Some entrepreneurs need to be passionate about their product to fuel them on their journey. Others take a more logical route—a lucrative opportunity and a love for business are enough to keep them going.
On this episode of Shopify Masters, you’ll learn from Andrew Youderian, owner of Right Channel Radios, a store that sells CB radios and antennas, who took a more practical approach to choosing his niche.
In this episode, you'll learn:
- How to prepare when you’re thinking about making the jump from the 9-to-5 to working on your business full time.
- What it means to add meaningful value when you’re dropshipping (and why that's critical).
- How to create content when you don’t know anything about the industry.
Listen to Shopify Masters below…
Show notes:
- Store: Right Channel Radios
- Social Profiles: Facebook
- Recommended: Usertesting, Asana, Helpscout, Zendesk, Evernote, Yotpo, Simple Maps, DirectedEdge, MyWifeQuitHerJob.com, Nerd Marketing, Ecomcrew, Retail Geek, Moz, BuiltWith.com
Transcription
Andrew: Hey, thanks, Felix. Appreciate you inviting me on.
Felix: Yeah, a big fan of your work and content for the ecommerce entreprenenursand definitely want to get into the Ecommerce Fuel side of your business in a bit, but let’s first start talking about your store. Tell us a little bit about Right Channel Radios. What are some of the most popular products that you sell?
Andrew: Yeah, well, so Right Channel Radios is, like you mentioned, a retailer for radio equipment for trucks, jeeps, four by fours, focused on old school CB radio equipment. Yeah, I mean, the popular things we sell are really antennas, radios, cables, mounts. Pretty much anything you need to hook up a cb radio system in your vehicle.
Felix: What’s your background? How did you get into selling CB radios?
Andrew: As surprising as it may be, it was not a lifelong dream from a childhood age. I worked a job out of college for a couple years in finance and ended up-- it’s kind of your typical story. You work for the man for a while. I worked with some great people but realized it’s not what I wanted to do long-term and so I quit and was exploring a bunch of different options. Didn’t know necessarily I wanted to specifically get into radios but had a hunch. One of the things I was exploring was ecommerce and I spent probably two to four weeks just really evaluating options and exploring and doing research and decided on the ecommerce route. Decided on radio equipment based on some research I did and just kind of dove in. That’s kind of the short story of how it worked out.
Felix: Yeah, so you had a job already. You sound like a stable job that ... I think a lot of people can relate to this, and wanted something more so you just straight up one day quit your job without knowing exactly where you were going to land or where you even wanted to land and were just kind of out there in a field and looking around. What was that moment like? How did ... Did it feel liberating or was it nerve racking. Give us an idea of what it feels like to make that jump without knowing where you’re going to land.
Andrew: Yeah, it felt good. It wasn’t too scary because I had been pretty good about saving up money the previous couple of years and was a bachelor at the time. No family, didn’t have a whole lot of expenses or dependents and so I had a decent sized runway and it was exciting. It’s always a little scary when you take a leap and you’re like, “I have no idea what I’m going to do next,” but for the most part, it was pretty exciting.
Felix: What would you say if someone asked you for advice on the situation where they are thinking about maybe not immediately but their working on planning towards going fulltime into a business or just going fulltime ... or just leaving their fulltime job like you did and figuring it out? What are some things that you would recommend they prepare, maybe six months ahead of time, to make sure that that transition is smooth?
Andrew: Just hording as much cash as possible and cutting your expenses. I mean, that may be the obvious one but I think there’s kind of two types of people in the world. People that look at money as a means for buying stuff and people that look at money as a means of buying freedom and flexibility and options and optionality. I’d really try to do that. I’d also try to learn as much as you can while you’re gearing up to quit.
I don’t necessarily know if the quitting cold turkey like I did is best for everyone. It was great of me. It gives you a real sense of motivation but there’s been a lot of people who have successfully transitioned out of a job with a side hustle or side project. Obviously, that’s much less risky but, regardless, the more you can start just going to town on learning as much as possible or reading and getting up to speed on ecommerce and marketing and those kind of things, that helps tremendously so you don’t just hit the ground without any revenue or business and have to learn everything from scratch.
Felix: Yeah, so I’m going to ask you to kind of put yourself in that position back then, back in I guess 2007/2008, when you decided to quit your fulltime job because I think there are listeners out there that are ... have this drive to do something more. Start a business but then don’t know where to ... They know kind of where they want to be but they don’t know how to get there. What are the first steps towards moving in that direction? Can you give us an idea of how you, I guess, not necessarily decided where you were going to be but what steps did you take to expose you to the options that you eventually chose, which was ecommerce?
Andrew: I was like, “What do I want my life to look like?” It wasn’t all about money because I just had got done with a job that I could’ve made a ton of money in but was limiting in a lot of different ways. I sat down and I said, “I want to call my own shots. I want something that doesn’t require a crazy amount of startup capital, something that’s location independent that has x amount of potential.”
I wrote out those criteria, what I ultimately ... what the end result I wanted to be was and I looked at a bunch of things. I looked at being a freelance photographer. I looked at doing options trading, and looked at ecommerce. Ecommerce kind of fit, especially drop shipping ecommerce, kind of fit those criteria. After thinking about it and dabbling in all three of those for a couple weeks and really giving it some time to marinate, I was like, “Okay, I’m going to go forward with ecommerce.”
You never really ... I think this is kind of something that’s just true in life but you never ... You don’t always have complete certainty about what you’re going to do and I think a lot of times people let that stop them from moving forward. Where I think the most successful people I know are really good at making decisions with incomplete information, imperfect information, and moving forward. You can always backtrack but move forward kind of thinking, “Okay, this is what I’m going to work with.
