How to Start a Business and Make Your First $1 Million in eCommerce Sales

How to Start a Business and Make Your First $1 Million in eCommerce Sales

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so the biggest thing is um getting that product market fit and really testing it and really making sure that you have it before scaling up on the marketing but i've had a lot of people they'll ask like you know the marketing for andy how do we do the same thing um but if you don't have product market fit the marketing doesn't do anything it doesn't matter what you're doing hey everybody my name is adam lavinter i'm an entrepreneur and founder ceo of scriberbase i'm also a published author and podcaster and i'm very happy to be here hosting an episode of learn with shopify where we release a new video each week that will help you start run and grow a successful online business for simple actionable tips to grow your online business make sure to subscribe today i'm thrilled to be joined by mike gettis who founded nd in 2015 canada's fastest growing vertical e-commerce company and market leader in the online mattress space after the big sale to sleep country canada in 2018 mike has gone on to launch another startup called kiln quality cookware at affordable prices which he built right on shopify mike welcome to learn with shopify let's get started [Music] let's start with finding product market fit so when you and raj have this idea to dive into the mattress space and i know you have some interesting views on testing or micro testing using digital channels how are you guys finding product market fit in the mattress space oh it's a great question i i think i see a lot of entrepreneurs like in general one of the biggest issues is product and getting stuck on product um so the biggest thing is getting that product market fit and really testing it and really making sure that you have it before scaling up on the marketing but i've had a lot of people they'll ask like you know the marketing for andy how do we do the same thing um but if you don't have product market fit that marketing doesn't do anything it doesn't matter what you're doing so part of it is really going back to those basics and really doing that work to make sure that you get there with it part of the problem is a bit of like a carton horse and chicken and egg problem is that you want to have some revenue early on and you don't want to burn too much cash so i think the issue is how can you do that as as rapidly as possible and i guess that's where there's a lean startup book and a few of those that have really talked about this this concept so the way we approached it just from a practical perspective was um to find to kind of take marketing out of the way so originally we started with like google offers and there was groupon and there was living social and so they actually just sent out email marketing for us on on our behalf the d2c revolution was just sort of in its infancy down in the us and in canada really was non-existent and so it gave us a chance to test out a bunch of products um so pillows memory foam pillows was a big one that did well and i think what we realized is with all the marketing the tempur-pedic had already done on what memory foam was that we had something there that we could just market well here's a memory foam pillow and there was marketing baked into even just the product name so as we tried it we saw that people quite like them they liked them better than their regular pillows there was a good product market fit i mean we even tried teeth whitening and actually there is a smile club direct company that's gone public and made a lot of money doing this too we could have gone that avenue i think we our hearts were a little bit more on the sleep side than it was on the uh on the personal beauty side but uh but yeah it was fun and we experimented with all these different products when we started doing our own marketing we already knew we had the we had the fit uh nowadays i i'm not using necessarily channels to do the the testing just using actually facebook marketing itself and you can do conversion-driven campaigns where you say you know find me a bunch of conversions do up a video part of the problem is it's hard to do completely like you can't just say oh let's just throw up a bunch of you know ghost brands and test a bunch of products and see what happens because customers don't trust that um so yeah so i'm saying like with kiln what we're doing right now is we're kind of doing it a little bit at the same time we're doing some of the marketing but we're testing all these different products i mean we know people need knives and they need plates and they need pens so it's just a matter of which one is the best and looking at which trends are there and testing the different uh testing the different products when did you and raj start thinking about brand and were you going through this you know these mission vision values type exercises like everybody points to india as being a beautiful canadian brand story um you guys don't necessarily come from a branding background so how did you get this right yeah i would say the branding background can be a little bit of a trap for entrepreneurs um and i see this a lot with people in the marketing sphere that we that we brought in and worked with over the years in agencies this concept of brand becomes really this huge thing around we need to think about the brand and i would hear people say that so many times in meetings around marketing and i think finally what i sat down is like what does brand mean you know and starter kept asking more questions like what does it mean to you when you say brand like what are you trying to say and what i realized is that everyone's definition was like it was coming from here that like brand meant something that was bigger than them and and it was but how do we measure this you know coming from you know i come from an engineering background so like how do we measure