In today’s show we will discuss with Steve Selikoff about retail sales. We are in 2020 now, and especially with COVID and the rush to e-commerce, let’s hear the strategy and mindset of retail now.
Topics Covered in this Episode
Introduce Steve Selikoff
Pleasure to have you on the show, I’ve seen you speak at your Canton Fair Experience in Guangzhou and also at the Global Sources Summit in HK – I’m excited to have you on. Can you give a brief intro of what you do
Mindset: Going Retail for Ecommerce sellers
I know many “dreams” of getting into stores, and many want to diversify from e-commerce, especially from 100% Amazon ecommerce sales. But retail seems daunting for many, what is your take?
Is it still worth it in 2020 and beyond?
Will retail survive post-covid? Or maybe Amazon will morph into a retail storefront buying up malls as warehouses and show case storefronts?
When do you consider retail sales?
Is it something you should do when your company is a certain size? Certain product type, skill set?
Adjustments that need to be made in your business
Hire new people, consultants?
How does revenue from retailers compare to Amazon?
Can you do both - sell on Amazon and to retail?
Big retail vs Mom and Pop
I’ve personally mostly sold to mom and pop – which basically buy upfront in cartons and then sell in their stores. Selling to big box retail I hear is a whole other ball game. Can you give us some insights or examples?
Do you need a USA sales rep?
We are “Global From Asia” here and many are based on the Asia timezone. Do we need to stay up all night and do phone calls, or hire someone, or pay a consultant? What is the normal way
Going to Trade Shows
Many discuss, and I have also done it, the trade shows for you’re Vertical. Is this the golden ticket to getting retail store clients?
Do these businesses need to pay upfront, or are they getting Net 30, Net 60?
Any tools or “quick hacks” for going into retail
Any shortcuts here such as a website database or tool?
Biggest challenges you see Amazon and Ecommerce sellers make when going to retail
What are the common pitfalls?
Listeners today - how to decide to take action
What should they start to do today, or not do, after listening in?
Your book - your BIBLE
And let’s also not forget to mention your amazing book. I grabbed a copy when it came out – The COMPLETE BOOK of Product Design, Development, Manufacturing, and Sales – this thing is massive and covers everything. Can you share a bit about the book and who it is for.
Other ways people can learn more about you
Where can people go online to learn more about you and what you do.
People / Companies / Resources Mentioned in this Episode
√ Steven Selikoff’s VIP Page
√ Steven’s book
√ Steve’s program – Product Development Academy
√ Selling on Wal-mart
√ Short video of Steve and Mike in HK
√ Book – Differentiate or Die: Survival in Our Era of Killer Competition
√ Book – Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel
Episode Length 48:14
Thank you Steve for your time today. Thank you for sharing, I was blown away, we could have kept going but as always we try to keep it short and we have so many more interviews coming up. Thanks everyone for listening.
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[00:00:00] All right. Welcome to episode 324 of Global from Asia. This is the really treat, a big treat, a very in depth discussion about retail sales with e-commerce post-COVID or anytime of the year. I think this will be a good one for the, for many years to come. Let’s dig in. Welcome to the Global from Asia podcast, where the daunting process of running an international business is broken down into straight up actionable advice.
[00:00:29] And now your host, Michael Michelini
[00:00:34] Thank you everybody for choosing to download and listen to episode 324 of the Global From Asia podcast. Michael Michelini here, your fearless. Fearless? I mean, I don’t think we’re all fearless at this time, at least unless you’re lying. I think we all have some fear. It’s not, how was that saying? It’s not about being afraid.
[00:00:56] It’s about acting against the fear or in the face of fear. You still go forward, you still take action. You still keep chipping away. You know? So we might be afraid. Today’s crazy times, you know, I mean, a lot of us have been trying to find our footing in a new world, in a new decade, 2020. We are trying our best here.
[00:01:22] Global From Asia to give you the information, give you the confidence, give you the goods. Today’s show is definitely going to be one of those. Steve Selikoff. I had the pleasure of meeting him in the Canton Fair and in the Global Sources show in Hong Kong. And he’s a, he’s a very talented, knowledgeable, experienced business.
[00:01:42] Person, and I’m really happy we got him on the show and he, he really wouldn’t, wouldn’t, we really wouldn’t get out of it. I mean, there’s so much to talk about, I mean, he’s got books, he’s got programs, got all kinds of amazing stuff. But today, I mean, man, you could just listen to this. And I, I believe get a lot of actionable insights and that’s what we like to do here at Global from Asia.
[00:02:05] We like to give and give and give, and we hope that you are enjoying. So. Steve is really diving deep into this. And after the show, if you still have time, I think this is a really long one. I feel like we’re on an hour. I have to call my mom and dad. That’s what that beep is on my phone. I could try calling mom and dad every week, but we will get into this.
[00:02:30] In this episode, after this, after the interview, I will talk about some of my experiences selling to retail with some of my various products in over the years and will be a little bit extra insights and some of my own mistakes. I think you learned the most from mistakes. I had a number of mistakes, kind of got it. I’m not afraid to make fun of myself.
[00:02:49] So if you want to hear some of those, I think you can learn from those as well after Steve’s amazing interview episode 324. Global from Asia. We do have show notes as well. Check them out. We try to put all this as much information on there as possible. Let’s dig in. We actually are upgrading our email system.
[00:03:09] If you’re on our newsletter, you might’ve gotten some switching of emails, sorry for that. But we’re making some huge upgrades in our processes and our systems and our team of 20 people. If you can believe that I can’t say full time, but we have an amazing team making things happen. So we’re making some huge upgrades.
[00:03:25] If you’re not on our email list, you know, Actually people like it, people were actually replying to me. They, when we were doing that transition, they’re excited. We try to give some special offers first to hear about many things and more amazing things to come with Global from Asia. Actually, there’s a few things in the works.
[00:03:42] I mentioned some e-commerce gladiator. I mentioned some other things we’re doing, getting on an email list would be one of the best ways to make sure you’re up to date globalfromasia.com/subscribe. All right. Thank you everybody for listening to another Global from Asia podcast. This is also a video form for those choosing to do our video.