At that point, I knew it was ecommerce and so I said, “Okay, well, what’s important for me in ecommerce? What’s my goal here?” Again, it was just to make a viable business that could buy me financial independence and freedom and so I took much more of a pragmatic approach to picking a niche versus a, “Oh, I have to be in love with this product that I sell.”
I set up some criteria based on some research I’d done online, based on some things that I just kind of intuitively thought like, “I want to pick an interest that has a certain amount of demand that’s high enough that you can actually make a living on it but it’s not so popular you’re going to have to fight with a ton of people.” Things like something that isn’t easy to get locally, a niche where, hopefully, you’re more sophisticated than the competitors et cetera, et cetera.
At that point, I had my list of criteria. Then I started brainstorming and so for probably a couple weeks I went through and just ... I went through Supplier Directory. They use worldwide brands. Walking down the street, anytime I saw something weird like, let’s say, with the racks on the back of a bicycle or motorcycle helmets, I just jotted down. Then I had list of 50 ideas. Compared those to my criteria and immediately, just kind of top of head, eliminated probably 90% of them based on my criteria.
I had maybe half a dozen left and I did a deep dive on those. I found the one that, based on some really in-depth research, I felt like had the most potential based on my criteria and then ... That was the radios. Even then, I was like, “Really? This is really what it is?” Going back to that thing about uncertainty, wasn’t sure about it but it’s either go back to the beginning or move forward and give it a shot. I did the best work I could and moved forward with the idea.
Felix: Yeah, I like that. Two things I want to say about what you just said, which was about the uncertainty aspect of it. I think that’s totally true and I acutally had a podcast that was released today where, by time this comes out it was released a couple weeks ago, with the founders of Lisa.com, which is the mattress seller that was [inaudible 0:08:43] on Shopify and with [crosstalk 0:08:45]
Andrew: Oh, yeah.
Felix: One of the founders, he was saying that one of the, I think, keys for him, for success, was to look at ... Envision the upside of every single risk you take, because we’re so conditioned, I think, maybe just as humans in general but also as business people, to assess the entire situation. Then there’s always going to be a reason to say no or a reason not to do it. I think what separates the entrepreneurs that are successful from the rest of the pack is that they’re able to move forward because maybe they prepare themselves mentally to say, “I’m going to look at the upside.”
Or maybe the just say, “Okay, maybe the upside’s there and maybe it’s not but let’s just move forward anyway with this uncertainty,” because, like you were saying, you can always adapt once you’re in the game. Once you’re in there, you can always backtrack. You don’t necessarily want to always backtrack but just having that option in the back of your mind can sometimes help you move forward because there’s that fear of, “What if I make the wrong decision.” Like you were saying, sometimes you ... Lot of times, you can always backtrack and don’t be held back by the fear of making the wrong decision so [inaudible 0:09:47] I love that point.
The other point was about how ... the other question that came up, based on what you were saying, was you took this really analytical approach, this really methodical approach to deciding, a) what you wanted to do with your life, and b) what kind of products you wanted to sell, which I think ... I really like that approach but I’m assuming that, at the end of the day when you’re looking at these, this list and these criteria that you were looking at, where there more than one great option? At that time, maybe you face this today even, when there is more than one great option, how do you choose to focus on just one thing?
Andrew: It’s funny, trying to remember back, and I can ... I remember maybe ... It’s been a long time. Trying to remember what my other options were. I don’t necessarily remember their being so many options it was hard to pick. I remember there being so many different question marks and uncertainties and variables that I was like, “Are any of these going to work?”
Maybe that’s just me being a worst case scenario and kind of seeing the holes in everything but, yeah. For me I think that the one with CB radios was just this is the one that looks like it has the ... meets the most criteria. Again, not it looks like a homerun but it looks like it might be feasible so that wasn’t really a problem for me so much.
Felix: Is this an exercise that you think still works today, if someone wants to approach this decision of choosing which product to sell, which business to get into by following what you did? Maybe you can kind of explain, at least maybe a few of the core criteria, that you looked at when you made a decision.
Andrew: Yeah, so there’s a bunch of different ways we could kind of take that, Felix. I think that, in terms of having a list of criteria for getting into the market today, I think that’s important. I think that list of criteria has actually changed. I started out and, still own the business and we still dropship but I think drop shipping’s getting a lot more competitive. It’s getting more difficult. I think Amazon’s making it a lot more difficult. Where, let’s say, seven/eight years ago, when I got started, distribution was a big issue, it’s what primarily I was solving, that’s less of an issue today with Amazon.
You can pick a drop shipping niche and there’s a bunch of criteria. If you want, we can get into those but I think the criteria have changed. It’s more about, today, having a great list of criteria where you can pick from a product that you can manufacture, or at least a product line you can manufacture to supplement some drop shipping. Also, that checklist being more focused about your customers, your marketing. To a lesser extent, the product but, yeah, the way ... Checklists are important but I think that the specific items are different.
Felix: Yeah, let’s get into drop shipping. If you guys, listeners, don’t know, Andrew is one of the co-authors of The Ultimate Guide to Drop Shipping,” a book that was on Shopify, and obviously has a lot of drop shipping knowledge because of his businesses.
You were saying that the market or not necessarily is it saturated or not but you were saying how it’s harder to get into because of Amazon. Can you elaborate on that? What does that mean?
Andrew: Yeah, sure so ... Let me preface this by saying, again, I love drop shipping. I still own a drop shipping business that is a meaningful business, does well. It’s definitely possible. It’s definitely very viable and there’s some great advantages to having drop shipping. You don’t ... No capital upfront. You can work from anywhere but it’s getting more competitive. I think to find a great drop shipping niche takes a lot more work than to find just a regular niche if you’re manufacturing your own products.
In terms of drop shipping ... Apologies, Felix, were you saying what are the criteria people should look at for a great niche? Is that what you were asking?
