Brand Fortress HQ: Amazon FBA Success Strategies
Welcome to the Brand Fortress HQ Podcast, the ultimate resource for mastering Amazon FBA success. Dive deep into the world of e-commerce with your hosts, Jon Stojan, Mike Kaufman, and Matt Atkins—three seasoned Amazon brand owners who have seen it all and are ready to unveil the secrets of their success.
Your hosts each and every week are Jon Stojan, Mike Kaufman, and Matt Atkins. Jon is a former predictive analyst for the Air Force and brings his analytical prowess to the e-commerce battleground. After establishing his own 6-figure brand on Amazon, he founded First North Marketing, a beacon for brands aiming to conquer the Amazon marketplace.
Mike Kaufman is an e-commerce pioneer, having been navigating the online sales sphere for over three decades. His expertise has not only led to the creation of a mid 7-figure brand on Amazon but also birthed invaluable tools and resources to bolster other aspiring brands.
Matt is the jack-of-all-trades in the e-commerce arena, from building a 7 figure meal prep brand, multiple Amazon brands, coaching new brand builders, to helping brands of all sizes grow at Canopy Management. His passion lies in fostering a community of entrepreneurs, offering them the wisdom and connections needed to thrive.
Join us for Tactics Tuesdays, where Jon, Mike, and Matt dissect the real-life strategies propelling their own brands and companies forward. Plus, tune in every Thursday for enlightening interviews with the brightest minds in FBA—transparent leaders and business owners who are shaping the present and future of e-commerce.
With two episodes every week, the Brand Fortress HQ Podcast is your stronghold for insider knowledge, innovative tactics, and inspiring stories. Whether you’re an established seller or just starting your FBA journey, our hosts are here to guide you through the intricacies of the Amazon marketplace. Unlock your brand’s potential and build your own fortress with us at Brand Fortress HQ.
Brand Fortress HQ: Amazon FBA Success Strategies
045: Beth Benike: Transforming Necessity into a Thriving Brand, Retail Strategies, and Shark Tank Triumphs
Transitioning from an online sensation to retail success entails more than just great products. Beth shares her experiences as a female Army veteran navigating diversity certifications that opened doors to major retail opportunities, such as Target's accelerator program and Walmart's supplier diversity initiatives. Understand the intricacies of being retail-ready, from logistical readiness to managing margins, and how these elements collectively drive a brand’s strategic positioning in the market.
Prepare for a rollercoaster ride through Beth's Shark Tank journey, filled with unexpected outcomes and lasting impacts. From securing a spot on the show to leveraging the Shark Tank alumni network, discover how Beth’s military training fostered a resilience that has been vital in overcoming e-commerce challenges. We also touch on the importance of strong manufacturing partnerships, overcoming overstock dilemmas, and future growth strategies. Beth’s story is a treasure trove of entrepreneurial wisdom, practical advice, and an optimistic outlook on the road ahead.
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Welcome everyone to the Brand Fortress HQ podcast. I'm your host, jon Stojan, along with my co-hosts, matt Atkins and Mike Kaufman, and today we have another Brand Builder episode for you. If you're an Amazon seller or an e-commerce brand and you want to share your story on one of our Brand Builder episodes, you can apply at brandfortresshqcom backslash brand builder. And today I'm excited to have our guest on Beth Beneke, who is the founder of Busy Baby. Guest on Beth Beneke, who is the founder of Busy Baby Beth. Welcome to the podcast, hey guys. So as we get started, tell us a little bit about kind of your journey with Busy Baby and where you guys are at today.
Speaker 2:Yeah, I am a mom that had a baby and had an idea for a baby product. So about seven years ago, after my son was born, I went out to lunch with some girlfriends and they brought their babies along and during that meal the babies were dropping and throwing everything. So about seven years ago, after my son was born, I went out to lunch with some girlfriends and they brought their babies along and during that meal the babies were dropping and throwing everything. So I immediately went on Amazon to find a product that would keep my baby distracted when he was big enough to join us at the table, so he wouldn't be kind of that guy at the restaurant. Long story short, nothing existed that would be a clean place for his food and keep his toys attached, keep him entertained. And an idea popped in my head the next day, and now here we are.
Speaker 1:So what made you feel like kind of going from that Because I think a lot of people have ideas for products and that type of stuff to be like. You know what I can go from I have this idea to where I'm not only going to make it into a product but also into a brand.
Speaker 2:Yeah, I mean, it didn't start out as a business. I call it an accidental business. It started out as I just cut and glue some things together to make a solution for myself and a girlfriend who had a baby a week after me. And it was when she called me about a month or so later saying oh my gosh, I forgot the mat thingy last night. I didn't realize how useful that was until I didn't have it. Like you should make this for real. It became a okay, how would I do that? Like how, like I should make this for real.
Speaker 2:And so it wasn't even then about building a brand, it was how do I turn this idea into a real thing? And so I enlisted the help of Bunker Labs, which I think you are very familiar with. It's an organization that helps veterans and veteran family members start a business, and I learned the basics of how to start a company. And then from there it became part of a response to customer reactions to develop additional products to go with the original mat that we had. And so now we have a whole brand product line of products that go together, interchangeable, and it's pretty exciting.
