TAS 234 Product Selection and Growing Your Business Advice from $10 Million Dollar Seller (Chad Rubin)

Every private label seller has dreams of their business going big. But very few think as big as what actually happened for Chad Rubin. Chad’s private label success forced him to create an amazing software solution for his biggest problems. You’re going to hear Chad’s story from the beginning until now – how he built an amazing private label business on Amazon, grew it to monstrous proportions, and then pivoted to create a software that is now leading the way in the ecommerce space.

Great ways to discover product ideas that actually sell.

One of the most difficult aspects of building an Amazon private label business is finding that perfect product that sells – and continues to sell. Chad Rubin says that those kinds of products require a lot of research into the market it will be serving. You’ve got to make sure that you’re actually meeting a real life need to ensure that there will always be a market for the product so you’re not left with a huge investment that never pans out. You can hear Chad’s advice for finding those kinds of products on this episode.

Come up with an idea that solves a specific problem.

You can’t expect to jump on Alibaba and choose the first product that looks like it might sell. You’ve got to find one that truly meets a need that consumers are willing to pay to have solved. Chad Rubin’s formula for private label success starts there. He suggests that you look at your own life – at the problems you face and the things you wish were different – and let those frustrations inspire you to create products that solve those problems. If you have the problem, you can bet thousands of others do too. Find out how Chad goes about his own product discovery on this episode of The Amazing Seller.

Come up with an idea that has to do with something you love.

Many private label sellers fade away over time because they start selling a product they think will be successful, but it’s not something they personally have an interest in. Chad Rubin says that long term success requires that you’re working on something that you actually enjoy or have interest in. When you’re passionate about the products you sell you’re going to be much more motivated over the long haul and will be able to persevere to see your business thrive. If you want to be inspired by an incredible story you’ll want to hear this episode.

Choose a product that doesn’t get you stuck in one narrow niche.

Successful private label sales depends on building a brand, not just selling one popular or in-demand product. When you only have one product you get stuck in a one dimensional place where it’s hard to branch out and create secondary streams of income for your business. Chad Rubin suggests that you start out with an eye toward building a brand that can span many different niches of products. That way you’re able to pivot more easily, add complementary products to your product line in a natural way, and maximize your potential to cross sell to your existing customer base.

OUTLINE OF THIS EPISODE OF THE AMAZING SELLER

  • [0:04] Scott’s introduction to this podcast episode.
  • [1:46] An iTunes review left recently (leave your review over there, too!).
  • [3:24] The upcoming workshop!
  • [4:24] Scott’s introduction to Chad Rubin and the beginnings of his story.
  • [6:42] How Chad recommends someone get started when looking for products.
  • [8:19] Why Chad focuses on products that bring innovation to the market.
  • [9:18] The way that Chad began selling his inventory on Amazon.
  • [10:55] How Chad pivoted his business to service existing brands.
  • [13:27] The places Chad gets his product ideas.
  • [15:26] Chad’s recipe for e-commerce success.
  • [17:30] The value of making sure your products are on more than one channel.
  • [18:58] The process to getting products listed on Wal-Mart.
  • [24:31] Choosing a brand that doesn’t get you stuck in one small niche.
  • [28:28] Is Alibaba the best place to find a good product?
  • [32:10] A big rookie mistake Chad made when he began.
  • [34:19] The way Chad fulfills his orders.
  • [36:19] How Chad created his own software to solve a business problem.
  • [38:30] Chad’s book: Why he wrote it and what it’s about.
  • [41:23] What Chad says to those just starting out.

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TRANSCRIPT TAS 234

TAS 234 : Product Selection and Growing Your Business Advice from $10 Million Dollar Seller (Chad Rubin)

[INTRODUCTION]

[00:00:03] Scott: Well hey, hey what’s up every one? Welcome back to another episode of The Amazing Seller Podcast. This is episode number 234 and today we’re going to be talking about two pretty hot topics. Number is product selection. Everyone wants to know more about product selection including myself. Then growing your business on and off of Amazon. That we all want to know more about. I’ve invited on a guest that’s no stranger to selling physical products online.

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He’s actually someone who’s doing $10 million in revenue per year and he’s doing it all with physical products. His name is Chad Rubin and I invited him on to discuss these two different topics.

Who wouldn’t want to ask someone that’s doing $10 million in revenue per year like, “What would you do today to pick products? What is your philosophy? What is your strategy?” Let’s hear what he has to say. That’s what I wanted to do. Now you’re going to be able to hear our conversation which is pretty cool. That’s why I love this podcast. Then the other part is like he’s a lot further ahead that a lot of us as far as growing our business on all these multi channels and he’s going to break that down for us as well. He’s got a couple that are pretty easy to actually get your product listed on. One of them is brand new, it hasn’t been out there that for long.

He’s going to talk about that on today’s show. Really, excited to have Chad on the show. Now, before we jump in there’s a couple of things I want to do. The first thing is, of course, I need to say, thank you so much for being listeners. You guys are awesome and all of the emails, the blog comments and iTune’s reviews. All of that stuff that I keep reading are just really, really inspiring to me and I want to just thank you once again. I did want to go over to iTunes real quick and read one of those reviews. I haven’t done this in a long time and I felt like I need to give you some iTunes love. Hopefully you guys will over there and leave a review when you get time. That’d be awesome as well.