Felix: Yeah, I think that’s a good place to start. If you were to give something out there that’s listening who wants to get started. Drop shipping, like you were saying, is low risk and it’s something easy to get started in but it’s going to be harder to find the products that you should be selling. Give us an idea of how you would coach someone, I guess, to approach finding the right niche to dropship in.
Andrew: Yeah, I think the biggest thing, if you want to take away one thing from this kind of subconversation on drop shipping, is that, if you’re drop shipping, you’ve got to add value. You have to add meaningful value somewhere because you’re not adding it through manufacturing a product. You’re not adding it through unique distribution channel because if ... Most of the time, if you’re drop shipping something, those suppliers are willing to drop for anyone else so you have to, first and foremost, add information somewhere.
For the niche we’re in, radio equipment, the way we add value is through it’s inherently a confusing purchasing process. There is ... To get one of our setups installed in a vehicle, it takes six or seven components. It’s not necessarily intuitive which one of those components are best for each vehicle. For someone to go into Amazon and try to put those together, they might be able to do it but one, Amazon doesn’t specialize on that. Even secondly, it’s really difficult to ... It’s a lot of work to go through and put together a cart of seven or eight items on Amazon that you may or may not know are going to work together. For us, our big advantage is informationally, is we help people with that buying uncertainty. That’s the biggest one I look at. Information can be a huge way to add value in drop shipping.
Some of the other things you want to look at is you want to look at niches that are accessory-heavy because margins on drop shipping are by default much lower than, say, manufacturing or even stocking your own products because there’s less barriers to entry. You don’t have any risk upfront and so, because of that, more people are in the game and that drives the prices lower. If you can find a niche where the majority of your revenue, or at least a good portion of it, is made up through multiple accessories, you’ll be able to make more money because somebody who just comes ...
We sold trolling motors for a while and those were ... Ended up selling that business but the margins on those were tiny, like 10%. They were big ticket purchases, $1,000, and people would price crunch, shop like crazy for them. With our radio business, people buy our radio, which we don’t make very much money on, those are maybe a hundred radio. Where we make our money is on all the accessories that they purchase alongside it, like a $20 cable that has a 100% markup, an antenna that has a 100% markup, these kind of things. They buy six/seven items. We don’t make any on the big ticket items. We make all of our money on the accessories so having a lot of accessories is really helpful.
Those are the two big ones. There’s a bunch of other ones like, for example, you have to, of course, be able to make sure you can find good quality suppliers that hopefully you can find multiple suppliers so you’re not dependent on just one supply chain. A bunch of other things but those are the two big ones I’d recommend people look at.
Felix: You’re saying before with drop shipping it was a lot easier to get into previously because you were solving a distribution problem. Now that’s no longer an issue, you have to find other ways to add meaningful value. I think what you’re getting at is that you now have to focus less on the product because the product is something that anybody can sell if they can find the drop shipper that you’re working with, but add value by either improving the experience like how you guys are doing with improving the buyer experience, or providing content, or education.
Are there any other kind of angles that you think a drop shipping business can use to differentiate themselves from others?
Andrew: Yeah, this isn’t necessarily as much on the customer side but on the marketing side. Again, because your margins tend to be lower on the drop ship side, it is harder to scale these businesses with paid traffic. I’d say on average drop shipping margins are probably 25% on the high side. Probably more like 10%, maybe even high single digits on the low side so, yeah, using paid channels is difficult.
Ad Words, Facebook ads, you can do it but it’s tough. If you can find a market where ... a drop shipping niche where there’s the possibility for a lot of organic marketing a lot of SEO marketing, lot of word of mouth marketing, that’s something that you can build up. If you can build that up, it takes more of a long-term approach but is definitely a bit of a mote that you can, if you’re willing to put in the time, can help kind of protect your drop shipping business.
Our CB business for example, definitely, there’s ... You can ... There’s somebody’s who’s really smart and ambitious who’d come and compete with us, but it would be more difficult for them to do that and take longer because we’ve got eight years of SEO work and marketing work behind it. I don’t think you could compete with us behind the traffic. You’d have to do it organically, which is harder, so going back to, if you can look at a niche where ... CB radios was a little tough to market but if you could look at a niche where either you have kind of a inside angle and can market it well or just ... If you’ve just got great SEO or organic marketing chops, that can help a lot too.
Felix: Yeah, I was going to ask is it harder or easier to defend your position or differentiate yourself when you are a drop shipper that already had? Is it already kind of intrinsic? Like you were saying, seven/eight years into the business, is it ... Do you think that a business that wasn’t a drop shipper would have an easier time with competition or a harder time compared to your situation?
Andrew: I think it depends on ... Are you asking if someone who wasn’t a drop shipper, if it would be easier to compete if they stocked everything?
Felix: Yeah. Is that a good position that you think drop shippers want to move towards eventually, or can you stay and defend your position indefinitely as a drop shipper?
Andrew: Yeah, okay, I got you. Good question. It’s easier if you can move up the value chain, where, instead of drop shipping, you’re buying and bringing those products in-house. You can definitely compete more effectively because usually your margins increase. If you’re drop shipping, let’s say your margin is 20%. If you buy it from a manufacturer in bulk, let’s say you double it to 40%. If that’s the case, you can spend more on marketing. You can spend more to acquire a customer and offer better pricing.
There’s a lot of reasons why, on the marketing side and the pricing side, you can compete more effectively. Yeah, absolutely, it’s easier to defend your position if the more you ... The further you get to being the manufacturer of the product, going from drop shipper to wholesaler to manufacturer.
Unfortunately, there was ... We looked at that in the Right Channel Radios business and this is something to think through too. If you do start a drop shipping business, the margin increase we get from stocking products is pretty negligible. It’s unfortunate. Instead of, say, doubling your margin, we get maybe a 5% cost savings from bringing everything in-house. Which, at the end of the day, it just doesn’t make sense to build a warehouse and staff it and ...
