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Firing The Man
THANK YOU TO OUR 25,000+ LISTENERS! We are so thankful to be one of the TOP E-Commerce Podcasts delivering high-quality authentic content to you! Serial Entrepreneur’s David Schomer and Ken Wilson share tips, advice, and insider knowledge about all things Amazon FBA, Walmart WFS, and E-Commerce. Discover how you can create multiple income streams by selling physical products online so that you can have the time and freedom to do what you love - whether that is spending more time with family or traveling the world. Ken and David have successfully created several six and seven figure online business ventures. During the journey, they have had major wins, losses, and lessons learned. This podcast will teach you about selling physical products online through platforms such as Fulfillment by Amazon, building a team, outsourcing, listing optimization, pay per click (PPC) advertising, driving traffic to your listings, and productivity tips / life hacks that will provide a path to be successful in building your online business. It’s a mix of interviews, special co-hosts and solo shows from Ken and David you’re not going to want to miss. Hit subscribe, and get ready to change your life.
Firing The Man
Mastering E-Commerce: Automation, AI, and Entrepreneurial Success with Parag Mamnani
Episode Summary:
Discover the secrets of e-commerce mastery with Parag Mamnani, founder and CEO of WebGility, as he shares his journey from a computer science graduate during the dot-com bust to a leading figure in e-commerce automation. Parag opens up about the critical challenges e-commerce businesses face today, such as financial reconciliation across multiple platforms and cash flow management, and how WebGility is revolutionizing the way businesses operate. Learn how to harness the power of data-driven decision-making and customer feedback, strategies Parag honed during his time at Amazon, to improve operational excellence and achieve sustainable business growth.
Explore the nuances of selling on platforms like Amazon, understanding deductions and fees, and how these elements can impact your revenue. We unpack the intricacies of expanding to new markets, including the challenges of currency fluctuations and the importance of mastering one sales channel before venturing into others. Whether you're looking to leverage marketplaces or build an independent brand, automation emerges as the key to efficiently managing multiple sales channels and uncovering hidden growth opportunities. Through insightful discussions, we highlight how e-commerce entrepreneurs can streamline operations and enhance profitability.
The episode also delves into the transformative potential of AI in e-commerce, exploring how emerging technologies are set to change the landscape. From AI-driven interactions to the challenges faced by small businesses in maintaining financial clarity amidst evolving fee structures, we cover it all. Parag's story is a testament to resilience and innovation in entrepreneurship, offering listeners invaluable lessons on the attributes that distinguish successful entrepreneurs. This episode promises to equip you with the tools and insights to optimize your e-commerce operations and pave the way to success in the digital marketplace.
Resources Mentioned:
- Webgility – E-commerce automation platform
- Book: The Art of Living by Epictetus
Connect with Parag Mamnani:
Welcome everyone to the Firing the man podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more, then join us. This show will help you build a business and grow your passive income streams in just a few short hours per day. And now your hosts serial entrepreneurs David Shomer and Ken Wilson. Serial entrepreneurs David.
Speaker 2:Shomer and Ken Wilson. Welcome to another episode of the Firing the man podcast. I'm your host, David Shomer, and today we're diving into the world of e-commerce automation and operations management with a true industry innovator.
Speaker 2:Joining us is Parag Mamnani, the founder and CEO of WebGility, a leading e-commerce automation software that has been helping businesses streamline their operations and grow efficiently. Prague has a rich background in technology and entrepreneurship, and he has dedicated his career to solving complex challenges faced by e-commerce businesses complex challenges faced by e-commerce businesses. With WebGility, he has built a platform that integrates seamlessly with various e-commerce channels, helping businesses automate their processes, manage their finances and gain critical insights into their performance. In today's episode, we'll explore Parag's journey from tech enthusiast to successful entrepreneur, discuss the key challenges in e-commerce operations and learn how automation is transforming the way businesses scale. Whether you're an e-commerce veteran or just getting started, this conversation will offer valuable insights into making your business more efficient and profitable. Let's get into this, prague. Welcome to the show.
Speaker 3:Thanks so much. You did a fantastic job on that script. That's brilliant. Yeah, thank you for that introduction.
Speaker 2:Absolutely, absolutely. So, to get things started, can you share with our listeners a little bit about your story into founding Webgility and what inspired you to focus on e-commerce automation?
Speaker 3:Yeah, yeah. So you know, I graduated from college with a computer science degree at the height of the dot-com bust and there were no jobs, so entrepreneurship sort of was a forced necessity. I had to figure out how to make money and during my last couple of years of college I would roll out of bed and make cold calls selling e-commerce websites. At the time there were a few open source platforms. Shopify didn't exist. There was no easy way to get going. You know you had to kind of install things on a server, get your website built and do all the muckery around hosting. So, yeah, just those. That's where my kind of training wheels and e-commerce.