Speaker 3:And would you say, beth, so that, as you fleshed out that product line under the brand, how cohesive is the product line with respect to the actual brand name? So, like Busy Baby, is the product line very cohesive to that or is it generalized more to baby and it just we're still Busy Baby?
Speaker 2:No, it's 100%. Everything we have is to keep your baby busy and it keeps their things off the floor and within reach so that they can stay engaged without needing you know independently.
Speaker 3:Awesome. And how many products do you have in your line at this point?
Speaker 2:We have eight, eight of the baby products we did start. We did produce a toddler product, so a bigger version of our mat designed for toddlers to teach them how to learn how to write letters and numbers, with an app that goes with it and, like you just kind of alluded to, it's a great product. We love it, but it strays just a bit from the Busy Baby name. So we still have it, we still plan to develop it further, but we decided to kind of pull back a little bit and focus just on the baby niche.
Speaker 4:Gotcha, you mentioned something about using customer feedback in making of products and making them better. I love that and I did the same thing, and I'm curious to know, first of all, how are you getting that interaction? How are you getting in front of those people to ask what their experiences were and what was the result of some of that communication that you got from them?
Speaker 2:Yeah, I mean. A lot of it comes from from responses, comments to our ads on social media. So we respond to every single comment that we see come through on our on our Facebook ads. We get emails from customers If a customer is complaining about something. One of the big probably the only issue we have with our mats is that suction cups don't stick to all surfaces. And if you go to Amazon, look at our product, all the bad reviews say it doesn't stick to anything. Most of it's user error, but it is just a fact.
Speaker 2:Suction cups scientifically need to create a vacuum seal with a smooth surface. So if your surface is not smooth, you can't create a vacuum seal. Suction cups aren't going to work. So we created a bib that uses the same tether system. So if you happen to be somewhere like a picnic table, a textured table, where you can't make a suction cup stick, now you can use our bib with the tether system to keep baby sinks within reach. You know in those places. So that would be one example of how you know. We looked at the reviews. We got that feedback in the comments and social media. People complained that our bib was too big for their high chair. In the Midwest, where I live, we have more space, more bigger high chairs. In places like New York City, where a lot of people live in small apartments, they have smaller chairs, so we made a smaller version of the map to meet that need.
Speaker 3:So that kind of. It's a couple of examples for you there, cool. So I'm sure John's probably going to want to move the conversation a little bit forward, but before we do, for context, I think it would be valuable for listeners to know how. What is the diversification of your business in terms of where you're selling? Are you primary D2C through your website, shopify? Are you primarily Amazon? What's the distribution of how you're selling?
Speaker 2:Sure, we started in 2019 on Shopify and towards the end of 2019, I fumbled my way through setting up my only two SKUs at the time on Amazon. As business grew via e-commerce over the next couple of years it grew to 50% Amazon, 50% Shopify. Then we started bringing in. We had a lot of people reaching out saying hey, I own a boutique, I'd love to sell your stuff in my shop. So we started selling into boutique stores and now we're onboarding with Walmart and we're live on Targetcom. So we're really trying to diversify more into retail this year. So currently we're 65, 70% on Amazon, maybe only 5% on retail, but that's. The big push this year is to really get into more retail stores retail, but that's the big push this year is to really get into more retail stores.
Speaker 3:And when you say on retail, so you said Targetcom, which of course is marketplace, but you also mentioned Walmart Do you mean the Walmart platform or do you mean Walmart retail shelves?
Speaker 2:Well, one differentiation both Target and Walmart is they both have marketplaces and they both have owned inventory for their dot coms. So with both Walmart and Target, we are going to be one piece, so we would be owned. They're buying the inventory from us, we're shipping it to them, they're fulfilling the orders, and then in Walmart, we're also onboarding to be in stores starting in November.
Speaker 3:Great.
Speaker 1:Awesome. Wow, that's really exciting.
Speaker 2:It's a lot of work. It is not fun. I thought setting up Amazon was a bear. Doing this vendor setup with these retailers is just as much of a bear as Amazon.
Speaker 3:We're trying to walk through that same process, not with, like, a Walmart or a Target. We sell pool tools and so we're actually starting with Leslie's pool stores and some other. You know opportunities down that road and you know the process has been like pulling teeth at this point so we're still hopeful. You know that the process is going to lead to something successful on the other end, but it is an interesting process for sure.
Speaker 2:Yeah, I'll say working with her. Oh, sorry, I was just going to say.
Speaker 1:I was just going to ask. So that brings up a great point, because this is one of the things we talk about is, yeah, Amazon is a great platform, but you know, reaching beyond Amazon, especially looking at brick and mortar and you talked about that being a bear and you have. You know, you've been on Amazon for five years, so I'm curious what have been a couple of those big challenges that you've seen so far in making that switch over to kind of 1P with Walmart and some of these other places are obviously important to continue to grow.
Speaker 2:Yeah, I mean, I wouldn't even say it's a switch over, it's just an addition to our sales channels because Amazon is still a bear. We're dealing with issues weekly still with Amazon, so that doesn't ever go away. We get to do that in addition to onboarding with the other retailers, but it's all just using their systems and it seems like everyone is. They all had old systems and now they have new systems, but they have parts of the process and the old and parts in the new, and so you have to manage both and things get crossed and there's a lot of silos. It's all just a lot.
