Marketplace or Direct to Consumer: Are you Ready to Transition? – 259
Thirty years ago, selling products was straight forward. A shopkeeper opened their store in the morning and closed it up in the evening. In between, they collected sales. Today it couldn’t be any more different. First, the “store” isn’t necessarily attached to the ground. With e-commerce, entrepreneurs can move the store around depending on how they want to sell, and who they want to sell to. Many business owners don’t stop at one store (or platform), they pivot between marketplaces and platforms in the pursuit of the perfect customer connection.
That’s why today on the AM/PM Podcast, Tim Jordan welcomes Caulen Foster, who specializes in transferring businesses from marketplaces to platforms and D to C (Direct to Consumer). Want to get a clearer idea of where to sell your own product? There are many complicated questions to ask. Fortunately for you, Caulen has a lot of great answers.
In episode 259 of the AM/PM Podcast, Tim and Caulen discuss:
- 03:00 – Starting with Protein Powder with Facebook
- 04:00 – Building the Infrastructure to Support Authentic Clicks
- 06:00 – What is E-Commerce Spillage?
- 09:30 – Which Products are Right for a D to C Platform?
- 10:30 – How the Toothbrush Test Works
- 13:30 – The Bright Idea That No One Knows Exists
- 15:30 – Content is the First Step
- 17:00 – Competing for Attention and Engagement
- 20:15 – Matching Content Strategy with Your Goals
- 22:30 – The Power of Facebook and Instagram
- 25:00 – Concentrating on Any One Single Channel Might be Dangerous
- 27:45 – Complex Not Complicated
- 30:00 – A Trip to Caulen’s Bookshelf
- 31:00 – How to Reach Out to Caulen
Enjoy this episode? Be sure to check out our previous episodes for even more content to propel you to Amazon FBA Seller success! And don’t forget to “Like” our Facebook page and subscribe to the podcast on iTunes, Google Play or wherever you listen to our podcast.
Want to absolutely start crushing it on e-commerce and make more money? Follow these steps for helpful resources to get started:
- Get the Ultimate Resource Guide from Tim Jordan for tools and services that he uses every day to dominate on Amazon!
- New to Selling on Amazon? Freedom Ticket offers the best tips, tricks, and strategies for beginners just starting out! Sign up for Freedom Ticket.
- Trying to Find a New Product? Get the most powerful Amazon product research tool in Black Box, available only at Helium 10! Start researching with Black Box.
- Want to Verify Your Product Idea? Use Xray in our Chrome extension to check how lucrative your next product idea is with over a dozen metrics of data! Download the Helium 10 Chrome Extension.
- The Ultimate Software Tool Suite for Amazon Sellers! Get more Helium 10 tools that can help you to optimize your listings and increase sales for a low price! Sign up today!
- Protect Your Amazon Brand with a Trademark! Protecting your brand from hijackers is vital. SellerTradmarks.com provides a streamlined process for obtaining a trademark for your business and shielding your products from fraud!
- Does Amazon Owe YOU Money? Find Out for FREE! If you have been selling for over a year on Amazon, you may be owed money for lost or damaged inventory and not even know it. Get a FREE refund report to see how much you’re owed!
Tim Jordan: One of the biggest hot topics in the e-commerce space right now is where the heck to sell our products. Do we sell on marketplaces? Do we sell on platforms? Do we sell directly to consumers? And there are a lot of questions that have to be asked to determine what’s right for your specific business. In this episode, we’re asking a guy who’s done a little bit of all of it, and that’s what he specializes in now is transferring businesses from marketplaces to platforms and DTC. And we’re going to ask him all these questions. Can it be a good episode? Listen to the end. Here we go.
Tim Jordan: Hi, I’m Tim Jordan. In every corner of the world, entrepreneurship is growing. So, join me as I explore the stories of successes and failures. Listen in as I chat with the risk-takers, the adventurers, and the entrepreneurial veterans. We all have a dream of living a life, fulfilling our passions. We want a business that doesn’t make us punch a time clock, but instead runs around the clock in the AM and the PM. So, get motivated. Get inspired. You’re listening to the AM/PM Podcast.
