S5E18 – How To Build and Sell A 7 Figure E-commerce Brand With Scott Cartwright

• (00:36) – Show intro and background history
• (04:28) – Deeper into his background history
• (08:14) – A practical advice about his e-commerce experience
• (09:39) – Understanding his production process
• (12:03) – Deeper into his business strategies
• (16:35) – Commercial break (Leadfeeder)
• (17:12) – How to achieve product market fit
• (22:10) – The importance of listening to the customers
• (25:33) – A bit about his numbers
• (32:24) – Embrace a cause or a story to get a focused business
• (28:32) – Commercial break (TYKR)
• (29:10) – Understanding his marketing and sales tactics
• (33:04) – What is his Amazon’s growth strategy
• (37:48) – A key takeaway from the guest
• (43:49) – Guest contacts

Transcription

[00:00:00.000] – Show Intro

Introducing Payback Time, the podcast for entrepreneurs looking to build and scale their startups, gain access to actionable tips, proven strategies, and valuable data that can help you avoid mistakes, skyrocket sales, and optimize profits. Your business breakthrough may just be an episode away.

 

[00:00:17.480] – Guest Intro

My next guest is an e-commerce entrepreneur. In this episode, we dive into a skincare company he built and sold for seven figures. In this episode, we talk about how he found product-market fit, how he market his product, how he leveraged Amazon, and we talk about his exit multiple. Please welcome Scott Cartwright.

 

[00:00:37.090] – Sean

Scott, welcome to the show.

 

[00:00:38.620] – Scott

Hello. Hello.

 

[00:00:40.090] – Sean

Good to have you here. So before we dive in, can you tell us something about yourself? Most people don’t know.

 

[00:00:45.440] – Scott

I say that I speak four languages, English, Spanish, French. But the crazy one is sign language. I studied to be in another life, it seems. Studied to be a sign language interpreter. So it was people who listen and then interpret for the Death. I was a student of that back in the day.

 

[00:01:04.750] – Sean

Asl, as they say.

 

[00:01:06.010] – Scott

Asl, exactly.

 

[00:01:06.880] – Sean

Yes, I know the acronym on that, American Sign Language. Awesome. Good for you.

 

[00:01:10.800] – Scott

Yeah, it’s pretty fun.

 

[00:01:12.760] – Sean

All right. Well, why don’t you take a few minutes and tell us about your career background?

 

[00:01:16.740] – Scott

Sure. I started out, I guess, my professional career, if you’d call it that. I graduated from college and I joined the Navy. I went to Aviation Officer Canada School like you probably saw back in the officer and a Gentleman movie, drill instructor and all that. Went through that training, became an aviator in the Navy. I wound up flying S3V Vikings off of aircraft carriers. I did that for three years. We took one of the aircraft carriers around the world from Norfolk, Virginia, to San Diego. That was pretty fun. After that, I got out of the Navy. That’s when I was doing sign language interpreting, trying to figure myself out. I did education for people with diabetes. I actually taught diabetes education to deaf people, which was interesting. I’m the only person doing that in the country. But so from there, I wound, and that was all back east, I wound up moving out west, and I was working, trying to get a supplement business going. It had moderate success, but not as successful as I would have wanted it to be. So then I wound up getting into or going back into health care. I worked at UCSD, UC San Diego Medical Center as a program manager for people who had blood clots in their pulmonary arteries.

 

[00:02:48.700] – Scott

Then, flying in, we removed blood clot, and I managed that whole program for them. Got my master’s degree in public health from that. Decided to move on from that. I know Sean is crazy, like all over the place, but I guess that’s how careers go, right? Then from there, I decided that I wanted to get out on my own and work for myself, do my own business. My father and I, he’s a doctor, we started a health coaching company for people with chronic disease, and so MS in particular, multiple sclerosis. We created a home study course around that. He was the brains. I was the person behind the scenes. He doing all the marketing and sales and all the tech stuff. We created a home study course. We created an online program. We created a supplement. We created private coaching. Then from there, I decided to let my father do his thing, and I was just going to go out on my own because I was behind the scenes on that one. Then so then I started a skincare brand, a vitamin E oil-based skincare brand. I don’t know how much further you want me to go, but- Keep going.

