Today Im talking with Roger Bryan about how to start an Ecommerce Business now a days
“We had 300,000 individual items on our shelves and we had over a million books sitting, waiting to be sorted. We were selling approximately 3 million books a year. Throughout the world, both online, individual, and then in bulk to a lot of the African countries.”
Ney Torres: [00:00:00] Hello, everybody. Welcome. Today we have a very special topic with one of the best minds that I know about that, and Roger Bryan, welcome again to the show. Today we’re going to talk about E-Commerce.[00:00:16] Roger Bryan: [00:00:16] Yeah. Well, great. Thank you for having me. [00:00:18] Ney Torres: [00:00:18] Thank you again for your time. Really appreciate it, brother. What’s your experience on E-Commerce and what can you tell people are thinking about? Yeah, I’ll do that. It seems easy. [00:00:27] Roger Bryan: [00:00:27] Okay. Well, it’s not actually super hard, but it’s not easy either. So my first E-Commerce business, I started in 2008 it’s called Thrifted. We were an online bookseller, so we sold books. So major things about success in E-Commerce, and I’ll tell the story about my first company, which I sold, and then the second company, which I’m working in now. [00:00:47] Ney Torres: [00:00:47] Okay. [00:00:47] Roger Bryan: [00:00:47] Is supply. If you can get a good stable supply chain setup of a product that has demand with margin in between, E-Commerce is very easy. The technical side of it is not that hard. It can be navigated. There’s people that you can hire to work through things and we’ll talk about what some of those things are. But in the book business, most people don’t understand that 90% of the used books that are sold online are donated. So people donate them to Goodwill, they donate them to Salvation Army, they box them up into these things called Gaylords, which are a thousand books at a time, and then brokers buy them and then sell them to people that sell them online. Because I had a company that was already working in the nonprofit space. I was able to go direct to the nonprofits by them without going through a broker and then set up my business selling those online at a significantly higher margin than most other sellers. And then that allowed me to grow that business exponentially. Sorry, somebody came into my office. I didn’t put a sign up on my door. When we were at the peak of our business, we had 80,000 skews online. We had 300,000 individual items on our shelves and we had over a million books sitting, waiting to be sorted. We were selling approximately 3 million books a year. Throughout the world, both online, individual, and then in bulk to a lot of the African countries. We’d split up the children’s books and send them out. This was such a fun business. I sold that company in 2012 which I sometimes regret because E-Commerce today in the year 2020 is like the thing for everybody to be doing in 2008. It wasn’t the same game. There’s a lot less people doing it. It was a little bit easier. There was less competition. So now let’s fast forward to today and what it’s like, the model itself hasn’t changed. In order to be successful, there’s three elements. You have to increased the number of skews that you have listed with good supply, you have to increase the number of marketplaces that you’re selling on, and then you have to increase either the frequency of purchase or the amount of purchases, the cart value, and multiplying those three things together. Could you, towards your net growth metric. This is something I recently took a program at Wharton and out of the 16 weeks that I was in the course, the one thing that I remember is that model for growing an E-Commerce business coming from a statistician and I was like, that’s really brilliant. So I don’t want to claim that that’s mine. I got that from the university. [00:03:29] Ney Torres: [00:03:29] So let me rephrase what you were saying, just to see if I understand that. You have to walk into, you have to have a supply, right? [00:03:35] Roger Bryan: [00:03:35] Yes. [00:03:35]Ney Torres: [00:03:35] Oh, okay, cool. Now that seems obvious. Then you have to walk to a conversation that the public already has. People are already buying books. [00:03:45] Roger Bryan: [00:03:45] Yes. [00:03:47] Ney Torres: [00:03:47] And what was the third one? [00:03:51] Roger Bryan: [00:03:51] Supply, demand and then after that it’s technology and infrastructure. I mean, there’s really supply and demand. I mean, that’s how everything in the world works. [00:03:58] Ney Torres: [00:03:58] Right. [00:03:58] Roger Bryan: [00:03:58] Then let’s reverse this and why people fail. Because they violate this rule or how people fail because they violate this rule. So the first way is on the supply side. So let’s say that you go to an auction and you buy a box of 500 electric toothbrushes, okay? I know this is totally random, but I actually know somebody that did this. Then