Case Study: Selling on Amazon

Today’s guest is making millions by buying from Walmart and selling on Amazon. I grilled him before this interview started to see if this was a real business and turns out that it is.

He’s selling online really well so I invited him here to find out what’s working for him.

Ryan Grant is the founder of Online Selling Experiment, where he teaches how to sell online.

Ryan Grant is the founder of Online Selling Experiment, where he teaches how to sell online.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com where I interview entrepreneurs about how they built their businesses. And on my second computer right here, I’ve got an article from CNBC, the headline is, “This 28-year old’s company makes millions buying from Walmart and selling on Amazon.”

I thought that was intriguing. I invited him here to talk about how he did it, but before I got him to talk we spent about 15 minutes with me saying, “Did you really do it? What did you sell? How do I know you’re the real thing? Did you lie to my producer?” And he said, “You know, Andrew, I can’t actually within the interview show the store or tell people what we sell, and I’d appreciate it if you didn’t, but I could do a screen share if that’ll get you off my freakin’ back.” And I said, “I don’t know if it’ll get me off my back but, yes, I do want to do a screen share.”

So we did a screen share and he showed me his backend of his Amazon store and we clicked around as he was showing me how much money he made in the last 30 days, how much money he made year-to-date and last year. I’ve got a good sense of the business now and I also promised him that there are certain things I wouldn’t say like what he sold on Amazon but if I remember the thing I could see and everything that CNBC saw and I know that they did their research, this guy is selling online really well. So I trust him when he says, I’m also teaching people how to sell on Amazon.

So I invited him to talk about specifically what’s working for him, how on Amazon and how he sold online and how he learned this whole thing and I think we might get a little bit into this online course but mostly I want to know about eCommerce today and what’s working for someone who’s actually doing it.

So he’s name is Ryan Grant. His store is, I’m not allowed to tell you, but we’ll talk about it. And the site that he has where he talks about his online selling experiments including not just how he sells on Amazon but how he bought a Shopify store and what’s working for him there and what’s not. The store where you can read up about it and if you want to learn from him by taking his course, it’s called “Online Selling Experiments.” And this interview where I talked to a guest after spending 15 minutes pushing him and challenging him is sponsored by two great companies. The first will let you do smart email marketing. It’s called ActiveCampaign, and the second one will help you hire your next phenomenal developer. It’s called Toptal.

Ryan, good to have you here?

Ryan: Good to be here. Thanks for having me.

Andrew: 2017, how much money did you make selling on Amazon? Revenue?

Ryan: Revenue on Amazon we did about 3.7 million in 2017.

Andrew: Okay. And I did look at those numbers so I could confirm that that is true. How much of that is profit though?

Ryan: In the ballpark of 10% is the actual take-home.

Andrew: So about $300,000 to $400,000 is what you’re getting from Amazon. And then you’re also selling online. How much of your business, how much of your revenue, excuse me, teaching. How much of your business is coming from teaching online?

Ryan: At this point, about 60% of the actual profits from the business are from the online retail side actually selling online and then 40% come from consulting and the online selling experiment side of the business.

Andrew: So give or take about quarter a million dollar profit from the teaching?

Ryan: It was a little bit less in 2017 but it’s in the ballpark.

Andrew: Okay. And this whole thing started because you went into your college bookstore and what happened?

Ryan: Yes. So my first semester of college, I was a freshman, I bought my books from the bookstore, I didn’t know any better and then at the end of my first semester I took my books back to the college bookstore to hopefully sell them, get some cash back for them and the offer that they gave me was almost defensively low and so low that even as a cash-strapped college student, I was like, “I can’t sell them to you guys for this.” And it led me into looking for some other options to sell those books and one of those options was Amazon. So I ended up selling my textbooks on Amazon as opposed to selling them back to the college bookstore. I was able to get a lot more money back for them.

Andrew: Did you do anything that any other college kids wouldn’t know? I mean, were you better at copyrighting it, at listing it more intelligently. Did you know to ship it to Amazon first or ship it later or do anything different from what an average college kid would do?

Ryan: Not really.

Andrew: Not at that point.

Ryan: Not at that point, it was just what anybody could do if they have a textbook that they want to sell. I didn’t do anything special at that point but that was my first experience selling an item on Amazon, so that kind of started it all.

Andrew: So I’m wondering then why did that excite you, making a few extra dollars was . . . you’re a guy who was selling throughout his life, right? You’re a kid, you did a . . . what was that pumpkin thing that you sold when you’re growing up?

Ryan: Yeah, when we’re growing up, at my parent’s house they have a hobby farm. We grew up on about six acres. We had some sheep, goats, animals like that and then we had a few cash crops, if you will. Those were pumpkins and strawberries. So we had pumpkins that we would plant in the spring and then we’d take care of them all year and then we’d sell them in the fall around Halloween time.

Andrew: Did you get to keep the money?

Ryan: We got a portion. I had to split it with my siblings based on who . . .

Andrew: A portion of the sale, so if you sold more you got more money.

Ryan: Exactly.

Andrew: Did you do something with it?

Ryan: Honestly, I mean it wasn’t a ton of money. I don’t remember exactly what I spent that on but I do . . . it was cool to be able to get money without having a job.

Andrew: Okay, so you had that experience then as a college kid selling books online even if you make let’s say $100 more, $300 more, why did that blow your mind so much that it changed the course of your life?

Ryan: I think what I saw was the potential of doing it at a larger scale? If you’re doing it just with your own books, it’s not life-changing. If you get an extra 100 bucks or 200 bucks but when you see hundreds or thousands of college kids in line looking to sell their books back for a price that you know is significantly lower than the price that they’re going for in another marketplace. I think I saw the potential of being able to pay them a little bit more for their books and then still be able to sell them at the market prices and make nice margins in between, so I think it was the potential for a scale that got me excited about it.

Andrew: I see. And so the next step was that buying their books?

Ryan: Yup, so then from there we would or I would . . . the next semester I sold books for some of my friends and that went well and then from there we . . . me in a body, I recruited a friend who was a roommate at that time to help me with this and our goal was to buy as many books as we could from other students. So we set up a table near the college bookstore at the end of the semester and then whenever we saw college students walking by with textbooks we would basically say, “Hey, we’re buying books and we’re paying more than the bookstore. We’re willing to make you an offer on the spot or you can go get an offer from the bookstore and then we’ll beat it by 10%.

Andrew: And the way you were doing, you were sitting down and seeing what the prices were going for an Amazon.

Ryan: Exactly. We would look it up on Amazon and then there’s another site called bookscouter.com which has a list of different websites where basically you can send your book to them and then they will send you a check for the book.

Andrew: You mean all those other places would send you check for the books, I see.

Ryan: Exactly, exactly.

Andrew: All right.

Ryan: So we would pay less than the BookScouter price less than we could get an immediate cash offer for so we’d lock in a little bit of a gain there and then we’d ultimately most of the time sell it on Amazon and then we’d be able to make a higher margin selling it on that platform.

Andrew: Were you being secretive about this? Were you the kind of person who would say I don’t want them to know that I was on Amazon?

Ryan: No, at that point we would say what we were doing, we would say we’re just selling it online and for the people that were already in line for the college bookstore they have a pretty clear buyer intent that they’re looking to sell their textbooks for cash, they’re not looking to put in that extra time and effort. So our value prop is that we’re going to pay you a little bit more than you’re going to get by going to that bookstore. So if they ask where we were selling it, we would say it’s Amazon.