Speaker 3:Obviously, amazon was starting to grow, ebay was seeing its time, so lots of businesses kind of looking at ways to expand online. So that got me into building an agency. We were developing e-commerce websites and launching e-commerce businesses or even moving retailers online fast. Seven, eight years into that agency I got an opportunity to work at Amazon and I was running a product there called Web Store and, again, an e-commerce platform for small businesses. So e-commerce is kind of all I've been eating, sleeping, breathing the last like two decades and pretty much you know, working with small businesses firsthand, or even being at the platform, it was very clear to me that e-commerce was going to be the future, that more and more retailers were going to move online, and when I looked at kind of that space, there was definitely a lot of platforms out there and solutions was that almost everyone would talk about their QuickBooks and their financial system and they didn't quite know how to do the right financial reconciliation for what was selling online, because there's a whole new stream of data and the more channels they sell on, the more different types of data.
Speaker 3:There's no real standardization around even how that data is provided to a seller, and so I thought that that was a big opportunity. And, you know, fast forward now, 15 years, webgility has been, you know, serving tens of thousands of brands. And, yeah, we're still trying to help solve that problem of how do you know businesses selling on multiple e-commerce channels kind of do their bookkeeping automatically, how do they do their financial reconciliation, how do they do compliance with sales tax. And also we've dabbled a little bit into, you know, as you look at Omnichannel, like how do you keep your inventory in sync, like what are all the nitty gritty operational challenges that you know businesses face when they're going online.
Speaker 2:Absolutely, absolutely. I love that. And and boy do you have a track record in e-commerce two decades which is outstanding. And one thing I think that kind of separates you from some other people that we've had on the show is you worked at Amazon and understand the inner workings of that organization. How has that shaped? How you've built out Webgility.
Speaker 3:Whenever I'm asked this question, the thing I like to say is that Amazon's like a fast track MBA. You know all the things that you go to college, like most people learn theoretically, boy, you have to cram that into just a matter of months, if not a couple of quarters. You kind of pick up all the skills and Amazon just also has this very unique I mean there's a reason why they're one of the top 10 companies on the planet. Like they just have this DNA and a culture that's very data driven, very experiment driven, it's obsessed about growth and so, you know, I think two years was a long stint.
Speaker 3:I picked up a lot of things and absolutely it's shaped everything, in fact, about the way that I run WebGilative, first and foremost, being very data driven, like really thinking about how to grow the business, how to run what's happening all the way from you know leads to sales, to ongoing implementation, to metrics around engineering and support and customer success Everything's data driven, and also a lot of experimentation, listening to customers and iterating. Yeah, I could keep going, but yeah, tons of learnings and it's definitely shaped the way that you know I've built and kind of been running WebGility. Of course, you, yeah, tons of learnings and it's definitely shaped the way that you know I've built and kind of been running WebGility. Of course, you know, over the years you kind of start to add some of your own tools to the tool belt, but it was very foundational running both an agency and then learning a lot from my days at Amazon.
Speaker 2:Absolutely, absolutely. So today we're going to be talking a lot about automation, and so, to start that conversation off, why do you believe automation is critical for the success of e-commerce businesses today?
Speaker 3:Well, if you ask me, automation is the difference between survival and death. So e-commerce in the world of e-commerce, it's now become so easy to sell. It used to be, it was hard to figure out how to sell online. Now it's incredibly easy to sell. The question, then, is, if everybody can sell, what makes you different? And I believe that the number one thing that makes you different is how well you've developed your tech stack, how automated your business processes are, so that you can find that razor-thin margin that you have in your e-commerce business and continue to accelerate your growth and beyond, I would say, data. The second thing that I think is really differentiating is your brand. So if you don't have your automation and your operations right, the only other way you're going to survive is by creating this unique brand and a unique presence online. Otherwise, it's really hard. It's really really hard to win in e-commerce without having automation and having a solid brand.
Speaker 2:Yeah, absolutely. And the statement of it's the difference between survival and death is, boy, does that statement punch hard, but you're absolutely right. And so what would you say to the entrepreneur? Let's take customer service as an example, and I think there's a lot of entrepreneurs myself included in this that really struggle with off-boarding certain tasks. And so what would you say to the entrepreneur that says you know, my customers are really important to me and I need to respond to every customer service request myself, and automation, you know, would scares me. What would you say to that entrepreneur?
Speaker 3:Automation you know would scares me. What would you say to that entrepreneur? Well, I would say to them put simply, you know, automation does not mean replacing humans, right? And so, just like I mentioned, you know, automation has to be kind of what gives you that competitive edge. Your human element, your brand, the way that you react and manage customers is also going to give you an edge. So it's not enough to just put automation and bots behind everything. It's important to put your touch on it.