[00:02:02] Scott: Just go on out there and leave an iTunes review.  Obviously give me an honest review just like you would if you were on Amazon. Let me just read this one real quick and again this is why I do what I do. I love reading these and hearing the feedback and that I’m actually making an impact, which is really what I think we’re all here to do in some way. The title was ‘Genuine guy, great actionable info #takeaction five stars, love it.

The name is Blaweg, B-L-A-W-E-G. I believe that’s how you pronounce it. Here’s what the review said, “Hey Scott. Just a quick word of thanks for putting your experiences, your successes and failures out there for all of us to grow by, those of us who want to grow. I like the fact that you are down to earth and share some but not too much about your personal life. You’re a real human being, I really like real people. I appreciate that you provide very practical and actionable info about the PL model of FBA. Some compare you to Jim Cockrum. That’s a compliment in my book, smiley face. #juststart, #takeaction.”

Obviously that person has been listening to the show. Awesome. Thank you so much for that and I really, really do appreciate it. If you guys can do me small favor and leave an honest review on iTunes for me that would be amazing. Thank you so much. One last little bit here before we jump into this amazing interview that I just did with Chad I wanted to remind you about our upcoming workshop. You can register by heading over to theamazingseller.com/workshop and the date that we’ll be doing it will be there. They are always going to be changing but go there now and you’ll see the next upcoming date and you can register for that. For those of you that don’t know, I break down the five phases in this workshop for picking a product, for sourcing a product, for going through a prelaunch, going through a launch and then doing some promotions after the fact. We break all that down.

[00:04:00] Scott: And we do some live Q&A and I just love hanging out with like-minded people that like talking about this business model. If you want to join me on one of those upcoming workshops, head over to theamazingseller.com/workshop. All right, guys that’s it. I’ve rumbled long enough here, I’m excited for you guys to hear this awesome amazing interview I did with Chad Rubin. Enjoy.

[INTERVIEW]

[00:04:24] Scott: Well hey Chad. Thank you so much for coming on the TAS podcast. What’s going on man?

[00:04:30] Chad:  Thank you for having me. A lot’s going on.

[00:04:33] Scott: A lot’s going on in your world, I know. You’re quite a busy guy. I love it and I love talking to all different Amazon sellers and you’ve been at this for quit a long time and you’ve grown into a pretty sizeable company but it didn’t all start that way. That’s really what I want to dig into today, is you’ve grown this thing like I look at it and I’m like this is this massive business but you didn’t start that way and that’s why I want to bring people back a little bit without going through all of the details. I’m sure people can find out all of the details on other interviews or wherever you’ve been on. I did want to talk a lot about product selection and stuff because I think that’s one of the big things that my audience is struggling with and struggles with. A lot of people do whether you’re selling on Amazon or not. Give us a little bit of your back story Chad.

[00:05:18] Chad: The quick back story I was on Wall Street. I covered internet stocks, I got laid off and my parents had a vacuum store, retail store that was going out of business. While I was on the street I put their products on Amazon but also with their own store front which is Envolution and when they ran out of that product through their bankruptcy process I actually created a direct consumer vacuum filter company. This is in 2008/2009 and I’ve traded a pretty large ecommerce presence. We do about $10 million in revenue a year. Then I started a software company to support my business and I’m sure we’ll dig into that. That’s really my background as I built a direct consumer home appliance parts company on Amazon and along with fifteen other channels that I sell on today.

[00:06:03] Scott: It’s pretty cool because some people think you have to come out with this like really like shiny product, something that is just it looks amazing and it’s going to just wow people. We’re talking about filters. Something that put in through a vacuum. Not very sexy but there’s a very huge market for it. You found that and you exposed that. That’s really what I want to dig in here today because I think that you can bring some really good insights and it’s like what you’ve seen happen, what you see happening moving forward and people writing trends and stuff like that. What would you say to someone coming up to you and maybe a good friend of yours and saying, “Chad I really love what you’ve built here. How do I get started in this process with finding a product or starting a business whether it’s starting on Amazon or starting your own ecommerce?” What would you tell that person?

[00:07:02] Chad: I would tell that person to solve a problem. Don’t just come up with an idea but come up with an idea that sells a specific pain point that you’re going to scratch. That’s where a lot of Amazon sellers go wrong today. It’s they go to Alibaba, they get the latest spatula and Amazon does not need another spatula on its platform. I would also say go after what you love. Go after something that you know about already. I’ve a good friend, he is a car mechanic. I was like, “Dude, this is a great industry, get into it. What’s the most replaceable thing that’s on the car or what’s the one thing you can improve on that solves a major problem?”

[00:07:43] Scott: I like it. I like that a lot and again you just came up with a book which we’ll talk about too and I read through all of the book, all of the main topics and everything you cover and it really called out to me because I believe that. It’s like if you can find a product that solves a problem and usually we’re going to want to try to solve our own problems. If you can find that product there’s probably other people that have that same problem that you could potentially solve and that’s what you’ve done. I love it though. The automotive industry. Like you said, there’s definitely replaceable stuff out there as well. Now, do you only look stuff that has to be replaced or if you found something that made sense, would you sell something that was a one off sale?