brand but then the marketers are like you can't measure brand brand is beyond it's a mr miyagi it's it's a mystery yeah and i i guess that's where i just kept asking more questions like how can something be beyond measuring and all the rest of it so i would say what eventually we did is early on we kind of had this concept where we're we're building brand and we're driving sales at the same time which old marketing just says that this is ridiculous there's no way you can do that and we just said well you know through facebook it attributes the marketing and then there's a lot of people where they may not buy but they learn about the brand and then doing some of our offline ads our goal was just to maintain a certain standard in terms of uh performance but we knew that there was you know a splash of people who were getting impressions but the first time was actually after the sale which was which was interesting learning because um since it wasn't our money anymore we were just sort of like let's focus on awareness right we had a year and and so we were sort of like yeah let's let's do this and i heard a similar story from another acquisition where they did the same thing and and it was amazing that really what it is to me what it's come down to is like people talk about sort of like this really short type salesy marketing as as especially the brand people think it's bad and then you've got the sales type marketing people who think the branding is just a waste of money but really it's just about like maybe like mixing a whiskey where you have some that's that's sort of short term you're trying to get someone tomorrow to buy but the branding piece for me is just about the time period that you're willing to invest over a multi like a period of time and you can measure in terms of awareness of through surveys and say do you recognize like when you think of andy what do you think of you know and if they say mattress you're like great i think brands work the same way where the most important is the word of mouth at the end of the day and that's really where your trust is going to be built which still comes back to the product market fit where people if they like your product they're going to tell friends that they like it and then you add in the customer experience piece around how uh how they worked in terms of receiving the product and all the other things around shipping and around dealing with the company and so i think that's where the trust starts to build but it's a long game it's not you know it's not a short game so like it's something that you just have to have as your philosophy from day one eventually i think maybe where my learning is with kiln is i'm starting to already be like let's think about brand but it's about how can we in a two three year timeline you know make investments today that pay back in two three years mixed in with some of the direct sort of facebook marketing as well which we're trying to get sales next week but i think if you don't have the long view you can fall off a cliff where you're just ios 14 5 hits and then if everything's based on getting sales next week and then you have a bug or a change on the ios side and then all of a sudden sales start dropping but if you had built a more you know robust strategy around looking not just into short term but also long term you're not going to see the same pick because you're having people that i heard about you two years ago that are looking to buy now what types of market dynamics were you watching so at the time you guys launched nd this is going back to 2015. casper is born in 2014 they have early success down in the u.s were you watching what they were doing south of the border the first one that we saw it was and definitely saw i think if anything them and their success was just like we're on the right track with us i think again it's like we're looking at some of these different products and you're like okay this memory like the mattress is where we got to go uh and we were sourcing and looking at different things in around that time um so we we tried mattresses actually the funny thing was with this is that where the testing isn't always perfect as we tried mattresses going through some of these channels and because they were so big and bulky and expensive a lot of customers weren't necessarily there there wasn't the branding like we couldn't control the return process and all those other things so it worked better when we did it ourselves so that's why like i guess the testing is more about getting some gut checks and things in there too um and then saying like well once we add you know the proper hundred night trial and and we had better customer service and can do the marketing properly around the unboxing experience like that would seem to be a big part too where when you were doing let's say you know an email or something you couldn't necessarily communicate that vision so i think that's where we saw and tuft needle was one that came before casper ii that they were on amazon originally they did all their testing via amazon so i've seen people do this too where they they build amazon stores and then they control they basically as a science experiment control for the marketing and then do do just source a bunch of products and then they find the ones that do the best and then they move those into a d2c realm and definitely i've seen people who have been very having a proper method in terms of moving it from amazon over to the dc realm and tuftonita was a good example of that one and they were i think the first one that i recall seeing you were getting comments from the gallery that were saying that of course andy makes you know made such a big splash because you got the marketing right yeah you know you guys had perfect marketing but you always say product wins over marketing yeah well i think part of it is with the reviews now the days as well um like our knife sets for example we send out to you know influencers and all these different