The E-commerce Leader

[00:00:00] Kyle: I think it comes down to understanding it’s market fit. Like any product that you bring to the marketplace and understanding is this product and improvement, or there’s some sort of edge that your product is going to give you in the marketplace
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[00:01:06] Jason: Private label, businesses are a fantastic e-commerce operation to get into, but they’re not without their challenges into. Episode, we’re going to get hot takes from the Roundtable squad here on what it takes to have a successful private label brand and scale it into e-commerce platforms.
[00:01:24] So, gentlemen, let’s jump into the topic today. I don’t know if anybody has. Super passionate point of view. They want to share first Kyle, Mike, Michael, either of you are in this biz specifically when, or you want to go first and kick it off for us
[00:01:38] Michael: all plunging. Cause I want to start with something a bit controversial, get people’s attention and then we’ll see what people think.
[00:01:43] And Kyle can disagree violently with me and then there’ll be lots of fun. So I’m going to say two things. Private label is dead and private labeling isn’t for most people listening to the show in likelihood. So the first thing, and then start with the second.
[00:01:55] Kyle: Need more context to that.
[00:01:57] Michael: Add some context.
[00:01:58] I didn’t mind context. So private labeling isn’t for most people. So if you’ve only got a few thousand dollars burning a hole in your pocket, I would suggest there are multiple sorts of models that could work amongst, which is probably not private label because it’s a high risk high reward model. And don’t get me wrong.
[00:02:12] I know lots of people just to. A more positive spin on it. I know plenty of people, including a couple of months of the mastermind who have done seven figure exits with private label businesses. So absolutely can be huge rewards, but if you’ve got small money to start with, you could do physical product sourcing, retail arbitrage, online, arbitrage wholesale.
[00:02:29] I didn’t personally have an experience, but I’m fascinated. I know nothing about that digital product businesses like Jason, obviously you guys have got a massive business.
[00:02:36] There. There are many, many models. Amongst which I’d argue probably not private label if you’re not fully funded. And the second thing to deal with my more controversial point private label in the strict sense is a dead business model. So if you’re just slapping your logo on an existing product, and if we’re lucky you get a personalized, but the packaging.
[00:02:53] But that was hard to do in 2014 when I started the seven years on, it’s not a good plan. I only know one serious business owner who’s doing this. And frankly, he’s really struggling his way out of that. So instead of which he needs a custom or customized product is going to take time or money anyway. So you may as well do it properly or do something else properly, but don’t half do private label.
[00:03:12] So that’s my main starting
[00:03:13] Kyle: point. I agree with you on, and here’s why private label is dead because private label is being done at school. By companies like Amazon and you’re not going to compete against them. So back in 2014, 2015, where you could just slap a label on some, on some product it a hundred percent, but.
[00:03:34] That doesn’t mean that starting your own brand, having and starting testing with private label, just to test a market, you can do so. And you can do so I think with limited risk. So I do agree with you to an extent, but I think that there’s an angle, which you can take with private label and which you can test with a low cost and low barrier to entry.
[00:03:54] You just have to sort of adjust your, your paradigm slightly, and you’re not looking to go with 5,000, $10,000 orders of units out of the. Unless you want to test and you have to, the secret to that model of testing, small is you have to find gaps in marketplaces like Amazon, where there is demand for a product.
[00:04:12] And and you can source it even, and even test it for say around 500 to a thousand dollars. Now, with that said, I will say that it is progressively harder and harder and harder to, to execute because of the level of competition on Amazon. So to Michael’s point. Choosing a business model that is less of a barrier entry to get into makes a lot of sense.
[00:04:36] You need to align your business model to your capital that you have available. And that, that would be the first starting point. So just don’t go ape into a, a business model and be like, I read that I heard hustle on YouTube and I’m just going to go jump in and try it and do it. That’s usually a good recipe to losing a lot of money.
[00:04:51] Jason: All right. Well, we’re off to a wonderful start, that sounded rather optimistic. Now that we’re all depressed about private label. I think to myself, who is it that I work with, who three years ago, had one business that was wholesale.