[00:08:27] Chad: I do a lot of stuff that does need to be replaced as well but I really focus on innovation because like in 2008/2009 like the Amazon Private Label game was a lot different and now we’re in an environment where really only the strong will survive like everyone’s copying everybody. It’s super, super important to try to solve problems, not just replacement products but also just solving… If you go on Amazon today and you find a product, everyone looks at how many product reviews somebody has but a lot of sellers don’t look at all the negative reviews. I read negative reviews all day long to find out what is going on with the product and how can I make it better and how can I create a product listings, that sort of leverage, those negatives and turn them into positives.

[00:09:19] Scott: Okay. I like that. Now, let’s go back to your story like a little bit in the beginning. What made you say to yourself, “I’m going to go ahead and launch vacuum filters?” What made you think that?

[00:09:31] Chad: My parents had a vacuum store and they were just resellers. I started playing this game of reselling and it was kind of like musical chairs, I would just get swapped out of the buy box every so often only winning 20% share. I also asked myself why do I have to buy these products for $20 and sell them for $24? It didn’t make a lot of sense. It was just plastic and paper. I was like, there has to be a better way. I need to do it better, faster and go direct to consumer. Just recently I was on another podcast and they were like, they called the title of it ‘The Godfather of Private Label.’ I’ve been called a lot of things, I haven’t been called that one yet. I thought it was a really funny way to phrase it. I really started this from my couch on the upper westside of New York, started with one product and now we have 2,200 product listings on Amazon today.

[00:10:27] Scott: Man, man that’s crazy. That’s a lot to take in in itself. That’s a lot to manage in all that. Again, thinking about the where you started but then also where people are starting. That’s why when people think of 2,200 SKUs they are like, “I can’t even imagine that.” You got to start with one. The one thing I can see that I’m looking at from the outside looking in your situation and where you went is and maybe I’m wrong, but let me know if I am, but like you’re being able like let’s say Dyson that brand name and you can make a generic brand or an off brand that fits that model. Then I can capitalize on that brand name. Is that something that you thought about or is that just something that happened?

[00:11:11] Chad: Well, we started making replacement filters to fit brand names. With Dyson for example they don’t have any vacuum bags but they have two filters and the machines. We made things to fit replacement items. We moved into a lot of unique items like aroma therapy or keyboard pedals for if you have a Yamaha keyboard. We’ve done a lot of other interesting things outside of the vacuum space but it all started with one vacuum filter.

[00:11:44] Scott: Would you say to someone though if they could find that problem that they are having with a name brand item to create their own better replacement part? You think that would be an advantage.

[00:11:58] Chad: I think the replacements parts is a good business. There’s tons of copy cats now. Like there’s tons of people that are going on Alibaba buying this stuff so if I was talking to you as a friend, which you are, I’d say if I were to do it today, I wouldn’t do vacuum filters. That space is comoditized like crazy. I have moved into a lot of higher value products that have tooling that sort of allow me to have a defensive position to be in, to protect me from all the Chinese sellers and the copycat sellers that are out there.

[00:12:31] Scott: I can imagine, even yourself with having your products. What does a typical vacuum filter cost? Not to make but to sell.

[00:12:40] Chad: To sell, again it’s been commoditized, like some people are making two cents a filter when they sell online. It’s just outrageous.

[00:12:50] Scott: I think it’d be easier to hijack a listing too is what I was kind of moving towards.

[00:12:53] Chad: Totally, totally but average selling price is somewhere between $7 to $14 or so.

[00:12:59] Scott: Do you have to battle hijackers on a regular basis?

[00:13:02] Chad: We always have people that are coming to our listing, hijacking it, I have a legal department that handles all of that. We’ve grown accustomed to having to deal with this. That doesn’t keep me up at night anymore.

[00:13:14] Scott: Right. I got you. You’ve took care of that. I’m looking at one of the sections in your book right now and it says, “Take a look at your life, jot down five things that piss you off. There’s a decent chance that piss off others as well.” I love that. Moving forward with that, where would people start just to jot down like you said there like jot down things that upset you or that upset maybe your maybe your parents like maybe your friends or do you go ahead and ask people? Where else can you go to come up with ideas other than internally?

[00:13:47] Chad: First of all, a lot of my ideas come from like I’ll walk around life, throughout my entire life, throughout the day and be like, “Why did that have to happen? It doesn’t have to be that way,” or if you go on Reddit and you’re a hobby enthusiast of whatever of drone planes you need to find a certain part or you to find something on Reddit like there’s all these places to discover all these problems that people are looking to get solved. Right now we’re living through really interesting period of time and I talk about this in my book where there’s a whole bevvy of companies that are going direct to consumer. You look at not only Crucial Vacuum which is my business but you look at Casper for mattresses or you look at Parachute for bedding or you look at Movement Watches for watches.

There’s all these industries that are disrupting legacy incumbents and now the time to do it because now we have this new thing called the internet that allows us to change and disrupt industries that have been just stagnant for decades of time. First you got to solve the problem like Casper came out with a better mattress. Bonobos came out with a better fitting pin, Dollar Shave Club came out with a better but also cheaper direct blade. There’s all these markets that you can disrupt. You just have to actually take time out, take some head space and think about what’s happening across your life and across your business that you’d want to change.