people if people don't like your product it's like you're pretty stuck and it doesn't matter how good you are with the marketing um so i know like like casper is an example they went through definitely quite a few versions of their mattress before they settled in and to the proper one and it can just slow you down part of it too is even after the after sale and all the referrals that you build in um you want your customers to be talking about your product and how great it is and wanting to share it and if you don't have that it slows down so all your marketing spend you're putting in kind of hits a wall where if someone just says well this product isn't that great you'll get a bunch of first-time buyers but you're not getting people who are referring you and being second time buyers and building that lifetime value so that part's important as well and so that involves you know taking customer feedback it's not like the journey of finding that product market fit doesn't just end at the point when you start doing the marketing and it's a continual process but i think if you can separate it a little bit that definitely helps and then as you improve your product and work on the marketing side it starts to work together quite nicely so reflecting back on your journey from zero to 100 million in revenue so the early stages of nd you mentioned facebook as a primary acquisition channel were you getting all your traffic on facebook at that time or were you diversifying across different channels uh google was a was the first big spend we put into digital marketing um a lot of that was based on just seeing the dynamics of google was sort of where things were even in the first part of the 2010s it seemed to be where people were marketing facebook kind of just got going but when we first tested it we weren't getting a lot of conversions on it people weren't used to buying things off facebook at that point it was still you know where it started with universities and then connecting with friends and then the news feed came and all that happened pretty fast if you if you think back on it like it was like one year one year when you're now it's like we've had it stable for quite a while and we're used to it but now like the idea of products wasn't quite there so it took a little while for people to even think of purchasing and originally it was just you know static ads people were posting uh and then now you know this move to video and some of that stuff so the i think what really changed with them is they came up with this look-alike audience um concept where find people that are like the people that already purchased and that seemed to be a game changer for them where all the sudden you had this magical audience that was like people that wanted your product and uh at our point too with to see it was still a fairly new idea in canada specifically so we were getting a lot of the lead users like uh this sort of bell curve of lead users to middle users to leg users um and trying to you know there's a whole book on crossing the chasm where they where they talk about this whole idea of going from the lead to the to the main part of the bell curve which is the challenge and so we were in the lead and we were getting a lot of that with lookalikes but then how do you get to the main part of the curve and then that that's sort of in your scale-up phase where you're like okay we've got a bunch of people that are buying this but we also want to get you know i guess our quote we the the person we would talk about was like but what about you know karen from saskatchewan do you think she's gonna buy you know an indie mattress online you know like they're not into buying things online or into the next coolest thing they just need a mattress for their house or for their kids or or what have you so that was sort of the next challenge of moving there and actually we found most of that came from using traditional media as well and looking at the media mix and and not just sticking with the digital stuff um because a lot of them were consuming differently or you know radio and tv and billboards and all those other things were important so i think it comes down to timing like if you if you fly out with a giant tv campaign before you have product market fit it's not really going to do much for you there was this magical time around 2014 2015 where you could just like put money in the facebook machine and then revenue would come out and you're just like this is amazing yeah yeah and i don't think that magic time i feel like it's it's starting to sunset a little bit i don't think it's as easy as as it was in that particular 100 percent what about these other up and coming channels tick talk snapchat pinterest were you guys testing any of these channels at nd or have you been experimenting with them with did yeah we did try all the channels um the one pinterest seems to be the one where i hear a lot where people get some traction with it um i haven't i haven't quite got perfect traction with pinterest we've tried a few different ads and tried some different things and i think with home it's more at least from what what people have told me more of a top funnel approach because you're getting people that are searching for say home decor or they're searching for but they're not going to be like i want to buy a mattress tomorrow on pinterest there's no like low funnel search there people are more in an idea ideation way of thinking so they're more thinking like i want to look at home decor and then if your sort of mattress shows up or if they're talking about kitchen tools and then our knife set happens to have an ad i think there is uh a spot for having a pinterest there in the funnel because apparently the the traffic is quite quite valuable i think for us part of it is just you know when you're when we have what was working really quite well with facebook marketing on andy's side and actually with kiln we find instagram's working really well that you just sort of