Andrew: And I guess if I were going to sell it in a bookstore, I wouldn’t want the pain in the ass of selling it on Amazon. “You give me 10% more, take it, this is my career, this is just a transaction in school.” Then you set up a table, you started buying it, weren’t the school administrators or the people in the store pissed that you were doing this?

Ryan: So right away it was perfectly fine and we didn’t have any issues. The first semester we did it, we actually purchased some books from the college bookstore. They approached us to sell some of their books because they had a program where they would pay a dollar for every book that a student brought up regardless of if it was going to be used in the future and a lot of those they had no use for. So they actually sold some books to us and [inaudible 00:08:46] buying them for about 12% of whatever they were selling for an Amazon from the bookstore. So right away they had no issue with us. They actually sold us some books and we were together . . .

Andrew: You bought it for . . . you bought it . . . the one dollar books and all those other books that they couldn’t sell you bought for 12 cents on the dollar.

Ryan: Yeah, exactly.

Andrew: Okay, 12 cents on . . . 12% of what you could sell for an Amazon. All right, so I could see that things were now starting to take off. At what point did you say I got to go beyond this?

Ryan: Well, it didn’t quite continue to play out quite that nicely. We did still scale up from there but after we’d seen success on being able to buy textbooks from students and sell them at the end of the semester, we also wanted to be [inaudible 00:09:35] the transaction when students were buying their books at the beginning of the semester too. So we put together a website specific for, I went to Winona State University in southeast Minnesota, so we had a site called winonantextbooks.com that basically was a copy of the school bookstore. It was basically, you select your class, your professor, and then the book will display on our website except it was from Amazon as opposed to from the college bookstore and then for any student that bought through that we were part of the Amazon affiliate program, Amazon associates and then we would get a commission for anything that we sold.

Andrew: That’s brilliant, but how did you get that list? The list of books by professor?

Ryan: That was part of the problem because we had initially sourced the information from the college bookstore and then that kind was the problem. So shortly after our site went live, we’d started to get a little bit of traction on campus, we got emails from the more or less the compliance department of the university and had to go and talk to them as well as the college bookstore people and that site pretty quickly got shut down. They wanted us to basically have to gather all of the data on our own. They weren’t willing to work with us and then it also ruined things on at the end of the semester too we weren’t able to buy books on campus. We tried but the first back at the end of the next semester to go and buy books. We were escorted out by the manager of the common area that was down there.

Andrew: You know, I went to NYU and right next to NYU in Greenwich Village, New York was, what was it called Shakespeare and Company bookstore and they wanted to do something similar. They wanted to sell books at a lower price to students who are just a block away going to NYU, a block away from the bookstore. And what they did was they came to me and other students who were pissed at the prices that the bookstore was charging and they said, “Can you give us your syllabus, your list of required books?” And they started to amass it and I could see that it was such a pain in the butt for them to do that they finally just gave up on it and decided to sell to tourists.

Ryan: Yeah. That’d be a huge undertaking to do that.

Andrew: I’m looking at your site right now, dude. This was a pretty huge undertaking too. How did you populate this site with all the books? Every page here seems to be a straight-up HTML site, straight up HTML page?

Ryan: Are you on like an archive’s version of it?

Andrew: Yeah.

Ryan: Yeah. We used, I believe the tool, we used at the time it was called associate-o-matic. It was basically a plug in of sorts. I don’t even know if it was WordPress but basically, you were able to put in the UPC for the product and then it would . . . and pick which location you wanted it in and then it would display on the web page. So it took a long time to put that site together.

Andrew: But it wasn’t being put together programmatically, right? It was someone manually arranging it, wasn’t it?

Ryan: Yeah. Yup, we were manually doing it.

Andrew: Yeah. That’s just a nightmare, but every course is listed on the left margin, if I click on one of the courses, let me click on where was this. I clicked on music, all the books are there displayed nicely and they all linked to Amazon. All right, so it sucks that that didn’t work out. You ended up becoming an accountant doing what specifically or working for an accounting agency, what did you do?

Ryan: Yes. So once I graduated from college I worked for McGladrey as an audit associate or an assurance associate was my official title but basically, I was working on financial statement audits for manufacturing and distribution companies.

Andrew: Okay. So at that point did you start selling online?

Ryan: Yeah. I was still selling online on the side.

Andrew: Books?

Ryan: At this point when I had graduated from college we [inaudible 00:13:26] textbook things on the slide still and we were, we’d expanded to doing it at about [inaudible 00:13:32] around southeast Minnesota.

Andrew: Sorry, I just lost what you said, you expanded to doing what?

Ryan: We were buying textbooks at the end of semesters. We were doing that at four different campuses around Minnesota. So that was still going on the side. And then, yeah, that was the main thing that I was doing. When I first started the job and I did that on the side throughout the job and then from there after working in the accounting job for the first three to six months I realized it wasn’t the path I wanted to be on and then I started looking in the ways that I could sell other products too. And start to find things that would sell year round as opposed to textbooks which are very seasonal.

Andrew: Like what?

Ryan: So when I first started off it was a lot of like toys, games, gift type items, groceries, really anything that I could find that made sense to sell. When I was first getting started then it was a lot of what’s known as retail arbitrage which is buying items on clearance and discounts at local retail stores and then turning around and selling at on Amazon, so just about anything that I could find on clearance that’s the type of thing that I would turn around and sell. So if you see it on a clearance aisle in a Walmart, Target, Toys R Us, not at Toys R Us anymore but a store like that, then it’s pretty likely that I’ve sold something like that in the past.

Andrew: You’d go into the store you’d see it on clearance, you’d look it up on your phone to see what it was going for on Amazon and if it was the right spread, you would buy it.

Ryan: Exactly.

Andrew: What kind of spread were you looking for?

Ryan: I wanted to see at least a 50% [inaudible 00:15:05] investment, so if I was, after all, fees, all shipping, if I was spending 10 bucks on the item I wanted to get paid at least 15 and then I’d make a profit of 5 which would give me that 50%.

Andrew: Were you shipping that in house at the time?

Ryan: I was using the Fulfillment by Amazon program and I was . . . everything came into the house and then I would box it up, ship it to Amazon’s warehouses, so, yeah, it was all in my house at that time.

Andrew: But at least when you’re doing that you can take 10, 20 different products, put it in one box and let them sort it out, right?

Ryan: Exactly, yeah.

Andrew: Yeah, individually boxing things?

Ryan: Mm-hmm.

Andrew: Wow. That is a lot of work though. Yeah, there are a couple of products that you’re especially proud of from back then.

Ryan: I never got too attached to the actual products. I just thought it’s sort of a commodity where it’s something that I could make money on from back in the day. Some of the big items I did really well with were Frozen was huge about three years ago. Those Elsa and Ana dolls did really well with a lot of those that we’re going for above retail prices on Amazon. I remember a really big haul of Teenage Mutant Ninja Turtles toys. Target had a huge, they market them down and they did like a buy one, get one, 50% off sale that was just huge so probably just bought like five grand of those toys over the course of a weekend and they all sold within a month or two.

Andrew: What about this? I got a little upset with my iPhone because it couldn’t do things like multitask in real time. I couldn’t have side by . . . I couldn’t watch a video while browsing the web mindlessly for a while. And so I bought a Pixel and then I discovered the ear buds and I love the ear buds so much that I decided I can’t go to the Pixel, I have to stay in Apple’s ecosystem. The Pixel phone was still in its brand new. I thought I’m going to sell it on Amazon. I shipped it over, I accidentally listed it as Pixel XL instead of a pixel, somebody bought it. Said I’ve got to return it and she’s going to return it, I’m going to resell it, but because she return it, it’s a pain in the butt for me and because she returned it, now it’s an open box which means it loses some of its value.