[00:04:00] And it’s a pleasure to get with us, Steven Selikoff. We’ve, I’ve gotten to see him speak at the Canton Fair and then the Global Sources Summit in Hong Kong. And, it’s definitely a real pleasure to have you on today. Thank you for making it, Steven. Absolutely. Thank you so much. It’s good to see you again.
[00:04:18] And frankly, I can’t wait until we can see each other in person and everything else. Tell me about it. I mean, we were chatting a little bit before the recording and yeah, I mean, this show is coming out September, 2020. So obviously normally it would be to get every movie getting hyped up, you know, about events and networking at Canton Fair and the Global Sources, fairs and everything.
[00:04:41] But I don’t think, yeah, we don’t think that might not be the opportunity this, this year 2020, you know, it was even rough in 2019, you know, I think we met in, Hong Kong was on fire when we met. So, I mean, literally, and, you know, things have been really, really, I don’t know, what’s the word?
[00:05:03] Very unique, the old days, you know, at least the days I know of the trade show seasons, but yeah, I do, I do look forward to meeting you in person again sometime soon. Yeah, absolutely. Absolutely. Okay. So I, you know, today there’s so much we could talk about. I, you know, I think when I think of you, you know, I’ve learned from your speeches and your contents about retail sales, you know, with.
[00:05:29] With Amazon or eCommerce in mind. So I think you’re like a great bridge of content and knowledge for a, you know, e-commerce sellers trying to dabble into retail. And so that’s kind of what I’d like to talk about today and you are doing, you’ve done amazing things. Canton Fair experience. You’re also running the Product Development Academy, which is your program.
[00:05:54] And, you also have an amazing book, which we’ll talk about later, which is like the Bible it seems. It’s a massive one. So that’s a, that’s a big treat for anybody. So, do you want to just add to that or, you know, give us a little bit about. The Canton Fair experience, we’re not doing that anymore. Doing Product Development Academy, which has got more of a focus of exactly what you’re talking about.
[00:06:18] What is the next step? If you’re already selling on Amazon and you’re looking to take a bigger step, broaden your audience. If you are a shark tank fan, or an inventor looking to step into manufacturing and working with China, or if you’re a beginner that wants to take a different path. The way I like to describe it is that all of us are looking at developing products and frankly, using them to make money.
[00:06:50] So Amazon is, is one sales channel, a great platform and selling to retailers is, is another one. And I started back in 2001 selling to retailers. And then I started, importing or developing and importing from China in 2005. And I think, you know that in 2006, when Amazon announced FBA less than.
[00:07:16] Less than three weeks later, I was, I was on FBA. I have a little breadth of experience and everything. It’s amazing. I know, It’s I remember your being one of the first on Amazon. I I think, yeah. So just people realize there’s, it’s, it’s a nice way of saying I’m old. I don’t know.
[00:07:39] I have to say I was, I was FBA when I saw the program cause I was selling a, mostly on my website and eBay. I was doing a bar supplies and I just, I just, I used my own third party fulfillment and I remember I just didn’t want to use their fulfillment, but I was wrong. You know, I remember those days in, they were man.
[00:08:00] We, we all had, I had no idea. Nobody had any idea. I think even then Amazon was only, at least for me, like 10% of sales or it was not significant. I think for most sellers it’s still, it’s still is a lot of sellers talk about Amazon. And, and they’ll talk about percentages that just aren’t accurate. I think that there’s a little bit of much misunderstanding of, of how big it is.
[00:08:27] First of all, when you get outside the United States, for example, if you get into Australia, Amazon is still relatively new, same thing in parts of Europe, but more importantly in the US it is a super strong platform. It is the strongest, obviously of all online platforms, but it’s still, when you look at all of retail, it’s just over 5%.
[00:08:54] And that is actually a huge change because of COVID. So here in the US, Jeff Bezos was, was called to testify in front of Congress. He sat in front of Congress and he said Amazon’s 4% of the retail market. What he didn’t say was the fact that he was quoting from his letter of April last year, when he, he wrote his famous apology letter to shareholders saying, Hey, we’ve been.
[00:09:22] Miscalculating our market share. It’s not 4.8%, it’s 3.7%. And, and he told all of his staff to always quote it as just under 4%. Well, it has grown 40%. And the, the online eCommerce market has grown from 10% to 15%. So when you add all of that up the numbers now come out to just over 5% of the retail market, but that means that there is.
[00:09:54] 85% of the retail market is still retail stores. And in the midst of COVID of those stores are still going strong. Amazon. This was going to shock lots of people in April, Amazon lost market share walmart.com at walmart.com. Yes. Just kicking it right now. And so, Amazon has, they had a great opportunity and they stumbled.
[00:10:24] I don’t think they’re going to stumble again. If this sort of thing happens, they’ve learned their lessons. They’re smart, but they let, they let Walmart step in a little bit. And for everyone who’s selling on e-commerce, if you’re not thinking about expanding to walmart.com right now, or other doc Toms, you should be because it, Walmart is where Amazon was, you know, in 2015, jump on it, start selling, get some experience.
[00:10:52] Totally agree. Yeah. I mean, I’ve been hearing a lot of chat about data and yeah. I mean, Walmart had earnings, I think their stock went up, but they surprised or they beat their expectations and yeah, their online retail is really doing well. So, so let’s, let’s go to the, the mindset, you know, for going retail.
[00:11:13] I know you’ve always liked your, you know, the way you share things. So these e-commerce sellers, a lot of people just feel like, I don’t know, I don’t want to offend people, but a lot of times Amazon sellers are lazy. They’re there, they’re sitting on their, they have their it’s, you know, it’s almost like, I talked to somebody lately.
[00:11:29] They said like selling on Amazon versus non-Amazon even a shopping, shopping cart, like Shopify or another channel is like a tool. Different worlds is what somebody, that’s a whole discussion, but, and then retail, they feel like it’s just so different. Like how could I really go into retail? This seems like daunting, like, what do I need to set up?
