This transcript speaks VOLUMES!
I know that might be perceived as me gloating, boasting or being a little ‘into’ my own stuff.
And that’s fair… But I DO know what you struggle with when it comes to growing (or heck, just starting) your ecommerce business.
And anytime I see an opportunity to make a positive impact and help you change those challenges into opportunities and victories, I take advantage of it.
For this transcript, I didn’t know Jeff (our CMO) was recording, but then when I knew he was, I saw the opportunity to go all out on some points, because I knew he would make sure it got to you in some way, shape or form.
So, I encourage you to read and engrain this in your psyche.
[Jeff Vacek] Alright, so overall in ecommerce people fail. We know a lot of people fail, and there’s a lot of different reasons why they fail. But the first step, as you and I know, to having a successful ecommerce business is sourcing. You have to source correctly.
[Alan Basinger] Yeah, but sourcing is actually the easy part. People fail before they even source.
[Jeff Vacek] Okay, how do they do that?
[Alan Basinger] Well they fail before they even source because they haven’t done any market research. They don’t know what markets they’re getting into. They don’t understand the market they’re getting into.
I’ll give you a great example. We weren’t a third party logistics company. We were an ecommerce company. We did logistics for ourselves, but we really didn’t understand the logistics market as well as we needed to, and we jumped in making it very hard. We have some capital resources that have allowed us to learn, but it’s a very expensive learning process. That’s where a lot of people mess up in ecommerce when they start trying to sell online is they don’t understand the market they’re getting into, they jump into some kind of a niche that they’re interested in. I love fitness, so I’m gonna get in the fitness niche, and then they start looking, and they just copy cat let’s say those rubber band doo-dads that are super cheap and easy to get into in a saturated market. The fitness market is huge, and it’s billions and billions of dollars, but they don’t understand how to break it down to be able to look at that market to find out where the opportunities are. So they just jump in the me too bandwagon, source some products, they lose on the buy, they don’t source correctly. So one, they’ve already put themselves at a disadvantage because they don’t know the market, right? They’re already at a disadvantage because they don’t understand the market, which is we ran into that same problem. I’ve done this myself. Then they don’t source it right, and then it doesn’t matter how well you list, if you messed up in the beginning you’re gonna have a hard time at the end. Again, back to GDW, we didn’t know. It’s been a very expensive learning process for us to get the correct staff, the correct systems, correct processes, the correct equipment, all of that stuff to be able to do that. Are we there today? Yeah, but the hundreds of thousands of dollars that we spent to get there is an expensive proposition.
[Jeff Vacek] So basically what I’m hearing is that–
[Alan Basinger] We saw long term value in that because we understand that market is very big. It’s outside of the scope of even just Amazon or just FBA Prep. The scope of that market is very, very big, so the long term benefits are there. So the investment is worthwhile from a longer perspective, as long as we can capitalize off and fund it. But most people are coming in with very limited budgets, very limited skill sets, not a very good understanding of the market that they want to jump in because they love yoga, or whatever, meditation, whatever that may be. Everybody has their personal thing that they like, and then that puts them at a disadvantage right from the beginning. And then they still have to learn business, they have to pay their dues, they have to make those mistakes, and they’re under funded, under capitalized, don’t know the market, don’t really understand selling, and they gotta make those mistakes. That’s an expensive process. So that’s where I see it. So you really need to start off with your feet in the right place. You need to do market research in the beginning, understand your market research. Once you understand your market, then you need to look for the opportunity in the niche. So market first, not niche. Niche is second. Find the opportunity in the niche, then source your product. If you can get those three right, you start off on a better foot than most people.
[Jeff Vacek] And you’re gonna help them in the Sourcing Mastery Training Program do that.
[Alan Basinger] In the Sourcing Training Program we’re gonna start off talking about markets and niches and looking at how we can define what that market is, look for opportunities in the niches, and then figure out what it takes to source those products. We’ll do it with a real product. We’ll go look at a market. We’ll look at a market, we’ll try to identify the market, see how big it is. Then we’ll look for the opportunity in a niche inside that market. Then we’ll go and look and see if we can find products, or a sourcing agent, or a manufacturer. This may take time actually, ’cause if you go direct it’s a little bit faster, but because this is more along the lines of doing it online, there’s a lot of back and forth. There’s delays depending on where you’re finding the products from and stuff like that, but yeah, we’re gonna try to go through the whole process with people to help them understand that. And if they can get the first three parts down, which is the market, the niche, and the sourcing, then they’re gonna be at a huge advantage, ’cause there’s 12 billion people that will teach you how to make a listing on Amazon. You can find that on YouTube all day long. Actually, Amazon has videos in their own website, and their help documents aren’t that bad. They’re actually pretty good. So you can get that help. That’s nothing. If you’re paying for that that’s not necessarily a huge benefit there. I don’t think you get the biggest value, biggest bang for your buck. But if you can learn how to figure out your market, identify opportunities, and source the product right, then you’re in great shape.
[Jeff Vacek] So what I’m hearing is that just like anything else, and you use the GDW example is that the thing that kills most people is the start.
[Alan Basinger] Yep.
[Jeff Vacek] The thing that they get wrong or fail at most of the time is the start, and if you fail the start, well then obviously everything else afterwards probably never even happens.
[Alan Basinger] You know that saying failure to launch?
[Jeff Vacek] Yeah, yeah.