[00:15:13] Scott: I agree and I think that’s some really great advice. Again going back to your book you have the recipe for ecommerce success because what we should think about here too, I want to dig into that a little bit is, ecommerce has been around for quite a while. Amazon it’s been around for a while but really ecommerce is been out there since the beginning almost. With that being said, do you see ecommerce itself like going away or where do you see ecommerce moving forward because I get a lot of people say Amazon is here today but it could be gone tomorrow which is true, that’s why people they shouldn’t really build all of their business on one platform. I’m sure you agree but what would be your advice for someone? Like, what is the recipe for ecommerce success in your opinion and in your experience?

[00:16:08] Chad: There’s a lot of answers to that question so the first piece is, I think starting on Amazon is great but not finishing on Amazon is even better. You got to build a brand, not just a private label business and I don’t even look selling on Amazon as a business I look at it as a channel. That’s how I look at Amazon. It’s a great channel to sell on, of distribution but I also believe in creating your own website whether it’s through Shopify or Big Commerce from Magento. I also believe in selling on Walmart. Walmart just actually announced in their quarterly earnings that they are investing a billion dollars into their market place business for any commerce business and they’ve aligned their CTO under the ecommerce director.

There’s this Amazonification that’s happening in ecommerce today which is like these sites, BestBuy, Walmart, Newegg, they are all creating market places and opening it up to create more selection, better prices between the competition with their market place sellers. I don’t think ecommerce is going away at all. In fact I think it’s actually growing in share but I do think selling on Amazon is great. I have nothing against Amazon but I do believe selling off Amazon and building a brand is far better than just selling on one Channel.

[00:17:23] Scott: I agree and someone just said the other day, they are doing really well too. They are doing like $400,000 a month in revenue, fairly new business but most of it is on Amazon. They said it’s really, they know what they have to do but it’s so hard when you’re on the Amazon crack, you called it. It’s like it’s just… If you hit a vein or if you hit like a gold streak it’s really hard to want to focus somewhere else because it’s going to take a lot more work to get that other channel going possibly. What would you say to that person? I’m just curious.

[00:17:57] Chad: People say it all the time. It does take a lot of work to build a business just by the way, your valuation multiple, if you’re looking at a service, if you’re looking to sell your business it’s far higher when you are actually across and diversify across a lot of channels. Scott, if I ask you today, “Would you ever invest in a stock that had one customer? Would you ever put your life savings into one customer, into a stock with one customer?” No. Why would you actually create a business where Amazon is your one customer and that’s it?

[00:18:28] Scott: It’s a good point.

[00:18:29] Chad: It’s a super important point and like honestly building a shopping cart is like not hard anymore. Putting your products and product listing ads isn’t hard. It’s actually super, super easy. Adding your products to Walmart, it’ll take you depending on how many SKUs you have, it will take you a day, it will take you two days, you could outsource it but like you have to be diversified especially in this environment. I do believe in building a stronger brand across many different channels.

[00:18:58] Scott: What’s the process? Really curious to go off a little bit. What’s the process to getting your product listed on Walmart?

[00:19:06] Chad: Actually Walmart just launched their new interface. It’s actually just like Seller Central, in fact it actually looks a lot prettier. To get onto Walmart, I mean Skubana, which is the software I created already allows you to get onto Walmart but you just have to fill out a form and you can get onto their platform. They are looking for sellers today.

[00:19:26] Scott: Okay, cool. All right. That’s awesome. Cool tip there. Going back to the recipe and again I’m looking at your bullet points here, you say to keep it simple and go for low hanging fruit. Maybe we can expound on that a little bit.

[00:19:42] Chad: Yeah. A lot of people they want to create the next Facebook, the next Twitter and be the next billion dollar company but for me I prefer base hits. After, in my book I talk about this, you discover the problem. Once you discover the problem then you validate your idea. I talk about different tools that I use to make sure that I’m actually not going to lose capital or time or even hair for that matter.  Very, very important.

[00:20:09] Scott: Why don’t you give us one of those ways that you would validate.

[00:20:12] Chad: Sure. The first one is I validate using Amazon’s database. I look at all the problems, I mentioned this, I look at listings and I look at product listings and I look at all th negative reviews. The next thing I do is I use another free tool called Terapeak, Amazon is great because 40% of products just happen on Amazon, which means 60% happen off Amazon. The other tool I use is Terapeak to research on eBay because, believe it or not, people still do shop on eBay. Then I use Google keyword planner tool to also just make sure that I’m going up the right path with the product. If people are searching it and searching these problems, okay other people have the same thing, if they are searching great. I’m going to move into that product.  Now, I’m like literally using data points on the internet to validate before I invest thousands of dollars into a product.

[00:21:05] Scott: That’s great advice. Terapeak I’ve actually used that years ago when I was selling on eBay, I was selling a few items just dabbling in and I was using Terapeak to do exactly that to see products that were trending, see the sales, so that’s been around for quite a while. It’s a pretty cool tool.

[00:21:26] Chad: I have nothing to do with the tool. You can use it for free, they have a free trial. They are like the eBay customer is very different from an Amazon customer.

[00:21:35] Scott: I agree with that too.