 

[00:04:02.150] – Scott

This is good. Keep going? Okay, so I created a vitamin E oil skincare brand. I grew that over three, four years time or so, sold it, was dabbling in a few other things a few years ago, and then I wound up acquiring a skincare manufacturing company and providing coaching around that now. So that’s the broad scope of it. Happy to talk about any more of those pieces if you’d like.

 

[00:04:27.840] – Sean

Love the overview right there. Thank you for taking us through your journey. We’re going to talk about two businesses here first. Let’s talk about that business you built and sold over the three and four years, the e-commerce brand built around skincare, vitamin E, it sounds like. Do you say vitamin E So it’s a vitamin E oil-based skincare brand. Got it.

 

[00:04:49.310] – Scott

So I with just the vitamin E oil. And then when I found out that it had success, then I expanded it to a full line of vitamin E-based products. So there was oil, an eye cream, a daytime moisturizer with SPF, a nighttime moisturizer, and a scrub. They were going along with it. So once I had a winner and I realized that When someone’s putting something on their face, they trust you. The first level of trust is something you put in your mouth. The next level of trust is something you put on your body. Once I knew that the customers trusted me, then I came out with a full line of products. Sure. And then from there, I extended to some pretty unique products or products from a lasm. I don’t know if you know what that is. It’s a skin condition, an acne product, a pretty unique product for hot flashes. So I’ll go into some niche categories and try to fulfill a need where there were no other products.

 

[00:05:51.020] – Sean

Sure. So we’ll talk about that business, and then we’ll dive into what you’re working on today. But with that first business you built and sold, what was the name?

 

[00:05:58.740] – Scott

Health Priority Health Priority Natural Products.

 

[00:06:01.240] – Sean

Health Priority Natural Products. Okay.

 

[00:06:03.170] – Scott

Health Priority. Yeah.

 

[00:06:05.510] – Sean

Got it. Okay. And was this a bootstrapped company or did you raise capital?

 

[00:06:11.060] – Scott

No, it was bootstrapped. It was just something that I started up. I wasn’t even sure I was going to sell vitamin E. I just knew I was going to sell something skincare. And so it was an Amazon-based play at the beginning, and I created it It posted on Amazon, and it got traction on Amazon, and that’s when things took off. So it was totally bootstrapped. It was hard because it’s like an inventory-based business is like you’re happy because the first time you’re ordering a thousand bottles, and the next time you know you need to wear 5,000 bottles, but you have to pay for those 5,000 bottles ahead of time. You don’t sell those 5,000. You have to pay. Then you have to pay. Then they have to produce them. Then you have to get them to Amazon, and then they have to sell. So you’re not making your money back for, I don’t know, 60, 90 days. And then before that 90 days is up, then you’re putting another order for 5,000 bottles. Then you’re putting another order in for 10,000 bottles. So it’s just this constant game that you’re trying to play, trying to I’m trying to balance the money.

 

[00:07:17.890] – Scott

Maybe I’d raise some money, but I didn’t know anything about that.

 

[00:07:22.680] – Sean

This is good for the listeners to know. And at times, I break in the forth of the wall and talking to them and be like, E E-commerce is, there are people out there, you’ll see the gurus on YouTube and social media be like, I’m making six figures a month on this E-commerce brand, and they make it sound like it’s overnight. And in most cases, it is not overnight success. It takes years to figure out product-market fit. And then what you just explained there, you got to figure out your manufacturing process, your supply chain, your shipping, everything around inventory, How do you deal with that? You better be good at that. Otherwise, your business can tank overnight.

 

[00:08:04.710] – Scott

Exactly. And you don’t really want it to be an overnight success, because if you sent in a thousand bottles and then you have to order 100,000 bottles the next night, you don’t have the money for that. And no one is going to give you the money for that because you don’t have any track record. You have to build a credit with people and things and processes and your manufacturer and all that because they’re not just going to go out on a limb for it. So Overnight is almost a kiss of death. As much as you want the overnight success, you really do want it to work up incrementally.

 

[00:08:38.540] – Sean

Yeah, good call. So let’s dive in one of the big challenges business owners have right up front, which is product-market fit. So this is a product based around vitamin E. I’m naive here. What does vitamin E really help with?