Speaker 3:You know, sal Altman will kind of famously said oh, you know, I see billion dollar startups run by two companies. These are outliers. You know, really, the businesses, the small businesses, are not gonna thrive without that human element. That's what differentiates them. You know, we love Amazon for how quickly it delivers stuff. But, man, you know, customer service is what separates them as well, right, like how easily you can return items. And small businesses until they can kind of build a muscle of automation plus supplement it with their kind of human element. That's how they're going to be unique and that's how they're going to win.
Speaker 2:Okay, okay, I really like that. So what are some operational challenges that e-commerce businesses face and how does Webgility address them?
Speaker 3:Yeah, yeah. So you know, without this being a full sales pitch on WebGility, I think you know small businesses and e-commerce merchants face a lot of different challenges right Right off the bat. You know you got to figure out which category, what's the right product to sell, what's the pricing, where are you going to do your procurement, what channels are the best channels to sell on, how are you going to promote it, your marketing, your cost of acquisition there's just a lot of things that merchants need to think about. The area where we focus and where I spend most of my time is, first and foremost, operational excellence. How do you really streamline a number of your operational tasks so that you get time back in your day?
Speaker 3:Time's your most precious commodity as an entrepreneur and you want to be spending it on the highest leverage places of your business. You don't want to be spending your time keying in data, having to worry about whether your inventory level is up to date at the right places. You don't have to be spending hours every week with doing your bookkeeping. You don't need to spend 20 hours a month trying to close your books and figure out just how much money you made. There's just places in the business that I find entrepreneurs spend too much time and to your early question, I think it's also because maybe they're afraid a little bit of, you know, spending the time on software. They're very comfortable rolling up their sleeves, kind of packaging the boxes, figuring out what's the best way to market, looking at all the tools for keyword optimization and so forth.
Speaker 3:But you know, operational kind of excellence and closing books, managing your financials, is often an afterthought, and I don't think it should be, because the moment you start to really generate any kind of traction, those are the things that actually slow you down. So I find, for example I mean I could you know laundry list of customers who haven't even standardized their naming convention for their products. Like, they don't have a good SKU name and they get a lot of volume, they decide to launch some bundles, they add some adjacent products. Next thing, you know, they don't have a really consistent catalog and they can't automate it when they span to another channel. So it's kind of like getting those financial basics right and, as you think about launching one channel or expanding to more channels, those are all the operational elements that WebGility helps solve and that's where I spend most of my time. I'm happy to dive in, you know, to any specific area. But yeah, there's definitely a lot of challenges for SMBs.
Speaker 2:Absolutely. And let's dive into the financial side of things, and I think that to me, when I get my P&L, that is my scorecard for how I did it to me and I go down to net income and this is, hey, you had a good month, you did good. It is the culmination of all of our team's efforts, of all of our team's efforts and so. But I don't think that everyone shares that attitude on a P&L and, honestly, my background's in accounting and so I love that, but the P&L is sometimes intimidating to people, and so what are some areas that you think entrepreneurs where should they be spending time as it relates to understanding the financial health of their business?
Speaker 3:Yeah, that's a great question, man. I think most entrepreneurs overlook the importance of cashflow. There's one thing to be looking at your monthly profitability, but when you look at an e-commerce business, you've got a few big expenses right. Number one your people. And if you're a small business and you're trying to optimize everything, you don't have a lot of staff. Maybe you've outsourced your fulfillment. Your people cost might be a little lower. And your second biggest cost is your inventory right. How much are you going to be buying? Your second biggest cost is your inventory right. How much are you going to be buying? Your third biggest cost is customer acquisition. So people, inventory and acquiring customers All these three things happen over different periods of time and you've got a bank balance that you need to manage and a stream of revenue coming in and money flowing out, and a stream of revenue coming in and money flowing out.
Speaker 3:If you don't understand how much money is coming in and going out almost on a daily basis, you don't have that edge that those fast-growing brands have. They've figured out how to master their cash flow so that they're able to. I mean something as simple as knowing your cash flow so that you can use a 30-day flow from your credit card to get more inventory or to beef up your advertising. If you're just looking at a monthly P&L, I think that's great, but that's even not enough. I think you need to be looking at your cashflow more frequently. You need to have a really strong sense of the money flowing through all of your different channels. That's where you're going to find your competitive edge and you'll find hidden opportunities to really accelerate your growth.
Speaker 2:Yes, yeah, absolutely, and you're so right. And you look at what kills a lot of businesses it is that lack of cash flow management, and it's a real challenge, especially, you know, I look at some of the businesses that I run when we're placing orders that won't be sellable for 120 days, and then, of course, amazon's going to hold on. You're going to rack up that storage fees, oh, I know. Going to hold on here. You're going to rack up that storage fees, oh, I know, and that's something that is absolutely critical to be thinking about cash flow today and cash flow over the next six months to a year, and so I really like- that, yeah, and you talked about profitability in the.