[00:21:36] Chad: On Amazon it’s like A+ content will help you win, on eBay it’s F+ content will help you win. The cheaper the listing, the better it will sell. I tried a hit across many different demographics to make sure that I’m putting my capital in the right place when I’m investing into a product.

[00:21:57] Scott: That’s really good. Again, skimming through your book here as we are talking here because I want to hit a lot of these points, especially in the product research stuff. It’s funny, I’m looking at one of your screen shots in the book and you’ve got ‘death wish ground coffee’, I don’t know if you noticed that. That’s a local company actually where I used to live in New York. It was about maybe 30 minutes from where I lived. They started their company right there. They actually got a… They won the spot for the NFL, the super bowl, they won that free shot.

[00:22:31] Chad: Scott, I was just at their… They are a customer at Skubana, I was just at their operation great north of Albany.

[00:22:40] Scott: That’s where I’m from. That’s where I’m really from. I’m just outside of Albany. I was out of Saratoga Springs. They are actually in Clifton Park area or it’s also could have been Boston Lake, could have been Malta in that area but that’s where they are from, that’s where their home base is. That’s pretty funny. I seen that, I seen this colored cross bones for the coffee and that was in all of our local stores around the super bowl because they thought it was going to be like a big huge thing and the commercial was cool but that’s funny. I just noticed that.

[00:23:11] Chad: They are massive, first are a really cool brand. Michael is the owner and they are fantastic and we’ve been solving a lot of their complex issues. Should they sell on numerous channels but they also have numerous warehouses. We’ve essentially got their operation in one place now.

[00:23:27] Scott: That’s awesome. It’s such a small world. That is so cool. Okay, I’m just again going through some of these… I want to really drill down for people that are just getting started. It can seem like this enormous thing that they have to go. Now, we’re talking about different channels and all of this stuff. You even said, you would still start on Amazon once you get your product but then how soon after would you launch on those other platforms or would you do it immediately?

[00:23:56] Chad: I would do them both simultaneously. It depends on how many products you’re launching. When I started out of the gate I immediately had my own shopping cart. I immediately was on Amazon, my next launch separate was eBay. If I was to do it today I would probably start on Amazon and get it up and running. Obviously with reviews and get my listings optimized. I would do Shopify, I would do video testimonials on my own site, create cool content for my own site but I would also then get it on Walmart and Jed and then I would move internationally. I’m just a very fast mover and I work extremely hard. That’s part of building a business. You need to actually put in the hours to make it work.

[00:24:35] Scott: Absolutely. Then as far as again thinking… Let’s say that we have an idea for a product that’s going to solve this problem and hopefully you even have in your book too. You would like them to be passionate about it but if you’re not, you’re not but let’s just that you are. Is it important to know that I can have future products to be sold to this customer? Like what’s your opinion on that?

[00:25:03] Chad: If you’re going after your first products. First of when you’re building a brand whether it’s on Amazon and off Amazon, you want to pick a brand that’s actually not going to pigeon hole you into one small niche. Like I make a mistake, this is nugget for the audience, is I picked a company named Crucial Vacuum not realizing that I was going to disrupt the industry very quickly and grow out of vacuums. Then I had to trade another sub brand called Crucial Air and then another sub brand called Crucial Coffee so A, make sure you’re picking a brand that goes across many different categories and you can use as you expand and grow.

[00:25:39] Scott: Again, I think that… What you’re saying then is would you have something that was a very generic one that could sell automotive filters, coffee filters, vacuum filters, is that how you would have did it if you were to start over?

[00:25:51] Chad: For sure, yeah. I would have picked a broad brand that can cover many different categories on Amazon because you never know where you’re going to be. You may start on vacuums but you may be somewhere else, you may start in cars but you may end up doing air fresheners for cars, whatever sticks. I think that’s a good place to start when you’re… Make sure you’re building like a true brand where you’re actually paying attention to your content that you put into your listings. You don’t want to go on Amazon and just copy the next company that’s best seller on Amazon and just copy that text.

[00:26:25] Scott: Right, of course. Again, I think that comes down to understanding your market, going through those reviews like you said, both the positive and the negative. By hearing what people are raving about, well that tells you what they’re excited about and that can help you craft that message whether it’s on Amazon or off of Amazon. Those are some pretty good pieces of information that we could pay attention to.

[00:26:48] Chad: For sure. A lot of people look at it like, “How many reviews does this have? I want more reviews than my nearest competitor.” Nobody is really taking time to understand, and this takes time, understanding your customer narrative. What are people saying about your competitor’s product and how do you actually put that into your keywords, maybe even into your photos to negate those negatives because they’re not negating those negatives? I go through people’s listings all the time and it comes up in every single listing that I core into.

[00:27:16] Scott: Let’s dig into that a little bit. You’re talking like if you have a picture and… Let’s just say you have a bullet point that talks about a benefit or a feature that you’re product helps solve but yet you have competition, competitors that their product actually has this one flaw that you seen that they were getting or other manufacturers are getting but yours doesn’t have that so you show that comparison side by side in an image. Is that how you would translate that?