Felix: Much riskier.
Andrew: ... everything that ... Yeah.
Felix: Makes sense. I want to go back to your pragmatic approach to finding a niche to sell in. You were basically saying it’s the pragmatic approach. The other side, I think, is the passion-infused approach, where you focus on what your passionate in and you are ... the kind of customer that is your ideal customer already. Can you talk to us a little bit about the kind of pros and cons of the approach that you’ve taken, which is to look at it analytically rather than the quote/unquote “follow your passion,” I guess, method?
Andrew: Yeah, so pros of the analytical method are I think you’re more likely to succeed. You’ve got a better chance of actually building up a viable business. The cons, the biggest con, is that it’s going to be probably harder to be motivated, especially in the early days. Getting started it was ... There were some brutal weeks of writing the CB radio purchasing guides and sending hundreds of outreach emails to people with radio blogs that just were soul sucking and ... because I didn’t really, inherently, care about it. I was driven by kind of an external force.
That’s the downside. The nice thing is ... and I still believe this is true. I think, for a lot of entrepreneurs, especially kind of just entrepreneurs at heart, they don’t care as much about are they ... It’s not as crucial that they love what they’re selling as much as they love the process of planning and executing it and thinking through the problems and solving those problems and growing. They can be selling Hula Hoops or CB radios or stocking caps and it’s all fun and games.
The other side, the passion side, is probably just the flipside of that. On the upside, you’re probably more motivated, especially early on to stick with something, to be able to ... Maybe you’ve got an informational advantage. You don’t have to learn as much about it because it’s something you’ve been interested in. On the downside, again, it’s ... a lot of times, I think with our passions, we ... Like anything where emotion is involved, we can’t necessarily see super clearly. You might be really excited about something and think that it’s going to make a great business but it doesn’t and ... but you can’t see that because you personally are so wrapped up in it. I think that’s the downside there.
The Holy Grail of all of this, right, of course, is something that you’re passionate about and ... It’s kind of the Venn diagram where those two intersect, but I think that’s not impossible but it is a tricky, tricky thing to find. If you can find it, oh, man, I mean, congratulations, but it’s not always possible.
Felix: Yeah, I agree with that. One of the cons that you listed was just your experience of having to write all of this content for something you weren’t passionate about, or maybe you didn’t know much about. It requires ... There’s a big learning curve involved. It think there’s going to be other listeners out there, other entrepreneurs, that are in a similar situation where they have started a business and they are not the ideal customer. They’re taking this pragmatic approach that you’re talking about. How do you create content when you don’t know anything about the industry or you’re not passionate about the industry at that moment?
Andrew: Yeah, great question. For the radios, I did it in a number of ways. One, I called up the suppliers and annoyed the heck out of their salesmen. Once we got the accounts set up, I called them up and I chatted with them for ... They probably regretted bringing me on as a client early on, because I wasn’t doing hardly any revenue and I was taking up a bunch of their time with questions.
Grilling reps at your suppliers, that’s something where, if you’re evaluating a niche, getting a sense of how well your supplier reps know the product line is something that I put into kind of a little criteria sheet to think through. That’s one.
Talking with customers, just talking with customers, you learn a ton about stuff. You got to be nimble and on your feet because a lot of times they ask you questions that you don’t/can’t, answer but that’s how you learn about your customer and the product. Sometimes you got to say, “Hey, you know what? I’m new here. I’m not sure about that. Let me find out and get back to you,” and then you get a ... You hang up on the phone and you do some internet research. You call the supplier again, if they’re still accepting your calls, and get an answer and get back to them. You slowly learn that way.
Just ordering the product. I ordered ... First thing I did when I started the business was ordered a radio and installed it on my own vehicle and learned a lot that way. Online, it doesn’t go for absolutely everything but, if you’ve got the discipline to do it, you can learn just about anything on the internet today. I mean, so just putting in the time to really dive. Do a deep dive on something that may not be as riveting as the most recent blockbuster. You can learn a lot if you’ve committed to just reading a lot of articles online.
Felix: Yeah, and the other, I think, important thing here is that, when we approach, [inaudible 0:24:41] us entrepreneurs be, or marketers who are content creators, approach a project, either for their own store or for your blog, and you have to write about a topic you don’t know much about, we sometimes think, “Man, I got to become a super, super expert so that no one thinks that I’m ... don’t know what I’m talking about.” Surprisingly, you don’t really have to. I’m not saying that you shouldn’t educate yourself as much as possible but you don’t have to feel like you have to be ... spend like three or four years or whatever researching before you start putting out content.
You just have to provide value, right. It doesn’t have to position yourself as the extreme expert in some particular topic as long as you’re providing a value. I think, as long as providing a value consistently, I think it goes much further than someone that provides great value every once in a while. I think that’s another important point to make.
Andrew: Yeah, if you spend two weeks researching something thoroughly, you’re going to know more about it than 99% of the population, even in ... You’re going to know about it probably than 95% of the people who are in the market for what you’re buying. Selling.
Felix: Yep, totally. Then, while you are teaching it back out or writing about it, then that just solidifies that knowledge even more with inside yourself, so you’re not actually wasting time creating content. You’re actually learning more about your market. It’s definitely a worthy exercise to go through if you want to create content for an industry that don’t know much about yet.
I want to talk a little bit about your marketing. You were saying before that, especially with drop shipping, PPC is hard. Doesn’t seem like you guys spend too much time on social media. Has your business always been driven by organic traffic from Google and SEO?
Andrew: Primarily, yeah. I think we probably get two-thirds of our traffic through SEO and then the remainder comes through kind of a word of mouth advertising and website referrals. Yeah, it’s very heavily driven which, definitely has its pros and cons, which we can get into, but, yeah, we’re very heavy on the organic traffic side.