[00:05:09] And when we got an update, they had three extra four Rex multi-million dollar. And their commentary was what they added to their business was private label somebody. So I won’t say the name, but that comes to my mind. And then other clients we have are crushing it with private label. So help me connect the dots here.
[00:05:29] Jen’s YouTube, both dumpster fired our topic a little bit, no disrespect to you or the experts helped me understand how actually in some situations private label could possibly. A good situation now that we have
[00:05:47] Michael: having done the de-mystify, I’m happy to worry people. And you know why? Because there’s this thing, maybe it’s a British thing.
[00:05:52] American thing, Americans, it’s almost rude amongst American culture to speak anything less than really, really, really positive, particularly amongst. Internet marketers from California. I’ve noticed. Now what I would say is I’m not doing anyone a favor if I’m going to really, you know, for example, if somebody looks amazing in a pair of size four shoes and my size or half size, 10 feet, it’s just going to be a miserable experience for me, for the right person, private labeling or custom product development is an incredible opportunity.
[00:06:18] And I want to be very, very clear. I know multiple people who sold their businesses for seven figures, personally, including moments of the mastermind. We’ve helped them do that. So. Fantastic. If it’s right for you, but equally I wouldn’t go out and try and invest in property or real estate with like $5,000 or pounds.
[00:06:34] It’s just not a realistic starting point.
[00:06:36] Kyle: What I’m trying to
[00:06:37] Jason: let’s assume it’s right for you then. What do you do? Okay.
[00:06:40] Michael: Kyle, do you want to take, what, what
[00:06:42] Jason: makes it successful when it’s right.
[00:06:44] Kyle: I I think it comes down to understanding it’s it’s market fit. Like any product that you bring to the marketplace and understanding is this product and improvement, or there’s some sort of edge that your product is going to give you in the marketplace for that particular audience or customer like that has to be the starting point.
[00:07:03] You just can’t. Say, I’m going to, I’m going to create a cell phone and compete against apple. That would be a terrible private label endeavor. Right. And there’s plenty of mature, very mature spaces on marketplaces like Amazon, but just in general, they’re just mature product lines, right? You’re not going to compete very effectively unless you have a really significant technical advantage or.
[00:07:26] You have like a hundred million people that you can just say, Hey, go buy this makeup and be Kylie Jenner. Right? Like she took her audience, pointed it at makeup that wasn’t all that special or unique, but because she had an audience, she drove a huge, huge growth in that business. Her audience gave her an edge.
[00:07:43] And I think that’s the very first thing you have to do. When thinking about custom products is what’s going to be your edge. Some of the most successful clients that we’ve worked with are private label actually built upon 20 years of experience in a particular industry. And they use that. To craft a better product.
[00:08:00] And I think that is sort of the secret sauce. It’s just not copying somebody else’s thing. You can’t, you can’t model necessarily someone else’s product to the full extent by copying them and have success. Okay. So
[00:08:12] Jason: your guys’ point of view. If you do it stupidly, it’s a bad business model by just copying someone’s simplistic phone case with your label on it.
[00:08:21] That is a commodity. Okay. Let’s assume that’s not the plan.
[00:08:27] Kyle: It’s good to put it out there though, because that’s. Some people have tossed this. This was the prevailing teaching of how to do private label across the internet. And I think we have to sort of raise awareness of fact that that particular methodology of doing it is dated and old.
[00:08:42] And if you do it, you’re likely to get burned. Okay. I was
[00:08:46] Michael: exactly the point I was trying to make you, you put it in a very polite sort of positive way, but yes, I think I’m just wanting to correct the BS out there. That that is like, you can. You know, replace your day job within a year from private level business, it’s possible, but it’s extremely unlikely.
[00:09:00] And I just feel that’s a responsible marketing side. Just want to put it out there.
[00:09:03] Kyle: So
[00:09:05] Jason: I step into this conversation, not having heard any of that. Marketing, you guys have clearly been jaded by the shiny object syndrome in the space, but you’re both practitioners coaching people on private label. That’s the disconnect in my mind right now is it’s not a
[00:09:25] Michael: disconnect because if I only.