[00:27:44] Chad: Yeah. A lot of people post images and I think… One company I think that does really well is A-N-K-E-R, Anker. They’re probably number two biggest seller on Amazon and so they have photos with their differentiators in the photos. They make really beautiful photos that really point out, “Oh, this is a faster charging time, this is very light weight, this is compact, this fit’s every device.” Sometimes a picture is worth a thousand words.

[00:28:13] Scott: That’s true.

[00:28:15] Chad: A lot of people are just throwing up photos, finding somebody on Fiverr to do it but you really should be taking time to invest in your photos that you’re creating with differentiators.

[00:28:26] Scott: Yeah, that’s great, great point. As far as if we’re going to go after that low hanging fruit like you’re talking about and not like reinventing the wheel with very little customization as you can because it’s going to cost you, once you start retooling and stuff like that it’s going to cost you some money to do that, to invest in that stuff. What would you say then? Would you say go into Alibaba or any of those other sites? Is that where you would start to go to try to find the manufacturer and then negotiate what you can tweak and what you can’t? Is that how you would go through that process?

[00:28:59] Chad: Yeah, I would find a comparable product on Alibaba and there’s a lot of noise on Alibaba, right now there’s trading companies that are middle men and want a piece of the cut. My focus especially my book is going direct to consumer, as close as I can to the factory. I would probably go though Alibaba and document all the similar products that are comparable to what I want to make. Let’s just say I want to make the lightest weight backpack in the world. I would find backpacks. Then I would start talking to these factories and first find out that they are a factory, I want to make sure that they have their own operational process.

This takes time. I would probably go on Skype with them, I would ask them to give me a Skype video tour of their factory, I would probably ask them who else they manufacture for and so if they tell me who they manufacture for that tells me who the company is. Maybe there’s no loyalty and it may divert me from wanting to use them because if they’re going to share that information they’re going to share with others for me as well when I start working with them.

I would get a video tour, I would compile a spreadsheet with the supplier, with the cost, with the different quality, I would ask them to send me samples and I would start digging in deeper onto all those companies and this takes time, of course you know. Dig into these factories, see how their English is, see how quickly they want to respond, samples and I can’t stress enough getting samples, samples, samples. Don’t just have one sample, get ten which will actually let you see their quality assurance process.

[00:30:30] Scott: Right, because the one they might have gave you was really good then the next one they gave you was crap. You want to see out of a few different orders how it’s coming though consistently. That’s a great point.

[00:30:44] Chad: Then when you’re ready… I’m trying to drop as much value as I can.

[00:30:46] Scott: Yeah, that’s great, keep going.

[00:30:47] Chad: I think once you’re ready to make that purchase, they’re going to of course tell you their minimum order quantity, their MOQ is 10,000. Of course they want you to buy as much as possible and I look at this MOQ as a negotiating point. I’ll be like, “You say 10,000 I say 100.” Then we try find our way in the middle. Start low, you can always go up but you can’t go back down.

[00:31:10] Scott: Right, that’s a good point.

[00:31:13] Chad: You got to care about the price that you’re buying, the quality but also the lead time, how long is it going to take them to actually turn around the product?

[00:31:22] Scott: That’s really good, that’s really good. Then once you negotiate back and forth, back and forth and it’s really getting that first order and seeing how things go and I think everyone should know there’s always a risk. We’re hoping that it’s going to be what we set out to deliver but you just never know and that’s where that relationship comes in, I think.  I’ve always talked about this, it’s like anything in business, it’s like a business partner in a sense because they’re working on your behalf.

[00:31:51] Chad: For sure, they’re a partner not just a vendor.

[00:31:54] Scott: Absolutely. Let’s move a little bit further ahead now for anyone that is listening to this, that is scaling that business and are scaling their business and they’re at a level now where they’re starting to have some struggle, some growing pains from growing. Maybe you could give us maybe some mistakes or maybe some things that you’ve learned through this process and how you’ve figured out how to manage a larger scale business now that you have grown.

[00:32:25] Chad: I would say a big rookie mistake that I made early on was trying to have my own warehouse. My core competency is on the marketing side, is building a brand and sourcing products and come up with ideas, those, ‘Oh shit!’ moments but my core competency isn't managing low level warehouse employees to pick and pack. It came a point where I had 15 warehouse employees. I was almost diabetic so I was pre diabetic and my wife is like, “Babe, you need to do something. You’re gaining weight, you can’t sustain this business, you’re growing at a crazy clip, like get rid of this warehouse and outsource it to a third party logistics company. “

I was scared, I was so scared Scott. I was nervous because I was like, “Wait, what if it doesn’t work out? What am I going to do? Is my profit going to decrease?” It was the best move I made. I automated my entire pick and pack operation to a third party logistics company in New Jersey and I’m happy to make introductions if anybody wants email me on this podcast and I’ll make personal introductions to them, they changed my life. Now I literally I’m building my brand, I’m marketing, I’m crowd sourcing and let the 3PL do all my pick and pack, all my FBA prep, receive my containers, bingo bango bongo.

[00:33:51] Scott: Done.

[00:33:51] Chad: Done.

[00:33:54] Scott: That’s nice. It’s funny, I’ve heard a lot of people in all kinds of business say that there’s that one moment too, you’re at that point where you got to make that decision because we all want to grow but you get to that point then it’s just, you’re more stressful than ever so where’s the happiness lying now other than you’re growing. Like you said, that one thing changed your life, it’s a pretty big thing but it was something that in order to grow you had to figure that part out.