Speaker 3:I think most business owners are savvy enough. Where they understand their high-level profit, I think they have a good sense of how much money they're making. Where I think they're missing out is I don't think they understand which products are making the money. I don't think they have a great sense of what channels are making the money, and so you got to go a couple of clicks in Find your profitable products, find your loss makers, and really that's where the fight tuning happens, and that's where we see the brands that go from one to 10 to 50 million in revenue. They're accelerating because they have really mastered those details and now they're really thinking at a skew level how they can really optimize to drive faster growth.
Speaker 2:Let's dive into that a little bit more, as it relates to, like, sku level profitability as well as platform profitability, and this is something I was looking at last week was profitability between Amazon and Walmart and the different fees that are associated with that, and so why don't we start here? Why is it important to have a good understanding of SKU level and platform level profitability?
Speaker 3:Yeah. So what typically happens is I mean, let's just use Amazon as an example. Right, if you're just looking at your top line, you're going to be looking at your overall sales. That's going to give you your top line revenue. That's how much money that you've collected, or Amazon's collected on your behalf. But every 15 days when that settlement comes in, you're not going to be getting the same amount of money because Amazon's going to be deducting all of its fees. It's also going to hold a reserve based on your history of returns for uh, refunds and so forth, and so you could have made, you know, you could have had a million dollars in revenue, but you might only get eight hundred thousand dollars as a deposit right off the bat. That means you have to wait two weeks before you know how much actual cash you're going to get in your bank. Yeah, okay.
Speaker 3:So if you don't understand that, your orders today does not translate into money in your bank in two weeks, like you gotta know, you gotta have visibility of your fees and deductions.
Speaker 3:You need to look at the trends of those fees and ideally you want to be looking at the trends of those fees and ideally you want to be looking at transactions as they come in, so you have a good sense today of what kind of collections you can have. It's also not great reporting if you're not tracking your top line and your expenses, because you could be under-reporting your revenue, because you're only looking at the net deposits you got from Amazon as your revenue instead of your total revenue minus all your fees. So you have to have a really good sense of your fees, otherwise your financials are frankly just off. And if right off the bat, on average I would say it's about 15% call it 20% on Amazon for a deduction off of your top revenue, you're likely misreporting your revenue by 20%. If you don't break down all of your fees collection and get it accurately recorded in your financial system and that has obviously tons of implications not just on cash flow but just even valuation of your business You're misreporting your revenue.
Speaker 2:Yeah, absolutely, and that is so critical as you're trying toporting your revenue. Yeah, absolutely, and that is so critical as you're trying to steer the ship in the right direction. And so, in terms of across platforms, where do you see? You know, if I think about growing my business, I can launch new products which, if I'm being honest and I don't think a lot of entrepreneurs in this space are if I launch 10 products, three of them are going to be home runs, Two of them are going to do okay. Five of them I'm going to kill in the next year because they're a failure to launch 30% win rate would be pretty good.
Speaker 2:Yeah, and I've been so. Yeah, but that's kind of risky, right, 30% win rate. But then I look at well, why don't I take these existing products, why don't I take my heroes into new marketplaces, whether that be expansion into Walmart, expansion into Amazon Canada or Amazon UK? And that is intimidating and we made this jump three years ago. And dealing in different currencies is my brain has been thinking in US dollar my entire life and and the fact that currency fluctuations are moving, and every time you change from US you know, from Euro to dollar, you're going to get hit, and so it does kind of make your head spin. And so where are some challenges? You've seen entrepreneurs, what are some challenges you've seen entrepreneurs have as it relates to, you know, going into new platforms?
Speaker 3:Yeah, listen, I think it's debilitating when entrepreneurs start off and they've achieved some amount of success on a platform. Sometimes I've seen, actually, people just start off trying to do too many channels at once and that's usually a recipe for disaster. But my recommendation is usually start off on one and really get it right and set yourself a course of what you think is the right level of revenue, the profitability that you want to achieve. That's going to make you feel like you've had success on that channel, or give yourself also like a cutoff time, like if I'm not able to make this channel successful, I need to do something different, right, go somewhere else. Broadly, I think about this in two major streams.