[Alan Basinger] It’s really, it goes with that part. You either are stuck in the beginning because nobody has taught you, and you’re having a hard time trying to find it, trying to find that market, find that niche, find that product, source that product, all that kind of stuff, and that just creates, it compounds upon itself, right? It’s a failure to launch. You can’t even get off the ground. And how many people are out there right now that can’t even get their business on? So they want to do it, they know they want to do it, and they have some kind of idea, but they can’t get past that. They can’t get past the idea stage. Right, can’t get past that idea, “I want to do this. “I have an idea.” Or maybe they’re a little more advanced. We have seen customers, and I’ve done this myself, you have an idea, and you go following the idea without all the rest of it, without all the other understanding, the basic business accounting and what it’s gonna cost, and they end up spending a lot of money developing an idea which turns into some type of a product sample, which turns into them ordering a big order of products, but they didn’t identify the market and what ends up happening is there’s no real opportunity. They didn’t do the market research up front. They just thought it was a cool idea ’cause they liked it. They didn’t understand if there was a market for it, or what kind of market, or what type of market, or how that worked, and so they end up with a crap load of product that isn’t sellable, or is difficult to sell, or maybe they didn’t price themselves right because again they didn’t understand the market and what the dynamics of the market are. One of the biggest change I recommend to people, Nathan Phillips who was a customer and is still a customer and then came on to help out, he comes over and he says, “I have this product. “It was selling really well and it stopped selling.” He’s got a good product, he’s in a good market, huge market, lots of opportunity, and it isn’t selling, but what he didn’t understand was the market didn’t want to pay what he was asking, because if you look at all the other competitors, if you look at the top sellers, if you look at what’s happening, you can see the market says X and you’re trying to give them Y. The market wants apples and you have an orange. Well they want apples man, they don’t want oranges. GDW is another great example. People want help, they want someone who can help them source products, right? They don’t want someone who just tells them about it. They want someone who can help them. I think that differentiates us from most of our competitors is that we actually will help them. Of course, with so many customers it’s hard for me to do a lot of one on one, but ask anybody, if you ask me a question, if you come to me and give me an intelligent question, I will come back and give you information to help you move forward. So in Nathan’s case he was priced wrong. He was too high for the market. I told him where to put his pricing. He lowered his pricing and he tripled his sales the next day and has continued to watch his sales increase. The key then is did he source his product to support the price that the market wants? There is where people, there is where winning on the buy is all about. If you got a product and you did the research and you see that there’s a lot of opportunity in volume in this market that people are selling on, then we’ll just say, let’s say the toothpick market is great, and you look at it and it’s billions of dollars, and you see other sellers doing hundreds of thousands of dollars a month in toothpicks, and they’re selling at $3.99 a hundred, and you go online and you try to source it, and it’s gonna cost you a buck and a half, two bucks to get it, you can’t compete. You can’t even enter the market. You’re priced out of the market before you even started. That’s where people screw up. That’s really it. Understanding that market, understanding what the market will support, and making that intelligent decision. And you know where I think that comes from? It’s emotion. People use emotion to make the buys. They don’t buy on the data. That’s really it. They look at the data. You know what? We do office hours when we go sourcing in China, and I do office hours, and most of the time what the office hours are is people coming to me saying, “Here are the products I found “and here’s what I’ve done, “and here’s what the market looks like.” More times than not, people get infatuated with a product emotionally, they’re tied to this product, they really like it, they think it’s cool themselves, but when you do the market research it sucks, and they will justify in any way they can their idea that this is such a great product. But the dollars and numbers show that they are not able to buy it at the price where it would be good. Yeah, it’s a niche, and yeah, there may be a couple of people making money in it, but at where you’re at or who you’re trying to buy form or whatever you’ve negotiated, you’re unable to get yourself to a point where you can make any money, but they’ll make the buy anyway, and then they can’t move the product or they don’t make any money moving the product, and that’s a lose. So I think that’s kind of where we need to focus on helping people is to understand that they need to make purchases based on data. They need to understand how to find the data, use the data to understand that market and where they need to be at pricing wise before they even begin to make the buy. Then they need to go out and figure out where they can source it for the dollar amount that they need to get it to, and that may mean working with a larger manufacturer and buying an MOQ that’s larger than they may feel comfortable with at this time. But, the market and the data and the pricing all say that’s where they have to be, and that’s really the hard part. It may be that you lose money in the beginning of the product to carve out market share so that you can get your purchase requirements up to a point where you can support the MOQ at the right price, and that means getting your volume to a point where you can buy enough to get the price down to actually start making money. But those are all things when you don’t know that much you do the market research. You don’t know that unless you do the market research, and make those decisions, and have enough funding to make that happen. That’s where people screw up.
[Jeff Vacek] I’m really glad then that we’re gonna be focusing on that, especially heavily at the beginning of the program then, ’cause it sounds like it’s really–
[Alan Basinger] It’s what it’s all about. It’s really what it’s all about, and the gurus out there don’t talk about this because they don’t understand it. They really don’t go over it, and it’s a key. There are so many people, we see it over and over again, who mess this up. We’ve only been helping people source for how long? A year now? Within a year we’ve only had maybe 100 people go with us to source, and the reason this is coming is because it’s what I see consistently over and over again, not only with us sourcing but in other groups, in the online sourcing, in Alibaba sourcing, all that, what I see is people making this same mistake over and over and over, and why can I list products and continue to make money? Why is it that we list over and over again and we tend to find a fairly decent amount of good markets and sell products? Because we went on the buy and we understand the market fairly well. The only time we haven’t was the third party logistics. We saw the market, we knew it was big, but we didn’t have enough expertise in the market, so we’ve learned, there’s lessons there too, and hopefully we’re able to give those to people and help them out. From a product research understand your market before you get in, understand what it will support, what you need to do in order to make it all happen. So yeah, hopefully we can help your people out on that and really educate them, and get them to a point where they can kill it and then they can come with us to China, or to Thailand, or Korea, or to Mexico, or to South America, or to wherever we’re going in the world to source products.
[Jeff Vacek] Awesome, thanks man.
[Alan Basinger] You got it.