Just curious, how does that work? All of your orders on Amazon, are they fulfilled technically by…? Do you have inventory into Amazon or does your…? Are your merchant fulfilled that you fulfill out to your third party? How does that work?

[00:34:35] Chad: I have a software that we built, it’s called Skubana, built around my own problems but I’ve opened it up to many mediums like large volume merchants out there. My process is that we have a unified platform that allows you to run your business any way you want to run it. For me I do merchant fulfilled, I do FBA, I have a 3PL, all my orders come in from all my different sales channels and they get automatically exported to my 3PL.

All my FBA orders are coming in because we’re tracking them for analytics and profitability but the 3PL process is all automated, my purchase order process. Actually we have something called PO artificial intelligence that will automatically trade a PO for you awaiting your approval with a nice bow on top.

[00:35:21] Scott: Nice.

[00:35:21] Chad: Not only did I automate my pick and pack process but I automated all these low value repetitive tasks with Skubana where I literally run a $10 million business today and I sell a lot of filters to get there, think about my average order value is like 14 bucks. We sell and we have all these complex issues and we’re using one platform to automate it and I have one employee in the United States running this business.

[00:35:50] Scott: Wow! How does that… Real quick and this is a little selfish, I just wanted to know this. How do you all of a sudden one day say I’m going to create this software from scratch to basically start to, basically simplify my business? That’s a pretty complex task itself.

[00:36:12] Chad: It is.

[00:36:13] Scott: I know we don’t have a whole another hour for this but just… Just curiously, one day you wake up one morning you’re like, “I’m going to fix my own problem.” How does that happen? There had to be connections, you had to have a developer, maybe you found developer or had someone else that knew how to align that stuff up.

[00:36:28] Chad: It all comes down to a problem. I found this problem where there’s all these expensive softwares that take a percentage of revenue to run your business especially if you are selling across multiple market places and I knew there had to be a better way. There had to be one platform that was just out of the box where you can just start running your business in one place, in a matter of seconds. I found the problem, it fell in my lap, I told my friend from college about this problem. His best friend he met on the tennis court and he told him about this issue, who turned out to be my partner, [DJ at Skubana. We co-founded this business together and then we started solving the problem.

Then we actually got the… One of our biggest investors is an ex Amazonian who came in and understood the problem we were solving, he was like, “You’re right. Every other software is inferior. I trust that you guys are going to build the right solution.” The next thing you have it is running a massive software business for large, large sellers like myself and Death Wish.

[00:37:28] Scott: Wow, that’s crazy. I just love hearing how it all comes to fruition. It’s like a lot of things have to line up but the other thing is that those connections you just don’t know where they’re going to lead you down the road. Right there just proves that you didn’t have necessarily the know how but you had a connection that you pitched an idea to that you had, maybe I’d like to do this and they’re like, “I know someone” or, “I can do this”. I just want people to understand too where you’re starting today doesn’t mean where you going to end up in the future, there’s always things that are going to lead us down our path.

Me being on this podcast wasn’t because I just decided to create a podcast, it was just because one thing led to the other where I wanted to create it for my own needs and beginning just to learn more about this business. Really just interesting to hear how stories bring people through that their journey. Cool, that is awesome. We’re going to link all these stuff up on the show notes so everyone can check out your software if they’re interested, obviously it is for a medium to a large size business but when you get there it’s definitely there for you.

Then let’s just wrap up with talking a little bit about the book that I mentioned in the beginning then we can talk about how people can grab a copy of that. What made you want to write this book?

[00:38:42] Chad: I started teaching in New York about three years ago at General Assembly and again something fell into my lap. After a student took my class, she was like, “You need a book,” and I was like, “I do?” She said, “Yeah, a book is the new business card, you need a book.” I was like, “I don’t have the time to do it,” and she was like, “I have a guy that will work with you on putting together all this into one coherence masterpiece,” and we did. I just fell into it again and I just have a hard time saying no to business opportunities.

[00:39:24] Scott: I agree. A lot of people don’t want to give because they’re not receiving something on the other end right away and I’m a big believer of giving way more before you ever receive. Who knows how many are going to read your book or download your book but there’s going to be some that are going to come through that are going to either reach out to you for help and then your software will help them or maybe it’s just going to be that next connection that you didn’t know about that’s for your next project three, five, ten years from now.

[00:39:49]Chad: Yeah, you never know, reciprocity is such a strong thing.

[00:39:52] Scott: It really is, it really is. In a nutshell, what does the book cover? I just touched, I just scratched the surface but what is the main goal for the book if someone reads it?

[00:40:05] Chad: The main goal is really to take people through my three step process which is discovery, validation and execution on building a brand across multiple channels.

[00:40:16]Scott: I like it.

[00:40:16]Chad: That’s my 10 second pitch.

[00:40:19] Scott: No, that was good, right to the point and it makes a lot of sense. Where can people find the book? I’ll link it up too but where could people go if they wanted to jump over there right now?