Felix: One thing I really like about the RightChannelRadios.com website is that you have a whole section dedicated to guides. It’s called the learning center. Is that where you put the most of your content? Is that where you guys create a lot of kind of SEO driven content or are there other parts of the website that really demonstrates your kind of content-heavy/SEO-heavy approach?
Andrew: Yeah, that’s the big one. That’s kind of where our technical resource library, where ... Yeah, we really wanted to try to create a hub and a resource online that would be one if not the definitive place to learn about how to install and select and troubleshoot radios for your vehicles and so we did that there. We also did a lot of ... I’d say that definitely helps, especially, I think, the last two or three years, with Google looking for quality content and weight on site stuff.
We also did a lot of outreach and a lot of third-party outreach early on, in terms of donating products for reviews, in terms of guest posting, in terms of offering buyers guides for websites, in terms of hosting and being a sponsor for different clubs, things like that. That kind of old school link building tactics and we tried to do them in as white hat a way as possible. We weren’t out there just buying a bunch of links.
Fortunately ... knock on wood, this could of course change. We haven't been hit with any major penalties on this site over the course of eight years but, yeah, we did a lot on the SEO side offsite as well.
Felix: Is that a strategy that you think still works today, especially guest posting and donating products for reviews?
Andrew: I think it can, if you do it really carefully. I think people say guest posting doesn’t work and link building doesn’t work. I disagree to some extent. I think it can still work but, again, you got to be really careful about how you do it. I think, before, it was more of a numbers game and today it’s more of a store and an inequality game. Going out and getting 10 links from some fantastic sites today is really the way to go, versus trying to get links from 200 different sites that are lower quality five/six/seven years ago.
I think it can still work. I wouldn’t base an entire SEO marketing plan around product giveaways and guest posting but I think supplemented and done smartly, yeah, I think it can help still.
Felix: Mmm, cool, so I want to talk about your other business. 2008 was when you started Right Channel Radios and you stared another business shortly after that. Can you tell us a little bit about that one and we’ll start there?
Andrew: Yeah, so the idea behind that was after starting Right Channel Radios, just wanted to start a second business to ... Just kind of the classic entrepreneurial curse of wanting to do more things than just the one thing you’re focused on. I took the same kind of pragmatic approach. Really focused on just trying to pick something that we thought would be a viable niche and picked trolling motors. Moved forward with it and I think we launched that in 2010 is when we started that business.
Felix: Were you able to use any of the marketing, maybe email lists or whatever you built up with Right Channel Radios, to help launch Trolling Motors?
Andrew: No and that probably was a mistake. It probably would’ve been a better idea to leverage what we had built but it was completely from scratch. No, there wasn’t a lot of overlap in terms of customers or connections or anything.
Felix: One of the, I guess, first ways I found out about you and your business and Ecommerce Fuel was through your, proabaly, one of your most popular blog post which was your open book sale of your $600,000 store talking about TrollingMotors.net. Maybe we could start with what was the, I guess, the reason why you wanted to sell the business.
Andrew: It had to do with a couple of things. One, it was ... Of the three things I was doing at the time, it was probably the one that didn’t make the most sense to focus on. Did have the best opportunities, and so I wanted to sell it because it was ... More or less, I wanted to focus on my other two businesses.
Secondly, I thought it would be a great experience to sell a business. It’s something I wanted to do, to be able to have an exit. Third, I thought it would make for some pretty, some potentially, interesting content on Ecommerce Fuel, on the blog so, for all those reasons, I decided to sell it.
Felix: What was the process like? What did you ... Did you worry? Did you sell it privately? Did you go through some agency to work it out? Or tell us about what it’s like to sell a store.
Andrew: Yeah, so I did it in a very unorthodox manner. Most people will sell it on their own or use a business broker to sell their business. I did it with a reverse auction. What I did is I pretty much opened up all of the ... I threw out a blogpost that said, “Hey, there’s the business. Here are the financials,” talked about everything. “I’m selling the business and it is priced ... Here’s the price and I will ...” It was a reverse auction. Most auctions, you have bidders who they arrange the price right. Someone who bids $10,000, the next person bids $11,000 and the highest bidder gets it.
I wanted to create kind of a sense of urgency to buy the business and so I did a reverse auction, which the price starts high and then it drops and the first person to make a bid at the current price gets to buy the business. That’s the approach that it took. A little bit unorthodox but that’s the one I went with.
Felix: Mmm, so what happens after the sale? How do you transition all of it? For anybody out there that’s either thinking about buying a store or selling theirs, tell us about the process of handing things off. Is it a smooth transition? What kind of things do you look out for when you are handing off a business that you just sold?
Andrew: Yeah, it’s ... There’s a lot of moving parts. I think one thing to be careful of is, especially if you’re running multiple businesses, it’s very easy to have a lot of overlap. For example, our ticketing system at the time was serving both of our ecommerce stores. Our hosting was serving both ecommerce stores and so, when I sold it and had to get ready to transition it, I had to create a brand new hosting account and transfer my site there.
I had to break off and start a new Zen Desk account and set everything up again for the new store. All these different things that you don’t really think about and that you can, I mean, definitely save money if you’re doing it on your own but when it comes time to transfer your businesses it’s an absolute nightmare to try to do that. That would be one thing I’d be careful of, if you’re thinking about ... If you ever think you might divest a property, try to keep it, if you can, it’s a little island. That’s really helpful.
Yeah, the process ... I think we went over under LOI, which means somebody bid on the site and signed a, what’s called a letter of intent to buy it. I think in early December, I think, late November. November 20th/25th, and we had closed the deal by January 19th after doing all the diligence, signing the asset purchase agreement. It takes about a couple month process to get it done.