So this whole idea of you selling it and it moves on is nice in theory but often you end up with returns where people ruin the product or they reduce the cost of the product and regardless of what happens you have to deal with shipping back and forth. So how much of your margin was eaten up by people who are returning and opening the boxes and returning?

Ryan: Yeah, that’s a good question. It definitely happens.

Andrew: It’s a longwinded question too.

Ryan: What’s that?

Andrew: I went really long with that question, I thought I’d all a little color to this instead of it was like a lot of wind. Okay. So yeah, how did you deal with that?

Ryan: It depends a little bit on what categories you’re selling in. So if you’re selling like toys and game, that’s a lower return rate as compared to like in apparel clothing and shoes have a much higher return rate. If you’re selling like general home goods, well, I saw a normal return rate of about 2% to [inaudible 00:18:08] on most orders. If you’re selling in the apparel type categories, it’s most likely going to be in the 10% to 15% range.

So at [inaudible 00:18:16], it doesn’t matter much like if you’re selling one item and it gets returned, obviously that’s a very frustrating thing. But if you sold a hundred of them, odds are two or three are going to get returned. So what we do is anytime we get a return like that, it comes back to our warehouse and then we have a process to either get it sold back on Amazon or if it can’t go there, then if there’s something wrong with it. It needs pictures, then it will go on eBay and that’s where we, anything that needs descriptions or specific pictures of it, then we’ll list it on eBay.

Most of the time we’re able to at least recoup our cost in the events of used products so in like your Pixel example if you bought it from a distributor, you’d probably pay 50%, 60% of retail. You’d initially sell it for a 100% of retail that gets returned and then you have to sell it as “used, like new” or you [inaudible 00:19:07] box, you still most likely can sell it in that 60% to 70% of retail price point and then you recoup at least your initial investment. So from my experience, the downside is relatively low, it’s pretty rare that [inaudible 00:19:18] things entirely or the customers ruined it that bad, so returns in the online retail space are kind of a fact of life and as long as you maintain that . . .

Andrew: That’s quite an operation though. You’re saying even back then when you were doing this from home stuff would come back to your house, you would decide what to do with it. Was it you personally taking pictures and listing it on eBay at that time?

Ryan: At that time, yeah.

Andrew: Wow. All right, we’ll talk about how you expand it from there and how you even got to CNBC in a moment. First, let me talk about a company called Toptal. Have you ever worked with Toptal?

Ryan: I have not, no.

Andrew: You know what, I talked about them a lot and I know a lot of people are curious about them and they’re not sure what it’s like, so I thought instead of me telling about my listener’s experience, I’ll tell you one thing that I read on Quora. There’s a poster on Quora, a guy who asked the question who said, “What’s it like to work with Toptal from the perspective of a company that’s hiring a Toptal engineer?”

And this guy, Doug, yeah, Doug McKay responded and here’s in a nutshell what Doug said. He said that he worked with Toptal to get mobile app design and user experience put together because he wanted to create his app. He said once the thing was done he went to Toptal and he hired, since they just don’t do developers they also have finance people, he went to Toptal’s finance department and he said, “Hey, do you have someone who could help me organize my data because I’ve got to go talk to venture capitalists.” He got them.

He has a result of the help that he got from them, six venture capitalists were interested in his company and so the return on investment of having somebody actually help them with these finances, help them think through is Pitch Deck and somebody who has experience to do that was incredibly helpful . And then he said, “I went to hire developers to help me out. I went cheap. I went to look at one of these freelance sites because they were a fourth the cost of Toptal. And I looked at it . . . ” and he realized, you know what, the results were also pretty crappy, much, much worse than going to Toptal. So he said, “Fine, I’m going to actually hire from Toptal.” And he did.

So from top to bottom Toptal helped them. First, user experience and app design which is Toptal’s designer group, then Pitch Help which is Toptal’s finance group and then finally, what Toptal’s most known for, helping company’s find phenomenal developers came from Toptal’s developer group.

So anyone out there who’s listening to me who’s heard me talk about Toptal for hiring developers and frankly, you may need them at some point too, Ryan, they are phenomenal at that. But as you could see from Doug and so many other people’s experiences Toptal now has designers that are great and finance people who are incredibly helpful. So if you’re listening to me and you want to hire from them, don’t just go to toptal.com, go to the special URL I’m about to give you where they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. That URL is toptal.com/mixergy. Top as in top of your head, tal as in talent, toptal.com/mixergy, toptal.com/mixergy.

You know what actually, let’s talk about this promotion. I feel like you’re really good at promoting yourself, subtle, charming, like it doesn’t feel heavy-handed and still freakin’ good. How do you get to CNBC?

Ryan: Yes, so CNBC, that all came from a Reddit AMA that I did. That was the primary catalyst for doing that. I did an AMA back in most probably October or November in the Entrepreneur sub-Reddit I’ve read it. And then that got a lot of engagement. I was talking about how my business at that point, we’ve done about 2.2 million year-to-date in 2017 at the time I did that and a lot of questions came in and it got a lot of exposure.

Andrew: This is the, “My business has sold $2.29 million on Amazon so far in 2017, ask me anything.” And then you’d kind of detailed it.

Ryan: Yup.

Andrew: And they at CNBC read that?

Ryan: Yup. So a team from CNBC saw that and then they reached out to me directly and I [inaudible 00:23:20] Zack Guzman who is the reporter who did the story. So he did an initial call with me to learn more and then he pitched the idea to his team. We went back and forth. I had to provide a little proof to verify.

Andrew: I saw that actually. I really respected that article a lot and it carried a lot of weight with me because I forget where, but several times in the article that they did to accompany the video, they talked about how they did . . . that they did researched on you, like they looked at the receipts from your Walmart experience, for example, right?

Ryan: Yeah. They checked. I shared some of the items that I sold specifically with them. I did like an export of some sales history from when I was first getting started. So, yeah, they definitely did their due diligence.

Andrew: And still before this interview started, I said, “Tell me what your Amazon stories?” that you said, “I’d rather not.” I said, “Okay, I understand.” Actually I don’t understand why wouldn’t you want to show it to the audience, and you talked about it. And then you also said, I won’t even show you, I’d rather not show you actually. You were pretty nice about it and I get the sense that if I push you a little bit that you’d go for it but there was some hesitation to it and I want to understand why do you hesitate showing it and did you show it to CNBC?

Ryan: I didn’t show it CNBC either.

Andrew: You didn’t either.

Ryan: No, not the specific store. We did a similar screen share and showed them specific screenshots. They got a copy of the 1099 from Amazon as well to go one step further, but in terms of like why, I don’t want that out there. Certain suppliers we have don’t necessarily want to be associated directly with everything, all aspects of the business, maybe the online selling [inaudible 00:24:49] side. They don’t want their brands necessarily involved with that and then on the retail arbitrage side of things which is still a component of my business, we don’t want to share the exact products that we’re selling. We’re willing some of the strategies because there’s differences in different geographic regions but if [inaudible 00:25:07] exact store then anybody can see exactly which items they are, try to get those items in their stores and it just creates a little bit of unneeded exposure or competition on some of those products for us.