keep keep working on that channel building content for it and that sort of thing so um so in my experience i found those two the facebook and google were sort of where we continued to focus long story short um i think all of them are worth testing and i think it's like something where you go back to and you say let's test it again let's just say it again but i haven't been able to fully scale um any of those other channels you know i remember uh riding the subway you know back in 2016 2017 and for every nd ad there was about eight kasper ads yeah and i thought to myself you know this is interesting and i wondered if andy by default would be experiencing a residual benefit of having a u.s competitor like casper come in and plow all this money into marketing here in canada did you guys feel like that was an advantage they did yeah and i have to give raj some credit he definitely reached out to them a couple times and was just like hey our sales are doing really well and then they would put more marketing and we were like this is great it i think part of it is looking at it from the perspective there's uh in terms of awareness there's um category awareness and even broadly i mean the awareness that a mattress exists is sort of ubiquitous everyone knows about a mattress and what it does but then it's about well can you buy a mattress online and then that's so sort of then you're starting to narrow in and then it's about which brand are you gonna buy but that's this whole middle category if someone else is paying all the money to educate everyone about buying mattresses online that's great so we definitely were just like all right keep going um and so for us it was just about then you know finding that better better little zone of product market fit which we kept working on that was that was in a better spot than they were at and at first it was sort of like they felt like a bit of a juggernaut and then that were bigger than us but i think as we just kept you know with a better product and we just kept marketing that same about being made in canada and it's a better product and we had better reviews and like i've still sleep on the nd is better than the better than the mattress than the casper mattress in my opinion so you just keep going and then eventually it just starts that that wedge turns into a crack and then you start to really get some get some traction with it and then pretty soon we were doing more top funnel marketing in canada and all the rest of it and we're just kind of sailing along and not really too concerned of what they were doing um i'm not really sure where their sales are at now but we were definitely quite quite far ahead yeah what were some of the other big brand differentiators that andy had well it's funny a lot of people in that traditional marketing space um like early on we're just sort of like well there's not enough differentiators with your product and this and that and we're sort of like yeah but it's a mattress people just want a good mattress and then the fact it was made in canada helped us it wasn't really like i would say a big part of it is we just wanted to make a good experience for canadians and we thought having a factory nearby would be better and it came really just from more of a product perspective but as a marketing uh piece that became super important as well and i think more and more at first we didn't know if people would perceive made in canada as necessarily positive because not that many things were made over in canada other than we knew canada goose was owning the whole idea of like being made in canada and canada's cold and they provide warmth and we're like okay that makes sense but people across the world can get that but maybe maybe made in canada mattress wouldn't work elsewhere but it certainly did well in canada specifically and people liked it i think what it was is even some of these brands talk about sustainability and some of these other things but for us it was all baked into that like local sourcing and all of that other stuff we didn't have to ship a bunch of stuff overseas and everything was made here and people like the idea that it supports the economy so that adds a whole uniqueness towards it how did you and raj start thinking about sourcing and manufacturing early on at nd and for those that are watching that have no experience with sourcing or manufacturing product overseas what lessons tips tricks could you share uh the sourcing part of the problem with sourcing is like a lot of the factories at least i know from the the mattress industry and from kitchen so far they're just like old school uh they're more handshake and they're older people who've been in the industry a while they have a lot of experience manufacturing but i think when you come in like a whirling dervish and you're like hey i wanna make you know online and i'm gonna build this and i'm gonna build that and they're just kind of like what are you talking about another thing too is not getting so much on this email like emailing them and all the time like just like pick up the phone see how they're doing ask them how their wife is doing or their husband or their partner and see what they're up to and i think i find that has a better approach than just being like are you interested in working with me on this project i'm looking at you know like for us we're working on a new pan right now uh cast iron pan and you know the talking to the cast all the people that pour metal in canada like they're not they're not internet entrepreneurs right like they're they pour metal in their shop so when you're telling them your vision and what you're trying to do they're kind of like i don't fully get this but i know this online thing's a thing and like i'm interested in this but i think you do want to build a bit of a partnership i think there is it sort of depends in terms of your sourcing strategy i think early on that partnership is super important because you don't really have that much volume i