Speaker 3:How did you so this is probably a valuable piece for anybody who's listening that either A it feels like they're ready to move toward retail or B wants to prepare their brand to be ready for retail? It would be useful to know what was the process that you went through to get to that point, and I guess I mean more specifically. I mean you could elaborate on what you've done from the beginning and started to do. Maybe that prepared you for that transition. But I'm also very interested in when it came to the point where you decided Also very interested in when it came to the point where you decided we're ready for retail, I want to get on retail shelves. What did you do? Did you hire an agency? Did you try and go to direct? Did you find some other channel? How did you manage to communicate with Walmart and Target, to actually be in the ballgame?
Speaker 2:Right, I've got a bit of a unique story, so it won't be applicable to everyone. Right, I've got a bit of a unique story, so it won't be applicable to everyone. But as Army veteran, as a female, I've got some diversity certifications that have helped me on my journey. And one thing I learned this year is deciding versus knowing. We decided we wanted to do retail three years ago. This is the first year we knew we actually could. So, going in as a younger brand thinking let's do retail, I went through Target's accelerator program. They had a I don't remember a couple of months long baby accelerator where I got to go behind the curtain and learn from Target executives how to create that pitch deck for your line, review how it works with the margins and all the extra expenses on the back end. And going through that program in 2020 or 2021, I thought that's a shoo-in for me to go into target. I've just learned from the target buyers how to get into target. They know who I am. It's going to happen.
Speaker 2:Turns out I wasn't ready for Target at that time, so it's a good thing I didn't get in. And then the way it's worked for me now we decided this year we knew okay, now we're actually ready. Now we've handled enough things via Amazon, via our website, with a growing product line, with now having our own warehouse and doing more of the logistics. Now we know more where we didn't know, what we didn't know before. So, as I've entered this next phase, I've gotten the opportunities to meet with Walmart and Target because of my diversity status. So I met the Walmart head of diversity supplier diversity at a women in business conference where she helped connect me to the baby buyer, so that, for me, was a fortunate circumstance. So I know that doesn't apply to everyone, so it may not be super helpful, but if you do have the ability to get certified as a woman, owned, minority, owned, any kind of certification, that's really, really helpful with the big retailers.
Speaker 3:Yeah, I think that's actually a pretty important point because, as you said, not everybody is going to qualify that way. But if you are someone who would qualify in some way for some of those specific certifications in that way, take advantage of that opportunity. Don't don't let that slip away from you, because you you can kind of fast track your way into a position like that and get to talk to people that you wouldn't have the other you know the opportunity to talk to. Otherwise. Before John and Matt jump back in here, I have one other question and that is related to you mentioned. There was the point at which you decided you wanted retail and thought you were there, and then the point at which you knew you were ready. I'm curious what is the one or maybe two very specific things that were standing in your way when you thought you were ready for retail? What are the one or two things that you were like no, we're not ready. These two things have to happen. What were those things that you had to address before you were there?
Speaker 2:I think one is our mindset and mentality. We're a very small, lean team and we thought we should. So when we decided let's make it a goal this year I think 2022 is the first year like let's make it a goal by the end of this year to get into retail to make some progress there, it was because we felt like we should do it. And our mentality has changed now to where we're not doing it because we should do it. We're doing it because we want to do it. So if you're feeling like I should be going down this retail path because that's what I should do, it feels like that should be the next step. That's not necessarily the right thing. We want to do it.
Speaker 2:It's a strategy. It's actually more of a marketing strategy for us because people are going back to the stores. Now Online marketing, online advertising, is not working like it used to. People are physically going back to stores. So if we can be on that shelf or be in that search on Targetcom when people are making a registry or Walmartcom, that's more eyes on our brand. So it's not even just a sales volume thing, it's a marketing play Same thing for us.
Speaker 3:I'm totally with you in that We've been making a big push to market our brand externally to Amazon much more this year no-transcript and then search for us online, which gives us a massive advantage. I think I don't know yet because we haven't reached it, but I think it's going to give us a massive advantage in terms of branded search, which is going to help us with our keyword authority on Google and on Amazon for ranking. So we'll see if that theory proves to be true, but other brands that I've spoken to seem to indicate that that is a truism and I'm hoping to take advantage of that.
Speaker 2:Yeah, another thing, one tip that I learned as going through this process is the onboarding part of getting into a retailer is very frustrating and hard and once you've successfully done one, it makes it much easier to get into the other. So when I was talking to Walmart at first, they were like, okay, it sounds like you've got the capacity, it sounds like you've got the bandwidth to do this. And I said, well, I don't know if it makes a difference, but we are selling on Targetcom. And they're like, oh, you have a vendor number with Target. And I said, yeah, oh, well, that's a different story, that's great. So now they know that we had the capacity to actually go through that process to get the vendor number, and that's now making it so much easier to get conversations with other retailers, because once you have a vendor number at one, they see that you're ready to go into more than one.
Speaker 1:I'm curious along that line. So you're talking about a lot of opportunity and a lot of progress you've made recently. But just rewinding a little bit, because you talked about a little breakdown of your business between Amazon and some of the other sources and well, you know, obviously Amazon is an important place to be. You know, one of the things that we've talked a lot about is diversifying, also off of Amazon, to continue to have a strong brand as you go forward. What were you would you say you know, in the last couple of years has been one or two of your big wins, you know, kind of outside of Amazon and kind of expanding your brand.