[00:11:49] Plus we mentioned FBA. So can, you know, I don’t know if that even we could talk about that later, but what’s the mindset somebody has to have, you know, to dabble into retail or get into retail. I think the mindset is once you, that once you think of your own business as being a business, And not a side gig then, right.
[00:12:10] Retail is a natural step and it’s not, it’s not that difficult. It’s just that it’s complex. And there aren’t thousands of videos on YouTube to watch for free. So there’s a lot of myths and misunderstandings, but I’ll be honest. I think retail is easier than, than Amazon. So if anyone’s lazy, it’s it’s me.
[00:12:33] I would rather take the simple way out and make more money I’m working. I just made it. You make one sale on Amazon. You sell one product, you make a sale to an independent retailer, a specialty store. Now you’re selling in bulk. So immediately that one sale could be 18 products and then you’re reordering again and again.
[00:12:58] So now you’re looking at 36 products and so on or one sale to a big box retailer. I, even during COVID, I just landed on a really nice retailer with 2,700 stores. That’s one sale and it is, you know, now you’re talking life-changing. Agreed. Yeah. So. I guess the thinking is, so I think you already answered this, but so we’re in COVID or post COVID.
[00:13:28] Some people say retails, you know, there’s been some even articles, maybe it’s like clickbait or whatever, but saying like retail’s dead or, you know, you know, the, the acceleration of eCommerce is, you know, gone five, 10 years ahead because of COVID et cetera, et cetera. I mean, what would you say to that?
[00:13:45] Kind of. I would say, read the numbers, the numbers I was telling you about. Yeah, exactly. S and P. Standard and Poor’s, they came up yesterday. So, I mean, those are accurate numbers. That’s, that’s what the, that’s the information coming out of their, their month, their quarterly reports and so on. But I think, the other thing to look at is what happens as stores open up.
[00:14:13] Right now retail stores, small ones are, are facing big challenges because they’re still paying their rent and their, their mortgages. And they’ve got stale inventory. They haven’t been able to get customers, but then as they open up, and we saw this just a couple of months ago as a couple of, lockdowns were lifted.
[00:14:34] Suddenly stores were growing at 17%, 21% year over year. The, the in store experience is as much emotional as it is business. There’s a term, retail therapy. People feel good going into a store. Stores are built on the psychological and emotional aspect of shopping. So, so follow me a moment. Think about this.
[00:15:01] We’re going to talk about two different types of stores, the big box stores, and then the small independence and specialty stores. The moment you walk into a big box store, and there’s a good chance that you have a shopping list. You say, oh, I’ve got to go to the store to pick up grapes or shoelaces or, or, I dunno, some sort of cleaning something for the car, whatever it is.
[00:15:26] When you go into that store, you give up that list. The moment you grab a shopping cart, because you are acknowledging that going to buy more than you can carry in your hands. You’re going to buy more it’s on your list and you immediately enter a scientifically driven design. To get you to buy what you didn’t expect to, bought the layout, the racetrack, the aisles, the width of the aisles, the height of the shelves, the lighting, the music, the fragrance in some stores.
[00:16:00] And of course the packaging on each individual item, it’s all built to get you to put something into that cart that was not on your list. And frankly, if you’re, if you’re like me, you get home and you say, Oh, I forgot what I went for in the first place. I agree. It’s all scientifically made. So if you’ve got a product that’s new and we all know that it’s difficult to launch on Amazon. But if you’ve got a product that’s new in a big box store, It’s perfect because people, if they see it on the shelf, it’s got a compelling pack shelf, is something that.
[00:16:49] That’s an emotion desire or ring in the car and then it gets, it gets more, it gets more powerful because as we said, it’s emotional retail therapy. There are some groups that treat shopping as a social occasion. You can go into any store from Walmart to Nordstrom’s and you can easily see four or five teenagers together.
[00:17:16] Boys and girls, because they are going together. They are seeing this as a group thing. You see best friends, you know, up, you know, thirties, forties, fifties, sixties, still walking along, talking, chatting, saying, Oh, look at this, look at. That, that’s social experiences. And then you have my favorites, which are the independence and the specialty stores, the gift stores.
[00:17:43] And so on, a completely different experience. There’s no shopping cart. You walk in there, you don’t have a shopping list for them. When someone walks into a specialty store, they’re hoping to find something. But they didn’t expect it’s a treasure hunt, you know, they will walk up and down every single aisle, they will look at everything on the shelves.
[00:18:08] It’s merchandised to capture their attention and say, look at this. I’m grabbing a, a vertical bento box and I’m going to use that at work or whatever. No one’s ever seen it before. And if they’re excited about it, when they get home, they, they put it on social media. They tell their friends. If they look at it, this, this, now they get an emotional feeling of success because they have won the treasure hunt for a new product.
[00:18:42] You can’t hope for anything better than that. That’s what people get. And that experience for the customer combined with the fact that the buyer is purchasing in bulk and you can see why I love selling to, to retail. It really is powerful. Awesome. Yeah, I like it. I like the it’s true. Like those I’ve maybe used the wrong word.
[00:19:06] I could call him mama pop, but yeah, I mean boutique or at a specialty store, you know, or you go on a holiday, you know, you walk down the street on a, on a small town and you see it. A nice little store and the bells ring, you know, the thinking, you know, they open the door and a little jingles and, yeah, it’s totally different.
[00:19:27] I like that. So, so maybe like, I think people listening, tuning in are probably interested in, it’s not like they don’t want to do it, but, and I know you, you know, I kind of asked it before, but what, what, you know, the mindset we talked about it and, uh, Should there be a certain sales volume, you know, do they need a certain skillset, a certain person, a certain type of product, you know, like, you know, it all, it all starts with the product.
[00:20:01] It all starts with the product. It is, you know, people think, oh, it’s great. I just want to find out how to make sales to retailers. And that is a complete art in our program, we’ve got one of the best ever, who has so much experience with selling to big box retailers and so on, but it actually starts at the very beginning with the product.
[00:20:24] So you’re choosing a product. And everyone tells you to differentiate. I have a copy of Jack Trout’s book, Differentiate or Die. That differentiating is so important. So you start off differentiating and some people will look at the reviews that, you know, two, three star reviews and they say, okay, what’s wrong?