Tim Jordan: Hey, everybody. This is Tim Jordan. Welcome to the AM/PM Podcast today. We’ve got a really cool topic. It’s one that is kind of in the front of people’s minds in e-commerce right now. You can divide e-commerce well, you can divide a lot of ways, but I like to divide it in two general categories, you have marketplaces and you have platforms, all right. A marketplace is someplace that already has traffic. This is your Amazon, your eBay, your walmart.com, your Etsy, your Zulily, right? It’s a place where you’re listing your products in a marketplace. Other people are showing up on the other side of e-commerce or what I call platforms. These are tools like woo commerce, big commerce, Magento, Shopify, that are supporting the infrastructure, the marketing kind of logistics of your business, but you have to drive your own traffic. Now, there’s a lot of benefits to each side. I think that one of the easiest ways to get started in e-commerce is through a marketplace somewhere like Amazon, somewhere like eBay, right, that has traffic, but some of the downsides to that are reasons that we might want to transition at some point over to an actual platform on our actual own direct to consumer capabilities. Right? So, that’s what we’re talking about today. We have a guy who’s done a lot of digital marketing. He’s done a lot of e-commerce stuff, and he’s kind of an expert in determining when to make that pivot. His name is Caulen Foster. So, welcome to the podcast, Caulen.
Caulen: Thanks, man. Thanks for having me. Super excited to be here.
Tim Jordan: So, do you think that I summed that up right by kind of splitting e-commerce into those two different segments? Or is there something I’m missing?
Caulen: No, no, no. You hit it right on the head. I mean, that’s what a lot of us are doing now. Anyway, even those in e-commerce we tend to work the two Amazon and Shopify, right. They tend to look at them as two individuals, even though from an infrastructure standpoint, like you were saying, they are different, but at the same time, if you’re building a brand organically, they’re one of the same in a lot of cases. So yeah, you’re right. People separate the view between marketplaces and platforms a hundred percent.
Tim Jordan: My understanding is you’re not new to e-commerce. You’ve been building and selling. I think it was supplements. You said direct to consumer started several years ago, right?
Caulen: Yeah. Yeah. Six years ago, I invented the almond protein powder. So, we pioneered that space by defining almonds in a very specialized way, turned it into a protein powder, went direct to consumer, used Facebook during the golden years of Facebook, right. When Facebook was just doing what it did. And I got to enjoy the fact that the company is still around. We’ve been doing a bit of an expansion on products, but yeah. So I’ve been in that and I’ve done product consulting. Obviously, e-commerce consulting, working with agencies, things like that. It’s been awesome. I literally am like a huge e-commerce nerd. Like I talk about it all day, every day.
Tim Jordan: If I look at your resume, you’re doing the DTC, which if people don’t know what that means, it’s like direct to consumer. You make a sale and you ship to them directly and you’re transacting them directly. So you had your DTC brand, you started doing some consulting, some brand consulting, and then you jumped into what you call performance marketing. What does performance marketing mean?
Caulen: Basically performance marketing is where you work with a brand. In my case, it was influencers, which, if you understand the nature of influencer traffic, which is warm, it’s a really great place to build the digital infrastructure that they need to support that traffic. What we do is we basically, at the time I would build their infrastructure for them.If they were driving thousands of impressions and clicks, I built the infrastructure to support those clicks and help them maximize the revenue. Then as a result of my efforts, I would take a small percentage of the sales. If I don’t perform, they don’t perform. That’s where the nature of performance marketing comes into play. So, it’s a riskier model, right? But like I said, if you understand the nature of healthy influencer traffic, that’s driven by authentic clicks and a really great brand attachment to that influencer, it’s a really powerful tool. That’s why influencer marketing is what it is because the traffic converts very, very well, because it’s warm, it’s coming from a person that people trust and they know they identify with.