you go and you set those things up to sell online and they start selling great. You bought him so cheap, you’ve got a good margin. You sold a hundred, you sold 250. You sold 400, you sold 450. You’re about to sell out of them and you’re like, shit, there is no more auction that I can go to to buy that exact toothbrush at the exact same price that I paid for it before. So you didn’t start any E-Commerce business. You took advantage of an opportunity. Gary V would pat you on the back and tell you good job, but you didn’t really get a business started out of that because your supplies are now going to run out. You found your competition model, you found your platform, you found your price point, you set up the logistics, you’ve got all of that running, and now you’re out of supply. Now you’re gonna start the whole process over again with whatever that next product is. A good successful E-Commerce business is going to find a distributor that can get them the product on a steady stream that has the right margin that they can get on demand. It’s not going to run out that they can sell. Then you switched to the demand side. The people are going to continue to buy so that there’s fluidity and continuity in your business. That’s the first way that people fail. [00:05:21] Ney Torres: [00:05:21] Sorry. [00:05:22] Roger Bryan: [00:05:22] No, go. [00:05:23] Ney Torres: [00:05:23] I have a question. So why will you see this opportunity when you have other producers? Because you don’t really want to produce whatever you’re selling, probably books or whatever it is. You’re just selling them, right? [00:05:36] Well, [00:05:36] Roger Bryan: [00:05:36] no. [00:05:37] Ney Torres: [00:05:37] That’s [00:05:37] Roger Bryan: [00:05:37] not actually true. We do want to produce a lot of the products that we’re selling now and over the next 24 to 36 months. We do plan on doing that. I look at it as the easiest way to get started is to find a good supply of products. Then white label those products and build your brand. And then once you have a brand built, learn how to manufacture them on your own. If you can’t, now I’m not going to be a manufacturer of books. I’m not going to become a publishing company, but certain products that we sell today, we do have plans in place to manufacture them locally instead of bringing them in from other companies. But we want to build our brand as a white label brand first and then go from there. [00:06:15] Ney Torres: [00:06:15] That’s genius and that makes sense. You want to have your competitive advantage. You want to create your own product because you know, there’s a couple of risks when you are white labeling even though you don’t have the costs. What can you give us examples of products that may be good products or have been in the past. I know you have, right? [00:06:37] Roger Bryan: [00:06:37] Yeah. No, it is. And it’s different for everyone. So let’s talk about what we do today. And what we do today is interesting because there’s a barrier to entry. So that’s why I feel comfortable talking about it. It’s like we sell septic products in most people. Depending on where you are in the world, 21 million households in the United States have septic systems. So that means that we’ve got a huge audience that demands certain products to keep their system functioning. So these aren’t want. These are needs, like people have to have the materials that we’re selling. When their system breaks, they need a new pump. When their lid cracks, they need a new lid for safety reasons. So they have to buy these products. Now, on the opposite side of that, there’s a barrier to entry. Not just anyone can buy these things. You have to have distributor ships, you have to have licensing agreements. You have to be in the industry and actually be doing services to be able to buy these products. So my wife owns a septic services company and it’s a 25 year old company that she bought seven or eight years ago, has done an amazing job growing the business and it gave us an opportunity to have access to these products. And over the last two years, we’ve slowly been bringing them online and that business has been growing. It’s doubled every year for three years in a row, and it looks like it’s gonna more than double again this year. [00:07:49] Ney Torres: [00:07:49] Amazing. I really want to talk to your wife about making an episode of that one. [00:07:54] Roger Bryan: [00:07:54] Okay. [00:07:55] Ney Torres: [00:07:55] Buying businesses it’s something I look deeply for a whole year. Back, like five years ago, I was just looking at businesses but I never really crossed a line. They’re hard to find. How did you guys decide septic products? [00:08:09] Roger Bryan: [00:08:09] She did this before we even met so the process that she went through is something that she would have to talk about. [00:08:17] Ney Torres: [00:08:17] Okay. So you have this company, I know you’re making it online, right? [00:08:24] Roger Bryan: [00:08:24] Correct. Yes. We’ve been online. Go ahead. [00:08:28] Ney Torres: [00:08:28] You don’t have any of those. You’re starting from zero right now. Roger, what do you do? [00:08:32] Roger Bryan: [00:08:32] Start looking for a product. I mean, there’s a lot of great courses out there. Ryan, Daniel Moran probably has one of the best ones. I think he’s focused more and on the scale side than the start side, but he’s got a great podcast. He’s got a great blog and things that you can go out there to learn about like the intricacies of starting. So of course you and I are only talking for a few minutes, but when I think about starting, it is about finding that first product. It’s about looking on Alibaba. It’s about looking in your local market. Sometimes people overlook manufacturing in their own backyard. It’s about looking on eBay for people that sell in bulk. When I was in college doing my undergraduate, my very first E-Commerce business was selling the Lacoste shirts, you know, the little alligator shirts and I would buy them a hundred at a time, and then I would sell them online individually, and I buy them for like $7 or $8 in bulk and then I’d sell them for between $35 and $42. And it was a huge margin for me, and I could sell a hundred to 250 of those a month. Unfortunately, about six months into that people started pointing out that they were counterfeit. Now, I honestly did not know, and I got shut down really, really quick. I swear. I did not know. I should have known then, but I was like 21 years old. I should have known that if I’m able to buy them for $7 or $8 involved, there’s probably something wrong. But those opportunities are out there. You have to hunt because once you find the product, that’s more than half of the problem of getting started. [00:09:59] Ney Torres: [00:09:59] So we find a product, Google ads, then what do we do? Write a landing page? [00:10:04] Roger Bryan: [00:10:04] No, no, no. None of that. That’s way too much work. If you can’t sell it successfully on Amazon. It’s the wrong product to start a business around because Amazon’s very, I mean, there’s a little bit of work to getting your account set up with them. You pay 30 bucks a month, but it’s the world’s largest store that has customers walking into the door every day. If you can’t find a way to sell it on Amazon, don’t try to sell it any place else. [00:10:28] Ney Torres: [00:10:28] Great. I had an “aha” moment right now. Okay. [00:10:32] Roger Bryan: [00:10:32] That’s been my experience. Now, if you’re bringing a brand new product to market that no one knows about that might be different. But we always want to sell stuff that people are already looking for and already buying. [00:10:43] Ney Torres: [00:10:43] That makes sense. I mean, I’m looking into that. I have, I own Lupinibeans.com and all the variations on the other. Most people don’t know it, but it’s the biggest catch. It’s a vegetable with highest protein content in the world, and it’s something not many people know, but we know in Southern America has a lot, it’s just America hasn’t catch up. But I’m finding out that educating people on finding and creating that demand is super expensive. [00:11:09] Roger Bryan: [00:11:09] It’s very expensive. I always look at that it’s kind of like a step three in the growth of an E-Commerce business, you find that first product that you can sell easily on Amazon and you expand it to other marketplaces like we sell on Walmart, eBay, Overstock, Google Shopping, Facebook Marketplace, all those things that you can just direct integrate into. And then once all of that’s working and you’ve got cashflow and profitability, and a lot of people would argue with me and reverse this role, then work on your own website, your own brand, your own traffic channels and things like that. It’s probably 5% of products that are out there that can be done like this. So you’ve got to really niche down to become a pro at one specific niche. If you’re trying to sell toothbrushes, cell phones, hand sanitizer, of course. If you’re selling hand sanitizer right now, you’re probably making good money if you can get supply. In coffee beans, you might not be as successful as somebody that niches down and sticks to say just plumbing fixtures or just UV lights. So staying focused will get you there. A lot of the top E-Commerce guys say, you got to own, you got to own your brand. You’ve got to own the market. We got a notice from Amazon this week that they’re not taking any more shipments of products until April 5th unless your household essentials, that’s scary. We’ve got to go three weeks without being able to ship new product in, but we have our other marketplaces, we have other distribution centers, so you just have to understand the risk is you’re going at this, but if you’re starting out today. You don’t have a ton of cash. Find a product that you can sell well on Amazon then you get started because once it sells there, you can sell