[00:20:47] What could be made better if you take that, the next step? And you say, what, how can I change this? No one else has changed. Now you’re going to start creating a product that’s ready for retail, because it’s going to be different than anything else that’s out there. It’s going to attract people who are truly interested in the product.
[00:21:12] And when you come down the very basics. Now I’ll tell you, in the book you had mentioned in our course, we go through a series of what’s called phase gates, you know. Go, no-go decisions about whether or not you’re going to create your product, but at its core, there’s basically two decisions. One, do customers want it?
[00:21:36] And are they willing to pay for it at a level that it’s going to be profitable? So if you have a product that you can differentiate, so that it’s not something already on the store shelves, and if you can make it at a, a margin at a multiplier high enough. That you can make money, then everything else starts becoming gravy.
[00:21:58] And it really is that simple. If you can do that, you’re going to have success on Amazon and you’re going to have success in retail. You’re not going to be worrying about competitors and, and frankly, You could, if you want to pursue it all the way, literally build a brand, build a business and make a, I hate to use this word because it’s used by all the gurus and life changing, uh, amounts of money.
[00:22:24] Awesome. Yeah. This is what goes to the next question. I think we want to make sure we cover is, you know, how does revenue or does life, you know, this revenue compare on retail versus Amazon. Like you already kind of hinted towards it before you, you know, you got a big. Yeah, you get one big sale. You have ’em I don’t have my, I don’t have my phone or my calculator.
[00:22:44] So you do the numbers on this. Let me get my go. Find your phone here. Okay. Alright. Yep. So the retailer I was telling you about just landed a nice big retailer during, um, during COVID. They have 2,700 stores. Okay. We are starting off with two products, but at the moment, we’ll just deal with one product just for making the math easy.
[00:23:12] We know from tests and similar stores that we sell 10.5 a week, but again, to make the math easy, let’s just say we sell five a week. Okay. So if you take 2,700 stores, times five a week. Okay. And the, the revenue, the amount that we sell to the retailer, we sell, we sell retail. It’s on the shelf for 1999. We sell to the retailer at nine 99.
[00:23:41] So let’s just say 10. Okay. And our profit is $4. So multiply that out, whether you want to say 2,700 times, five times 10, and that’s the revenue or times four and the profit. What does it come out per week? So it profit is 54,000 U S and then if it’s revenues 135,000 us per week, per week, 52,
[00:24:12] So, yeah, well, by that by 52, and you’re looking at millions, there’s a million top line in revenue revenue. And then that is 2.8 mil. Yeah. One of the two products that from one big box retailer. So. That’s just the revenue compared to Amazon. I don’t know any product that will do that amount of revenue or profit on Amazon, but let’s take it to the next step.
[00:24:45] Just practicality, FOMO. You’ve heard of FOMO. Fear of missing out. Yeah, I’m on Amazon. If you had, well, here we go. Let’s say on Amazon, I’ll use my little bento box here. Let’s say on Amazon that you started off with this little container and it sells really well. And you say, aha, I’m going to expand it and bring in another container.
[00:25:08] So now you’ve got two products. This is how you expand on Amazon. It sells really well. You bring out a third product and you’re saying, great, I’ve got three products. This is my brand. If selling really, really well. And if you want to keep on growing, be able to expand to Amazon Germany or Amazon Australia, or Amazon Spain or UK or whatever on in retail, you do the same thing you sell the first one.
[00:25:34] It’s great. You bring out the second and the third and you want to expand, well, let me tell you something. If you’re in Target, you’re getting phone calls from Walmart. If you’re in Walmart, you’re getting phone calls from Target. If you’re in Home Depot, you’re getting phone calls from Lowe’s. If you are in CVS, you’re getting phone calls from Walgreens and Walmart and Target.
[00:25:56] So you’re taking that success, which was, whatever it is, 4,000. It’s an, I don’t know if I have the numbers off the top of my head because I actually decreased the numbers. But now you’re going to introduce that to other retailers. So you’re able to expand in multiple directions and you’re able to then do the same thing as Amazon and expand into other countries.
[00:26:24] So success breeds success, and that’s why major retailers, that’s why celebrities and so on, want to get involved in selling to retail. There’s a woman who endorsed one of my products back, gosh, 15 years ago, named Lisa Lillian. I love her. I will always be, be grateful to her.
[00:26:51] She started an empire called Hungry Girl. And Hungry Girl sells cookbooks. They sell food, they sell cooking ware, and everything else, because products are incredibly profitable. Now, is it something, you know, if you, if you start with a me too product, you’re not going to be able to grow like that.
[00:27:14] Retailers, if the retailers have a light bulb and they’re selling 10,000 of this light bulb and you come along with a light bulb and you say, it’s the same thing by mine. Well, now when the customers come in, They’re still going to buy 10,000 light bulbs. It’s going to be split between yours and theirs.
[00:27:29] And it doesn’t mean anything to the retailer. They want their, the cash register receipts to increase. They want their margins to increase for that category. They want their customers, a foot traffic increase. So unless you’re bringing something like that to the table, that’s not going to happen. In the book.
[00:27:46] I used an example of tent pegs. So you have a peg or stick to put up your tent. That’s great. There’s already the one on the shelves. They’re not going to buy yours because the most that’s going to happen is you’re, we’re going to cannibalize the sales from the other. But if you suddenly have a tent stick that also has a little LED light on it.
[00:28:08] So you don’t trip over it at night. Now they’re saying, this is a, you know, you’ve got a standard tent stick here. Now we’ve got a tent stick with led lights at a different price point here. Our customers have a choice. We’re going to be making more money because they’re going to spend more money in an LED one.
[00:28:25] You get an influencer to talk about it. And now people are walking in the store saying, where’s that wonderful tent stick with the light that I read about online. Now you’re bringing people into the store. They love that. And frankly, we all know it’s going to happen. Someone’s going to walk into that store and say, I tend to stick with a light.