think later on when you're fairly big as a brand you're looking at more more corporate level things like what's our costs and what's our lead times and you're pushing on this but i think if you try to get a little too too greedy on that early on that you can you can potentially hurt a good partnership with someone because they they're going to make a product for you and that's critical to to be able to get forward did you have a vetting process or was there a scorecard that you used to figure out which was the right partner early on it was more about relationships it was just about who can i get along with well and do they have the capabilities at least to make what i need and then i think as we especially at lower scale you can spend a lot more time on each unit as time goes on you're looking for people with manufacturing mindsets when we scaled up you know your thousands uh in a month or thousands in a week you just need someone who can who can crank them out at a good quality standard and has that under control which is a different skill set than when you're doing your first hundred and they're trying to come up with new ideas and help you out with a product design process and things so i found the relationship piece was important there for sure but i think quality control you can manage yourself um inside the company and so we had a strong team there led led in operations that did a lot of that quality control and looked at all the different pieces and and a lot of that too is just follow-up and checking in on things and saying you know why are we making this decision in that decision and making sure that there's consistency and things like that you've talked about the importance of co-founders um and that you really value having a partner in the mix why was raj the right co-founder for you and why were you the right co-founder for raj and what were the unique abilities that you guys both brought to the company yeah i think it's just complementary skill sets worked really well um i a big thing is if you're gonna work with someone having diversity within the team in terms of skill sets is super important um in in as many ways as possible and a lot of it is that you know if you're building in an if you're first you're starting with co-founders but then after you're looking at bringing people in to help um that that like employees and things so the problem is if you hire and and you're working with you know all your co-founders have the same skill and everyone you're bringing in is has a similar mindset it's very easy to just have a giant blind spot on on certain issues so it's nice to have people with different perspectives and then and the important part with the co-foundership is that they're gonna they're gonna challenge everything in terms of what you're looking at because you especially early on you really you don't have necessarily a giant data set to say oh we've sold 100 000 mattresses so we know all these different things that the customers want you're still just working through it via dialogue with your co-founder and so having that person with a different perspective can help challenge any ideas like hypotheses that you have where this is going to work and that's gonna work and and they can really help you nail that down especially if like you know talking about product sourcing and working with suppliers there's a sort of operational mindset and then having you know someone who has um at least thinking in terms of social proof and some of these other things they're not necessarily the same brain that thinks this way um like hey let's do a campaign where we get jose batista and then we like bring him in and then we have like a mattress shoot and then there's a pr thing that comes in and then we're gonna do a campaign on the subway like there's that's like a marketing mindset so it's good to have a mix of both of those because i think if that marketing mindset goes into the factory it can be you know the whole thing can fall apart and if someone's too organized with the marketing where like it needs to be a neat pile of everything needs to be perfect and attributed you know it doesn't always work that way sometimes it's just about let's make a big splash you know that you've talked about the importance of relationship building with your customers in a direct-to-consumer context the importance of responding to reviews giving the customers the right experience servicing them the right way what are some of the key lessons on the customer service side and do you carry some of those over into kiln and do you share that same advice with other founders based on your own experience here yeah for sure uh a big thing is just customer service even the name um really implies it's more of an operational function and it's just like even going through the calling one of the phone companies one of the big phone companies it's like if you want to leave they're like oh we're going to pass you to a different team and then they have like a different team for each piece of it like if you're a new customer they have a prospecting customer service team and if you're about if you're looking for a promotional offer they have a separate team but then the problem is you get transferred around to all the different teams depending on how you're feeling that week but none of it for the customer is beneficial but for them operationally it's efficient and they're using the least amount of money possible to generate the most amount of return from those experiences that i had yeah that you learned that maybe there's another way that's just more customer-centric and not so focused on saving money and the other piece was is that you can look at it also as with customer experience you can look at it also as a bit of a sales channel as well and not necessarily like the upsize your fries kind of perspective but more in just like building that relationship having customers be happy people's recency drives their feeling about an event so if they had