Episode 22: Starting An Ecommerce Business with Roger Bryan
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.