it any place else. [00:12:39] Ney Torres: [00:12:39] How much will you budget to Greeley or first company? [00:12:42] Roger Bryan: [00:12:42] It’s hard. It’s like today, I would want to say, you know what, you need $10,000, but I started a multimillion dollar company with a $6,500 loan in 2005. So it can be, if you can bootstrap and you are an entrepreneur and you can do the work on your own, you can accomplish amazing things with a little budget and it depends on the price point of your product. Many of our products today are two or $300 per unit, and we have to buy them 50 to 100 at a time to get discounts. So that’s going to take a lot of cash. But the buddy that did the electric toothbrushes, I think that 500 all of them for like a hundred dollars at two bucks a piece, and they were selling online for 35 so it was a good, like if you’re out there, look at the local auctions, look at the wholesale auctions and different things like that. They’re in every major city throughout the United States, Canada. I don’t know about any place other than that. And just look for something that you can buy in bulk, but before you get into it, think about what your next steps going to be. Because once those two brushes are sold, you’ve got the cash, but you’re sitting there like, well, what do I do now? [00:13:41] Ney Torres: [00:13:41] That is really good. I’m changing my point of view because if you asked me six months ago, I will kept saying, “Okay, if you want to start a company, you start a web page and start selling through there first to see if there’s some traction.” But then now I’m thinking you really want to do your webpage at the end. Like where you proven all these other Amazon’s. [00:14:04] Roger Bryan: [00:14:04] Driving traffic to it, yes. Setting it up, maybe not as much. Yeah. Get it set up, get it registered with Google and make sure that it’s properly indexed, and this is my SEO brain that kicks in, but don’t start spending a bunch of money on traffic to there. If it’s a preexisting product that already has market demand and you can get good supply, you win. Now it’s not. Again, it’s not super easy to do that, but it is less expensive. Maybe a little bit more time consuming than putting up a webpage, driving traffic and trying to create your own sales. And I guarantee you, the majority of E-Commerce professionals would argue with me on this. But my two success stories in the space of all, we have both been built around a good supply chain with good margin on an in demand product. And after that, it feeds itself. [00:14:43] Ney Torres: [00:14:43] What will most of the professionals tell or say? [00:14:46] Roger Bryan: [00:14:46] Oh, you’ve got to build a brand. You’ve got to build a website, you’ve got to dial in your traffic. You got to build a list. You got to get your audience. None of that are wrong, but I do that a couple of steps later than maybe they do. [00:14:56] Ney Torres: [00:14:56] That’s what I’m learning right now. So, okay, so you have $10,000, you have time, you have energy, and you have to go to some webpage, like, I don’t know, Jungle Scout they’ll come and start looking for products. I think 5% that you just mentioned. [00:15:14]Roger Bryan: [00:15:14] Yeah, I love Jungle Scout. I mean, it’s on my browser right now. So I look at my supply opportunities. So I look at Alibaba, I look at some wholesale opportunities on eBay. I look at wholesale opportunities locally. I take that exact product, I go to amazon.com. I type it in, I find it, and then I click Jungle Scout and Jungle Scout tells me how many units a month are sold, what the average price is, what the average net revenue is after Amazon fees and then I do my math. Do I have a 20 plus percent margin on there? I do. Okay. Let’s take it to the next stage. Let’s look at the sellers. Are the sellers selling prime? Are they selling seller fulfilled? How much feedback do they have? Where is my store relative to their store? Because it is a competition of metrics. [00:15:57] Ney Torres: [00:15:57] Okay, so you want to find a bad competition. Basically, three, four star reviews like 10 reviews or something like that? [00:16:05] Roger Bryan: [00:16:05] So let’s look at it like this. So if you have two products, if two people are selling the exact same product, and let’s say that they’re selling those toothbrushes for $35 and both people are selling them both. So now both people, you have two sellers, same product, both selling for $35. The next thing is Amazon’s going to get preferential pricing placement or preferential search placement to whoever’s prime. So if they’re prime, you need to be prime, which means that you’re sending it to Amazon and doing fulfillment by Amazon. Then the next stage below that, remember price is the same, is who has the best feedback. So whoever has the highest number of feedback relative to their score, like we have a 100% positive feedback on our store because we bend over backwards to