 

[00:08:53.640] – Scott

So it’s a major antioxidant. And so when you have it in a skincare product, it has anti-aging effects and anti-inflammatory effects. So it helps with what people are mostly looking for with their skincare product is moisturization and evening the skin tone and texture. I don’t know if you remember, but back in the day, people would, they may still do it now, cut open vitamin E capsules and use the vitamin E topically on burns or on scars. It’s really healing as well. So it was just one of those things I was trying to draw a little bit off from nostalgia and and go with something that people trusted and a little bit of luck or accidental research, I’m not sure what you want to call it, that I landed on the vitamin E.

 

[00:09:39.930] – Sean

Now, with that, did you develop the product and then have it manufactured overseas, or how did you actually make the product?

 

[00:09:48.870] – Scott

So I worked with a natural product formulator here in the United States, and we came up with the product together. So I knew that I wanted it to be vitamin E, but based, but I didn’t know what else should go in it. And so I worked with a formulator. We came up with a formula, tried it, gave a few samples out to people, and then went with that. But so it’s all formulated and manufactured in the United States.

 

[00:10:16.180] – Sean

Got you. Okay. And I assumed this was a cream. Is that right?

 

[00:10:20.460] – Scott

An oil.

 

[00:10:21.220] – Sean

An oil, got it.

 

[00:10:22.430] – Scott

Oil blend, yeah.

 

[00:10:23.640] – Sean

Got it. And let’s talk about the unit economics here. This is a consumer play, and you were able to sell it on Amazon. Are you talking about something that costs between 10 and 30 bucks, somewhere in there?

 

[00:10:34.290] – Scott

That cost the customer?

 

[00:10:36.850] – Sean

Yeah, customer cost. We’ll get to your cost in a second.

 

[00:10:39.770] – Scott

Okay, yes. So it cost the customer, 1990. Yeah, $20. Okay.

 

[00:10:45.170] – Sean

$20 play for a bottle, sounds like.

 

[00:10:48.330] – Scott

For a bottle, yes, exactly. And I was a high priced person. It’s important for me to be the high priced product in the market, just so that I can have one higher procedure value. And then two, it gives me extra cash to acquire a customer. I never want to be… When you’re the cheap product, Amazon and everyone else is just a race to the bottom trying to just meet you. I never want to be that person. I was selling my half ounce of product for more than the full ounce of other vitamin D products. And you may do it, too. You may What do you go? Do you see a product? You see it is expensive. Like, oh, well, it must work. And then it also allows you, when you have a high priced product, it allows you to really take care of a customer. So a customer right in and say, oh, I don’t like the fact that this happened. But we’ll send you a new bottle and we’ll send you a full ounce bottle to replace the half ounce bottle that you purchased. And people love it. No one takes care of people.

 

[00:11:52.660] – Scott

They feel like they got something special. They’ll tell their friends about you. They’ll be. So it was important for me to be that person.

 

[00:12:00.220] – Sean

A gracious experience from A to Z is so critical. Yes. If you’re just selling your customers something, fine. But if you can give them an experience, a gracious experience, that’s the trigger. And I’ve worked for companies that have that philosophy. You want to really move the needle. You need your customers telling their friends and family, that’s where you get the growth. And a gracious experience is the input to that output.

 

[00:12:26.430] – Scott

And you have to have the money to do that, though. Yeah. You need to be the Oh, yeah. You need to be gracious. And so being the high-priced leader allows you to do that.

 

[00:12:37.230] – Sean

So you’re selling for 20 bucks. What was your hard costs all in?

 

[00:12:41.490] – Scott

So to get the product made was $4 or so. So a nice margin there. And then the only other thing that eats into that, though, money is Amazon. Jeff Bezos did not become Jeff Bezos by giving you- For free. Charging you to use his platform. So he gets a nice little cut out of that. But he has the eyeballs. You know you have to pay for the eye and he has them and he has the credit card. So with that, What margin did he take? He takes about 25, 30 %.

 

[00:13:21.960] – Sean

Wow. Okay. I look at that- That’s just in referral fees.

 

[00:13:26.410] – Scott

There’s also, sorry to cut you off, that’s just in referral fees. Then there’s an extra. He’s He’s making money off of your advertising as well because they’re advertising on Amazon. So in his pay-per-click advertising model, he gets money there.

 

[00:13:40.370] – Sean

What % is there?