[00:28:46] I don’t see it on Amazon. I’m going to put one on Amazon. So of course you want to be in an Amazon, but you’re also going to be getting so what happens? Well, you already have a strategy for your product. So bunch of people are, are aiming at you and saying, we’re going to come up with tents, tent pegs with lights and you’re saying that’s okay, go ahead and copy it because I’ve got a tent stick with a light and it’s got it.
[00:29:12] And an ultrasonic mosquito Repeller. So they’re aiming for you here. You’ve already taken six steps over there and you’ve got the next one. So I think like that, then you are built for retail and all of this. And I think it’s, it’s it. It’ll start clicking, but all of this works just as well on Amazon because suddenly you don’t have competitors.
[00:29:39] I love the book, Zero to One by Peter Thiel. He calls it a monopoly of one and you become a monopoly of one because you’re the only ones out there you can focus on. What’s the next thing going to be is it’s going to be tent pegs with mosquito repellent and, you know, who knows it, magnetic. So they all stick together when you.
[00:30:00] When you carry them, you’re able to focus on your product and its development and what’s the next product and variations, and everyone else is focused on, well, let’s copy that tent peg with the light on it, which is, you know, that’s your history already? Like? Yeah, always. Yeah. Always trying to be one or six steps ahead.
[00:30:19] And then yeah, it can never sit in your laurels. You know, if you know, innovate or die, I think has a saying, or, you know, if you, if you’re not. Yeah, I think that’s a book name actually, but, it is it’s Jeffrey Gitomer and I’ve had a chance to have lunch with him. Grillin’ yeah, absolutely. Yeah. This is Differentiate or Die, which is Jack Trout.
[00:30:46] Great. So I’ll jump to a couple more questions has been fascinating already. One is I think some people think even, I think, you know, do you know, do we need to be in the U S have somebody in the U S physically, you know, I think you need to be on the phone you need, or somebody has to be on the phone, you know?
[00:31:06] I think that’s probably required, or, I mean, what’s your feedback on that? Not, not anymore. And particularly because of covert. So you’d need to have your, your inventory in the us, particularly as for big box stores, but even for, for smaller stores, table’s top stores, home decor, kitchen, where it’s okay.
[00:31:28] You don’t have to be in the US what you do need is a 3PL solution. And everyone right now is becoming by necessity experts in the 3PL solution. Here’s, here’s a great thing to realize. 3PL is not going to warehouse 3PLS, a third party logistics provider, so they can provide so much for you.
[00:31:52] Is it a warehouse where you’re just going crawl across dock and sending stuff out? Is it pick and pack where you’re sending stuff out to, to customers and then you could do dropship, like with Wayfair? I had a 3PL in Maryland that did my pick and pack. They did my stock, they were sending stuff out to retailers.
[00:32:14] They were also doing all of the commissions to my Salesforce. They were sending out samples to, retailers as samples need to be sent out, they were doing accounts receivable. They were even doing collection. Amazing. And, at that time, I was married. My wife was disabled. I wanted the solution that allowed me to focus on my wife when I needed to.
[00:32:37] Got it. And have the 3PL take care of all that. Okay. So absolutely you do not need to be in the US. And even better these days, buyer meetings. Now, the buyer is the person that buys for big box stores. Buyer meetings are happening. Just like you and I are talking right now, people are learning.
[00:32:58] You don’t have to get on a plane and travel and that’s a wonderful realization. It makes it so much easier for people to live anywhere in the world, have a laptop lifestyle, and still sell to retailers. Great. That kind of answers one with the trade shows the East. Maybe that’s also not being as necessary then with COVID obviously keeping Canton Fair and others, Global sources.
[00:33:23] This is not happening this year. So I guess the same probably for, you know, a lot of times people would say go to industry trade shows to get, get these accounts, get these deals. It probably still is helpful when it is open. Right. But it is helpful when it’s open. There are, so there’s an entire infrastructure for selling to retailers that that’s invisible to.
[00:33:47] Most people, there are special trade shows. There are actual complexes, both Atlanta and Las Vegas have, Atlanta has the America’s marts. Las Vegas has the world trade Mart. And each of these buildings have showrooms and retailers can, twice a year, that they have shows where the retailers come in from all over the world and they walk through the showrooms.
[00:34:12] The products are merchandised, so they’re displayed out for people to see. Um, that’s a great opportunity, but here’s the part that. That that’s even more beautiful. So these showrooms have a sales staff and that sales staff is going to show your product off. They’re going to say, Hey, look, this is an hourglass made with little, a little, most, everyone needs a most on an hourglass.
[00:34:41] And that’s wonderful and great for the week and a half week that the show is there. But when the show closes down, those salespeople go out to their regions and they travel around from store to store, to store on your behalf, selling. You’re a little hour glass with and, and making money for you. The sales staff might focus on, on a particular retailer.
[00:35:07] They might focus on big box stores. So again, you don’t have to be there. If your product is compelling, you’ve got a sales staff selling view. It always helps to be there, but it’s less and less necessary. And those shows are closed down at the moment. I had a few fabulous, fabulous space and at the international home and housewares show, it’s been renamed.
[00:35:32] No, and they canceled it because, and then they brought it for next February and they were kind enough to give us the same space. And again, that was canceled. So now it’s going to be August of next year. And they’ve given us the same space again, which I’m very, very thankful for when that opens up. I will definitely be there.
[00:35:53] I want to talk about my product. If you live in Singapore or you live in China or you live in Germany or Australia, I mean these days, it’s not that difficult to hop on an airplane. And if you can turn around, hop on an airplane and have some meetings and suddenly you’re in. You know, 200, uh, specialty stores, it’s worth it.
[00:36:14] It’s worth getting on the plane for a few hours. People get to know you and your product so you don’t have to, but it’s still very useful. Sure. So my last, I think main question is I think some people think about the payment terms, the financing there’s net 30 or 60. I mean, that’s probably the terms of these big box.
[00:36:34] I mean, give us a little bit insights. Sure. Absolutely. So in the US a lot of big box stores are at 60 days. Some are even at 90 days net. In Europe, they’re still shorter payment terms. And for independent retailers, uh, specialties, mom and pops as you call them Frankly, don’t give them terms that did not, unless you’ve had them for awhile, they’ll pay up front and, and surprised Amazon sellers, they pay for the shipping.