Tim Jordan: So, you have sold your own brand online and you’ve consulted all the brands. Then you started doing external traffic and things like that. How were you first introduced to a marketplace? Which I assume your first one was Amazon.
Caulen: Yeah. Well, I got introduced to it actually, oddly enough, through a direct to consumer brand that one of my good friends was a part of, so they were– their predominant sales were coming from Amazon, but they had a pretty decent looking Shopify store. They just couldn’t get it to convert. And my buddy, he had been asking me to take on the project, but you wanted to do it kind of like an agency, right. And I hadn’t really done that at the time. And eventually he convinced me as a really good friend and I told him, Hey, I’ve got a good buddy of mine who just exited an agency that he’s a part of. If they’ll take it with me, we’ll take a look at the brand and we’ll help you build this thing out. And as we started looking, we realized that, wow, this brand is predominantly built on Amazon, but it has huge opportunity and leverage, and content to leverage on Shopify. So that was where we first came into contact with brands that were, okay, like this is doing this on here, but it could also be doing this on there as well.
Tim Jordan: And you use a term called “spillage,” right? What is “spillage?”
Caulen: “Spillage” is basically what happens when you’re selling on both platforms and you have sales that trickle from one platform to the next. So in the instance of this business, they were selling, they’re doing very well on Amazon, a seven figure brand. And they were getting customers who were finding their brands, looking them up, probably interacting with them on social media and decided to purchase directly through the website because brand consumers know, they know when they’re supporting a brand directly when they’re buying a product through Amazon. They’re not– I don’t know if it is a huge factor in their buying process in the masses. Some people it is, but not everybody. And I think that what happens is you get what’s that spillage, and it can happen from either end. It does, it’s not exclusive to Amazon or Shopify. People could be buying your product on Shopify. And then you get spillage onto Amazon, which you can expect about 10 to 14% of your running traffic.
Tim Jordan: If I understand this correctly, the scenario you’re talking about, where you get the spillage is a brand that’s selling in a marketplace like Amazon, and then they’ll set up a Shopify store to look more legitimate. They hope they’re going to get some sales there. They’re not absolutely, intentionally pumping traffic to that website, but they’re just getting enough accidental brand recognition that people are accidentally finding the site. Right?
Caulen: Right, exactly. And especially if you have a great product too, right? Like a product that people use or consumables, it’s really going to be more frequent. If you’re using a spatula, it might not be, as– somebody might not have that brand affinity, right. But if you’re consuming consumer product foods and stuff like that, that’s why you see a lot of a healthy mixture of brands that are supplements and health foods. They usually have both or some level of both platforms for that exact reason, right. Because you start to develop a connection with these brands because you use them every day, right. They have a very strong triggering event. There’s something that becomes a staple in your daily routine. So, you naturally start to build up that. Well, you know what, let me go see if these guys have a website, let me go see if the guys have an Instagram. And that’s usually the natural order of e-commerce anyway, when it comes to sales. So, yeah, definitely is the number one way that I’d say that that happens.
Tim Jordan: And that’s very different than an actual direct to consumer brand method, because if you’re selling intentionally on Shopify, you’re driving traffic through external sources, you’re really focusing on that. What you’re talking about, it’s accidental, right. There are people getting into accidental traffic and determined, Hey, maybe this is something we can start focusing on.
Caulen: A hundred percent. And there’s a lot of brands that happen for, like I said this brand, they weren’t doing any efforts on external traffic. Really. They were just getting, they had subscriptions. I mean, they had a pretty decent amount of subscribers for a brand that literally had never really run a lot of traffic and they just couldn’t get their Shopify store to really work, right. But just by the natural order of traffic and their loyal followers and customers that were buying the product over and over on Amazon, they came over and you can, like I said, expect about a 10 to 14% increase in spillage. When, if you’re running, like from Shopify to Amazon, if you’re running traffic, you’ll usually see some spillage because of the nature of how traffic moves online. You know what I mean? It’s just not linear. People bounce all over Google ads, Google calls at the messy middle, and that’s exactly what it is. It’s the messy middle.