[00:09:28] I own property or real estate as you call it. And I think there’s a wonderful business model. I’ll continue to buy it. My wife and I will keep buying it. And that’s a very standard business model everyone’s familiar with, but that doesn’t mean I would turn around and advise a friend who said I’ve won, I’ve got 5,000 pounds going to buy a flat in London.
[00:09:42] Let’s say that. I would say no, go and get another 50. You know, I wouldn’t say that applies to private label. What I would say. To Kyle’s point. If exactly, you’ve got to have an edge, I would say the people I’ve seen do very, very well are obsessives about product development. And I think there’s two ways to go with it either be obsessive or find one.
[00:10:00] So Jason Francios for example, that interviewed for the podcast. So that’s why I’m mentioning him because I know he’d be happy to have it talks about develops a weightlifting belt, which is the most common thing in the world on Amazon. But his partner was, had a PhD in physiotherapists and he’s a, an obsessive CrossFitter, which I guess is the only kind of CrossFitter right.
[00:10:16] Another guy minute. Again, referencing a podcast, just cause I know he’ll be happy to have it talks about, was obsessed with supplements since his teens, he couldn’t find the perfect supplement. So he created one and again, that’s done very, very well. Now I’m personally don’t care about product development, but I know some very obsessive product developers these days and they tend to approach me.
[00:10:34] I’m a lucky position. Now. I love helping people sell a product, which is really fantastically made for a particular purpose for a particular market, because that has a really solid chance of success. And I think that’s, that’s the way they go with
[00:10:46] Kyle: it. Yeah, I it’s interesting because when you start to think about Amazon, specifically as a marketplace and the business models that it supports when you’re getting into it, to your point earlier, Michael, about few of a little bit of money, but even if you had a lot of.
[00:11:01] There’s some skillsets that you have to develop, and there’s a lot less risk in developing that by selling someone else’s product already has a brand. So if you’re doing arbitrage or you’re doing wholesaling or whatever it is, you don’t have to build a brand at the same time while and master marketing as well as product development.
[00:11:18] Those are two different skill sets. And essentially if you start with private label and you’re, don’t have a solid marketing background, you don’t have a solid branding back. You’re going to be, you’re going to be going down two tracks at the exact same time of growth. And it’s just hard. I mean, it’s just a difficult thing to do.
[00:11:36] So it’s not even a, it is a money thing. Yes, it’s capital, but it’s also a skillset issue that you have to solve as well because product development and marketing and brand building are two widely separate things.
[00:11:47] Jason: Love that obviously leaving off the brand of private label brand is sort of a shortcut term. Isn’t it phrasing wise, but the whole point is that it’s the brand. So now that we’ve kind of pointed out the pitfalls concerns, a shiny object syndrome, snake oil sellers pitfalls. Can somebody concisely say a hot take or two or three about constructively, if it’s right for you, if you have capitalization capitalized, if all things are right, what are the attributes of a successful private label?
[00:12:23] Branded product line?
[00:12:25] Kyle: want to say this, Kyle. Sure. I think you have to understand the market. Like we talked about. I do think that there’s a level of product development and passion around it. You have to have margin in your product like that more, maybe more so than other business models.
[00:12:41] I would argue it on Amazon is that you have to have margin. To scale, private label to skill your own product. Meaning you’re going out now, you’re putting down the 25, 50,000, a hundred thousand dollars, $200,000 to pay for your product. You have to have capital and the best source of capital is going to be the capital that you can turn over in your, in your business and your cash flow wise, your cash on cash return and margin becomes a really critical piece of that.
[00:13:09] If you don’t want it very much margin in your. You’re going to have a very, very slow growth curve and probably too slow to survive for the long-term or at least you’ll hit a cap, right? You’ll hit like a plateau and you won’t be able to scale much past it. And so understanding that is, is important. I think a strong brand is also a critical piece because you have to now stand out amongst your other competitors.