[00:40:29] Chad: It’s called Cheaper Easier Direct, it’s on Amazon, it’s $0.99. I have a physical copy that I can send to people as well, I’m waiting to get approved on Amazon to sell actually paperback books, believe it or not I have to wait for that process. It’s on Amazon, Cheaper Easier Direct and it’s really everything that I’ve had to struggle through and go through and all the mistakes I’ve made to build my business.

[00:40:51] Scott: It’s great. Like I said, a lot of the things that I pulled away and it’s the critical part and you would agree, product research, product discovery, all of that it’s really one of the main things that you need to do because if you screw that up everything else that you do isn't really going to matter. It really does come down to picking the right market to or your products to market or to send to that market and to figure out those problems inside of that market.

You laid out really, really well on the book and you did here on the podcast. I want to thank you once again. Chad, is there any last little bits of advice you’d like to give anyone especially people that are maybe just getting started or maybe have been going at this thing but they’re just feeling like they’re at a plateau? What would you say to someone in that phase?

[00:41:39] Chad: I would say look at vulnerabilities across your life and your business. You look at those vulnerabilities and actually try to execute on them based on those problems you’re trying to solve. The Amazon world and the community does not need another spatula or like a silicone mat or a silipat mat, you just don’t need it. Try to solve something where there is an actual problem and there’s not tons of copycats that allow you to have a defensive decision going forward.

[00:42:07] Scott: I love it. Hey Chad, this has been awesome. I could talk again for hours on this stuff, you know that and I’m sure we will again in the future. I just want to thank you once again and I know the TAS audience is thanking you as well. Ton of knowledge bombs you dropped here today and I want to thank you and I think everyone should go and grab a copy of your book, It’s definitely going to enlighten people and also open their eyes to a different way of thinking about finding products and then launching an ecommerce business. Thanks again Chad.

[00:42:38] Chad: Thank you Scott, thanks for being you.

[00:42:39] Scott: Hey, no problem. Thanks, take care.

All right, there you go, another great interview and it’s always really interesting to get behind the scenes look of a bigger business. Not that maybe you want to get to that level right now, maybe that’s just too big for you to even wrap your head around. I know for me it gets a little overwhelming to think about all of the different channels that he’s managing but he has created a software tool that takes care of that problem. Of course you got to have the products, you got to have the infrastructure to get that stuff going but we really did cover a lot of things there. I think the Walmart thing, the being able to go and launch your product on a site like Walmart as another channel, that’s a big golden nugget right there. I want to thank Chad for that.

Again, definitely go check out his book, I’ve definitely went through it, it’s got some really great nuggets in there for you as well. He’s laying it out there as far as what he would do to really start over in a sense and then build another brand. It’s really kind of neat to hear how someone would do it at his calibre, at his level. Definitely go out and grab that. I’ll leave a link to that in the show notes. You can get the show notes by heading over to theamazingseller.com/234 and you can grab the transcripts and the show notes all over there so definitely head over and check them out. Once again that’s theamazingseller.com/234 and all the links to everything we discussed will be there.

Then, lastly I want to remind you that if you wanted to attend one of our upcoming live workshops, head over to theamazingseller.com/workshop. Once again that’s theamazingseller.com/workshop. If you guys want to follow me on Periscope or on Snapchat just go search me in one of those platforms and you’ll find me. Snapchat’s a little different, it’s @scottvoelker1 and then Periscope is just @scottvoelker. I’m just randomly over there hanging out with people so it’s fun. If you guys want to see a little bit more of the behind the scenes of what I’m doing on a regular basis definitely those are the platforms I’ll be doing that. It’s really, really awesome to be able to connect with a lot of you there.

[00:44:47] Scott: That’s it guys, that’s going to wrap it up. Remember I’m here for you, I believe in you and I’m rooting for you, but you have to, you have to… Come on, say it with me, say it loud, say it proud, I am so pumped today, “Take action!.” Have an awesome amazing day and I’ll see you right back here on the next episode. Now go get them!

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3 comments
  • Golden info from Chad.
    I’m a product sourcing newb, and I quickly figured out that the whole ‘imitate and improve on the best seller’ thing is already fast becoming near impossible to sustain, due to piracy, factory infidelity (most manufacturers lack the strategic thinking to see how not selling to all-comers might lead to lower initial sales growth, but how to convince them that protecting their own region-specific customers (we entrepreneurs) will prevent a price race to the bottom, what use is a widget factory if your customers go bust competing with each other? But they don’t wanna know!)
    Then there’s the fact that the ‘easy’ or inexpensive Amazon product opportunities have all been snapped up in the last year or two.
    I have taken months, and a big risk, by forgetting about the ‘do it better’ dogfight, to finally come up with a new solution to a not very pressing problem, it’s an adaptation from an industry that already successfully use it, but that industry benefit more than the domestic market, where I am looking to launch.
    I know it’s not going to set the world on fire in its present domestic iteration, as it’s really more a “nice to have” than a “OMG! you saved my life” type of product.
    Now to validate it (and maybe find an *OMG* angle in the process?)
    Thanks Scott, you are indeed an authentic human being, and a living breathing inspiration to me personally!

  • Great Podcast Scott. Chad does a great job of getting people excited about the possibilities of PL while highlighting the fact that it’s not easy and that Amazon customers don’t need another spatula. Find a problem and offer a solution. Create value to receive value. Simple, but by no means easy.

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