Andrew: All right, that’s interesting that you didn’t show it to them. We can’t say that it’s, you asked me not to say specifically even what kind of apparel but you said, you can say its apparel that I showed you, the apparel store.

Ryan: Mm-hmm.

Andrew: All right, how did you focus in on apparel?

Ryan: Yeah. We got started there are as it’s an angle that wasn’t . . . well, there’s a few reasons. One is it’s a higher price point on each product that we sell. There’s challenged that come with that category like shoes, for example, sell though relatively slowly compared to other categories. You also [inaudible 00:25:56] stock a lot of inventories so it’s fairly capital intensive.

Andrew: Will, you have to stock it with apparel, a lot of inventory, uh-huh?

Ryan: Yup, because there’s different sizes. It’s not like you’re selling just a copy of the board game Monopoly. If you’re going to stock shoes, you need sizes 6 through 12 or whatever, whatever sizes you want to carry. So it’s a lot more capital intensive. There’s, in my opinion, a little bit less competition that it’s a higher return rate which creates [crosstalk 00:26:18] people who aren’t willing to deal with and it’s also an [inaudible 00:26:20] that requires a . . .

Andrew: It’s also what, sorry, but I don’t know why the connection is kind of flaky. What is it?

Ryan: Okay. It’s a category that requires an additional level of approval from Amazon so that creates an additional barrier to entry. So that’s been one of the reasons we focus there category part of the year depending on which time of the year you see which categories we’re selling on. It’s going to vary a bit too. So apparel is consistent year-round for us but if we come to the end of the year where at Christmas people are buying things for gifts, toys, and some of the household categories would be a lot higher on our list because of what we’re selling at that time. So we adjust outsourcing a little bit over the course of the year based on what’s most in demand.

Andrew: You know, one of my favorite questions that our producers ask guests before we start is what’s one question that I didn’t think to ask that we should ask you. And your response was, “You guys should probably go deeper on the twist and turns of the early online selling days.” So what are they? So far it seems like a natural, easy transition from one step to the next. Talk to me about what some of those twists were. What are the challenges?

Ryan: Yeah. There were definitely some challenges along the way. One of the biggest ones was probably having my Amazon account suspended. So in, I believe this was the summer of 2015, there was a product that I was selling. It was called the “Pedicure Power,” it’s like a nail filing tool for dogs. We bought a liquidation lot of these and it turned out that some of them were defective and customers were getting them and they weren’t working properly and it caused and enough of them were returned that Amazon basically stopped us from being able to sell that particular item and then it led to the actual suspended which is Amazon’s punishment, if you will. But all your items stopped being for sale and you don’t get paid, they hold onto your monies, and then basically you have to put together an appeal to get back and get reinstated and reactivate your listings, paid, and continue to sell. So I was able to get reinstated.

Andrew: How long does this take you?

Ryan: In this case, it wasn’t very long. I was a bit back within about two days but I had known some other people who had been suspended and it’s taken three to four weeks to get back. We knew how to put together the appeal in the way that Amazon would be likely to respond to it and knew what information to include on the front end. So that helped a lot in terms of getting it, taking quickly but that’s not everybody’s experience. So I think I was a little bit lucky in that timeframe that they were able to look at it too because it definitely takes a lot longer for some people.

Andrew: You know, I saw that you’ve written about this on your site a couple of times. It seems like it must have been for the two days really painful but as big challenges go that’s not the worst. That’s not so painful, is it?

Ryan: It was scary. I mean when you have to send a text to like an employee and be like, “Okay, we’re not working today because the account is in jeopardy,” that really makes you take a step back and think about, “Okay, what do I need to add to this business or am I on the right path?” And basically it makes you reevaluate the risk-reward of decisions and things like that. But, yeah, I mean there’s definitely worst bumps that could come up along the way but that was a pretty scary one at that time as Amazon was the biggest driver of the revenue for my business then.

Andrew: And all right, and I could see how even the other sources of revenue were still dependent on that.

Ryan: Exactly.

Andrew: So you got back on, were there other challenges or was that the big one, the only one?

Ryan: That was a big one. No other huge ones really come to mind, I mean building a team and figuring out how to manage people and do that in a cohesive [inaudible 00:30:20] definitely challenges that come up there but I don’t know. I’ve learned some things in terms of like contracts and getting a lawyer involved when reviewing agreements, but, yeah, I mean I think I’ve been pretty fortunate to avoid some things that could go worse than they have for me.

Andrew: Let’s talk about hiring. At first, it was you then you started using the word we, and you explained that it was you and your roommate. Was the roommate a co-owner in the business?

Ryan: He was of the textbook, in the textbook days.

Andrew: So all those sites that you’ve created you guys co-owned but once you were done with that he moved on in a separate . . . you guys moved to your separate ways.

Ryan: Exactly.

Andrew: And then when you started selling, you started doing everything yourself, going to the stores, listing, and etc. What’s the first person you hired?

Ryan: Yes. So the first person that I hired was someone to help me buy via retail arbitrage. So someone else to go in the stores and help source products, that was the first role that I borough people on for just because . . .

Andrew: And you give him specific set of rules.

Ryan: Yup.

Andrew: Go to this store, look for these types of things, look for this margin. Okay?

Ryan: Exactly.

Andrew: Did that workout okay early on or were there some issues there?

Ryan: No, that worked out pretty well. The initial way that I did that setup was paying them a percentage of the profits once the item is sold.

Andrew: Okay.

Ryan: That was messy from an accounting perspective so that’s not the model that I use anymore. But outside of that the actual setup of having people conduct retail arbitrage that worked very well and it’s something we still do in the business today.

Andrew: All right, and then what was the next set of hires?

Ryan: Yup. And then from there, it was basically hiring some additional shipping and prep help to be able to get the inventory out the door with more people buying, it led to more inventory and then it’s been a fair consistent progression from there to make sure that you can get the inventory out the door. It’s like as soon as I have capital to buy more inventory, I would hire support to be able to buy more inventory and then once we’re buying more than we’re able to ship out then I would add in prep help to be able to get that inventory out the door.

Andrew: Why didn’t you get a warehouse?

Ryan: The first warehouse that I had, it was about 735 square feet. I moved into that in September of 2014, so that was a year after I was fulltime in the business.

Andrew: And then you, somewhere around there also bought a duplex, I’ve read your post about that.

Ryan: Yeah.

Andrew: I read that you said, a $138,000 is what you paid for. And I’m thinking, San Francisco, that’s not even nearly a down payment. Where do you get a duplex for that much money?

Ryan: Yeah, 139,000 was the purchased price back in March of 2013. This is in Minneapolis.

Andrew: Minneapolis, you get a duplex for that much, started bringing in rent, uh-huh?

Ryan: You do then. The market has changed quite a bit. Since then there’s still, if you go a little bit, if you go further outside of the city and some of the suburbs you can still get a duplex in that price range. It’s not in a very desirable area at this point, but, yeah, I bought the duplex . . . I actually bought the duplex before I quit my accounting job while I still had the W2 income that the banks like to see. So that was one of the things I wanted to make sure I had in place before I quit the job. [inaudible 00:33:43] bought the duplex, I live in half and then I rented out the other, and basically since the entire time that I’ve owned it it’s been rented out and the rent that I get from the other half of the duplex covers the monthly mortgage benefits, so I basically then living for free for the past five years.

Andrew: And you’re still in the same place?

Ryan: I have actually just sold it and the sale closes, it’s set to close in a couple of weeks.

