes a much longer time.

It's if you're launching your products, there's a whole bunch of upfront stuff that goes into defining that product and getting samples and improving and working on the packaging, getting the listing created and then doing some of the giveaways and all these different things that happen in the launch phase versus when we decided that we wanted to sell ColorIt, and we started into the let's get our profit as high as possible phase because we're looking to sell this business, that was actually really easy. I mean, it was easy to go back and be like, we don't need this expense, we don't need that expense, we're not going to launch these new products and spend a bunch of money on that. We're going to actually spend some time curtailing our PPC costs and getting that more under control, especially on Amazon.

And next thing you do like our net profit exploded because we were spending time doing that. And I do think it's tough for a business to — especially of our size to be able to do both, because you just don't have the manpower and brainpower to be focused on both of those things. So, just another thing where I think that you've done well by picking your quarterly rocks and making that your thing for this quarter. And when such a time comes that you're more focused on that profit, you can go back and worry about that currency thing later.

But if you extrapolate out how much you would save from the currency thing, let's just say it's 1,000 bucks a month, think about how much more value this new hire is going to bring to your business over the next few years. And it's like a compounding interest effect. So I think it's tough to stay on that path, especially if you're frugal and money conscious. But I think that you're doing the right thing there.

Jamie: Yeah, there's a long list of stuff that hasn't got done but there's always next month. And I think with Isabel trained up to take more responsibility and more management, more day to day, it will free me up to get these little bits and pieces done. And we can really kind of deliver on that growth absolutely. So one thing I wanted to ask you about was the weekly scorecard. So we've got — this is my list of things that I want to do that we want to measure weekly. So we've got website sales and ACOS ad spend, total Amazon page views, average conversion rate, number of skews out of stock, and gross profit. Do you want the monthly list or do you want to talk about the weekly list first?

Mike: Let's talk about the weekly list first. I think that — so ours is a little bit short, we don't do page views; we're not 100% Amazon. So we're not looking at page views, we look at gross profit, there was one more, your conversion rate, that's also another really good one to have on there. I think that this is one of these things where every business is a little bit different. I think that because you're more Amazon focused, you're going to want more data points for that. These are — so just for people that are listening, I mean, these are things that you want to know in your business on a weekly basis because you don't want to wait a full month until you know something is out of whack.

I mean, for instance, let's say you're ACOS goes from 20% to 30%. That's a really bad result that could cost you — for us, it would cost us five figures in net profit. And if you waited a whole month for that to go on, it would be more like mid five figures in that profit. And so these are things that you want to be able to address if they get out of whack really quickly. And so I mean, the things that you call out there seem to be pretty good to me. We also have Sentry Kit installed, which is kind of another weekly scorecard thing, just to make sure that listings aren't being hijacked or images changed. That's more of a daily thing because if somebody comes up with that, we just react to it. But yeah, I mean, I think that those are pretty good data points to be looking at.

Jamie: And then we have the monthly, we have average order value, click through rate, for ads both average cost of sales and total cost of sales, sales from emails and total stock value.

Mike: So I mean, net profit seems to be one that's missing off that list.

Jamie: Yeah, that would be a good one.

Mike: Yeah. I'd be looking at — one of the things we look at is percentage of sales to ads. For advertising budget is looking at — we want that to be somewhere under 15% of our business a little bit different. We actually have it — right now we're getting close to being under 10%. But if we see it go above 15, we know that something is really wrong. We're looking at our gross margins. Just making sure that nothing is getting out of whack there. But you already mentioned gross profit on the weekly.

Jamie: Yeah, that's gross profit is that's just like a dollar amount. So it's not…

Mike: I would be looking at it — I think it's important to be looking at things in terms of percentages, at least for me, because like I was actually just doing a roadshow with someone. And I basically was trying to instill in them that every e-commerce business is virtually the same in a lot of ways no matter how big or how small. As you get bigger, the math is all the same, you're just adding zeros, right? So I mean, don't look at the fact that we're getting close to doing 10 million and you're at 100,000. The math is all the same, you want your gross profit margins to be in line. You want your net profit margins to be in line. The biggest drivers of that are your advertising costs. So looking and making sure that you’re keeping close tabs on that.