Tim Jordan: Yeah. And that makes a lot of sense. And it helps, I think, to set the tone for where I want to go for the rest of this interview, which is to learn from your experience, right? Because you have the DTC experience, you have the influencer external traffic driving experience, and you’ve helped people move from a marketplace to an actual independent platform. So, I think that you’re probably the guy and that’s why I wanted you on here. That can answer a lot of these questions that people have, such as who actually needs to make that transition. Like when, why, who, where, right. And one of the first questions that of course is going to be asked that I’d like to address is which products are right for platforms, because there are so many people that obviously want to make that transition. They want to start reaping some of the benefits of an independent, direct to consumer site, but they’ve got a product catalog. They’ve got stuff that they’ve sourced. They’ve got a brand and not everything is going to work if you make that transition. How do you assess if somebody’s product is right to actually move to a DTC model?
Caulen: Yeah. That’s an amazing question. And it’s super relevant because it’s really the first thing I look at is the product. So in addition to– the very first thing that you want to look at is the product, right. And how do we do that? The first thing we do is we have something that we develop with my business partner and I called the toothbrush test. And it’s like, sounds super simple. It is super simple. But it really lays out the metrics for how you want to pick a product. And it’s based on the premise that if a product can improve or replace the way a problem is solved, it should more than likely be on a platform. It can expand onto a platform. And in some cases they might want to start on a platform. So, I’ll give you an example. So, the toothbrush test is actually based on a true story where a gentleman that we were speaking to, he wanted to expand from Amazon to Shopify and he was selling toothbrushes and he was doing very well on Amazon doing six figures a month. And he had a very good, consistent flow of traffic. And his idea was that he was going to be able to expand onto a platform like Shopify and start basically doubling his sales channels overnight. Right. And it’s just not the way things work. I wish it was sometimes, but it’s just not. And it was kind of hard at that time because the toothbrush test didn’t exist. Right. It was hard to explain to him why it wasn’t working. I didn’t want him to think I had to keep telling him, like, I don’t think you have a bad product. I just don’t think it’s a great opportunity for a direct to consumer platform like Shopify.
Caulen: So, I started going through his products and his competitors and what we came up with naturally created the toothbrush test and the toothbrush test we had. We took a picture of his toothbrush and I said, Hey, listen, this is your current toothbrush. Very generic, probably like a wholesale item. And then I found a picture of a, there was like a product that had like an electric toothbrush and it had like a stand and a water pick. And it was, it looked a little bit more exciting. And now we go back to improving the way a problem is solved. You have– toothbrush solves a problem, but now we want to improve the way that problem is solved. So how do we do it now? We have the electric version, right. And that also comes with a bundle. So, it’s got a little bit of an offer, which offers a little bit further down the line, but it’s still important to know. Then the third picture that we had, and that’s– we will call that worth the test, that’s a product that is worth testing. Then to the right of that, we have a picture of a hands-free toothbrush. I didn’t even know a hands-free toothbrush existed, but they do. And basically that product completely replaces the way a problem is solved. It doesn’t just improve the way it completely changes the experience. We would call it a new mechanism, right? It’s not doing this. It’s not electric. You just put it in your mouth with bubbles. And that product is probably going to be something that is more platform centric versus marketplace centric, because who’s really searching for a hands-free toothbrush. That’s not a bottom of the funnel or what I would consider like a high intent search. So, that’s how we look at it. And if anything falls to the left of the toothbrush test. So if it’s more like a generic product, like if, if I say, oh, that’s a toothbrush test, that’s a toothbrush and it fails the toothbrush test. I probably wouldn’t expand that product. Now, if it falls to the right of the toothbrush test, which would be with the electric toothbrush being the anchor, if it falls to the right of that in terms of its ability to improve, replace the way a problem is solved. Now, we can go into the next layer of product selection.