Andrew: For how much?

Ryan: A lot more.

Andrew: Multiple times of what you paid, multiple times the sale price?

Ryan: Yeah, it’s at least double.

Andrew: Okay. Wow. You know, by the way I’m still like hunting you down as we’re talking. If you see my eyes go everywhere, it’s because I’m using domaintools.com to look up your domains, spyonweb.com to look to see what other . . . but you’re hosting with Google, right? Your website?

Ryan: My website, Online Selling Experiment is hosted through a WP Engine.

Andrew: WP Engine, but the domain then maybe it’s, I can’t find anything. I thought I had something I said, “I think I know what he’s selling online.” And then it was someone else’s site.

Ryan: Got yeah.

Andrew: All right, let’s continue then with the story. So you’re continuing to hire, it seems like you’re constantly hiring people to do things for you instead of helping you think through the business, am I right?

Ryan: Yes, that’s been the path that I’ve taken so far for the most part.

Andrew: Even the Shopify store that you bought, that’s one of your latest experiments. The person who’s working on it with you is an intern. They’re here to learn from you. You’re guiding them telling them what to do. They’re picking up knowledge as they do it. Why is that? Why are you hiring people just to do your process to do what you’re guiding them to do instead of hiring higher level people who could teach you more?

Ryan: Yes. So there’s a couple of angels to that. For the most part like with the hiring I’ve done especially the initial hires was I would want to figure it out myself, put a process in place, and then outsource it because then I’d be able to support them in doing that and that’s worked well for me. So that’s part of the reason that I’ve stuck with that strategy. When it comes to like the online selling experiment side of the business, I’ve hired a specific copywriter. I have somebody who helps specifically with the SEO side of things.

So in that, when it’s a more specialized task something I don’t have as much knowledge in that’s when I looked to hire someone.

Andrew: And just bring them in to do that?

Ryan: A set of skills that I don’t have.

Andrew: Okay.

Ryan: Yup. Something, where I feel like I have a good strategy or at least a good outline for a strategy and the Shopify store, is a good example of this. I have something that I believe would work. I don’t necessarily want to be the one that has to put in the time to execute on strategy but I want to more or less put the game plan in place, let them run with the game plan and then see how it goes. And if it works, great, if it doesn’t at that point that’s when I look to get a specific expert involved from there.

Andrew: All right, I want to know how you sell on Amazon in a moment, what’s working for you, how you figure out what to sell, how you list it that’s different as much as we can. First, I’ve got to tell, I think I’m going to tell you for the first time about ActiveCampaign. Have you ever used them?

Ryan: I have not, no.

Andrew: Let me give you an example of how ActiveCampaign could work. You write about eBay, Shopify, Amazon, I think you even do a little bit about your own personal story on your site. Your posts are super well tagged and you’re clicking from one to the other. What I don’t think you do at least from my spying I couldn’t find this, you don’t notice that if I’m reading constantly the Shopify articles which at this point I’m fascinated by Shopify, you’re not tagging as a Shopify interested person. Imagine if you were, if you were to say, “Andrew just keeps clicking on every Shopify thing. He has clicked on one or two eBay articles or Amazon article but Shopify, every time I post he clicks it. I should send him an offer to do coaching with me for Shopify stores.

Or I should, I don’t have a course right now but let’s test the waters for a course. I’ll find an affiliate program and email him about Shopify stores to see if he’ll buy that. And if he and people like him do then maybe we create our course for Shopify. Or let’s send him a link to a tool for Shopify that would be helpful that if he’s clicking it and buying it we’ll make an affiliate commission but more importantly we’ll know that everyone in our audience who reads a lot of articles on Shopify is open to buying these tools. Maybe we should create tools.” So that kind of technology is pretty intense. Do you do anything like that now?

Ryan: Not on the actual webpage.

Andrew: You do it via email clicks?

Ryan: I have to use tag setup in my email system but yeah, in terms of how people are interacting with the online selling . . .

Andrew: What do via email clicks?

Ryan: It gauge interest for different things and track which links people are clicking on and then based on what they click on they can get put into different sequences.

Andrew: What are some of your sequences?

Ryan: What’s that?

Andrew: What are some of your sequences in your email?

Ryan: The main one at this point is getting started selling on Amazon and then there’s one for, I’m going to be launching a new membership site soon. So I’ve been mentioning things about that and of people click on that . . . and I’ve been collecting tags on if people are interested in like retail arbitrage, online arbitrage, wholesale, which are all different methods of sourcing on Amazon and then maybe they’ll be offers at some point in the future but it’s a way to gauge what people are likely to be interested in the future. And then another one we collect is what experience level people are at.

So if they’re just getting started on Amazon, if they’re selling $1,000 per month on Amazon or if they’re above $10,000 [inaudible 00:39:19]. Why?

Andrew: Okay, that makes total sense and that is the kind of stuff that you want to ask people about and email is probably the best but well, email informs on your site surveys are useful for that. The thing is that most of us are doing that. It’s a pain in the butt with a lot of software to do it but most of us are at least tagging what people are clicking on. We know the segment based on that, most software makes it a pain in the butt, ActiveCampaign makes it super simple. In fact, if you go to their site, the URL that I’m about to give you can see they’ve got these gifts to show you exactly how to do that.

The onsite stuff we don’t do enough. Meanwhile, onsite is where people tell us a ton about themselves, what are they clicking on, what videos are they watching all the way to the end, what do they keep coming back to, what topics? And so what ActiveCampaign decided to do was make that super simple so that more businesses could actually do that. I’ll give you a little snippet of code, you put it throughout your site and once you do you can say this page means that they are paying attention to this topic, let’s tag them with that. If they have enough of those tags lets sell in that way.

That’s what ActiveCampaign does, so that you tag people based on what they do on your site, what they do in your email, it lets you message the via email or more and more people are saying, “I don’t just want to message people via email, there’s some things like if you do a Facebook . . . I think you did a Facebook Live, didn’t you, where you’re going an AMA? Did you do an AMA on Live?”

Ryan: I might have a long time ago, yeah, not recently.

Andrew:Okay. Well, if you do something like that or even a Reddit AMA, sometimes it’s good to say, “I need everybody to show up right now,” and there’s nothing like a text message to get them show up right now for webinars for Facebook Live, etc. and ActiveCampaign natively will enable you to do that. So if you or anyone else is looking to do deep, smart marketing automation that’s super simple, so simple that they show you on their site the backend to show you how easy it is, I urge you to go checkout activecampaign.com/mixergy. And the reason that you want to put that /mixergy at the end is first of all, you’ll be helping out your friend, Andrew, and second, what you’re going to get is they’re going to migrate you from whatever other software you have, they’ll migrate you for free.

So if you’re using a stupid competitor which doesn’t do this type of marketing automation or even a brilliant one that does it but makes it too complicated they’ll move you over for free if you use this URL. They’ll also let you try their software for free so maybe one night . . . do you drink whiskey, wine, something else?

Ryan: I don’t drink too much, when I do, usually beer.

Andrew: Beer, so maybe one night you’re just cracking open a beer or watching something on Netflix and you tried them for free. You get a sense of it and you go, “This actually could be good. Maybe not for my whole business yet because I’m not ready to do it but there’s this new idea I have them and I put it on ActiveCampaign. And when it’s free you can do that, the second month for free after you pay, and two free one on one sessions and I already decide I went too long so I’m going to end it by saying, go to activecampaign.com/mixergy, activecampaign.com/mixergy.