[00:13:34] And, you know, even if you have a really cool. And it’s designed well, and it’s functionally adding a ton of value to your customer base. If your brand is. People will not buy from you, right. Because they’re immediately associating the value of your product to the value that you put into the brand. Right.
[00:13:53] And so brands have meaning and the more thought and energy put into that to make it look like a professional brand and not just a sticker, you print it off the internet. It is. Again, adding actual business value, which is probably the ultimate outcome for me of a private label business is that you’re actually building real business value and all of that sort of cleanse to.
[00:14:18] Sure
[00:14:18] Michael: Michael, a hundred percent. Yeah. That, that all makes absolute sense. I think you’re totally right. But margin, I know some businesses that have relative low margin on their products and they borrow a lot of money. If they’re successful at scaling, which is a big risk factor. We talked about that before and the more you can use your own cashflow to get a return.
[00:14:35] The better I’m like, I literally do know some people who put a few thousand dollars in maybe six, seven years ago and grew a business to several million dollars a year in revenue within 600 years. It does happen. It’s not common, but it’s good to set that up. The other thing is to your point, Kyle, I think you made an incredibly important point.
[00:14:51] You are learning two very big skillsets product development and sourcing is, is just huge. And I think. I would simply say, if you can learn on maybe the wholesale selling. So you’re still working with suppliers and just got a big skill set to learn there, but you can focus on the marketing side and that’s what you actually bring possibly to somebody who’s very good at product development, with a bricks and mortar type supply chain.
[00:15:14] Well, they’re not good at Amazon focused or internet focused marketing. If you can develop that skillset on a proven brand and hone that you’ve got that half of your business done, I think that’s a really great way to get started these days. And the way I got started was I plunged in and I developed the two skillsets at the same time.
[00:15:30] Kyle super tough on, I don’t think it’s necessary to do that to yourself. I think you can, you can work your way in. And the other thing I would say is then you’ve got two choices at that point. You can either stick to your skillsets and then find somebody else who’s obsessed about a particular product line and really great at product development and work with them as a business partner or in a slightly looser formation.
[00:15:52] Well, you can learn the skills yourself by gradually working your way into private labeling, which is what some of my clients that are doing in the mastermind. And that’s working very well for them because they have the existing cashflow and business and skillset in place. So they can gradually bring in this new skill set.
[00:16:06] So either of those, I think works very, very well. Yeah. Love
[00:16:09] Kyle: it. Love it.
[00:16:10] Jason: Okay. I’m going to add two more peas to your list of a power over product, packaging, pages, and price. I’m going to add two more peas to your list, so you had product packaging, pages and price. You also have power or control over your promotional strength strategies, and you have power and control over your platform that you said. And so the value proposition there, and, you know, I mean, Kyle and I’ve worked with a lot of people.
[00:16:36] Like one person comes to my mind and won’t mention what it is, is specifics are, but he crushed it three years ago with multimillion dollar product launch used a crowdfunding model. And then when we. What was it a couple months ago? W we haven’t worked with them for a while. We caught up with him.
[00:16:53] He had a completely different product line that he was just absolutely crushing it with, and it was a totally different approach. Product-wise but the, the commonality was too, you know, Kyle you and Michael’s points. He’s a great model. He, he knew how to apply the branding, the promotional tactics, the pricing strategy, the supply chain to basically jump from one.
[00:17:18] One whole niche, completely different into a different niche. And the commonality was, he was a fantastic, you know, 25 year veteran, 30 year veteran marketer. So you guys, his points are valid in terms of it being, I guess, an amateur hour, if you just slap a label on something made off of you know, from Alibaba, of course that’s how to do it wrongly.
[00:17:42] But when you see examples of people who hone their marketing skills over years and years, And then apply it to a niche or a new industry. And you think to yourself, what in the world, how did they just go from zero to a seven figure business? By using products that are made by somebody else manufactured by somebody else that they may be tweaked, slightly changed, modified repackaged, and improved upon you.