Speaker 2:I mean.
Speaker 2:For me, obviously, getting on Shark Tank was huge and outside of Amazon, that was a big expanding the brand moment.
Speaker 2:Another thing we have done that I'm very proud of and excited about is is finding a niche, so it always just seemed common sense.
Speaker 2:Our product is for babies, let's market to the new parents and that's where we're going to sell, and that's what we've done for years. But we started getting feedback from occupational therapists, pediatric professionals who work with kids that have special needs, and they've talked about how developmentally beneficial our products are and how helpful they are in their practices and it's now opened up a new world. For us to be able to really specifically target those people and reach out to people that work with kids in our product and think it's helpful for the kids or their families that they're working with is now going to refer that product to multiple people over and over, versus I'm paying $12 to get to a mom on Facebook who might buy it for a friend for a baby shower gift or might tell a friend group about it, but that's about the extent of that $12. I spend $12 on an occupational therapist and I might get 20 you know 20 orders. So that's another big thing that I'm pretty excited about and happy about with off Amazon business development.
Speaker 3:Yeah, I love that. It's actually. It's one of the reasons why we want to make a bigger push for the pool pro market for our products. We've sold the pool pros from the beginning, but it really wasn't ever a big push for us. We've always been more of a residential market product. But, reasonably speaking, it's actually the pool pro market.
Speaker 3:The only reason that we ever courted them at all, to be honest, was because we knew that if we treated them well and gave them a good product, their customers trust them to know what's the best tool out there, right. So we knew we'd get referrals out of that. That they would, you know, because their customers have to clean their pool in between pool cleanings by the pro. So and we have gotten many referrals out of that. So, but what's interesting is is that we still haven't really courted them.
Speaker 3:You know we really haven't pushed that side, and so that's actually one of the things that we really want to push hard on this year is to really push into that pool pro market to get those referrals. I mean, not only do they buy in bulk, which helps, but many of them are one-offs, you know, like many pool pros are just a guy that's out there and he's got a route of you know 40 houses that he does. So he still doesn't buy a ton of pool poles and nets, but he's got 40 customers that he would potentially recommend us to who would buy our product. So we really want to make a push in that direction and I think it's a really good point for sellers to look at. How can you move up the chain to individuals who have a status above those that you're trying to sell to, who they respect, so that if you can target that individual and they start recommending you, then that all trickles down.
Speaker 1:Well, I think I can't let go of what you mentioned, which was getting on Shark Tank, which is an amazing accomplishment. So first, congrats on that. I am curious seeing it as watching the show it's interesting. But I'm curious, you know, seeing it as you know, watching the show it's interesting. But I'm curious. What was the most surprising part about your experience of being on Shark Tank?
Speaker 3:Well, and how did you get there? Like, how does that happen?
Speaker 2:So for me. I so I mentioned Bunker Labs when I very first started having my idea and I went to this course that year. The show had reached out to Bunker Labs, looking for veterans to feature on the show. I was nowhere near ready for that whatsoever, but I took the producer's email address and I put it into my contact list and then eventually, when I did launch the product, the first product I blasted my entire email list and this was my yahoocom with high school sweethearts and whatever, literally anybody whose email I ever had got an announcement that Busy Baby was live.
Speaker 2:And when that producer was on there I completely forgot about it. And so the next day he reached out to me and he says I see, you're on the market. Do you have any interest in being in Shark Tank? Do you have any interest in being in Shark Tank? And that led to a almost two-year conversation before you know, from that moment to when I stood in front of the sharks and filmed my episode. Wow, two years launched.
Speaker 2:So I didn't really have much for sales. And he says well, we take companies at all stages, but to best set you up for success, it'd be good if you had at least 100,000 in sales. So reach back out to me when you get there. But when I got to 50,000 in sales, I also got issued my first patent. So I reached out and I said I'm not at 100 yet, I'm at 50, but I also now have a patent. Would that make any difference? He says, yeah, that's absolutely wonderful, that's great, but we just wrapped season 11. So we'll start casting again for season 12 in February or March. Reach out to me then. So when I reached out then, then that led us to eventually filming in September of that year during the pandemic.
Speaker 3:So that's all. Back to John's question. Yeah, that's all I got. So that's the most surprising thing.
Speaker 2:There was a bunch of surprising things for me. One is that not everybody watches Shark Tank, so I thought it was going to be this huge life-changing thing. For sure we would just go viral and blast off and it would just be like holy smokes, here we go. Two weeks after my episode aired, I was doing a product demo and someone told me wow, that's so smart, you should go on Shark Tank. I was like I literally was just on Shark Tank two weeks ago and I still get it all the time, all the time. Oh, that's a good idea, you should go on Shark Tank. So Shark Tank turned out to be a great marketing event For two weeks. It was very popular. We get six weeks of orders within the three days of airing.
Speaker 2:The most surprising and the very best thing that's come out of Shark Tank is the network of friends I now have. We have a Facebook group of people who have stood on the carpet in front of the sharks and we do reunions, regularly, meet up together. I have a close circle of friends that were all on the show and I think it's one of the most important things in business as an entrepreneur, because my regular friends, my pre-business friends. They don't understand any of the things that I do during the day, and so if I have a bad day because Amazon changed the material of my product from silicone to PVC and it's PVC free and now I have to figure out how to fix that, I have to tell them the backstory of all of the things. I can't just be like Amazon changed my material again. I can say that to my Shark Tank friends.