You know, Saatchi the guy who sells that for us said, “Andrew, I’ve been noticing you go really long with the ads.” I said, “Yeah, I’ve got to cut it back.” He goes, “Yeah, because in my agreement with sponsors I tell them, ‘Andrew will talk for 30 to 60 second.’ And then you go as long as five minutes sometimes.”

Ryan: It a good deal for the sponsor.

Andrew: Yeah, great for the sponsor and hopefully, it’s useful for the audience. I’d love it if my audience told me if it wasn’t if I was going too long. Guys if I’m yapping too much, andrew@mixergy.com, let me know.

All right, where do you get the ideas for what products to sell? What tools are you using to figure that out?

Ryan: Yes. So we use, it depends on a little bit on which sourcing method we’re using but if we take retail arbitrage the main thing that we’re using is a scanning app. It’s a . . .

Andrew: Scanning app, sorry?

Ryan: Scanning app, yup.

Andrew: Just to scan to see what it’s selling for on Amazon?

Ryan: Exactly.

Andrew: What app do you use for that?

Ryan: The Amazon seller app is one that’s free, it’s a good one to get started with the one we’re currently using. It’s called Scoutify. It’s made by a company called InventoryLab and basically what these apps do is it lets you take your phone. You point your phone’s camera at the barcode on a product and then it’s going to show you all the different or how well the product is selling in Amazon, how much it’s selling for and it gives you enough information to make a decision if it makes sense to buy that item to sell on Amazon or not.

Andrew: I see that at inventorylab.com/solutions.html but it’s in there, all right. Once you’re still using this, you’re still going out and doing arbitrage on clothes?

Ryan: We do it on some products. We do it more on like general products. So things like toys, gift type items, home improvement items, we do a little bit of apparel and shoes mixed in there too. Yup, so that’s still a portion of the business, so the outsource retail arbitrage, so I have buyers that go out to the stores and do this for me. And another big piece of our business if what we call wholesale sourcing, so that’s buying from manufacturers and distributors of existing brands and then we’ll basically partner with them buy products from them at their wholesale prices as if they’re selling to like a brick and mortar retailer and then we’ll do the online distribution for them. We’ll sell it on Amazon, eBay, jet.com or on websites wherever they want it sold on the distribution channels that we offer and then we’ll put it for sale for them and basically manage that into the process.

Andrew: And then you at that point aren’t taking that risk because they’re telling you where you sell it and you don’t pay unless it’s sold, right?

Ryan: We pay when we receive the product so we do a pretty deep investigation into all the products before we purchase them and then we’ll gauge demand as best as we can before purchasing them and usually we’ll start off with some test orders to see how well things sell and then based on those initial orders and how things sell through that’s what we gauge our future reorders on. So we do pay for the product that we’re bringing in.

Andrew: How do you know? What kind of signals are you looking to tell you that something is worth testing?

Ryan: Yes. So the main three pieces are first, the return on investment, how much money are we going to make on it. The second piece is what we call, what’s known as the sales rank. That’s a piece of information specific to Amazon and it’s an indication of how long it’s been since the item is last sold. So if an item has sales rank of one it’s the most recent item that’s sold in a specific category. So that’s another very helpful piece, and then the number of reviews that the product has is very helpful for determining how often people are buying it.

So the sales rank in combination with reviews gives you a lot of information about how quickly the product is selling and then we coupled that with the return on investment and the faster the item is selling, the lower we’re willing to go on the return on investment scale. If we think it’s a little bit slower selling, then we’re going to be more likely to require a higher return on investment to sell those particular products.

Andrew: And you’re using the sales rank directly from Amazon. I just did a search to try something out. There’s something called pull-up assist bands, I don’t know what that is but it’s the first thing that I clicked on when I went to Amazon and their Amazon bestsellers rank is a 194 in sports and outdoors. That’s what you do or are you using a tool to get that data out?

Ryan: Yup, so we use a tool for that, it’s called Price Checker 2 on the wholesale side, basically, we can upload a list of price list and UPCs and then the software is going to give us an output that has that sales rank, it will run the return, it figures the factors and all of the Amazon fees, it’ll look at the reviews and things like that.

Andrew: How do you know the return figures?

Ryan: What’s that?

Andrew: How did you know what the return figures are for that?

Ryan: Return on investment not actually return percentages.

Andrew: Okay. This is from dailysourcetools.com, is that the tool?

Ryan: I believe that’s the company who puts that, yeah.

Andrew: Okay. So you’re getting all that. You then run a small test to get a sense of how well it’ll sell. Do you look at comparables, other products that are similar too?

Ryan: Yup. I mean basically anytime we find a winner anytime we find something that we can buy we’re going to look at what other products are similar to it, what other products that manufacture distributor carries and we just branched out from there. So anytime we find something that works we’re going to see . . . we’re going to take that any as many different angles as we can to find more similar products or in that same umbrella to carry as many products.

Andrew: All right, now you’ve got the product, you’re ready to test, did you do anything different about the photos, the design, the listing, the search engine optimization within Amazon?

Ryan: For the most part, a lot of the products we sell are initially they’ll have a listing on there. We do make sure that the listings are [inaudible 00:47:48] that we have at least, we want six images that are quality show the product that they are clickable and able to zoom in on the products. We want to make sure the bullet points are filled out, contained search terms. We want to make sure all the backend things are in place. We’ll set them up so that they run in our PPC, our . . . we run ads through Amazon [inaudible 00:48:08] about all the products we launched initially so that allows us to gather additional data and it helps to sell through faster too so we’ll set them up on that system. And, yeah, so we’ll go through and makes sure the listing is optimized, set up the ads and then at that point we’re pretty much ready to start the initial test and see how they sell.

Andrew: Do you work with a copywriter on that?

Ryan: At the moment, no, we do that in-house but that’s something we’re considering for the future.

Andrew: And is that something that you also put together a checklist for and then the team goes in and writes it or someone else did that?

Ryan: For that particular process that’s more or less that’s been done by the members at this point so I had a version that I was using but that’s been tweaked and optimized by the team over time.

Andrew: Okay. It seems like you’re a big system and checklist person, right?

Ryan: Yeah, I mean I try to put the process in place so that there’s our game plan so far. Because if I can get a result doing something , if I can put a system in place or a process in place then I can have somebody else do that and get that same result and then I can work on something else and kind of continue having that run while focusing on growing another aspect of the business.

Andrew: You know what, so we’d be going to that too at my company at Mixergy. The problem we had for a long time was we’d have a system and it would just work and we’d never improve it. And we finally did something that helped which is put together a checklist with deadlines to check on the big processes that we have like the pre-interview process that you went through there is a reminder to check on it every three months and after you did your pre-interview we went in and overhauled it and adjusted it and now we’re going to go back in in another few weeks and adjust it again. That helped us. Do you have any tips like that for improving a process because it’s so easy to set up a process, no works then disappear on it because it works.

Ryan: Yeah. I like that idea that you just mentioned there of having a regular interval to follow-up on it. Yeah, I mean, to be honest, I don’t have a great answer for that. We are tracking the outputs of any process that we have so we’ll have, if it’s a process for like retail arbitrage buying we’re going to be tracking the return on investment percentage by the individual buyer, by individual store or things like that. And anytime we identify an error in there basically, with the analysis we’re looking in for two things, things that are doing really well that we can do more of and things that aren’t doing very well that we need to tweak, change or adjust.