Speaker 3:I know a lot of your listeners are marketplace sellers, and so marketplaces for me are like a great way to experiment. Right, because you've got the traffic already. You just need to fine tune your listings, your pricing and I don't mean to make it overly simple, because it's not, but at least you're not having to invest in a whole lot of advertising avenues and building your own website and brand, which I think is the second kind of component or second type of seller If you're going to build your own brand and launch your own e-commerce store, you're taking on a whole new skill set of learning, marketing and campaigns and running ads and so forth. But if you're starting off on a marketplace, I think you got to really fine tune, find those three out of 10 winners and set yourself some goals and once you've mastered that, recognize that adding another channel is, you know, it can be almost double the effort unless again to my point earlier you have some automation in place, right? So it's one thing to understand currency, but it's an entirely different to understand the competitors in those geographies, to be able to understand the sales ranking you're going to get in the US versus other geographies.
Speaker 3:What's going to happen if you go from, say, selling on Amazon to selling on Walmart? You're talking, you know you're going to need pricing tools to really get those numbers right across them. How are you going to allocate inventory between your two channels? If you're going international, how are you going to handle fulfillment, you know, in the US versus shipping internationally? Do you just have to build like a lot of? You need to build a lot of skills and kind of rigor around channel expansion, and so I typically my recommendation and things I've seen successful is really master one channel and then add channels over time, but really add them as you acquire the skill, experiment and also kind of keep it in the same geography. International expansion definitely opens up another set of skills that you need to acquire, which you want to be prepared for, because it's not just a matter of listing the product there, it's really getting everything else formulated right, so it is a heavy lift.
Speaker 2:Absolutely. And where does automation play in that? If somebody is wanting to expand but they don't feel as though they have the time, where does automation play in that expansion and scaling?
Speaker 3:Yeah, I mean, listen, shameless plug for WebGility. But you know, the first place that automation comes into picture is how do I put my catalog up right? So we offer a solution to list your products on multiple channels. So if you're selling on one and you decide to add another, you can take the catalog and publish it up to the channel. So that gets you a baseline of all your products. You don't have to replicate and kind of manually enter things. So listing is one place that automation can really help.
Speaker 3:Second is order management. So you know, abjility can handle orders from all the different channels and we streamline, we can handle them in different currencies. So we can take care of all of that and just bring all your data in neatly and record it into QuickBooks so that your financials are accurate in respect of how many channels you sell on. The third is keeping your inventory updated. So on an ongoing basis. If you want to allocate inventory differently, like or you have the same inventory across the board when you sell on one channel, you want the other channels updated with the right inventory counts. That's another place where automation can really help.
Speaker 3:I can think of fulfillment kind of things as well. We can automate purchasing workflows. So as you expand channels, your sales velocity might go up. Maybe you run out of stock more frequently. We can auto-generate purchase orders for your vendors.
Speaker 3:So there's a lot of different parts of the tech stack. The moment you add another channel, you have to make a lot of choices, even pricing right. What's the price on one channel versus price on another? Lots of different places. That automation can be very helpful because now you're you know not only are the channels different but they will impact the velocity of sales and they'll impact the type of buyer that's coming your way. Even segmenting all the customers right. So you want to track all your customers that are coming from, say, one channel separately from customers coming on another channel, be able to market to them differently. There's so many considerations and getting that data right and automating all of that with your financial system is kind of our forte.
Speaker 3:And we've seen companies you know. I'll just give you one example. Um, I bring up this story a lot because I'm a big fan of uh, of his Dan. Uh, he runs a. Uh ran previously kind of a small retail location out of Sacramento selling baseball products. Uh bases loaded his company and he went from one brick and mortar location to now multiple warehouses across the US and is selling on over 15 online channels, and he's mastered automation to the point where other brands in the sports category he's helping manage their business and run their operational flow through Webgility. So it's very powerful once you can figure out how to go from one to many but be able to put a system in place that keeps all your data flowing accurately.
Speaker 2:Very nice, Very nice and yeah, to keep track of. You reach a point where keeping track of things in a spreadsheet is just no longer viable and I, my brain, is organized into rows and columns. I love Microsoft Excel. I've frequently said if, if you were to remove Microsoft Excel in the internal combustion engine, the world would stop.
Speaker 3:And I agree with that, totally, totally, even though, even though I'm a, I love automation. You know, spreadsheets are not going away, man.
Speaker 2:We're going to still need them. Yeah, yeah, and but it's. I think that is something that that entrepreneurs, that they'll reach a point where, where you know, manually inputting things and keeping track of things in a spreadsheet just is no longer efficient and it soaks up a lot of time and resources to to keep that going. Absolutely yeah. So next topic I want to dive into is AI, and this is definitely changing the landscape of e-commerce and, in my opinion, it's here to stay and it's a super powerful tool, and so I'm interested to hear from you how are people leveraging AI for automation and to grow and scale their businesses?