[00:18:09] See the awesome. Of this model. So Kyle Michael, any further thoughts? How do you weave it all together for us? Just a quick
[00:18:17] Michael: one on the sourcing side, because obviously as you said, Carlin, I’m so glad to hear somebody articulate that. So clearly that the sourcing and product development side is a huge skillset.
[00:18:25] One thing I would say since you mentioned Alibaba, Please don’t go to Alibaba this morning. I was working with a client who’s working on developing a product that, that could be handmade or could be manufactured. So we’ve, we’ve sort of thrown open the sourcing to three possibilities. One is handmade in India and we’re using a person who specializes in that.
[00:18:41] Cause I don’t live in India. And under the he, the second one is China. We’re looking at options there and we got two people there. That are experts in how to source there and they can find quality factories and they have very, very rigorous quality control processes developed over decades. And the third option we’ll look into is sourcing in the U S where there’s a little bit more oversight by the governments like it is in Europe and therefore we’re going direct to manufacturers.
[00:19:02] And so what I would say is you don’t have to reinvent the wheel. I personally don’t freight stuff around the world and what I dream of doing so, and these days I don’t go direct to factories. I use a middle person who’s really, really. And I would suggest again, to a point where maybe made earlier, I don’t know if it’s in whatever you know two way chats Jason and the e-commerce leader or what this, this one, but it’s a, who not how question nerdy, I think often and the sourcing thing.
[00:19:26] So don’t try to become expert in something that will take a lifetime. That’s different that there isn’t enough time find a trusted person preferably through referrals personally, and then use that.
[00:19:35] Kyle: Yeah. To extend that as well. The reason why Ali Baba itself, I like to find products is a terrible place to find products.
[00:19:43] I am not terrible, but it’s more of challenge is the best factories are not even on Ali-Baba because they don’t need the business. Right. So if you have someone who’s got 20 years of sourcing experience in China, they already know who those factories are and probably have the connections to get you connected to it.
[00:20:01] But they’re not going to be publicly available on places like Ali Baba, because they don’t need to be right. So they have the highest quality and the best price. Or at least the other highest quality, for sure. So there’s just little things you learn over time with that. But second here’s, here’s my other hot take and I want to throw this out there for people that are interested in private label.
[00:20:18] If you are a marketer or you have marketing skills, you can build an on. And you got, and you’ve proven that over time and and you have some capital and you’re thinking about private label. I think that there’s a pretty interesting opportunity to go and actually buy private label businesses that are still sort of in the smaller states.
[00:20:39] You’re going to have a lot of these big, big roll-up companies. Like the of the world that are going after sort of like the million dollar private label and above. And, you know, there’s some wiggle room they’ll go down to two and a half million depending on the niche and which ones are going. I think that there’s an interesting gap, a private label businesses that are sort of probably in that.
[00:21:00] You know, 50,000 to $250,000 price range of the value of their business, where maybe they have some IP, maybe they have some product development expertise, but they just don’t know how to market their product very well. I think that would be interesting opportunity for a really good marketer to come and have some money to get an asset relatively.
[00:21:20] And go out and be in the private label business without having to become a a developer like a product developer. And you could actually partner with somebody like that in that scenario. So, and
[00:21:30] Jason: those businesses are scaling up and being available for sale all over the internet. I mean, there’s so many sites now micro acquire and Flippa and empire flippers, and there’s just so many marketplaces.
[00:21:42] Shopify has its own marketplace where you can acquire the. You know, version zero to version one efforts where people have gotten some sales, velocity, they have sorted things out. They’ve gotten an audience and a product that’s matching and they, you know, they can demonstrate it through revenue and those businesses are frequently available.
[00:22:01] And so that is interesting. All right guys 30 minutes in, we’ve got a rapid here. Interesting conversation definitely went places we didn’t expect. And so as always, it’s an honor and really, really grateful for the time and talent you all bring to the party. So I know audiences as well. If you’re listening to this on the Kulin app, we’d love your like comments and followership of the show as well.
[00:22:25] On Spotify or apple play, if you listening to it there in the future. So thanks everybody so much. I’m going to end it here.
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