Felix: Is it pretty much like wipe your hands clean or was there a kind of ... I’m not sure how similar your situation is to other sales but where you required to be a part of the business for a certain amount of time with the transition. Or, like you were saying, in January you finished the sale and then that was it? They’re off on their own and you’re off on your own.
Andrew: Yeah, no. Good question. Usually, with most sales, there’s a transition period and it varies based on the owners, the complexity of the business, a lot of things. For ours, it was, yeah, I definitely helped him out for couple months, or maybe six weeks. The first week, of course, you’re helping out a lot. You’re showing them how things run. You’re really walking them through things and helping out a lot and over time that fades.
Say, by the time two months had gone by, I’d hear from him maybe very occasionally, maybe every month or so. By the time four months had gone by, I almost never heard from him. Usually a transitionary period, which you negotiate how in-depth and how involved that’s going to be and a lot of times people commit to a certain number of hours that they can help with. It usually, for the most part, it’s up in ... For me, at least, it was after a month, was mostly finished.
Felix: Awesome so I want to talk now about your, probably, your second most popular blogpost that I have read, which is about your migration from [Magento 0:34:38] to Shopify. Tell us a little bit about the decision. Why did you decide to make that move?
Andrew: Yeah, it was ... The biggest reason was ... There was a couple of reasons. The first one I was just getting sick of being on Magento because it’s, as any Magento store owner will probably attest to, it’s very powerful. You can customize the heck out of it but it’s got a fairly high technical workload involved, in terms of upgrades, in terms of keeping everything running properly. I’m just barely competent enough to try to tackle it myself but so poor at technical issues, like system admin and PHP that it takes me forever. I just got tired of it so I wanted to go to a hosted solution and Shopify was my ... the one I liked the best.
Also, to a lesser degree, mobile traffic was becoming an issue. I definitely could’ve just used a new theme on our Magento installation to get a mobile site up and running a little bit more affectively. When you migrate platforms, that’s a great time to redesign anyway and so I just figured I’d kill a couple birds with one stone.
Felix: Yeah, you did mention that it wasn’t just the move from Magento to Shopify but you were going to invest $50,000 into a complete overhaul. Tell us a little bit about that breakdown because I think that’s obviously a large sum of money but if someone else out there wants to spend something like that or maybe a fraction of that, what can you do with $50,000 to overhaul your entire brand and your business?
Andrew: Yeah, so $30,000 of that, roughly, was developer fees and design fees. We used a great company, Carson [Lacomos 0:36:08] over at FuelMain.com great guy and did a killer job for us. About $30k of that was development design, and then $20,000 was kind of just payroll expenses. My team was pretty heavily involved in terms of kind of building out. Writing new copy for all the products, getting some new pictures and photography, really revamping the technical library that you talked about.
You can see kind of the before and after, if you go to that blogpost. Maybe we can link that up in the show notes but it’s ... Yeah, we got ... We were able to get a brand new design, a brand new logo, really a fairly involved kind of wizard, selection wizard on our website. If you go to our website right now, you can pick your make and model of your vehicle and it’ll automatically spit out which one of our components work well. Kind of a really cool shipping calculator on the cart side that was built custom for us, that says ... Kind of like Amazon does, it says, “Hey, if you order this in the next two hours, it will arrive on x date.” It was a fairly ... Definitely not a ... Definitely a decent chunk of change but you can get a lot for that, so.
Felix: Yeah, did you know that the investment was going to pay off? Again, the listeners out there might be investing this much money into a complete overhaul. I know a lot of entrepreneurs on Shopify. They think about doing even similar things like paying for a custom theme or paying a developer or designer to overhaul their entire website and maybe several thousand dollars that’s going to ... That could be spent somewhere else. Is there a way to determine if it’s going to be a worthy return on your investment to focus on things like design and overhaul in a website?
Andrew: Yeah, really good question and the thought process ... I’d say, if someone’s thinking about it, if they’ve got an established business that’s generating some reasonable revenues, and they have a very specific reason for why they want to do a redesign and a custom redesign can help them solve some of those problems they may be having, that’s a great time to start thinking seriously about it.
I’d say for people, if you don’t have a business that’s doing substantial amount of revenue, or if you don’t necessarily have any specific problems or UX issues or things that you’re trying to address with your redesign, probably, at that point, you’re probably better served with just a stock theme. There’s a bunch of beautiful stock themes out there that are going to be way more cost effective than trying to custom hire someone to do what you’re trying to do.
We had a couple different UX things we were trying to accomplish. We wanted to invest more in branding and the business had been up and running and stable for a while, in terms of kind of revenue and profitability, so. Yeah, that’s kind of how I look at that one.
In terms of thinking through more specifically if we knew the investment would pay off, like anything, you don’t know if it will. Kind of the thought experiment I did is I went through and we had ... One of the reasons we did it was 2013 we had a great year. 2014 our year was terrible. Our revenues dropped by 30%, largely based on the mobile issue. We wanted to do the custom design because, one, there was some specific user interface things that we wanted to address. Our whole value add kind like we talked about earlier, was drop shipping, is really being incredible about helping guiding people through that purchasing process. We wanted to add some custom things that could help do that more effectively.
Yeah, you make some assumptions. You say, “Okay, well, $50,000. If we don’t make this redesign, what is the future going to look like in terms of the increase, in terms of the profit from the business and also the value of the business?” If we do do the redesign to make some basic assumption and I had done a couple redesigns in the past so I had a rough idea of what was feasible. You say, “Okay, well, maybe this redesign, we think it’ll increase our profitability let’s say 30%. Oh, okay, so what does that translate into in terms of increased dollars on an ongoing basis? Also, if we decide we ever want to sell the business ...” this is something I think most storeowners a lot of times don’t think about. How much of a difference would that make in the sale price? You can say, “Well, if we do increase the profitability of the business by 30%, obviously you can get 30% more for the business,” but your multiple you will get will probably also be larger because you’re stopping a sinking ship so to speak. Yeah, you definitely run the numbers but there’s no hard, no surefire way to understand if it’s going, to know if it’s going to work, apart from just going through with it.