 

[00:13:41.450] – Scott

Oh, that’s probably another 20 % I’m trying to remember the numbers, but yeah, I’d say somewhere in there. And the money that he charges you just for fulfillment for Amazon, for FBA, that’s actually people doing things. I guess truckers and all these other things. But with the advertising, he’s not really paying anybody. They’re just showing it to people on his platform. So it’s not really a hard cost for him there. But anyway, I’m You’re taking me back to my Amazon days where I’m like, oh, gosh, it was so hard just because you’re trying Amazon is taking all their fees and you’re trying to turn that. You need that money for inventory. But it’s good. It’s good. It all works out at the end.

 

[00:14:31.510] – Sean

So after paying all the fees, you said you had the referral fees and you had the advertising fees, and there’s an FBA fee on top of that. So a third fee?

 

[00:14:41.650] – Scott

Yeah, it’s about 15 % or so. Yeah.

 

[00:14:44.170] – Sean

Okay. So After all in there, the $4, what does that turn into? About eight bucks?

 

[00:14:50.580] – Scott

Yeah, the total profit was probably $10, $8 per bottle.

 

[00:14:58.000] – Sean

Not bad. I have talked to people who are selling products, and you’re looking at almost a 50 % profit margin, whereas I’ve talked to other people that have been closer to 15 %, sometimes as low as 10 %. I think I talked to one person, it was 8 % profit margin.

 

[00:15:15.780] – Scott

Yeah, but is that skincare? I’m not sure.

 

[00:15:18.980] – Sean

It wasn’t skincare. It was a totally different product line. But this is where you get a lot of inexperienced e-commerce people that think they can make their fortune doing Amazon FBA, and they’ll list a product and next thing. They did a horrible job with sourcing their product, finding a manufacturer. Then they don’t charge the right price. And next thing, they’ll sell a product for, let’s say, 20 bucks, and 18 bucks are going out the door.

 

[00:15:49.780] – Scott

Yeah. No, that’s true. And I’m talking numbers, just to be totally transparent. These were numbers several years ago. As well. The cost of everything has gotten higher. Where that may have worked five… Where it’s not working now for them, it may have worked or they may have been more profitable 5, 10, however many years ago.

 

[00:16:13.400] – Sean

Sure. Yeah. What years did you build this company?

 

[00:16:16.980] – Scott

So it started end of 2014 through 2020 or so.

 

[00:16:24.430] – Sean

Oh, so about six years you had it, 14 to ’16?

 

[00:16:27.980] – Scott

Well, that was the start. The whole process started in the 2014. But yeah, so let’s say five years. Yeah.

 

[00:16:34.950] – Sean

Got it. All right, folks, let’s take a quick break.

 

[00:16:39.210] – LeadFeeder Ad

If you’re like me, you have a lot of traffic coming to your site, but it’s very hard to determine the difference between window shoppers and qualified buyers. Fortunately, there is a solution. I’d like to introduce you to Leadfeeder. Leadfeeder is a tool that shows you what companies are visiting your site, what their browsing behavior is, and it integrates that data within your CRM. The solution? Convert more traffic into sales. Head to Leadfeeder. Com for a free demo and get a free extended premium trial when you tell the rep that you heard about Leadfeeder through Payback Time podcast.

 

[00:17:10.920] – Sean

All right, back to the show. To back up a second, how long did it take to find product-market fit? Because you’re making a real product. I’m in the digital space, so creating a SaaS product, you’re not making something physical. You write new code, essentially, or change code to create a different feature. And you can go back and forth on that, iterate until you find product-market fit. In your case, you have a physical product, in this case, an oil. You got to make that oil, then you got to get out to customers and get their feedback until you hit a home run and have something that’s out.

 

[00:17:48.500] – Sean

How long did that take?

 

[00:17:50.220] – Scott

So for me, it was fairly quick because… So I’m a marketer at the end of the day. I’m not a skincare person. And so what I want to do is I want to win before I even produce the product. So what I want to do is I put on Amazon a vitamin C serum. I wanted to see what success I would have with the vitamin C serum on Amazon. I private labeled that, meaning I did not buy a bunch of inventory. I bought 10 bottles from someone else, put my label on it, a custom label, it was their custom formula, but I private labeled it, sent it into Amazon, People were buying it. But when someone buy something from you on Amazon, Amazon gives you a search term report telling you what the product was, what the search terms were that led someone to buy that product. And so what I figured out from selling my vitamin C bottles where people were looking for vitamin E, but they were buying vitamin C because it had vitamin E in it. I reverse engineered the product market fit because I knew that people were looking for I looked on Amazon and saw that there was maybe one other competitor that I could figure I could outmarket.