Andrew: But it’s the numbers that are telling you. You keep looking to see. And then since you have so many numbers, so many different products, so many different product categories, so many different buyers. How do you make sense of it? Is there one spreadsheet that gives you the numbers that are important or something else?

Ryan: Yeah. There’s kind of like one man spreadsheet for different aspects of the business, so for like the Amazon side of the business, we’ve got one spreadsheet that tracks mainly return on investment by brand, profit by brand, profit by store, profit by category. We track all of those different things overtime. And then for some of the other projects, we have like a one-main spreadsheet. So there’s probably three main spreadsheets where I’m tracking these things on a regular basis.

Andrew: All right, let’s talk about Shopify. I saw your experiment with Shopify. I freakin’ hate that you’re not giving the name of the company that you bought but you bought a company, what was it, on Flippa or on exchange.shopify.com or was it. .?

Ryan: Yeah, I bought it on Flippa and the reason I’m not giving the name for that site is that I don’t want people to think that the reason that site is successful is because it has my name behind it and I’m like . . . if I do an interview like this I can get the name out there. So I want an organic way to show that . . .

Andrew: You know what, I totally get that. I think that makes for a better case study and you do show the backend of it but, man, I just love to see what you’re doing. But the problem is that you’re doing a long-term test that month after month you’re checking in on it. If you just wanted to do a quick test, you put the thing up and then I think one of my past guests did it for like seven days to show how fast it is to get some sales. But it wasn’t as deep as your test.

All right, but I get it. Let’s talk about Shopify because I get solicited a lot by people who say that the make $2 million, $3 million selling online. What I’d learned to do is investigate. They will send me their personal Shopify site, but the more I investigate, the more I realized that the majority of their sales are coming from Amazon. Low, low margins, you’re getting 10% margins, they’re getting much less than that. They’re barely getting a profit and their Shopify store is getting hardly any customers. And that’s disappointing for them because at any point their Amazon business could be taken away by someone who’s selling a knockoff product and their Shopify store it means a connection to their audience and to their customer base but it’s not working. So what have you learned about selling on Shopify that we can pass on to them?

Ryan: Yes. So with Shopify, yeah, I mean this project is one we’ve really started taking seriously over the past five months I would say. I mean honestly, one of the biggest things that’s been working with for us lately has been working with existing brick and mortar retailers to carry the product. I don’t think a lot of people are necessarily approaching them to get their products in the store. But that’s been working really well for us and we’ve been getting repeat business from . . .

Andrew: Wait, going to retail stores and saying, “Sell my products that I’m selling online?”

Ryan: Exactly. So we’re selling it online too and that’s working. I don’t think we’re doing anything super crazy in that regard just yet but what we’ve been getting the most traction on is actually approaching brick and mortar stores to sell our product in their stores and we’ll sell it at wholesale prices to them and then they’ll turn around and sell it to their customers.

Andrew: So you’re selling some unique product and then you’re going to the stores and selling it to them and what’s your process for selling that?

Ryan: Yes. So we don’t physically go to the stores but basically, we have a team of four virtual assistants who are researching stores to find prospects and then we have the main guy on my team who is working on this project, we’re using a software called woodpecker.co to automatically send these emails and it personalizes them, it will automate a follow-up if they don’t respond and then we’re just, every day we were doing outreach like that and that’s been starting to get some really good results. We’ve been seeing some reorders already from some of these existing clients and, yeah, I’m pretty excited about where that’s going, and our margins on the whole sale side are over a 100% as well. So whether we sell at wholesale or retail it doesn’t matter to me. In the whole sale side, we get a much larger purchases.

Andrew: What’s your criteria for finding stores to sell to?

Ryan: We’re looking for a specific niche. Like for us it tends to be more like gift shops but we go a little bit deeper than that. Basically, we want somebody that’s selling similar products but doesn’t have the particular niche.

Andrew: So what you’ll do is you’ll find these stores. How do you find their email addresses and the right buyers?

Ryan: Some of the time we’ve got a few places we check. Most of it is through Google and having the virtual assistants, if they find the potential prospect, if they [inaudible 00:55:29] the store that makes sense they’ll look on their website for contact emails, they’ll search on LinkedIn, they’ll search on Yelp, they’ll search on their Facebook page, wherever there might be contact information listed they’ll go to places and then in a perfect world we’re looking for the email address of the [owner 00:55:45] or a buyer for the store. But if we can’t find that, if they can’t find that within about 5 to 10 minutes I forget what we put in the guide, then they’ll just use the generic email for the store, the generic contact email or our contact form and [inaudible 00:55:58]

Andrew: Okay. So it’s very manual and it’s your team internally that’s finding all these contact info.

Ryan: Yeah, and that’s with virtual assistants. So those are people, those are hired through onlinejobs.ph. So it’s overseas virtual assistants.

Andrew: It’s searching other sites. Onlinejobs.ph, I’ve heard really good things about them. That’s hiring virtual assistants in the Philippines, inexpensive, diligent people, that’s what you end up getting there. And you hire them fulltime?

Ryan: In English. Yup, those are for our fulltime working, English is a primary language of the Philippines so there’s almost no language barrier which is one of the big reasons to go there too.

Andrew: That’s interesting. So you acquired the company from Flippa, they sold something that was unique. You said you didn’t do enough due diligence. You probably should have done more but frankly, if you would have done more you also said you would have, you probably would have bought it anyway. You’re selling it online. It seems like Facebook ads were working for you for selling to individuals. Did you do anything else like SEO?

Ryan: We’re just getting started in some SEO strategies and getting some links built. Yeah, we have some Facebook ads that are working. We’ve got retargeting ads set up. Those have been converting pretty well. We’re running some Google ads. Those have been performing quite as well for us so far. But we’ve got certain search terms that are generating a profitable return on ad spend so we’re kind of putting that in maintenance mode is kind of what I’ve called it. We’ve tested a bunch of things, we found a few that work so we’re letting those continue to run and then, yeah, we’re starting to do more outreach for the consumer side.

Andrew: And so then you said “Here’s the category of stores that we want to sell to, let’s see if we can find a way to get as many of those stores on the list as possible then the next step is to find their contact info, then you guys use, what’s the name of that software, use woodpecker.co to automate the emails that go out. The emails look like they come from this guy on your team who works for you as a fulltime person?

Ryan: Yes, fulltime, yup.

Andrew: It’s customized. If they don’t respond there’s another follow-up that says, “Hey, you might have missed my message,” or something automated like that. Then when they do respond, he jumps in. He talks to them probably on the phone and sells.

Ryan: Yup, either on the phone or email. And then sometimes we’ll send, the purchase price of each product we retail most of them between like $30 and $60 but our lower end products only cost us $7 to make. So we’ll sometimes send a sample to people as well. So basically, the close happens via email or a phone call. In a lot of cases, we’ll send a sample and then send them our price list of what we have and they’ll just place the order all via email.

Andrew: And what do you use to coordinate all these steps? Is that just Woodpecker or is there something else that you use?

Ryan: We are using HubSpot. We’re not fully utilizing it well enough yet. We’re going to need a better system for keeping track of all of the main clients we’re working with, but right now it’s a combination of Woodpecker and HubSpot.

Andrew: And so when you add people to a list of . . . potential customers to your list that’s going to HubSpot.

Ryan: Yeah, it goes into there too.

Andrew: Wow. I always think of HubSpot as inbound marketing but this is total outbound marketing, number one, you’re just using them as a CRM the way that some people have use spreadsheet.