And then just your overall expenses, your overhead expenses, and making sure that as a percentage of sales that that stuff stays the same. And then if you're doing that, that means that you can make a pretty calculated decision in terms of like your hires, because you're going to keep your overhead percentage the same and as you grow, you can afford more staff. And you can just make sure that those numbers don't get out of line. You can make a business decision, we did this early on in our growth phase, where just like, okay, we're going to bet on the come a little bit.  

So we're going to allow our overhead expenses to get bigger than they should be because we think that that's going to help drive faster and bigger revenue down the line. But you want to make sure that you understand those numbers on a monthly basis and the cause and effect of that, and that you're not just — things get out of line without an explanation, I think is really important.

Jamie: Yeah, they're definitely some good ones for us to think about. I guess the other thing about that, the weekly scorecard is that you have to look at it every week, because I sometimes get these kinds of reports. But I want my team to draw them up and I don't really look at them. And so I think having a timeline of this, and then knowing the data is that we have other reports where I can then go and look into all these kind of things in more detail and try and see if there's any problems or if we've got any kind of sales spikes, any kind of good news as well. So I think it's going to be a really amazing habit that we are going to have.

Mike: And by the way, just one other thing real quick. I mean, it's not necessarily just like you said identify the bad things; you just mentioned like identify the good things if you have a sales spike. So I mean one of the things that this weekly scorecard thing does for us is keep us from running out of inventory, because we've had sales spikes happen. And without looking at on a weekly basis, you would probably run out of inventory if you're keeping things a little bit thin like we do in terms of stock at Amazon. So it helps us identify like, oh, there's something going on here. We had a sales spike, let's take a look. This wasn't planned. And we can then identify the skew or skews that are attributing that and make sure that we don't run out of them.

Jamie: Yeah, it could happen in beauty. You can either maybe, for some reason, one of your rankings goes up without you noticing. Or maybe someone shares a product on YouTube without you asking, and it's good to — if you notice a sales spike, then you know to look for it and try and find them. But if you're not monitoring, you don't notice it. So the other thing I wanted to talk about, the second thing was you hired Jacqueline as your director of e-commerce, is this about a year ago now? How long ago? How long has that been?

Mike: A year and a half ago now.

Jamie: Yeah. So we're about a couple of months in on the same kind of journey. What's your kind of update? What have you learned over the sort of year and a half?

Mike: I learned that I should have hired her sooner is probably the biggest thing.

Jamie: I'll second that.

Mike: Yeah, I mean, I know that sounds like almost like I'm being funny, but I'm actually serious because I just, I guess especially after reading Traction, she's the implementer. It just happens and I don't have to worry about it. I was just out of town for three weeks doing the EcomCrew roadshow stuff and I helped him with the ColorIt transition with the buyer in Austin, and didn't really have to be thinking about things. And also, I'm heading out for almost two months this Friday, with a combination of go into Asia and back to Miami, then Mexico City, it's almost two full months, and just having someone there that can handle that stuff is irreplaceable.

And also in the time that we were in this high growth phase, she was helping with all the product launches, and just keeping things organized and making sure that we weren't wasting a bunch of time on a calendar because you can waste three and four days here, like going back to a supplier and another three or four days here. Next thing, like months of extra are added to your timeline getting products developed. So I mean she was really great at that. She sets all the quarter — I mean, we wouldn't still be doing Traction if it weren't for her. I mean, she's gets all the quarterly rocks done, works with me to do that and forces me to sit down with her and puts the time on my calendar to do it which is important. So I mean, yeah, I mean, things look a lot different here than they did before.

Mike: Great. Yeah now I’ll just say to anyone listening, probably one of the biggest mistakes that we made is not making a top level hire earlier. The sort of the bigger your kind of senior management team is, the easier your life is basically as a business owner. So yeah, that’s definitely true.

Mike: It's been irreplaceable, I mean, it's been great.

Jamie: So yeah, it looks like you don't have any shortcuts, I'll just keep putting in the work, keep training and working side by side along with her. And then just gradually give her more and more responsibility and step away from jobs one by one.