 

[00:19:05.670] – Scott

Then I created that product that people were already asking for. It’s a little bit different. You don’t have to do a lot of this guessing if you just listen to what people tell you and then make that, do that. I call it the restaurant model. You go to a restaurant and you tell them what you want and they go get it for and bring it to you. A waiver doesn’t come to you. A server doesn’t come to you and say, take this T-bone steak. You’re going to buy this T-bone steak, and I may spend so much time. You’re going to like it. You’re going to like it. You’re going to have it. They’re like, why don’t I want a T-bone steak? But if you tell them, Hey, I’d like some pasta, then they say, Oh, we sell pasta, and they go make the pasta for you and bring it to you. So that’s what I did. People were telling me they wanted vitamin E, and so I went and created a vitamin E product.

 

[00:19:56.930] – Sean

Key takeaways I want to highlight for the audience here. One, One is, I like what you did there with the data. You list a product that you know that sells. Vitamin C is hot. Everybody, like my wife and I, we take vitamin C. Basics, right? Okay, what else are they searching for? Not everybody’s looking at the data like you did and you’re looking at, okay, so they’re looking at or searching for vitamin E. There’s a lower, probably from my point of view, probably a lower search volume, not search volume, a lower amount of competitors for vitamin E. Right. So you have a wider moat, and you can get your product out there listed, almost a blue ocean, if you will.

 

[00:20:41.480] – Scott

Exactly. And especially if you know that you can do better than the competitor, the competitor that are out there, then it’s good.

 

[00:20:48.790] – Sean

Yes. So going from the first iteration of the oil to really where you started hitting massive traction, did you go through a bunch of iterations over that duration?

 

[00:21:01.020] – Scott

There were a few just because I started out with a scented version, and then people were in the comments and in the reviews, they said, Oh, we love it, but we’re sensitive to smells, so we love an unscented version. Just a few little tweaks like that, listening to what they were asking for. Then the unscented version wound up being the majority of the sales, 70% of the sales people would I prefer that. Or someone would say, Oh, we would like it in a little bit bigger bottle. We’re going through it so quickly. So created a full ounce of it. So a full ounce and a half ounce in the scented and the unscented were the only iterations Because I was trying to not go crazy because then it’s a lot of skews that you have to manage and a lot of just different inventory options that you’re trying not to manage. Because you could go crazy and make it a bunch of different sense and all these different things. It just complicates the logistics and all of the ordering and the management and the paying and all that.

 

[00:22:09.330] – Sean

Got you. Now, another big key takeaway there, and this is a discipline that a lot of entrepreneurs or aspiring entrepreneurs they can’t do, which is listen to the customer. Listen, all the way, don’t make it about you. And that’s what you did, is this constant feedback loop and looking at the comments. Did you ever get people on a Zoom call or get them on the phone to really dive deeper into what they’re looking for? You ever do that?

 

[00:22:35.260] – Scott

I did talk to a lot of people. This was before Zoom, though. So a while ago. I did talk to people. I talked to people quite a bit because that’s important for me to figure out what they’re really looking for and how we can position the messaging and just what we can do better, especially to create that experience that people are looking for that they miss.

 

[00:23:02.480] – Sean

Did you get them on the phone or did you meet in person and with people?

 

[00:23:05.690] – Scott

It would be on the phone. We would call people up from the… That would have purchased on the website, actually, because we have their contact It does.

 

[00:23:15.270] – Sean

That’s great. That’s the tried and true way. It’s not the glamorous way, but it is the easiest way to find product market fit is simply listen to the customer. And I’ll ask entrepreneurs that are building a tech platform like mine, and I’ll ask them, How are How are you doing with product market fit? And they’re like, Well, we’re still working towards it. I’m like, Well, how many customers do you talk to per week?

 

[00:23:35.780] – Scott

Crickets.

 

[00:23:37.120] – Sean

How many do you talk to per month? Cricket. You are missing the mark by a lot. You got to be on the call. Nowadays, I try to get people on Zoom so you can see facial expressions and read their body language. You’ll say something and they not wince, but if they… They’ll say yes, that’s interesting, but they mean no, then I’m like, You really don’t want that feature to you.