Speaker 3:Yeah, absolutely, this is kind of top of mind. In fact, I just did a webinar yesterday with a whole bunch of folks talking about AI and kind of practical tips on how e-commerce businesses can start to leverage AI. It's to your point, it's here, it's here to stay and you know it's about time everybody starts utilizing it. When we ran a poll in the podcast, it was 50-50. Like 50% of people had kind of adopted AI and 50% hadn't. So maybe a little bit of a tell on what's happening in the space. But you know, first of all, I'd say that AI is still at its early innings. There's still a lot of experimentation that's happening. Chatgpt, when it was launched a couple of years back now, really kind of you know today that how you can go from these complex screens and UI and just a whole different way of interacting with software right, you're now typing in prompts and interacting with a bot and also, I think, the notion of generative AI, which really just is all about how can I generate new types of content right, that's really captured the imagination as well of of entrepreneurs. So, first and foremost, I I feel you know there's already a lot of great tools out there. In fact, you know places like you know, say, even Shopify has got the it's sidekick that helps answer some questions about your business Webgility we launched our AI assistant a couple of weeks back it's in beta and the couple of places where I think AI can be really, really helpful.
Speaker 3:First and foremost, I think it's the best way to get answers to questions. We often spend time kind of searching, browsing, looking at dashboards, looking at reports. Wouldn't it be great if we could just ask them questions and get answers to them instead of having to go search and look for it right? So that's the one kind of really impactful place where I think, also just looking into the future, I think that's how interaction between users and software is going to evolve right, we're going to go from really doing a lot of stuff on screen to really just asking questions, interacting with bots, and this is going to become more ubiquitous, especially as Apple introduces its AI agents, because then it's going to be in the palm of, you know, a billion users and then we'll really start to see their behavior change.
Speaker 3:But the first, I think, real place is getting answers quickly, and we've put that into effect for our business, for our customers. So today you can log into WebGlut and you can ask it basic questions about your business and it'll give you answers Over time. You can ask it complex questions Over time. It's not only going to answer your questions. I think the second thing that's going to be really valuable is for it to give you predictions or to tell you what is to come, and so AI will be very powerful there.
Speaker 3:And the third, I think most relevant to this conversation we've been having around, automation is, instead of just information, what can it actually do for you? What actions can it take for you? So we've just gotten started. But simple things like post all my orders to QuickBooks, sync all my inventory across my channels you could just have a conversation or update my price across all my channels for this product. From this to that, you know, set the inventory levels to low for now or, you know, change this.
Speaker 3:There is going to be so much capability added to these agents. We're just getting started and I'm sure there's going to be tons of innovation. I know Amazon invests a lot more in innovation on the consumer side before it spends time on tools for businesses, but Amazon has got its Q agent, which I think is pretty powerful. Meta is obviously investing tremendous amounts. Google's got Gemini, shopify's got its Sidekick. I think there's going to be lots of innovation in e-commerce and AI is going to really, really beneficial. There's going to be lots of innovation in e-commerce and AI is going to really, really beneficial, really beneficial. And those early adopters that can kind of pick up the technology, that are not shy to use it and really put it to work, like you know, put an AI assistant to help you kind of take actions. Put an AI assistant to help your customers get quick answers to support questions. There's just a lot of different opportunities where you can capitalize on now and you don't need to really wait.
Speaker 2:Absolutely, absolutely so. With a fellow entrepreneur on the podcast, I would like to talk about the early days of WebGility. It seems as though most companies start with an aha moment Someone sitting often by themselves, and a light bulb goes off, and so can you share a little bit about the growth and what was the aha moment? And then what did you do after that?
Speaker 3:Yeah, yeah, I had that aha moment towards my final days at Amazon. You know, I've always it's funny. I love, by the way, the name of your podcast, friday the man. As much as I enjoyed Amazon, you know, while I was there it was always like the back of my mind was okay, when am I going to start my next venture? And so, as you're thinking about that to your point, like I was thinking back, what were the pain points that I saw when I was working with small businesses and brands launching online? And then what were the problems I was seeing Amazon sellers face on a daily basis? And I could clearly see there was going to be too much data, there was going to be too many apps, there are going to be lots of channels and it was going to get really messy unless there was going to be some software that could put it all together.
Speaker 3:So, if you actually go I have this internally in my slide deck, but, like if I go back to, like day one, I had three things written on a whiteboard integration, automation, insights. So a three-legged stool. You have to solve integration because you're going to have too many channels and systems. Data has to be integrated well. Number two, you have to have automation, because you can't be doing things manually. And, last but not least, you conquer integration and automation.
Speaker 3:Now you must get much better insight, because the large enterprises have the data at their fingertips. They are running their systems through a lot of different places, but they can put it all into a data lake. They can run tons of queries on it, they can see what's happening from procurement to fulfillment. And how can we give that power to small businesses? So that was the aha moment for me. I wrote it down and that's what kind of got me going with Webgility. But yeah, it was. You know, it's been foundational. This is kind of how we've been continuing to invest in Webgility and for our customers is how can we, how can we help them integrate more things, how can we help them automate more things, and what are those insights we can deliver that'll really give them that edge?