Mike: Yeah, I mean, this is definitely one of those things that it just takes time. It takes time for them to become comfortable with the task and for them to learn. I mean, you're basically asking them to do your job that you were doing previously, like 90% of the job you were doing previously let's say that took you four years to learn, right? So just be cognizant of the fact that it  took you four years from 2014 to 2019, or 2015 to 2019 to learn all that stuff, and they're coming in just as green as you were in a lot of ways, maybe coming in with a different perspective and additional skill sets that in the case of Jacqueline, she came in with an MBA and fortune 500 logistics experience and things that were way above my head, which was awesome.

But at the end of the day, the job that she's doing was effectively the job that I was doing two years ago, and now I can do another job. And I have this saying that you should always be training your replacement. And that's basically what's happened, and that goes for everybody. If every employee always had that mindset where they weren't defensive about their job, and just wanted to be kind of like Milton on Office Space or just like he just wants to have a stapler or whatever and defend that job, then you'll be much better off. I mean, when I was an employee, I was always looking to do something new and take on another responsibility and reach another level. And that often meant that I had to find someone else to do my current job, or at least help with it.

And even as a business owner, you need to be thinking that way. And if you're going to go from a million pounds to 10 million pounds, your company is going to look very different. And in that case, you're going to have to evolve and learn and someone else is going to have to take over the stuff that you're doing right now, everything is in stages. So there's not much you can really do to shortcut that. These are the few things that just take time and you got to be patient with.

Jamie: All right, well, I will pull back in a few months and let you know how it's going. So with the baby, I’m going to be forced to take a step back, so yeah, Isabel is going to have step up, I’m not sure she’s ready.

Mike: That's probably a really great opportunity. You said she's been there like six months or whatever now. It's a great opportunity for you to let her sink or swim at this point, right. I mean, I did a similar thing with Jacqueline. I mean, when it came time to go to Asia, and this time a year ago, because like I said, she's been here about a year and a half. So this time of year ago, when I was going to Asia for two months, she had been with the company six months. And I was like, okay well, I'm leaving, good luck and let's see how this goes. And she did an incredible.

Jamie: So the last thing I wanted to talk about and this really came out really well in the vision day talking to our team who are involved in this part of business is that the whole China sourcing part is taking up more and more time, the just general communication back and forth. In a way, issues like China full stop is one. So it's taking the logistical organization of just reorders, sewing out little issues is taking a long time. You send a 10 point, they will send a 10 point email across, and then not only get a response at about five, there's like little delays. There's same problems showing up on inspections again and again, there's delays, just all kinds of things happening the whole time, negotiations back and forth, taking quite a long time. So we're coming more and more sticking.

And Lucy, who we hired for sourcing and new product development, her strength is mostly the new product development rather than the sourcing, she's not had so much experience negotiating with the factories. And when she was doing that, she was part of a really big company. So she had a lot more clout than just being with a smaller player like us. So we've come to the conclusion that we need, either to hire someone full time in China to work for us, or we have a sourcing agent or a trading company. We need someone to handle all the conversations with them in Mandarin, who knows when the time is to use flattery and when to swear at them in Chinese or like when to send them a present for Chinese New Year and to just really keep those relationships going and take care of a lot of those details and maybe find us some better suppliers as well.

So just wondering what your tips are for working with a sourcing agent because if we free up more time for Lucy to work on like finding great product designers, looking for opportunities, and doing that kind of stuff, we can have someone take care of the China end, hopefully negotiate us some better prices and hopefully pay for themselves that way, we really feel like it's going to really help us.

Mike: Yeah, so we went through a similar problem a year and a half agoish, we were kind of at this crossroads having the same problem. And we came close to hiring a full time person in China to help with this. That's actually what I was planning on doing. We weren't able to find the right fit. And my plan was to continue to look into it till I found the right fit. And this person was — the salary range is about 1,600 bucks a month is about what you would be looking to pay to have someone full time on the ground on your behalf doing sourcing for you within China.

And the recommendation would be to be looking for someone in a geographical region that's where you're sourcing from. Typically what happens, I mean, this is not 100%, but typically within China, things are sourced in regions. I mean, you have regions that are in the clothing textile stuff, you have regions that are into manufacturing, and regions that are into like making big industrial type things, regions that are doing like chemicals and things of this nature. So I'm assuming that there's a region that most of the skincare type products or beauty products that you're sourcing comes out of. I could be wrong about that but let's just say it's Shanghai as a for instance.