Tim Jordan: It makes a lot of sense when I think about the different private label products out there, the different types, right? I have these kinds of three that I categorize. I have these Yeti products, which are something people are looking for that can’t find it, the kind of mythical creatures. I have what I call the better mouse traps, which is just an improved product. Then I have this thing that I call the bright idea. Like it’s a really cool idea. It’s a really cool product, but no one freaking knows it exists, right. I have a friend who’s an owner of a product called wet sleeve. And what sleeve is just like a hands-free, athletic, active water bottle that slides on your arm. It’s a neoprene sleeve. It’s an amazing product, but it was a complete dumpster fire on Amazon. Because nobody knew they wanted this thing. Nobody even looks for it. Right? There’s no keywords. So what you’re saying is the toothbrush test helps determine maybe, if you have one of those bright idea products that just won’t work in the marketplace because there’s no traffic, there’s no intent. But because of the nature of the traffic and awareness that you’re generating for a DTC brand, you can educate people that it’s something they want to have, right?
Caulen: Dude, a hundred percent right. That’s exactly right, yeah. The bright idea is the hands-free toothbrush, right? That is the marketplace. Or that’s probably not the marketplace product. That’s the platform product because it’s just, you have to show people that they need it there. We would– it goes back to their level of awareness and sophistication of the market. They have a very low level awareness that the problem may exist. And they also have a low level of sophistication that the solution exists, right? So they don’t know that their problem, their problem, unaware and solution unaware, which is literally the hardest thing to market in any business, you have to explain the problem that people have, they don’t know they have. And then also the solution and why this solution is relevant. That’s a very, very hard psychological thing to do for someone. So yeah, but they do have really amazing opportunities because they replace the way a problem is solved. So there’s that direct response ability to kind of introduce something new to the marketplace, which is really healthy for acquiring customers.
Tim Jordan: When we’re looking at a product and we determine, Hey, this is something that needs to go DTC, it needs to go on a platform. We have to start figuring out how the heck we’re going to educate people that these things exist and that they want it, right? So, how do you start approaching the marketing traffic campaign? My suspicion is there’s going to be a lot of content.
Caulen: I feel like you’re right in my process because literally it’s like, there’s a lot of other technical things under the product level. But yeah, like once we get through those sec, those layers, the very next thing is always content. Like we can amplify the message. We can do a lot of amazing things for your brand, but none of it really exists without content like content is literally the anchor for every single thing. It’s not just your ads. It’s going to be your ads. It’s going to be your landing page. It’s going to be your emails. It’s going to be anything and everything that is going to help build a relationship with your customer or collect sales there. Those are the two most important things in e-commerce is providing value and obviously a transactional relationship with you and your customer, but that’s all driven through content. And it’s all driven through pleasant content and pleasant infrastructure. And you can’t really, those are one in the same, right? Like you cannot have pleasant infrastructure without pleasant content. It just doesn’t exist right now, especially since the standard is getting higher and higher and higher every day when it comes to direct to consumer marketing, right? Because brands have to compete, we have to compete to get clicks. We have to compete to get people’s attention, right? Like with Amazon, there’s a lot of keywords, right? Like keywords are the bread and butter, so to speak, right? That’s what you want. You want to rank for keywords. And with Shopify and with Facebook and Instagram, when you’re using these platforms, you’re competing for attention, you’re competing for engagement actually. That’s really what you’re competing for. *Because you want people to click on that ad.
Caulen: So, with that being the competitive nature of where e-commerce is, the content has to get better. You have to constantly be iterating, trying new things, user generated content, compilation videos, stop motion videos. There’s a lot involved in it. So content, if you don’t have it, you’re going to need it. And if you don’t have it, you have to be ready to invest in it. If you have it, great, awesome. We have a really great baseline for us to start testing things. But even then, you’re probably going to need more because there’s ad fatigue. There’s all there’s things like that that just happen. But content, yeah, man, it’s literally the backbone of any successful e-commerce campaign that I’ve ever been a part of has been built around good-looking content, and really great offers. But yeah, content is content is king more now than ever like that statement is probably even more relevant now than ever than when it was created like 30, 40 years ago.