keep our clients happy. But there are sellers out there that have 95% but have 3000 feedback where we only have four or 500 I’d have to look at what the exact number is. We might not go head to head with them. So now we know we’ve got to go all the way back up to price. We’re going to have to sell for less than $35 in order to win the buy box on Amazon. So we start to go through and maybe look at some trend history of pricing through Jungle Scout to see how much cheaper people have sold in the past. Are we going to get driven down from $35 to $20 a penny at a time in order to win the buy box. When all of those metrics work out, again, this is why it’s not easy. It’s still not hard, but we buy and we move forward, and if we get into a price battle, we get into a price battle, but it gives us some metrics to know that we have an opportunity to compete. [00:17:32] Ney Torres: [00:17:32] Okay, so you find how many stores will you open? Will you just focus on one or let’s say you are aiming for that 10,000 a month lifestyle. You want to make 10,000 profit. [00:17:44] Roger Bryan: [00:17:44] I recommend that everybody reads the book called The One Thing. [00:17:47] Ney Torres: [00:17:47] The One Thing. [00:17:48] Roger Bryan: [00:17:48] Yeah, because my answer to that question to that question is always the same. One. One, one, one, one. One store, one product. Get it up and running. Once it’s working, add more products but stay in the same store niche. Now, there are points in the future with that rule could maybe change, but most people will never reach that. A seven figure business is going to be best built in one niche. [00:18:14] Ney Torres: [00:18:14] Perfect. How do you exit the business? [00:18:17] Roger Bryan: [00:18:17] I’ve exited three times and two of the three I regret. So I’m probably more in the cash flow mindset now that I’m 42 years old, can I start a business that’s going to be running 20 years from now so I don’t have to start another one on? And if the answer’s yes, then that’s where I want to be. But from an exit perspective, each one’s unique. Sometimes you sell in your vertical. When we sold our publishing business in the crypto space, we sold to someone that had just sold a publishing business in the photography space and wanted to be in the crypto space. So we were one of the only options for them to buy. When I sold the marketing agency that worked with nonprofits, because we did marketing for nonprofits or for car donations, I actually still do a chain of auto auctions that wanted to control the inventory that we got through our marketing. They didn’t care about the marketing, they wanted it to keep running, but they actually wanted the cars. And when we sold the bookstore, we sold to another bookstore and they wanted the supply and the infrastructure equipment. [00:19:14] Ney Torres: [00:19:14] You find it through business brokers? [00:19:17]Roger Bryan: [00:19:17] No. I’ve never used a business broker. [00:19:19] Ney Torres: [00:19:19] So you just opt? [00:19:20] Roger Bryan: [00:19:20] Yeah, no. I mean, well, I actually have to rephrase that. We did use a business broker for the publishing company, so I have to take that back and I don’t have anything against them. But if you’re out there in masterminds and you’re networking in your industry or your space, your buyer is probably sitting next to you at your next mastermind. [00:19:37] Ney Torres: [00:19:37] I understand him because they’re marketers. [00:19:39] Roger Bryan: [00:19:39] Yeah, well, or they’re bookstore owners, they’re E-Commerce business owners. They own spetic companies, depending on where you are. They’re there in your industry. Now, if you’re selling a pizza shop, that might be totally different. Maybe you need a business broker to do that but when we are in the digital space, publishing companies, E-Commerce agencies, they’re those buyers are extra masterminds. If you’re at the right masterminds, of course. [00:20:01] Ney Torres: [00:20:01] Oh, talking about masterminds for a second, which is a different subject. What are the best masterminds for you? [00:20:07]Roger Bryan: [00:20:07] I’m not going to answer that question cause it’s so different for each person. [00:20:13] Ney Torres: [00:20:13] For you? [00:20:14] Roger Bryan: [00:20:14] Yeah. No, I’m gonna avoid that question. Sorry. [00:20:18] Ney Torres: [00:20:18] Okay. Because you’ve got friends there. [00:20:20]Roger Bryan: [00:20:20] Yeah, I mean, I will make somebody happy, but I’ll piss somebody else off by answering that. [00:20:25] Ney Torres: [00:20:25] Okay. [00:20:26]Roger Bryan: [00:20:26] It’s just not worth it. [00:20:28] Ney Torres: [00:20:28] Well, thank you very much for your time, Roger. And again, people, you’re starting a business. I think this is the best way probably to do it. So thank you so much for your time, Roger. [00:20:38] Roger Bryan: [00:20:38] Thank you for having me. [00:20:39] Ney Torres: [00:20:39] Okay. Bye bye.