Felix: Yeah, well, one thing you said was about how you want to only consider doing this if you are trying to solve a specific user experience problem. I think this is an important topic also because how do you know if there are actual problems versus you kind of making up problems and then deciding to try and go and fix them. I think this also happens a lot, where entrepreneurs are held back because they think, “Okay, I can’t launch yet because this problem exists,” but in reality it might not be an actual problem at all, at least not a problem preventing sales.
Can you talk about that? How do you decide whether something’s an actual problem versus a problem made up by the entrepreneur?
Andrew: Yeah, absolutely. I think the biggest way for us was just doing old fashion user testing. We used usertesting.com and probably the easiest one to point out, I think I mentioned this on the blogpost too, was we ran some user tests and we hired people to come to our site and shop for their vehicle. Just said, “Hey, pick out a CB radio for your vehicle.”
We picked from a pool of people that had off-road rigs and trucks and so we knew they were kind of in our demographic, and watched them go through the process. On almost all of the user tests we saw, they’d come to our site. They’d land on our site and they’d say, “Hey, how come there’s not a little wizard here, like on KellyBluebook.com, where I can say, “Hey, here’s my make and model of my vehicle and year, and get recommendations? That’s what I’m used to doing. That’s what I want to do, but it’s not here.”
Almost immediately we thought, “Okay, this is going to be a core part of our redesign because everyone, that’s just what they are looking for, based on these tests that we’ve done. I think it’s ... To answer your question, I think user testing is really the only way to know, because, yeah, you’re right. A lot of times, the stuff that we think is important may or may not be.
Felix: Yeah, I like that, that you actually went out and ... I think you said you used the usertesting.com?
Andrew: Yep, it’s usertesting.com.
Felix: Okay, yeah, definitely. There’s that one. I think there are others out there too. I think it’s really important to not make just a [inaudible 0:42:34] assumptions but actually test to see if they are actually UX problems before you invest thousands or hundreds of dollars into changing things on your site. Not just because it’s money that could completely go somewhere else but then all of your attention and everything, it’s also kind of being wasted on the wrong things.
I want to talk about your day-to-day now, what it’s like running the store. Obviously, you have Ecommerce Fuel. You have your drop shipping site. How do you kind of spend your days? When you wake up in the morning, how do you decide what you spend your time doing?
Andrew: Yeah, it really depends when we were doing the big redesign on Right Channel, it was probably 80% working on the ecommerce business, for a period of probably six months. Recently it’s been more working on Ecommerce Fuel, working on all sorts of stuff. Our private community, it’s kind of, like you mentioned, it’s a .... We have a private community for six and seven figure vetted storeowners.
Working on all sorts of things related to that, in terms of improving our website or creating content for the podcast or blogposts or organizing an event that we do every year, Ecommerce Fuel Live. Or welcoming new members, things like that. I try to break up my day usually in the mornings. I can have a to-do list, I fill out every night and on top of that, I have the one item, the one important non-urgent but important long-term item, I’m trying to work on. I could be ... Like today, for example, it was crafting an email series for people that apply for our community but don’t ... They have a great application. They meet our criteria but, for whatever reason, they don’t finish the application process and so following up with them.
Try to carve out the mornings for really important strategic work and then the afternoons, I try to do things like get to email, phone calls, things that are less important but you still have to do. Like regulatory stuff, just the little things that can ... are essential. That’s kind of how my days and years look.
Felix: Do you have a team that helps you run these businesses or is it all by yourself? What is I guess the Ecommerce Fuel and the RightChannelRadios.com team look like?
Andrew: Yeah, blessed to have a really great team. On the Right Channel side, I have kind of a similar structure for both. For both businesses I have kind of a one-person state side that’s kind of the operations or the kind of the day-to-day person that’s ... I have someone that’s on the radio business side based out of Montana that runs operations, answers phone calls, deals with customers’ orders, all that kind of stuff. Then, working with him, is a virtual assistant that kind of ... that also tag teams that.
Then, on the Ecommerce Fuel side, same thing. We have a fulltime community manager. Her name’s Laura Sorino and she helps out with the community. She helps out with the podcast, organizing events. A lot of diff things, and she kind of handles the day-to-day, just keeping the trains running for that business as well as she has a virtual assistant that helps her with that as well, so.
Felix: This is I feel like, not necessarily a common path but definitely a path that I’ve seen a lot of entrepreneurs kind of follow which is that they successfully started the business like you have done. Then transitioned to creating content around their experience. For you, it’s Ecommerce Fuel, the podcast, website, the community and kind of transitioned into that direction as well. You definitely have built a business around, I think, other entrepreneurs already thinking about taking their experiences and then also building websites and blogs and, eventually, maybe turning that into a business as well. For someone that has successful business and is looking to go ahead in this direction, how did you get started? How do you get started building an audience based around teaching your experiences?
Andrew: For me, when I got started the biggest thing I wanted to do was you just hit on it. Build an audience first. I think if you come out of the gates and you have two blog posts and one of them is the Hello World blogpost, that’s built into WordPress, and you start offering a course, that’s a tough sell. Unless you’re the world’s best copyrighter.
First year, I stared Ecommerce Fuel, I focused almost exclusively on just writing, writing quality articles, trying to connect with people, trying to help people. I wrote ... The way I kicked off the whole blog was I just spent two weeks in a cabin in the woods and wrote a book. It’s called Profitable Ecommerce that I gave away for free, that I ... I think it was ... Maybe I’m slightly biased but I think I probably charged $1,500 for it but I just gave it away because I wanted to use it as a way to build credibility and build my audience. Yeah, I think it’s building credibility, building an audience by writing and helping people first, and then figuring out what kind of things they need in being able to help add value once you get to that point.