Tim Jordan: Now, do you think that the format of content changes depending on the type of product that you have?
Caulen: That’s a really good question. So, yes it does. And I think that– so I’ll give you a great example. If you’re selling a product that does something that’s really unique and really amazing, the most important way to convey that, especially in direct response or direct to consumer marketing is to do demonstration content to show how powerful it is. You want to show how powerful a blender is? You put a brick inside of it, you blend it up, right? You want to show the features of a product and how amazing they are. You need to be able to demonstrate that. People doubt two things, they doubt the product or they doubt themselves, right? That’s usually the way the consumer thinks when they’re buying products like in the supplement space. People doubt themselves more than they doubt the product because they just say, oh, well, I’ve tried so many diets and, or I’ve tried so many products and I never stick to the program or vice versa, right. Or I’ve tried so many products and none of them worked. So, we want to alleviate that barrier, right. We want to make people feel comfortable with what they’re buying based on the proposition that you’re selling with that product. So like I said, if you’re selling a blender, do this, if you’re– anything that you might be selling, you want to be able to have a bath bomb is a really cool way of demonstrating content, right? Like that’s why they hit the way they hit when they first came out, because that’s a really cool way to demonstrate the product working. And that’s something we look for as well. But yeah, that would be one way, another way is just really captivating the user with lifestyle, making people feel like it’s a part of their life, every business, or every product really needs a triggering event that really makes people want to use that product. Or else you probably won’t have enough, especially on the consumable side. Right. But coffee, when you wake up, you’re triggering an event. That’s what you trigger. Chips, picnics, Super bowls, whatever you want to have. So, anyway, it kind of boils down to keeping all of that into mind when you’re doing that.
Tim Jordan: Do you think that if you’re talking right now to somebody who is selling on a marketplace, they’ve got a product they want to make this transition. Do you think that they need to have a bunch of content already, or they can get started and slowly start building this content and making it. Do you need a big splash to get started? Or can you get started? And then like slowly start backfilling.
Caulen: So I think that that would have to be aligned with the business owner’s goals, right? Because if their goal is to go ahead and just turn this thing into a sales machine, right. Like to really where you want to match them, but let’s say you’re doing seven figures on Amazon. You really want to start hitting the ground running on Shopify. You’re probably going to need to invest in a lot of content, right, in that case. But if you’re looking to possibly build like just a slow new sales channel, ease your way into it. I would say that taking small chunks of investment at a time to get content is perfectly reasonable because your expectations are not that you’re going to go ahead and double your sales channel overnight. You’re building a building in the time that a building takes to be built, right? Some people like to build a building in 12 months, and that’s what the architect and the developers are going to do. Some guys, they take three years and it’s just a longer process because they want to take their time. So it really aligns with where your goals are with your brand or your product. So again, if you’re trying to hit the ground running, you gotta go hard on content, because you’re going to need it for a lot of different parts. Again, ads, emails, things like that. But if you want to build a brand, or if you want to build a machine or a piece of infrastructure, that’s going to help add a new sales channel for you over time. And you’re not really super reliant on it, but your efforts and your efforts are really there. And you’re really in the place where you feel like that’s where you want to go with your business. I don’t think that there’s a rush, right? The business isn’t going anywhere. And you can take chunks out.
Tim Jordan: We’re talking about goals. We all have different goals and we have to really analyze our goals to determine what we’re going to be spending our time, energy and money on in the near future, what type of goals that people might have lean towards breaking free of a marketplace and going to a platform, like what goals do you see are pertinent with the type of people that need to make that transition?