[00:37:05] Isn’t that a nice thing to do. So, plus you have business rules, so you have multiples and MOQ. So, yes, they may fall in love with the, with the moose, but they have to buy six or eight at a time. And there may be an MOQ or a minimum Amount to be spent. So the first order may be, they have to spend.
[00:37:27] $250 and then follow up orders, maybe 150. You get to set all of, all of these rules. Got it. The challenge becomes your cash flow. Cash flow is to look at the cash floor flow. I’m going to approach it the same way they taught us in accounting in college, the same way they teach CPAs. It’s a little bit different than what you see in the, the.
[00:37:51] Amazon, structured of cashflow. If you have a product that you have created, and it goes into a store on January 1st, and it’s going to be sold out in two months. So March 1st, it’s going to be gone. You need more inventory to put on those shelves on March 1st. So give it 30 day lead time of production, 30 days for shipping on the day, your products go into the store on more on January 1st.
[00:38:20] You also have to start production. So that by the day you sell out, your new product is showing up and then so on. So every two months you better have a new order started. And when you’re looking at an order of $300,000, you say, wow, that can, how do you do that? We do it a couple of ways. Number one, you do it with your negotiation.
[00:38:46] You set yourself up where you’re helping out the factory and covering their raw materials up front. So maybe it’s 12%, 15%, 16% you pay that upfront. And then you set up terms so that the balance is paid 60 days after receipt of BOL or in cases of some retailers. Literally they’ll build purchase it in China at the dock.
[00:39:09] So they’re just buying by the container load, which is pretty common. But either way now you’re at either the BOL, gets transferred when, when the boat leaves the dock. So you’re 30 days out. You’ve got receipt. Now you’re looking at 30 or 60 days after that. So you put 15% down on January 1st.
[00:39:30] You don’t pay the balance until, uh, February 1st plus 60 days, March for April 1st. So you’re not paying the balance until April 1st. Well, that’s fabulous. Now it gets a little more complex because what happens is you deliver your next set of products and they arrive on March 1st, just in time to replace the inventory.
[00:39:54] But you’re not going to get paid for the ones you brought in, in January for 60 or 90 days out. So what do you do? It is very standard in the industry. If you don’t have the cash on hand and. There’s lots of ways of doing that. All sorts of ways of financing cash on hand from investors to revenue based loans, transactional loans, even UPS does it.
[00:40:18] You can get money from UPS to launch your product, right? But let’s say you don’t, you can also do AR financing. So now under, under AR financing, the moment you have that accounts receivable, you get 85% of that in your pocket. So a, a $300,000, order, which costs you 30,000 or $45,000 to the start. You suddenly have whatever the retail cost of that is.
[00:40:47] Let’s say it’s a million dollars. You get 85% of that. So now you have $850,000 in your pocket. No problem pay your factory. Don’t even wait the 60 days. Hey, at that next day, they’ll be thrilled to work with you. And then when the rest of that comes in, the AR financing will give you that 15% minus their 3% charge, whatever, and you set it up like that.
[00:41:09] So there’s lots of standardized cash flow solutions. That’s being done and has been done in the industry for years. It’s just not the type of stuff. That’s, that’s apparent to Amazon people because. They haven’t been exposed to it yet, but none of this is new. It’s all standard. It’s done. Nobody expects someone to have, you know, $10 million in their back pocket to pay for all this.
[00:41:37] It’s just a different game. People treat you like a, I don’t want to use the wrong word. I would say people treat you like a grownup. They treat you like an importer. That recognizes where that money is. And here’s one more in the U S there’s even an import export bank. Just for importers. Now, you’re not going to have access to that as a selling a product, but financing for import exports.
[00:42:04] Then just talk to your banker and they’ll walk you through all of their, their, their financial products, even LLCs was another option. So yeah, it definitely can be done and it’s nothing to be. Hold you back. Yeah, it’s amazing. Really? I appreciate it all this valuable. Yeah, I mean, we’re kind of past our normal time.
[00:42:24] I really appreciate everything. No, it’s good. It’s good. I, I don’t, I guess maybe for the final it’s we got through most of my questions basically through the questions. I think the last one is I always try to have like, You know, what action can somebody to maybe they’re selling on Amazon or eCommerce or their shopping cart, maybe they want to get into retail?
[00:42:47] I definitely think we’ll, we’ll talk about your book too and your, your Academy, but, uh, it was something they can do, like a small maybe, or, or, or action or. Thought process change, I guess. What would you say? Something they should do? First thing to do is just literally dip your toe in the water, see what it’s like.
[00:43:07] And that’s actually a lot easier than they think now. It’s not going to be simple right now during COVID lockdowns. But just so that you can prepare yourself for hopefully in a few months when lockdowns and, um, take your product, take your bestselling products, find those that are the most unique or the most differentiated, um, your malice that’s red rather than any other color and walk down the street, drive down the street.
[00:43:37] Find local mom and pop find a, a specialty store or an independent retailer that sells for whatever reason, it would be selling a red mouse and walk in and say, Hey, I’ve got this. It’s been selling really well on Amazon. It’s got some good traction. I’d love to, uh, to see if are you interested in selling it?
[00:44:01] And the two things are gonna happen. They’re going to say yes or they’re going to say know, and either way you have now learned about selling to retailers, if they say yes, they’re going to ask you questions. Like, what’s the price they’re going to ask. They’re going to use terms like keystoning, which means whatever they pay.
[00:44:19] They want to double the price that the customer is paying. Um, they’re going to ask you about the multiples, how many do they buy at a time and stuff like that. And frankly, we’ll talk about the book in a moment, but all those terms are explained in the book and in the course, but that conversation is a great one.
[00:44:35] Or are they going to say no? In which case you’re going to say, well, why? And they’ll say, well, because we already have red mice or because it’s not appropriate for our store, something like that. And now you’ve learned. Just as much, you go into another store and walk into another store. That is the very best way.