I'd be looking for someone in that area, in Shanghai Ningbo, in that region that they can be getting around things by train and not by plane and just make their lives easier. You realize that China is about the size of the United States, so something that's in Beijing versus in Guangzhou is multiple hour plane flight took to get there, so just something to be aware of. So we were looking for someone in a particular region of China that we source a lot of stuff from, and it was going to be about 1,600 bucks. We talked to a lot of different people, interviewed a few in person while we were over there, and we weren't able to find the right fit quite yet. But we were on this path of being determined to find that person basically.

And during that process, we ended up finding a sourcing agent, and ended up going that route, which has been just absolutely phenomenal. I can't say that it's better than necessarily than having a full time person yourself. But it's definitely better than the solution that we were in before. And now what happens is we have this English speaking sourcing agent who's based – half his time is in San Diego, which just happened to work out great for us and half his time is in Shanghai. He has an office over in Shanghai with a couple of dozen people or whatever that are helping with sourcing stuff.

And basically, I can hand him a product and say, go find this for me. And then I don't think about it until he comes back and tells me he's found it and what the prices. And this has worked really well for us. We actually have an awesome story of where we were able to get our best-selling product down in cost from $9 and 60 cents to eight bucks, which times tens of thousands of sales per month adds up to be a huge amount of money. And that's including his cut.

Jamie: Is that by changing suppliers or by changing his negotiation?

Mike: We end up changing suppliers. The supplier, there's a whole long story to that. But we did change suppliers or has been situations where he's just negotiated down with the current ones, and they wanted to keep our business. What I realized, even though I think I'm a good negotiator, I'm nowhere near as good as he is and they know what the real price is. I don't really know, I don't have any background in that right. So it just seems like oh, I can make the margin I want to be making, that's good enough. Or I can charge this and make the margin I need to make. But the reality is I could be making more. And that allows me to grow my business even quicker by spending more money on ads or whatever it might be.

So he's been incredible. And they've done all kinds of stuff for us. I mean, like our Tac9er multi tool is something that they developed. And we basically told him like, look, this is what we want to develop, but we don't want to copy anybody, we want something that is unique to us. And so they did like all the CAD drawings and made us samples and went through that process. He's also like on the line during manufacturing, and deals with any quality assurance issues. With that particular product, they were making them and they weren't flat. He was — when they had made a few thousand, he went and looked and they weren't laying flat on the table, because when they were stamping them and you're doing the heat treating process, they were warping a little bit.

And he asked me about that being okay or not, I was like no, like absolutely not, we can't have that be warped. And so they take care of all these types of things. And the one thing that he can't fix is like that does take time to fix. But he's there dealing with it, I don't have to deal with it. I don't have to be the one going back and forth and pressuring the manufacturer and knowing what's right and what's acceptable. He got him to remake them all, and at no cost. And it just took a little bit longer. And it was a brand new product. So at that time, it didn't really matter that it took longer because no one was expecting it to release.

So long story short, it's been great, I'm happy to share that relationship with you. We actually share it with our EcomCrew Premium members, we've had a lot of other premium members use him. I've been really happy so I'm happy to share that. And I don't know if he can source in your particular niche but it's been great. I think that getting that relationship is key to continuing to grow the business.

Jamie: We tried a lot of sourcing agents but either they weren't any good, or we didn't give them enough of a chance because we would give them one product to try out. And then when we couldn’t get a viable product from that, we decided not to go with them. And also a lot of the time, we would find out like we were just like, okay well, let's just spend a couple of hours on Alibaba ourselves and see what we can get on our own. And then we would find out like we could just do better on our own. And so I think that now we'll try and give — try some new companies and give them a bit more of a chance, give them a few different products to work on and maybe like some easier ones as well and see what they can do. And I’ll just find someone that we think that we can gel with that we can work with.

Mike: Just like your Isabel person that you hired and like my Jacqueline and my Mia, I mean, these are people that took a long time for us to find. I think that you're going to put an equal amount of time into that sourcing relationship to find the right person. But when you do, it will drastically change your business. I mean, ever since I've had this guy, it's been night and day. I don't think about it anymore. He just does all the sourcing; I don't have to think about it. And that's pretty awesome to me.