something terrible that happened right before they opened the box that's going to affect you a lot worse than if something bad happened on the website before they ordered it but then they unboxed it and it was fantastic so trying to you know bake in the unboxing experience has become a big thing for a lot of the d2c companies for that reason so yeah i think with the customer experience side a lot of times it was just sort of like someone's upset just give them something like good parents i don't care right that's going to be in big bold yeah exactly any people are going to call me be like everybody's calling he's upset just give them something yeah that's on the wall yeah exactly well it's just there's no point on on trying to fight people over some of the stuff it's it's just to be more relaxed with it and be more personable yeah as opposed to putting them through uh you know abcde sort of journey that's baked into some operational plan that drives ebitda people don't like it they they feel it you know yes talk to me about your experience selling to sleep country so huge accomplishment 89 million dollar acquisition um it's fantastic how did conversations with sleep countries start and do you believe now looking back that that was the right acquirer for you yeah i do um yeah we talked to a few different groups what i love about it is it did keep everything in canada which is what our mission was from from the start was was better sleep for canadians so it was able to our mission statement was able to really um you know stay together you were talking about mission vision values at one point we went through that process for sure where we went through trying to figure that out because you do need a bit of a north star for what you're doing and especially as the team gets bigger not everyone understands where that was from day one and what you're thinking is so it's important to have that sort of posted on the wall for people so they get where that's at but yeah with soup country that's what it was for me that it made sense that that it was just like we're off to the same we're after the same group and we're out to do the same thing and they have a big charity program and you've talked to me in the past about the importance of getting feedback sometimes uh from your employees as being the most important sources of feedback so are you doing that now with kiln with your team of 10 what sorts of feedback have you been getting and can you share some of the more interesting pieces of feedback that sharks have shared with uh mike about mike yeah i would say like the biggest thing was early on i think it's like when you start off as a founder in a company and you build your team it's really a journey going from this this founder person that starts a company and with a small team to like managing a larger team and i think there's a journey that a lot of people go through on that um especially if you're like especially if you're a younger founder it's not like you've managed teams of hundreds of people in your past so you're still learning as you go and so i think at first you kind of think well you know i came up with these great ideas and you can develop a bit of an ego thinking you've got things figured out but then you need help from people like you can't be good at everything there's nobody who's good at everything and so um it's it's like i guess i guess we had to go back to the pro stars you had bo jackson who could play baseball and football you know like there's a few people who i can give it to them that they can they can do both but i was like for me i you know you just have a limitation to what you can do and so that's where your co-founding team helps early on too and then as you bring in bring in the broader team but the feedback piece is super important and especially as you go through that journey you're not going to necessarily have a leadership coach that's going to be sitting beside you being like hey you're a little outside here but even just in terms of your leadership style like if you can at least just like get more feedback from people on everything i think it's beneficial i think where some people maybe they get scared as they think if they take too much feedback that then they're going to be forced to go that direction or whatnot but there's a there's a there's a big difference between having an empathetic conversation with someone about how they feel about something and saying like i totally hear what you're saying we have to go this way but what you're saying makes total sense and i think then the person actually feels heard and probably is more bought into your decision as opposed to we're going this way sorry i don't have time to deal with this right and so i think that's the tendency uh you know from what i've seen from some founders where you get into this sort of myopic direction of like we just need to build this huge mattress company and it's got to go this way but it doesn't you never want to get frustrated if they think something's bad about your product because because you want to just like fix it and if enough people you know you get 15 to 20 people that say this part of the product i don't like then you should change it you know and and make it better for them and that's going to help you sell more and you the reviews are are some of the best best taglines you can come up with the customers are the best marketers okay mike look it's been a pleasure chatting with you today uh thank you so much for being here it's always good yeah talking andy talking kill and wishing you the best of luck thank you if you guys thought this video was helpful make sure that you give it a thumbs up that helps us grow the channel and grow the community for more simple actionable tips to grow your online business make sure to subscribe to learn with shopify so you don't miss out on future releases i'm adam lavinter and thanks for watching [Music] you

2022-01-26 23:05

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