Caulen: Yeah. Great, great question. So, the number one goal that I would say that most, all the clients that we work with the most successful and in ways of meeting their expectations is really understanding that Facebook and Instagram, which would probably going to be your two most popular traffic sources, even today with a lot of stuff that’s going on with Facebook, they’re still going to be probably the best traffic sources for customer acquisition, not front end revenue, not front end profitability, like customers, like your strategies need to revolve around getting customers. And then focusing those efforts on a lifetime value play like really trying to get people to come back and use your product. A great example to simplify would just be, think of like a restaurant. If you’re a restaurant in a small town, or even in a decent sized town, your restaurant is not going to be successful if you only have people come and eat at your restaurant one time. Restaurants are built on recurring customers like people coming back and people bringing their friends and family. That’s really how I look at direct to consumer marketing right now, and new customer acquisition and where businesses are on Amazon in relation to their goals. They have traffic, right? If you’re selling really well on Amazon, you have a pretty good, deep understanding of acquisition on Amazon, I guess. I know we all never really have it all figured out, but you’re going deep on acquisition. You’re acquiring customers and very consistently predictable traffic is what we will call it. And if you have that, and what you’re looking to do is accentuate that and maybe start acquiring customers somewhere else versus trying to build that exact same model. You’re going to have your expectations met a lot better. Whereas if you’re trying to, you’re selling a toothbrush and it’s selling for 9.97 and the traffic on Facebook is expensive as it is. You’re not going to be profitable on the front end and anybody who promises you will, I can promise you, you’re not going to be working with them for long because it’s just not going to happen. Right. It’s just not likely. It’s very, very unlikely. But if your strategy is to look at this and develop strategies, either on your own or with a partner, growth partner, your goal should be customer acquisition, find a way to get customers and turn them into lifelong products.
Tim Jordan: So Caulen, if you’re talking to somebody about their goals and they give you a list of goals that might not really show that they need to be moving to DTC platforms, like what would those goals be, where you would say, Hey, pump the brakes. This might not be for you.
Caulen: Like I was telling you before, it’s really focused. So, the first thing that I would say, is looking at this as a way to escape a current channel that you’re on, right? Like for example, Amazon, your fees are through the roof. Your inventory limitations are killing you, your logistics, your container prices are–
Tim Jordan: You’re frustrated.
Caulen: You’re frustrated. I’m tired of this. I want to move to DTC and I want to build the same exact business there. And the reason why I think that that’s a really risky and kind of dangerous thing is because now you’re, you’re taking your business from one single channel model to another. And any time you rely on a single channel, it’s ridiculously risky for your business. Doesn’t matter whether it’s Amazon, Shopify, Walmart, Etsy.
Tim Jordan: You can’t put all your eggs in the same basket.
Caulen: You really can’t. So, if your goal is to exchange your eggs from one basket to the next, it’s a really bad idea in my opinion. And it’s just risky. Because again, now you’re going to go with all the peaks and valleys that come with the new channels, the new marketing, all the new data you’re going to have to be able to interpret. It’s a lot of work, right? So, that would be the number one thing that I would say. The second thing is probably focusing your business on a front end only model, basically where you’re selling a product you’re trying to be front end profitable. And the average order value of your product is in the 20, $30 range, even 40, 50 right now, probably even higher with the cost of goods. And if you’re paying an agency or something like that, you’re going to be in a very, very tight spot, relying on a product that’s 60 or $70. And you’re trying to get front end profitability, and you’re trying to replicate what’s happening and working for you on Amazon. I would think that that’s probably a bit of a risk to our model. We work with a lot of consumables, and if they’re not consumables, they’re probably higher and average order value, the $300 range, maybe like a dash camera or something like that with a very unique dash camera as well, it would have to be that. And something that maybe another factor that we look at is, besides average order value and things like that would be is, or being a two voice is can two people in a household use it. So a dash camera, you need two cars, for example, or you have most people have two cars, so you might need two of them. So maybe that’s not like a lifetime of full blown lifetime value, but at least, you know there might be more products you can sell in the future. So definitely looking at consumables, average order value, what your goals are in relation to those things. And again, just focusing on building a brand that people are going to come back to and use your products over and over again on the consumable side. And if not, it has to be able to sustain the cost of traffic on Facebook.