Speaker 3:What does that mean right?
Speaker 2:They all deal with it. They're like, oh my God, that's so annoying, like, do you need help with a flat file upload or something you know to fix things Right? And there's other and even better is the people in the group that I'm close with are the other moms who are trying to. You know, we're all doing this grind and we have little kids and we're trying to balance it and do great at both, and so I have someone to commiserate with on all things life and business, and that's honestly the very best thing that ever came out of Shark Tank was this network of people I now have to support me, to reach out to when we have issues, celebrate with each other. That's the most unexpected and best thing, for sure.
Speaker 1:Fantastic. Well, one of the things I've heard you bring up a couple of times that I just want to kind of double click on, which is Bunker Labs. So a couple of things there. First of all, Bunker Labs amazing organization that basically helps veterans who want to become entrepreneurs, that are entrepreneurs and are looking to grow. So for folks out there that either if you're a veteran and you're looking at starting up a business, I definitely recommend go find BunkerLabs. They have a bunch of resources online and then if you're interested in getting involved with that program, they still do quite a bit, so you don't necessarily have to be a veteran or get involved. They've got a lot of different chapters around the country to help all types of different entrepreneurs. The other thing is that we're recording this right after Memorial Day. So again, Beth, thank you for your service, and I'm just curious how do you feel like your military service has influenced your journey as an entrepreneur?
Speaker 2:Oh, I mean, it's got everything to do with the fact that I'm still here, because it's hard. And one thing I talk about a lot with regards to being in the military is when you're in the military you do tons of training, so much training. You train for missions, and then when you actually get deployed and you're going on missions and things don't go as you planned in your training, you can't just be like oh, that didn't work and you have to like, you just have to figure it out. You have to find a way to make it work. Whatever the situation is, you just have to figure it out. You can't just be like, oh shucks, and like go back to bed.
Speaker 2:So when it comes to this entrepreneurship journey, there's constantly things that come up that did not go as planned at all, or a new challenge, and the mindset that is just ingrained in me from the military is just like okay, well, how do we find our way around this one? Or what alternate do we? You know there's, there's always some way to make it work, and I think I I know a lot of people that when they hit a wall or they get rejection or something bad pops up, you know they can sink down into a slump and they can just put their head in the sand and say, you know kind of have a little bit of a victim mentality and I just don't think that's something I even can do, because you know kind of have a little bit of a victim mentality and I just don't think that's something I even can do because you know my time in the military, you just do it, you just figure it out. So that's for me the biggest thing.
Speaker 1:Okay, so before we kind of pivot into you know the second part of this, Mike or Matt, any other additional questions that you wanted to ask? Beth, I've been talking way too much.
Speaker 4:So yeah, I mean I just you know you're, you have a. I love people's story and how they ended up in this e-commerce game and learning about yours. What I also love is our products that solve a problem, that you created, something that solved a problem of yours that turned into a business and I have a similar story with that. But my question for you you does the next five years look like for you? Do you have plans to sell the brand at some point? Are you looking to continue to expand the product line?
Speaker 2:What does the next five years look like for you and your brand? Yeah, great question. Initially the plan was to grow it and sell it. Just grow it and sell it, because I run the company with my brother. He's also an Army veteran. He's got some retail experience running retail stores, but neither one of us has any experience doing any of the things that we do Product development, e-commerce, marketing. We have never done any of these things and so we kind of thought if we can, a couple of knuckleheads from the army can grow this business to a seven figure business. Could you imagine if we sell it to somebody who knows what they're doing and has resources, like how far they could take it? Like I so badly want to see somebody to get enough revenue or sell it for enough that I can take on my next adventure. So we need to grow it. We want to grow it to a value that will allow us both to take on our next adventures.
Speaker 2:We're still having fun. We still have so many ideas. We have a whole line of products that we can create with our patents that are dedicated to aging disabled communities. So you've got the elderly in assisted living facilities that maybe have Parkinson's dropping utensils in the dining facility. There's a lot of uses for our products in other markets. So sometime in the next five years we'd like to expand into that market with the same products just adapted for adults, and or exit. I mean, I think sometime within the next 10 years we'd love to exit, but who knows? Who knows what's going to happen between now and then.
Speaker 3:Well, the nice thing about an exit is that if you have this patent and this patent is applicable to those other areas as well, you can sell that portion of the patent that applies to the baby market and hang on to the patent for the rest, and at least then those exit dollars, you can use those for that next brand venture. So I think there's a lot of value in that. But we're in the same boat because we're looking for an exit but at the same time we've had a lot of buyers who've had interest. But the problem that we have is we know how much revenue is still in the tank from the things that we already know we need to implement.
Speaker 3:And so then there's the decision should I take the money now, or should I grow two or three times what I am and sell that? What's the market going to do? Is the economy going to crash? There's all these things that you don't know the answers to. So we're in that same boat and we're going to ride it out for a little while before we exit, I think, but it is a tough, tough, tough decision.