[00:44:53] Of learning. And frankly, since the decision maker is the person that’s in this store, you have a really good chance of making a sale and making some money. Definitely. It’s great. It’s great advice. Yeah. I think take, take action test test. Like what’s the worst that it can say is no, right. Like you said. So, thank you so much, Steven, for your time today.
[00:45:13] Let’s talk about the book. It’s a massive book. I mean, seriously, like it’s a, I know you even have some promotions for it. I mean, this book should, is invaluable by itself. And you also have your, your program, your product development academy.com. Do you want to give us some insights about, about these so people that are interested with what you sure.
[00:45:34] So Product Development Academy, we take you through everything from the very beginning to coming up with product ideas, because when you’re coming up with something unique, you can’t use the tools like jungle scout or helium 10. Those are great tools for identifying existing products and analyzing them. But with new products, There’s no history to look at and it can’t magically have an eight ball and give you an idea.
[00:46:00] So we take you through a number of steps of coming up with new unique products. Then we take you through what are called Phase Gates. And it’s fabulous because one of the experts that we have is a fellow named Victor there who at Apple, he was the, he was hired by Steve Jobs, I mean, Johnny Ivy. And he talks about that.
[00:46:19] He’s third down. And he talks about the processes at Amazon. It’s the exact same thing as the Phase Gates. And we take you through the Phase Gates to make sure that your products are profitable, that it’s going to have customer demand and so on. And then we take you through all those steps design.
[00:46:34] development, choosing a factory, managing your factory remotely, which is even more important during COVID and the, the experts we have are, are incredible. Dave who’s one of our mentors has helped develop products for shark tank winners for Boeing, for Starbucks and so on. Tim has, has put hundreds and hundreds of people.
[00:47:00] Into big box stores and dealing with purchase orders of, you know, you’re waking up in the morning and finding a million and a half dollar purchase order or more. That’s what, that’s what the world’s like. And you know, I feel like, you know, I’ve only been doing it for, with retailers for 15 years.
[00:47:19] And I’ve been in front of thousands of, of the smaller stores. I love those, a good handful of ’em a big box stores, but I like surrounding myself by people know even more. And in the program you get. All of us. Um, everyone that’s taken the pro, this is fabulous. Every single person that’s gone through product development Academy, every single one of them says it’s unlike anything they’ve done before.
[00:47:43] It is, it fills in gaps and it gives them a, um, an approach they’ve never seen before, but here is the problem. It’s expensive. I know that it’s expensive. The goal is to keep it small, to give everyone personal attention. And, and I know that the price keeps rising, but the value is there. On the other hand, I know it was like when I started off, I know what it’s like to bootstrap.
[00:48:11] I know what it’s like to, to, to say, Hey, you know, I’m, I’m working, you know, one job and maybe a side gig, and I’m wanting to start this up. And that’s why the book is out there because yeah. It doesn’t have that personal attention or the experts, but all the information is here as well. And, and it’s on Amazon and it is information you won’t get anywhere else.
[00:48:32] We we’ve been out at this point, um, about just under 80 days and we are at 2,780 something books. So are a lot of. Yeah, it’s information. That’s not found
[00:48:54] you know, industry to retailers. What most people don’t realize is [00:49:00] that their online platforms. Selling like Amazon sells to consumers. There are retailer platforms have to have tax ID that didn’t have to be authorized and approved, but once you get there, you can get, you can buy stuff from, uh, uh, from manufacturers and you become a manufacturer.
[00:49:20] There’s also information on, marketing, both sell to and sell through marketing and, and all of it’s in the book. So when you are starting out and you’re on a budget, I wanted to make sure that the information was there as well. Um, and then go to the site. When you go to the site, product development Academy of.com, we’ll let you know about promotions and there are occasionally free downloads the book for, for people who are even tighter because.
[00:49:49] Good information is, is priceless. And, um, uh, hopefully when you go out, you get a chance to have good, accurate information. You can structure your plans, you can structure your dreams. And, and if this helps a little bit, then that’s just, that’s incredible. Yeah, that’s great. I know I’m just, I had a lot, it also, you give away a lot of free downloadable stuff and everything, so, so thanks for everything you do.
[00:50:18] I’m sharing like on today’s show and, at these events and your book and the program, which I agree with. I mean, yeah, it’s gotta be expensive. I mean, you’re giving away all this amazing stuff for free. If people want the real time and access, that’s, you know, If they can a budget let’s, let’s give the, the alternative to that as well.
[00:50:40] Also, if somebody has just stuck with a question, they read the book and they say, I don’t understand this or whatever else. You can also just get on the site and just ask for a free 20 minute consultation. Get money on the phone or on zoom and I’ll explain things I’ll, I’ll help you out and stuff like that because, um, that pays a forward and yep.
[00:51:00] That’s really, really important. So I’m there, I’m available and I want to see people succeed. I want to get people, give people a taste. It’s not just Amazon, it’s Amazon plus, and that plus is such a wonderful big, um, it’s exciting. It’s wonderful. I love that. I think that’s a great, great time. So that’s a great quote.
[00:51:23] We might use that in our show notes for sure. Thank you so much again, and I hope, yeah. I hope to see you in person someday, but it’s the internet, so someday soon, absolutely. We will see each other again. Actually I came across a photo of us together just the other day and I think there’s also, I think I did a quick video with you and I’ll try to put it into the show notes.
[00:51:49] Yeah. I put a note, so people want to see a little video of us. They can do that on the show on the show notes. Thanks again, Steven. Excellent. Okay. Thank you. Take care. Bye bye. Actually this week, when the show goes on, we’re going to have another amazing GFAVIP members call. This one’s our knowledge series, where Rolands in Taiwan is going to be sharing some hacks and insights of Amazon FBA.
[00:52:14] He’s actually been working on his butt, sharing me, his slides, he’s going above and beyond. I mean, I’m so amazed with our private community to share openly. And that’s what makes these online calls different, you know, they’re, they’re small, whereas not too many people, 20, 30, 40 people actually know. No, I haven’t been that many yet, but people get to know each other.