Tim Jordan: I’ll be honest with you. There’s been a lot you’ve talked about, right? Like you’ve asked, you’ve talked deeply, and I think it’s valuable to talk about, because this is a question nobody has. There’s only so much time that we have, there’s only so much focus we have and we get the shiny object syndrome of, oh, let’s jump to this and this and set this up and set this up. But I think that people forget how much work there is. Setting up a Shopify account is easy. Opening up a Shopify store is easy. Being successful on Shopify or any DTC platform is not easy. There’s so many pieces of the pie that have to be considered and have to be executed well. And it’s just not easy. That wasn’t worth it for a lot of brands. A lot of people, I absolutely think so, right. No doubt, but we do need to be very objective in the way that we’re thinking about priorities, goals, and realistic expectations before we do this. But I do think that there are a lot of people that should have made this move a long time ago and haven’t. Just because there’s a lot of stuff it’s complex, it doesn’t mean that it’s necessarily complicated.
Tim Jordan: You can break down each piece and bit to something that is executable. If you don’t want to do it yourself, you can outsource this. There’s a lot of great solution providers out there that can do these little bits and pieces for you. But I think that the stakes are high if you just stay on a marketplace or especially if you just go down one marketplace, because at any time you can get suspended, anytime something can happen and anytime a rule can change. But also when you get off of the marketplace, that’s your audience. If you’re selling on Amazon, you’re not selling to a customer. It’s very, you know, very similar to putting something into the Walmart store, on a physical shelf at Walmart and the client buys your brand and checks out. You don’t know who that was. You just know that something moved, you know, and, and actually having a direct to consumer brand and platform gives you an actual direct consumer relationship. So yes, it’s not easy. Yes, it’s complex, but there’s definitely value to be had there. If you click off some of the positives on the checklist, like Caulen shared with us today to make sure you are a good fit. That’s awesome, Caulen. As we wrap up, is there any last tip or hot topic that we forgot to discuss that you’d like to drop on us?
Caulen: No. I think we covered a lot of really important things. The goal, I think, is being able to create offers that are appealing to your customer. I always say that if you can’t compete, if you have your product, if your unique selling proposition on your product, if you can’t compete at a very strong USP, you can definitely compete on your offers. And that’s basically showing your customers the incentive and the initiative that your brand is taking to acquire their business, right. And use the data that you have to expand upon your business. But yeah, man, I think you brought up a lot of really great points, everything you brought up about expansion and keeping an eye on multiple channels. I wouldn’t want to tell anybody just to be on Shopify, right? If you can be on Shopify, you can see if you can be, I expand Amazon too. Like, we don’t want to keep people down. And yeah, I think that that was a really great way to put everything.
Tim Jordan: So, one of the questions that I like to ask all of our guests is, in your entrepreneurial journey, figuring this stuff out, you must have learned something from a book. If you could go to your bookshelf right now and pull one off the shelf to share with everybody that they need to read, what is that book?
Caulen: I got a tie between– there’s two of them. So, I’ll get a bonus here. One is shorter, it’s called the 16-word sales letter. A short book, really solid, direct response marketing book really teaches you a lot about products. And it’s really relevant to this. If people listen to this podcast and then read the book, you’ll see there’s a lot of stuff that I’ve pulled from there. The second one is breakthrough advertising. Probably one of the best marketing books I’ve ever read. It was actually– the book is so relevant. And so like timeless, it was written in 1964, and it’s taught me more about digital marketing and marketing online than any other book I’ve read, even those that specialize in e-commerce. So, it’s an amazing book. Yeah, it’s crazy. And the book is like, it’s literally the price of a college textbook and it’s worth every penny. It’s unbelievable. Best book I’ve ever read.
Tim Jordan: Amazing. Good recommendations there. If someone would get in touch with you, Caulen, how will they go about finding you?
Caulen: So, you could contact me directly through LinkedIn. That’s usually the best way to contact me. You can look me up. Caulen. And my last name is Foster.
Tim Jordan: We’ll go ahead and wrap up now. Thank you all for listening. Make sure to leave us a review if you feel so inclined to do so. And we’ll see you guys in the next episode.