Speaker 1:All right. Well, this is probably a good time to kind of pivot to the second half of the episode, which is kind of about the challenges that you're facing right now. So, beth, what are maybe a couple of those challenges that you're seeing right now, that you're working on solving?
Speaker 2:One is a decline in the e-commerce revenue. We cannot figure it out for the life of us, but there's been a decline in both Shopify and Amazon sales over the past year. And then the bigger issue is cashflow. In this, I call it the messy middle part of business growth. We're too big to lean into the startup tactics that I had in the beginning days and we're not big enough yet to hire the professionals or engage in the bigger business strategies of a big business, and we've got a lot of money tied up into inventory. So we're kind of stuck of. You know, do we take an investor? I'd rather not. Do we get another line of credit? How do we kind of push through this spot? We made a few missteps last year. A valuable learning lesson was we started out last year Q1, best year ever. We were 75% growth over the previous year. It never slowed down from Q4. It just kept climbing. And so we're like, oh my gosh, this is amazing. If this is going to continue, we need to order enough inventory to support that. So we ordered inventory to support that At that point.
Speaker 2:I just hate marketing. It's not my thing, I'm not good at it, but as an entrepreneur in a small team. You just take on all the roles that you can take on. I do an okay-ish job. I thought now this is the time I can afford to hire at least a fractional CMO. And so we were fortunate to meet somebody who used to work as a CMO for Fisher Price like what better fit huge baby business. She had small kids. She's just this brilliant, wonderful person and we brought her on and worked with her for about eight months.
Speaker 2:We rebranded because we're not long. Our old logo had a busy baby, like a baby, with a mat with things connected to it. Well, we're not just a mat anymore. Logo had a busy baby like a baby, with a mat with things connected to it. Well, we're not just a mat anymore, we have this product line. So we got rid of the mat, updated the logo.
Speaker 2:She really helped us pull our brand kit together and be really concise about who we are and what we do and actually for the first time ever, had brand colors and fonts that were like established brand guide. We never did that. I just popped open Canva and like here's the four major colors that we use and it was never official. So a lot of stuff really pulled together. But what we learned in the end is marketing for a internationally known brand with a ton of resources is very different than marketing for an unknown brand with very little resources.
Speaker 2:And so the mistake I made was, when we brought her on, I took my hands off the wheel and I was like, okay, we got someone who can handle it and never really, like you know, kind of hit my head in the sand maybe, and every time sales started dipping it was an excuse. The first time was when gas prices skyrocketed last April or May and I was like, wow, everybody's afraid there's going to be a recession and gas is so high, sales dropped because people are just hanging on to their money right now. And then we saw a little recovery in June and then they went down again and we're like, oh, maybe people are saving money for back to school, and just kept kind of making up excuses. Well, in the end it was just we weren't advertising properly and we were way overspending on ineffective methods and got ourselves into a hole.
Speaker 2:And now we're digging ourselves out of it and that's why we're now doing some more guerrilla marketing tactics where, you know, we had a VA search on Google, state by state, for every pediatric occupational therapist. You know, san Diego, california, occupational therapy pediatrics. Write down the name, the address, everything we're going to be doing, you know an email flow out to those offices. We're going to send an actual postcard in the mail and all that effort is going to cost us less than what we spend in one day on Facebook ads and hopefully start reaching out to these. And then the same thing with retail stores. We'll be doing the same thing with the baby stores across the country and sending them information. So we're in 400 boutiques now. There's thousands of them in the country, so we're going to just do outreach to them and try and expand sales that way, because online is just not working how it used to work.
Speaker 3:Right. So, first of all, I love the fact that number one that at least you recognize. Obviously, you feel like it was a little too late to recognize that that marketing approach is different for you than it was for Fisher Price and that that individual didn't really recognize that. So at least you're riding the ship now, but I like the fact that, well, again, you didn't give up Like, okay, here we are, we screwed that up, but how do we fix that? You know where do we go with our marketing to repair this, and I think you found what I think is likely to be a very productive way to address that issue, at least in part. It's not going to fix it entirely, but I think it's a great opportunity and it's a very inexpensive way to go about it.
Speaker 3:I do have a question, though. So you mentioned cashflow and you mentioned that e-commerce isn't working the way that it was previously. I guess three questions that are related. One would be correct me if I'm wrong, but it sounds like both revenue and, potentially, profitability are both down. And then you also have the issue of this kind of cash flow turnover. Is that a correct assessment of where you are?
Speaker 2:Yeah, that's right.
Speaker 3:Okay, and then I guess, as a follow-up to that, what are your margins right now and maybe what were they say two years ago by comparison? Do you know?
Speaker 2:Just offhand, we were looking around like oh gosh, I'm going to get all flustered out with the numbers. It's the massive increase in our OPEX has shrunk the margins by like 100%. We went from 30 net profit to none. Right now, Okay.
Speaker 3:So there's basically zero profitability at the moment. None, you're saying.
Speaker 2:Yeah.
Speaker 3:Okay, so is most of that due to is a lot of that due to. Amazon fee increases. You know advertising costs, what, what specifically, what one or two areas do you feel like are the worst areas that that you're having troubles with?