Ryan: Mm-hmm.

Andrew: All right, let me close by asking you this question, this was on my mind a lot when I saw the notes on the pre-interview. We asked you the same thing we asked a lot of guests like if you could teach something what would it be, because we want to know what’s the thing that you’re especially good at that we want to get that knowledge out in our audience so that the people have some superpower, some business superpower because of listening to this interview. Here’s the weird part, you said I would teach them board game strategy like Monopoly, Risk, etc. why board game strategy?

Ryan: Yeah. I would add like there’s Catan. There’s . . .

Andrew: By the way that is a good game. My wife’s mom loves to play it. When she comes we play it. She’s incredibly good but it takes about an hour to learn how to play it.

Ryan: It does. Yeah, the first time [crosstalk 01:00:07]

Andrew: I had several of the Catan game at my, one or two at my house with past interviewees. I get it. Okay, tell me more, sorry?

Ryan: Yeah, the reason for that is making [inaudible 01:00:15] expected value and there is a reward. I think if you really boil down why people are successful or not, a lot of it comes back to their decision making and if you make your decisions based on expected value and in particular evaluate expected value, make the decisions based on times where you have a positive expected value, if you do that consistently overtime, you’re going to most likely do pretty well in . . .

Andrew:But Ryan, are you doing this in your head? I’ve got, my brother when he plays poker, he’ll do the percentages in this head. Do you do that in your head?

Ryan: I do, yeah, some of the time. I use to play a lot of online poker, so.

Andrew: And so as you went through online poker, as you go through Settlers of Catan and Monopoly you’re saying what are the odds of this happening and that happening, and you do that math fast.

Ryan: Yeah, or like if we take the Settlers of Catan example, a lot of people won’t trade in cases where they get a very advantageous trade but they have this one card that they want to hold onto because they need it for this next thing that they’re going to do but if they would accept the trade they would get so much more value and then they could leverage the value that they got [inaudible 01:01:19] thing that they still need. So if they would look at it instead of . . . look at the expected value side of things I think they’d make a different decision. So I don’t know if that made sense.

Andrew: It does and I think that that means that you make better trades but man it must drive you crazy when someone has a trade that logically is so good for them but they won’t do it.

Ryan: It’s a little frustrating.

Andrew: You know what I’ve learned with these games, one of the best things you could do is just spend about 20 minutes online doing a little bit of research about them. It’s not that hard to figure out in Monopoly these days. If you played it long as I did growing up, you’d know which were the right spots to buy up not the ones that feel right but the ones that keep turning that you keep landing on. Now, if you just spend 10 minutes, 20 minutes online, you could find all these out. You know, exactly where you should be buying, Settlers of Catan too, the first thing that you need to do is pick a property that will then give you these assets depending on the dice roll. And you just have to know which ones you should pick up front, and I’m going to tell you right now.

Ryan: Exactly.

Andrew: You know what, which one you go for, I’ll you which ones I’ve read that actually makes a ton of sense.

Ryan: Well, it depends on how the numbers are distributed on the board.

Andrew: Right.

Ryan: If you do it random, but for the most part I’m looking for six is [inaudible 01:02:32] I want to be honest, many of those is . . .

Andrew: Six is in what?

Ryan: Six’s and eight’s.

Andrew: Six’s and eight’s, right.

Ryan: I prefer to be on one of each, one, six and one, eight for diversification and then if I can pick which resource, I’d like to be on “or” because that allows you to build cities and then you get twice the rate of a settlement.

Andrew: So I prefer, tell me if I’m wrong, I thought that the best place to be is, obviously, you want those six’s and eight’s because when you roll six or eight you end up getting a resource. I thought the better ones to get were wood and brick, lumber and brick, because if you get lumber and brick could build lot of roads. If you get lumber and brick it means that you could get the ball rolling in the early part of the game and then you get to have whatever they’re equivalent is of houses, you know, the . . . interesting.

Ryan: Yeah. I guess I don’t know but I should I look up the statistical odds but in my experience from the games I played when I get “or” early on you’re able to build cities faster and then you’re getting resources at twice the rate of other people. Usually, other people are going to want to build cities too so you can leverage the “or” to get your bricks and wood.

Andrew: Because you’re negotiating with them, you give them “or” which is likely what they get.

Ryan: Exactly, so, that’s my impression.

Andrew: You know what, I love that. I would love to play board games with entrepreneurs just let’s sit down we’ll have a beer, not too much because I want to do the math in my head anyway, and just play that. Forget skiing, I find that skiing is kind of fun with other people, I’m not much of a skier but you don’t get to talk. When you’re playing board games especially with dudes when I want to talk to guys I can’t just go out for drinks. We have a talk but it ends up being in this hype cycle. If I want to have deeper conversations, I invite them over for poker inevitably everyone will bust out and we then could just hang out.

Ryan: All right, yeah, for sure.

Andrew: So we talked nothing about the one thing that you told our producer you’d like to bring up. I’m just going to bring it up at the end. I saw you’re trying to figure out what that was. It’s you said, “Hey, look, I’m teaching this stuff right now. If anyone wants to I’d love for them to come to my site and sign up for my course.” I’m going to tell them right now, here’s what it is, its onlinesellingexperiment.com, single word, right, onlinesellingexperiment.com.

Ryan: Yup.

Andrew: When they go there they could read up about some of your experiments. At this point it’s plural. You have the Shopify store, you’ve got an experiment with Amazon, you used the list all of your revenue as you did it, you don’t do that anymore. Why don’t you do that? Why don’t you list your monthly Amazon revenue?

Ryan: Yeah. I don’t do that for three main reasons. The one is we don’t necessarily want our suppliers knowing exactly how much money we’re making on the products. I don’t necessarily want all of the family and friends that I have knowing exactly how much money the business makes. And then it also creates some interesting dynamics with members of my team when they see exactly what the business makes on a regular basis. So I felt like during the months that I did that and shared, it was for about the first two years I did this site. I felt like that I kind of proved that selling on Amazon was a viable replacement for the accounting job and that it had kind of achieved that goal. So I decided to discontinue those posts for those reasons.

Andrew: All right, it’s still a really well-done site because those old case studies are up because I like the way that you think about your business and I like seeing you go through it. I will say the one negative is it is cryptic. I think there’s a reason why you don’t say it all but I’d go, “I want to know more man. How much . . . tell me that, tell me this.” But you do do a good job of being useful despite that like you’re not holding back and saying “If you want to know all the tools that I use to give me your email address.” You’re just listing them and giving people links directly to them.

You’re not saying “I’m trying something new in eCommerce.” You’re saying, “You know like I’m trying Shopify, here’s what’s working, frankly, the numbers are pretty low on the Shopify experiment but let me tell you how it happened.” And I think it’s an interesting read.

Anyone who wants to check it out should go to onlinesellingexperiment.com, your copywrite is phenomenal. And, of course, if you want to take it to the next level with them somewhere on here, I don’t even know where the freak is, but somewhere on here you also has a course that you can sign up for and a membership and books and other stuff, but there’s a lot of good free stuff on there too.

All right, glad that you were on here, thank you so much for being here and thank you to the two sponsors who made this interview happened, the first is . . . do you remember the two sponsors?

Ryan: Toptal and ActiveCampaign.

Andrew: Wow. All right, I’ll leave it there. Thank you so much, Ryan, I really enjoyed this conversation.

Ryan: Yeah, thanks for having me. I appreciate it.

Andrew: Bye. Bye, everyone.


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