Jamie: So has he also improved things like the quality, the percentage of shipments that you can pass first time, the percentage of shipments that are late? Have those kind of things improved as well or they stayed the same but just with lower prices?

Mike: It's all gotten better. All that stuff across the board is getting better.

Jamie: Wow, it’d be amazing and all that time back. So does he just give you a price to include his cut or does it just…

Mike: The price includes the cut, it's 8%. And like I said, even with his markup, we're still saving tons of money. And I mean I don't even really look at it as markup because again, we don't pay for inspection fees anymore because he takes care of all that. So that saves us some money. He inspects every order. The amount of time I've gotten back is worth a ton to me. So I mean, I think that the reality is that for us like it's just a win all around and he also wins as well. He's also got a relationship with a freight forwarding company that saves us a bunch of money to help with logistics. So it's been great. And yeah, after we sign off here, I'll be sure to pass along the info to you.

Jamie: Fantastic. I actually, you've actually already given me his email address. I just simply haven’t gotten around to contacting him, but it's going to be one of my rocks for next quarter — for this quarter, it is on my rocks for this quarter. So I will definitely be in touch with your guy and it's great to hear such good things about him, that there’s good providers out there. So it's worth kissing a lot of frogs I guess to find the people.

Mike: Yes, exactly.

Jamie: As long as you can make a difference.

Mike: That is what business is all about right.

Jamie: In hindsight, maybe we should have kept going because yeah, it's a major blockage in our business. And it's really slowing down the number of new products that we are able to launch.

Mike: Yeah, makes sense.

Jamie: But yeah, thanks so much for taking the time to talk to me. It really makes a big difference being able to follow your journey and to actually know about the businesses because you're so open. It really makes it really easy to learn. So I kind of forget all this stuff, so let's just learn from listening.

Mike: No problem. It's been fun doing all that and that's been the point of it all along. So I'm glad that's what's actually happening in reality.

Jamie: It’s great to hear you’re now focusing more time doing what you're passionate about, which is training and teaching other people to run successful businesses. So you build a team now so you can do the kind of stuff that you enjoy. And I've got some stuff in mind that I want to be working more on. And yeah, I feel that within about three to six months, I'll have a lot more time to pursue some of the deals and some of the interests that I want to do so yeah.

Mike: Yeah, it makes a big difference. I mean, you'll find your disposition just like your mindset. Your headspace is just so much better when you're doing that versus just doing things that you're not necessarily passionate and enjoying day to day and live is only so long man. And you look back at some point and be like, I wish I wasn't doing that for two years of my life or however long and that's kind of the way I've been approaching it and it's been great.

Jamie: Yeah, I love doing what I'm doing now but I don't want to be doing the same thing for years and years. I just love the fact that this business gives us the chance to be constantly growing, learning new things, reaching the next level. So to me, it's like a really fulfilling line of work just to spend my time doing and I'm really enjoying the things I'm learning now that are going to help me get it to the next stage.

Mike: Cool excellent. Well, I got to scoot because I have another one of these due but it's been awesome chatting with you and follow up with us in a few months. Let us know how the parenthood thing is going and how the business is going, we would love to hear from you.

Jamie: I will do thanks.

Mike: Thank you. Bye-bye.

All right, guys, that's going to do it for the 241st episode of the EcomCrew Podcast. Don't forget to head over to EcomCrew.com/241 if you want to leave a comment for Jamie or me or Dave, or anybody else. Just let us know what you think of the episode. We always love to hear from you, EcomCrew.com/241. And as always, I like to leave a reminder about leaving a review on iTunes for us. It is really helpful. We've got a bunch of new reviews that have come in lately. We really appreciate it. So head over to iTunes, leave us a review. It really comes in handy to help promote the EcomCrew Podcast. Besides that guys that is going to do it for this week. I hope you guys enjoyed this episode of the EcomCrew Podcast. And until the next one, happy selling and we'll talk to you soon.

Outro: Thanks for listening to the EcomCrew Podcast. Follow us on Facebook at Facebook.com/EcomCrew for weekly live recordings of the EcomCrew Podcast every Monday. And please, do us a favor, and leave an honest review on iTunes, it would really help us out. Again, thanks for listening, and until next week, happy selling.