Speaker 2:Okay, okay, I love that. I love that story and I like how the very beginning started with three words and built out from there. So, prior to recording this podcast, you and I were chatting and you had some questions for me and we said let's pause, let's save those for the podcast and definitely want to give you an opportunity to ask me those, because I think it'd be a great conversation.
Speaker 3:Yeah, I mean you know you're in the world of Amazon and marketplaces and your audience is in finance man. I've been doing this now a couple of decades. I'd love to hear you know how has sort of the e-commerce, accounting, the financial problem, evolved for you? What's your perspective on? What's your take on Webgility, maybe some of the software solutions that are out there? How are merchants like? How are you solving this? How do you feel like other business owners should solve this in terms of just getting their data right and managing their financials more accurately?
Speaker 2:Yeah, absolutely so. I don't think that QuickBooks is a one size fits all for all businesses. One thing that you know when you talk to a lot of business owners, they'll often tell you that the industry that they work in is unique, and maybe I am doing that same thing. But I'll give an example of how e-commerce is different and how financial reporting needs to adjust. In a typical business, you are writing a check or swiping a credit card for all of your business expenses and you know the amount that you're writing a check for or swiping your credit card for. Now that is not the case for an Amazon seller. There are a number of expenses that are unknown, that need to be accounted for, that you're not writing a check for and you're not swiping a credit card for and in our business. So there's a phrase tacos total advertising cost of sale. So there's a phrase tacos total advertising cost of sale. There's a metric that we've come up in our business called AF costs, which is Amazon fee cost of sale, and what we do is we dig deep into the DRSR report and we dig out all these nitty gritty details of expenses that're being charged, and what we found is our average AF cost across three brands is 8%, and when I'm managing a business, if I'm talking to the PPC manager, if I ask them to take tacos from 20% to 12%, that's a big undertaking and it's gonna have a big impact on sales. 12%, that's a big undertaking and it's going to have a big impact on sales. Now, if we can manage our AF costs of Amazon fees maybe do removal orders or disposals or really monitor those fees then it's just an easier move for the business. And so I always say what gets measured gets managed, and there are a lot of things that are tough to manage as an Amazon seller, and just when you get a great system in place, amazon will change. An example of this would be they're introducing a new penalty for returns. If your return rate is above industry average, you get penalized, and that's something that if you are not in the details and I will say you have to dig deep to find these reports they are not on the main tab, there is not a dropdown menu that says here's a list of everything we're charging you for this month, and so that's an example of where I think QuickBooks is a good base. However, the financial reporting process to arrive at good financials in QuickBooks, I think, needs to be adjusted for things like this. And especially, I think it is easier to expand internationally through Amazon than it would be running at like a brick and mortar store. That's right.
Speaker 2:And so I think more people, earlier in their entrepreneurial journey, make that jump a business. And I was dealing in US dollar, canadian dollar, euro, british pound, pakistani ruby and Philippines peso. That was six currencies. That makes my head hurt. And because that jump happens earlier, I think there needs to be tools in place to help those entrepreneurs make that jump, to be tools in place to help those entrepreneurs make that jump. And so, um, to be, uh, fully transparent, um, I heard about WebGility in a mastermind the other day when I was talking about this AF coast and someone said you, you, you need to look into this, and I, and so that's how we got here, that's how, um, we invited you to the show. The show was based off of a recommendation from somebody in a mastermind, and so, yeah, I think there are a lot of people that don't know, don't have a great measuring stick for how well they're doing, and that's scary. It's scary running a business with a blindfold on, and it's a lot different. You know, my first business was selling corn.
Speaker 3:I sold it for $3 a dozen. It was easy. It was easy to understand, and most businesses are easier to understand, think this is so relevant. I would just zoom out, though, and make a broader point, to break this problem down into one of visibility and compliance like compliance financially to fine tuning and optimization.
Speaker 2:I agree.
Speaker 3:So QuickBooks needs to be the system of record for visibility and compliance. You have to have a financial system of record that gives you the high level, to your point, the P&L. Ideally. Man, if you want EFCO's related breakdown of fees, we can give you exactly those line items and you can map it to an account in QuickBooks. So you can go crazy with this, because we can map to every level of fee detail in WebGility. But I would actually suggest, when you think about visibility and compliance, just get the compliance piece right with QuickBooks so your high-level numbers are accurate. And then the second part of that problem is how do I do my fine tuning and optimization? That's where you need more granular financial reporting and I love that you're talking about this, because that's actually exactly where we're investing right now in WebGility building more reporting capability to provide line item level profitability. And, man, it's a hard problem to solve. Yeah, so my team's hard at work doing this. I'm giving away secrets a little bit, but yeah, we are building better reporting capabilities to give the business owner granular fee, sku level fee details so that you can get a better sense of variability of those fees. As you probably know this better than anybody else they keep introducing new fee types. We don't even know what the hell they mean. Yeah, it's such a moving target because and by the way, there are fees that are called other fees and then there are other fees that are called other fees. So it's a moving target.