Felix: Yeah, it’s definitely a ... It’s one of those things where it’s a pretty simple ... simple steps you have to take but it does require a lot of work. It’s not a complex kind of path as long as you’re providing value, paying attention to the community that you’re building, you’ll know where ... They’ll kind of lead you in the right direction but it just requires a lot of work. Like you were saying, two weeks straight of writing, I think, would kill me so I congratulate you on doing that. Cool, so maybe to close this out, let’s talk about some of your favorite things. What are some of the apps and tools you use to run your business ?
Andrew: Apps and tools? I use Asana. That’s kind of what we use for our internal knowledge base and kind of task tracking. Skype of course. Use Help Scout and Zen Desk. Yeah, what else. Let me grab my phone just a second . Let me see.
Felix: Yeah, let’s take a look.
Andrew: All right, I use Ever Note. I’m kind of an Ever Note newbie but definitely use that. The Shopify app gets opened quite a bit. Let’s see, what else have we got here.
Felix: Any Shopify-specific apps that you use?
Andrew: Oh, you mean like plugins for Shopify?
Felix: Yeah, those as well. I thin okay a lot of our listeners love hearing about what other stores use, just to see. Just to check it out themselves.
Andrew: Yeah, we don’t use too, too many. We use one that is a ... We use [Yolkpo 0:48:47]. We use a map. Disclosure, this is an app developed by my brother, but it’s cool and I love it. We have it on our site. It’s an order map and it shows your orders of your customers in real time. You can customize it and it’ll show who ordered and where they ordered from in the last week on your website. We use that. That’s kind of cool
Felix: What’s the name of that app?
Andrew: It is ... It’s called Simple Map and the website is SimpleMaps.com. We use Simple Map. We use the Clavio plugin. Traffic Control to deal with 404s, Directed Edge for product recommendations. Order Lookup, which lets people look up their orders [inaudible 0:49:30] without logging in. Those are the big ones.
Felix: Cool, and are there any books or blogs that you were the most helpful to helping you on your entrepreneurial journey and just your business?
Andrew: What ... I think early on the guys at StomperNet, like the old school SEO and online marketing training program. Those are the guys that I cut my teeth on marketing with. I don’t think they’re around anymore but it was ... They definitely helped me get my start. Today, people I read a lot ... I definitely read the Shopify blog. I read Steve Chiu’s blog over at MyWifeQuitHerJob.com. Drew Sinake’s blog over at NerdMarketing.com. I read Ecomm Crew by Michael Jackness and his co-founder over there. Jason, Jason Retail Geek, Goldberg over at RetailGeek.com. He’s got a lot of ... He writes a little more for a larger enterprise perspective but has a lot of great stuff over there. The [Mas 0:50:29] blog, I enjoy the Mas blog. Those are the, probably, the big ones for work and ecommerce that I follow on a regular basis.
Felix: Awesome, so what’s in store for the remainder of this year, remainder of 2016? What kind of, I guess, big-term goals that you want to hit by the end of the year?
Andrew:
Yeah, so we’ve got ... I’d like to really get a product that we’ve been developing in-house, it’s on the market right now, and we’re just in the very, very early phases of trying to build up ... really market it more or less. I’d like to get that. It’s our first proprietary product. It’s a vehicle organizer that we built.
I want to get that to the point where it’s generating some meaningful revenue and really more or less, more than anything, learn the ins and outs of manufacturing a product, importing it, selling it, kind of moving beyond drop shipping. That’s a big goal.
We’ve got Ecommerce Fuel Live coming up in Savanah for all of our private forum members, all of our community members and that should be fun. It’ll be our third annual event. Looking forward to doing that. Hopefully looking forward to doing some travel and some adventures with the family.
Yeah, those are ... and kind of adding a couple of things we’d like to do for the Ecommerce Fuel community, move over to some more advance forum software as well as build out a really robust tool for being able to talk about and review platforms and carts and tools that ecommerce merchants use. Right now we’ve got, in our community, we’ve got tons of discussions on everything from Shopify and Big Commerce and Yolkpo. All the apps and carts that people use but they’re kind of scattered everywhere.
One thing we want to build out by the end of the year is a platform that leverages Built With. I don’t know if you’re familiar with that but it’s a really cool app and so create a platform that goes out, scans all of our members stores. Detects what their technology is and consolidates that. For example, if you want to learn about Yolkpo, you can go to a page in our community and it’ll say, “Hey, here are the 150 members that use Yolkpo. Here are all the discussions on Yolkpo in the community right now.” It’s just a way where you can really quickly not only see everything with Yolkpo in one place but you can find what store owners are using it and get real-world feedback on it with kind of people that you trust inside. Yeah, that’s kind of some of the stuff that I’m excited to roll out this year.
Felix: Yeah, I love that idea. It’s so great. Thanks so much, Andrew. RightChanneRadios.com is the ecommerce store. EcommerceFuel.com is the website and the community, and Ecommerce Fuel podcast, searched it on iTunes for Andrew’s podcast. Anything else that, or anywhere else that you recommend our listeners go and check out if they want to follow along with what you’re doing?
Andrew: Just on twitter @Youderian or @Ecommercefuel. Between that and the blog and the podcast. I do a podcast, like you mentioned, as well. Just the Ecommerce Fuel podcast, you can Google it or go Ecommerce Fuel in iTunes. Those are the places I hang out, so.
Felix: Awesome, thanks so much, Andrew.
Andrew: Hey, thanks for having me on, Felix. Appreciate it. It was fun.
Felix: Thanks for listening to Shopify Masters, the ecommerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify.com for a free 3 day trial.
About The Author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs, and founder of TrafficAndSales.com where you can get actionable tips to grow your store’s traffic and sales.
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