[00:52:32] We’re building relationships with Axiom, also studying ways to do more smaller groups on specific topics with all these new online tools coming out for calls. So if you want to get on the inside of what we’re doing, gfavip.com supports the show. Thank you. Thank you so much, Steve, for sharing. I mean, really I was blown away.
[00:52:50] I mean, we could have kept going and there’s always, I mean, that’s the hardest part, like how, how to keep these short and we have so many more amazing interviews coming up. We got them already recorded, already ready to go. And a weekly schedule with, uh, people that can’t figure out how to keep this stuff short.
[00:53:06] I don’t know. I, I don’t know a lot of you seem to appreciate shorter shows, but we’ll see how it goes. So, I mean, we’re trying to give as much value as possible here. And I would say, I said the intro, I would talk about some of my experiences. So I think I mentioned in the interview, but I sold more mom and pop.
[00:53:24] I have sold some larger chains, but mom and pops is more my experience. They would basically find the product. I think they would even hear about the product from from their customers. That was what I learned. Sometimes these mom and pops shorts stores at one shop, five shops, 10 shops, maybe to go. They grew up by now.
[00:53:42] And it’s really sad with the COVID, but they would, they would call us up. Phones actually is really helpful with this stuff. They, they like, at least when we did this with the bar supplies, they like to call. And talk to somebody, you know, I guess to me, you can do email now, but they would say, Oh, people were asking about this product.
[00:54:00] Or we heard this product, you know, we had some cool ones that would like shoot limes and there are Corona bottles and stuff. And yeah, they would just pick up a few case packs. It’s really almost like a big customer. And sometimes we’d even sold to bartending schools. That was actually a really good Channel of sales and, you know, people there doing it, and then they would actually want to package it their own way and put their own logo on it.
[00:54:26] So, you know, you can try to cater to these people. I mean, I guess you got, choose who you want to do. I know with the Amazon world, we’re all just selling B to C direct and. Just to, you know, streamline automated, but I do believe retail stores, you do need to have at least somebody that likes to talk to them and service them and cater to them and customize a bit.
[00:54:45] There’s also some retail case packs, you know? Cause he, you know, he goes to these convenience stores or he stores, they, they would have it. So you would see some packaging, a case pack. No, 1224, 36 in the packet, it’ll be on the shelf. And any could like look at the product, look at the directions on the flap of the box, you know, of the carton box.
[00:55:09] So we had to design some of these carton boxes. Um, again, you might not have to worry about that if you’re just doing pure e-commerce, but I think these are some adjustments, adjustments we had to make, and we had no idea what we were doing, Andrew, my partner at the time. And I, we had no idea what we were doing.
[00:55:25] And you’re just kind of listening to your user, but we would, we would get these retail accounts, retail store accounts, and they were, they were fun. They were really small. I mean, almost, just sometimes a, a home customer buy as many as these stores, but this one has some of these unique products. And, I think you should have a sell sheet.
[00:55:47] He know like a PDF listing. How is your case packs. Do you have a retail packaging? You know, w like I mentioned earlier, and they would, uh, you know, how much does it cost for a carton? You know, multiple cartons. I never actually gave terms. Sometimes they would ask for terms. But there were so small, I just, just pay me with their American express or their credit card, you know, just make us special.
[00:56:11] You also want to decide, do you want to buy it off your website? You know, I actually made like a wholesale section, like a subdomain and I try not to index and Google are password protect it so they could buy it and they felt special. He kind of went a little bit of a special checkout or you could just invoice them in like FreshBooks or some kind of a accounting software.
[00:56:29] But those are so many adjustments and mistakes that we made, but feel special. You don’t want us to say, Oh, just go to the website and just put in 24 pieces, you know, and get the 24 piece price. I mean, you could probably technically make your shopping cart, do that, but I, I recommend they actually have a kind of special, hidden way, even if the prices are the same too, like a retail customer that buys 24, try to make people.
[00:56:53] These retail stores feel like to get a price. Cause they actually got to add profit. Right? Right. They gotta make money. They gotta charge more than a and you also got to give enough margin. Right? You got to think about that. You got to think about how, how much is your retail price? How much that’s where a lot of times factories in China or Asia screwed things up because they would just sell things so cheap on online that the stores couldn’t buy.
[00:57:14] Because if you’re selling, if you’re, if your cost is two dollars and you sell it for $5, The store can’t really make money. We’re going to do sell from first three, and then they, they have to sell it for five because you’re selling it for five online. Sometimes they will actually hope you didn’t even sell it on your website.
[00:57:31] Of course, now we have to sell everything online, but back five, 10 years ago, they were hoping maybe you could just do retail. Some people only did retail. And then the website would just list the stores. I remember seeing that, of course, nowadays we’ve got to sell in line, but just give me some of my stories.
[00:57:47] You know, they were not so technical. They would give you your credit card, their credit card number over the phone, you know, and I had to get that Paypal terminal. And I could just process their order for them. I think he did Stripe too, but they would just want to talk to you on the phone, or sometimes they would email you a PDF of their scanned credit card and then they would just want you to actually run their card for them.
[00:58:12] They would just say, just give, just give me another 48 pieces and put on my account. And you would process their card for them. Luckily, no chargebacks on those. But you know, they’re nice, little, you know, I think B2B is a great little way to kind of smooth out your cashflow. You get these incomes.
[00:58:34] It would actually, you know, with our bar supplies, we had decent amount of bartending schools and his mom and pop stores buying from us. You know, every three months, six months you get a call, you get a special email and it would just, and they were nice. You know, you build relationships with these people, you know, that’s, that’s what it’s about.
[00:58:49] So I think that’s enough for my blahblahblah session. Thank you so much for choosing to listen to this show. We try our best here to deliver the goods, deliver some valuable insights. I hope you enjoy. Thanks again, Michael Michelini is my name and that is enough for today. Got to call my mom and dad now see you later.
[00:59:09] To get more info about running an international business. Please visit our website www.globalfromasia.com. That’s www.globalfromasia.com. Also be sure to subscribe to our iTunes feed. Thanks for tuning in.