Speaker 3:It's a problem that's still unsolved and you know experts, I would say, like yourselves, have found ways to create spreadsheets, dive into the right reports to go dig out that data. But I think that's where optimization, fine-tuning and scale happens. I find the challenge, even at the first step, which is even just getting an aggregate view of your profitability at a channel level, getting even your aggregate you know those high level 10 groupings of fees that Amazon gives you, getting that itself gets, I think, most entrepreneurs better informed of what's happening in their profitability and where their margins are entrepreneurs better informed of what's happening in their profitability and where their margins are. And then I think the next level is, to your point, that optimization and fine tuning. And boy, I've seen some pretty incredible Excel spreadsheets out there from our clients, you know, found like creative ways to dissect it.
Speaker 3:But yeah, I mean those fees are a mystery man. Ways to dissect it. But yeah, I mean, those fees are a mystery man and you definitely got to have some sort of an Excel sheet, some model, and yeah, it's, to your point, mind-boggling. You have to really be a whiz at Excel to kind of understand those details. Frankly, the companies and entrepreneurs that have invested some time in digging in there are the ones that have found a lot of hidden margin. They've found a lot of opportunities to grow their margins.
Speaker 2:Absolutely, and that's if you're in a single digit margin category. That's critical. That is the difference between paying yourself and not paying yourself.
Speaker 3:That's right, survival or death.
Speaker 2:Survival or death, absolutely so, all right. Well, this has been an outstanding conversation. I think we could sit here for several more hours chatting, but at the end of every show we ask our guests the same four questions. We call it the fire round. Are you ready? Sure, all right. What is your favorite book? Ooh, all right, what is your favorite book?
Speaker 3:Ooh, keeps changing as I, you know, learn more, but I think a book that is easy and maybe a little different. It's not a book on business, it's called the Art of Living. It's based on the Stoicism philosophy written by a philosopher, epictetus, and uh, it really talks um, yeah, I'd encourage almost everyone to go read it and it uh the very sort of foundational principles even in Buddhism about how you know you can only control yourself and you can't control anything outside of you. Um, so I love, I love that book yourself and you can't control anything outside of you. So I love that book. I kind of go back to it whenever I'm having any kind of tough day. It's a quick read but, yeah, very grounding.
Speaker 2:Very nice, very nice. I'll have to add that one to my reading list. What are your hobbies?
Speaker 3:Hobbies. Well, I've got two little ones so I spend a lot of time with them whenever I'm not working. But you know, I do do enjoy playing a little bit of golf and I do frequent the gym. You know, got to find ways to stay young.
Speaker 2:That's right, that's right. What is one thing you do not miss about working for the man?
Speaker 3:Oh, rigidity, yeah yeah, very good. I, you know, I've always like I love experimenting, I love iterating, I love trying new things. And I think you know, working at a large company, your, your hands are often tied. You kind of have to stay within the boundaries, you have to play by the rules, and that rigidity can be very constraining If you can kind of flex your muscle as an entrepreneur, try new things. Sometimes they work, sometimes they don't. But, boy, that freedom to be able to experiment as an entrepreneur, I think is probably one of the biggest things that keeps me on my seat.
Speaker 2:Well, absolutely. And uh, last question what do you think sets apart successful e-commerce entrepreneurs from those who give up, fail or never get started?
Speaker 3:Man, you gotta have a lot of tolerance for pain, um, but I would say, you know, if I were to just sort of generalize, I would say it's resilience, it's resilience. I think entrepreneurs in general are very optimistic. They're perpetual optimists, like they think they're going to win. But then as time progresses and you try things and you hit failures and roadblocks that can really beat you down, you down. And those that have kind of gone that extra mile, that continue to be resilient, they have that grit to just keep going are the ones I see often, most often, succeed.
Speaker 2:Very nice, very nice. And if people are interested in learning more about WebGility, what?
Speaker 3:would be the best way. Yeah, of course, definitely check out webgilitycom. And if you want to connect with me, I do post on LinkedIn, so check out my LinkedIn. It's just Parag.
Speaker 2:Mamnani, very nice, and we'll post links to all of that in the show notes Parag. I want to thank you for your time today and looking forward to staying in touch. Love the conversation, david. Thanks so much for having me.