Speaker 2:I mean it's it's marketing costs in general. So, like I said, our Facebook and Google and you know all the ad spend, digital ad spend, and then it's the decline in Amazon revenue. And what's interesting is we started working with another agency to help us manage Amazon and it's the first one we've ever worked with brilliant guy who focuses on profitability and profitability per skew. We've never had anyone help us dig that deep into our products on Amazon and he's been able to reduce our ad spend significantly and double the return on the ad spend and the ACOS. But it's not scaling. So we got it efficient and we're spending less, but as we try to spend more, it just becomes inefficient again.
Speaker 2:It's a weird thing that I don't fully understand.
Speaker 2:And then we've got just some weird backend things happening in Amazon that don't make any sense and we're learning about in 2024, this new AI that Amazon has that's giving preferential treatment to brands that are following the brand guide most closely.
Speaker 2:So there's things about the number of characters in your bullets and the number of characters in your title and if you have more or less, the algorithm favors one more than the other. I don't fully understand all of it, but I get the gist of it, and so we're trying to currently this week optimize all of our listings so that they meet the brand guide, specifically because someone that we got through to at Amazon sometimes you get people that are not helpful at Amazon and sometimes you get the rare find that's just a gem, and we found a gem who really went through this with us and we have a lot of noncompliance per the brand guide and that somehow affects the algorithm. I'm not really sure how, but we're working on that. So the decline in Amazon revenue it's not necessarily the increased fees haven't hit us as bad as the fact that we're just not selling as much.
Speaker 3:Okay, what percentage of your Amazon sales are ad-based versus organic sales?
Speaker 2:25%. Are ad-based or 25% organic. I've actually got it fairly handy here. I want to say it's more so. This last week just under half of our sales came from ads.
Speaker 3:Okay, so we're upside down in that. Like, our brand is 70% ads right now, whereas it used to be probably 70% organic. But in our category a lot of Chinese sellers have moved into that category at very low prices compared to ours, so that's made ranking fairly difficult. Thus our external levers that we're trying to pull. But if you're closer to that 50-50 range, I mean I don't think that's as bad. I don't know, John, you work with a number of clients. Where do you feel the market is right now in that sense? How many of the brands that you're working with are less than 50% ad-based? That you're working with are less than 50% ad-based.
Speaker 1:So I would say probably about. So about 30% of them are, but most of them it really depends on category. So how competitive is that category? And then what stage is the brand at? I mean, like Beth, you have a pretty developed brand. You guys have a solid presence from what I've seen in the past on Amazon. So you guys aren't you know it's not like you're trying to, you know really push volume at the expense of maybe like margin or something like that. So I mean there are some, but again, it really depends on category and how competitive that category. And, like you said, mike, you know there's been a lot of overseas sellers that moved into these different categories. That make them a lot more competitive. I'd also be curious and I'm sure you guys looked into this but just what your market share looks like. Did you guys lose significant amount of market share over that time period where you saw sales go down?
Speaker 2:There have been a few versions of knockoffs that have come onto the market since last summer. When you're looking at your listing, you can see 1,000 plus sold in the last month and then I can look at my competitors and they've sold 50 in the last month. They're not taking a huge share. I don't have any tools to look at the back end to see specifically how much they're taking from us, but there have been definitely some other products come out that compete with us.
Speaker 3:For your key terms. How is your ranking compared to what it was a year or two ago?
Speaker 2:I have no idea because I don't manage that compared to what it was a year or two ago. I have no idea because I don't manage that. Unfortunately, our key terms are our name. You know it's almost all brand search. People hear from other people.
Speaker 4:Most people are typing the words busy, baby into the search. So how much of your operations do you outsource? Are you familiar with the search query performance report? Are you that much into the weeds into your Amazon account?
Speaker 2:I don't use it because I don't run the ads. So what's that?
Speaker 4:Yeah, I was just asking kind of what your familiarity with that report, Because I mean that report it's not just ads, that. That report shows you. It actually you're able to look at a keyword level how you compare in terms of impression, share and click, share and add to cart, share and all that kind of good stuff compared to your competitors. So it's a fairly very detailed report that kind of shows you how you stack up in terms of all those kinds of things compared to competitors. You how you stack up in terms of all those kinds of things compared to competitors. So I was just wondering how much of that report you look at, if at all, or if that kind of stuff the operations on the Amazon side is handled by your service provider.
Speaker 2:Yeah, the service provider uses that to update our bullets and description and everything like that. Not often, but that's part of what we're doing right now. Since we have to make sure we get our character counts down to whatever the Amazon style guide prefers, we're going through and using that report to optimize the keywords in those bullets.
Speaker 1:Yeah, I'd be curious to what that data looks like from the. So one of the tools that Amazon now offers that's a little bit newer, is Product Opportunity Explorer, and that might be able to give you a good picture too of just on you know, obviously not necessarily applicable to your branded terms, but any non-branded terms, like how you compare to your competitors and what that market share looks like, and I think they still they do you know like 365 days worth of that view, so you can get kind of an idea of at least, hey, what is the total search volume. So that way you know, like are we, is it just that the search volume is down or is it that we're losing market share? Cause those are two different problems to solve. So that might be interesting.
Speaker 1:And then the other thing that kind of pops in my head and you know, mike, you know more about this than I do, but I wonder if you know, from an inventory perspective, a service like Skewdrop or something like that to make things a little bit more lean. I don't know, beth, if you've ever looked into a service like that before. What?
Speaker 2:is it?
Speaker 1:Might be something that's helpful.
Speaker 3:So Skewdrop is a service that we started using not too long ago. That's helpful. So Skewdrop is a service that we started using not too long ago and the way that Skewdrop operates is that they essentially become a staging warehouse in China versus a staging warehouse here in the US. So we've had a staging warehouse here in the US, in California, for quite a number of years. Every product that comes in goes to that staging warehouse and then we divide it to our 3PL and to Amazon FBA warehouses and it's worked relatively well for us. It gives us an opportunity that we can have an FBA and an FBM listing on Amazon. So we never stock out at least rarely. But what SkuDrop offers is there are some significant benefits in terms of A. You can actually ship pretty inexpensively directly from the SKU drop warehouse into FBA warehouses and you get really good rates, even on LCL shipments. So if you're not doing full container loads and you want to do smaller shipments, you can do that and still get a really good rate. They're also checking into Amazon faster. One of the things that we're discovering recently is the check-ins to Amazon warehouses are taking forever and our check-ins from our skew drop shipments have moved much more quickly into Amazon warehouses. But the other thing that it does is in a sense it helps with cash, because what you can do is if you're staging warehouses in China and you can ship in smaller shipments as long as you're still getting, let's say, for us we don't really get any significant volume discounts from our manufacturers. From our manufacturers they give us the same price whether we put a small order or whether we put a larger order. It's never really changed too much. We might be able to negotiate that a little bit, but the point in that is is that if you have some break points, get to the break point at least so you can get a good price on the manufacturing. But you don't have to order more than that. You can order a small amount of product, send it to SKU drop and then you can send it in small shipments over to the US, so that you have you have less inventory at risk First of all. In other words, if the ship goes down, you don't lose as much inventory at one time. Also, if a shipment gets stuck at Amazon, it's just that shipment. So when you're sending in a number of shipments back to back to back to back, one might get stuck, but the next one comes in maybe a week later and it gets in, and so a lot of times it helps you avoid stockouts, but also you don't have as money tied up in inventory at any one time. You don't have to order a massive amount of inventory to bring over to the US and then funnel it out to Amazon FBA. It's a tighter, it brings things tighter. You're, you're the.
Speaker 3:The amount of time between the production of the product and when it's actually in Amazon shipping, or you know, to customers might be 45 days versus right now where for us you know, if we, if we do it, the alternative route it's coming closer to 90 days because Amazon's taking so long and we've got domestic shipping and the price is higher. So there's a guy I can put you in touch with him His name is Jamie over at Skewdrop, and he can walk you through the whole process and explain to you all the benefits of utilizing them. But it's worth investigating. I think it could really help you in terms of cashflow. There's also some other techniques that you could potentially employ, and this will be especially useful because of your profitability issues. Right now, getting that cash flow under control is going to be fairly critical, and so there are some techniques that people are using.
Speaker 3:Well, one of them that was that was recommended. It's semi-complicated but it's not really bad, and that is somebody's using basically credit card stacking and they'll use, like a plum card, an American Express plum card, which gives you a longer time to pay essentially 60 days and with Amex you can actually get multiple cards more than you might think you can get with decent limits, and so what they'll do is they'll stack cards but then they'll only charge at the front end of the month. So essentially what happens is by that stacking you've got 60 days before you pay, but you get more than that, because if you charge it at the beginning of the month, you've got 30 days before the statement goes and then you've got more time beyond. So there's some creative ways that you can do that. Have you negotiated? I assume you are bringing in from China. Yes, you're manufacturing in China.
Speaker 2:Yep.
Speaker 3:Okay, so have you negotiated with your manufacturer to get what are your terms right now when they produce product for you? How long do you have before you have to pay?
Speaker 2:Yeah, we have. I think we have great terms. We pay 30% upfront to start production, we pay 20% when it's on the boat and we pay the remaining 50% 45 days later. So it gives it time to get here.
Speaker 3:That's actually quite good. That is actually pretty good terms.
Speaker 2:Yeah, we have great partners, Much better than many sellers. Yeah, we have great great manufacturing partners and even right now, because we are overstocked, we own our own warehouse. So I'm very anti-3PLs because we do it ourselves and it's the most fun part of our job and what 3PLs charge is just insane to me. But we have so much product right now because we overordered last year and our partners in China right now are still letting us keep our pricing, despite the fact that we're ordering smaller quantities right now.
Speaker 3:So we're very fortunate at least in that aspect Sounds like you've got a really good relationship with them, at least.
Speaker 2:Yeah, they're wonderful, wonderful, wonderful people.
Speaker 1:Sorry, mike, I don't mean to cut the conversation short, but I do see that you know we're coming up on time. So, beth, thank you so much for being on the podcast. I really enjoyed the conversation. Hopefully, some of the you know some of the discussion on the latter end has been useful for you. Obviously, you know some of the discussion on the latter end has been useful for you. Obviously, you know anything that we can do to help.
Speaker 2:Feel free to reach out, but I want to just say thank you so much for being on the podcast. Yeah, I look forward to getting this ship turned around and reach back out to you, John, and come back on and like tell everybody how we figured it out and how we fixed it.
Speaker 3:That'd be, amazing Well absolutely.
Speaker 1:We'll definitely have to have you back for that.
Speaker 2:All right.