 

[00:24:00.360] – Scott

Exactly. No, it’s so true. I mean, you just talk to people, and no one wants to talk to people, but it’s the easiest thing. You find out what they’re looking for. But I find it really important because you find out the language that they use that you can then use to, I start to say influence, but to make them understand that you know what you’re talking about and that you are someone that they can trust, because that’s what it boils down to at the end of the day, even selling skin care. They want to trust you. And when you use their words, they’re like, Okay, yeah, he gets them. And there’s vocabulary you use, that I use, that inside whatever group we’re in, and you know that they know what they’re talking about is like, Okay, yeah, this person is…

 

[00:24:47.640] – Sean

Man, that’s smart. You write down as you’re having the conversation with them, write down the keywords they’re mentioning, and you go to the next person, the next person. I try to do the same. You use their language, then that becomes your marketing copy. You don’t have to hire an ad agency for 100 grand to try to figure out your tagline.

 

[00:25:11.290] – Scott

Exactly. They’ll tell you. They’ll tell you, and you just write it down, and then you just- That’s it. Think back. Same thing you do with your kids. Your kids say stuff to you. Why are you saying that? But when you try to say it back to them, it doesn’t quite work with your kids because they’re like, Don’t try to be cool. But your customer, they realize.

 

[00:25:33.860] – Sean

Can you take us through the numbers a little bit? Do you recall, because it was about four-year process, four or five year, of what revenues you made year over year, just so we can visualize the growth trajectory to recall?

 

[00:25:48.900] – Scott

If I could think of it, it probably went… So at the peak, it was up to about three and a Three and a half million in sales. But as you can imagine, that did not happen overnight. No. I did not look or think to look at that, but it snowball. It’s not a…

 

[00:26:17.960] – Sean

Straight line.

 

[00:26:19.150] – Scott

It’s not a straight line. That’s the word for it. It’s this hockey stick thing because things start compounding. When you start getting… The more people buy, the more reviews you get, and when people start seeing the fact that you have 1,000 reviews is different than 3,000 reviews. 3,000 reviews or 5,000 or 10,000, those numbers. And then so when that happens, more people start buying, and then the algorithm at Amazon would give you priority, and then you have more money to spend on acquiring customers through the pay-per-click advertising platform. So it Sorry, I don’t know the exact- That’s okay. Year one, year two, year three, year four, but it did not go in a logical way.

 

[00:27:13.760] – Sean

Do you know when you hit an inflection point where you’re in that mode where you’re working hard and you’re putting in the time and you’re not really seeing the ROI quite there, but did you hit a certain point when, bam, it just started taking off? Would that be year two, year three, year four?

 

[00:27:32.050] – Scott

Two to three, yeah. Somewhere in there. By year three, things are starting to really click because you also have enough revenue that you can create some spinoff products and just add to the customer experience. We decided to throw in a gift. If you bought a kit, you get a special scrub along with it. You have enough money to do those things. At the beginning, you’re just putting money just back in, just trying to feed the beast. But after that part, then the beast is getting fed. You have some proper relationships in place with American Express, preferred partners, so where they’ll give you a loan. It’s like a loan, but it’s cheap money. But you have to be at a certain… You have to have been with them for so much time and all these other things. It gets easier to do those type of things once you’ve been selling for a longer. It just takes a while to get there.

 

[00:28:32.260] – Sean

That’s great. Let’s take a quick commercial break.

 

[00:28:34.780] – Tykr Ad

Do you feel like stock investing is too confusing, too time consuming, or too risky? It doesn’t have to be. If you ever considered investing on your own but don’t know where to start, I welcome you to check out Tykr. Tykr guides you through your investment journey by steering you towards safe investments and away from risky investments. I created Tykr because number one, I wanted to remove emotions from investing, and number two, I wanted to save time. If you’re interested, you can get started with a free trial. Simply visit Tykr.com. That’s T-Y-K-R.Com. Again, Tykr.com.

 

[00:29:09.270] – Sean

All right, back to the show. And let’s dive into marketing and sales a little bit. So you stayed on Amazon for the whole duration. You didn’t jump off Amazon. Is that correct? That’s correct. Yeah. Yeah. Okay. Would you say that was your primary marketing channel?

 

[00:29:25.390] – Scott

That’s the primary marketing channel, yes. And then in addition to that, I was also overseas, but that’s Amazon as well. I was one of the first ones to go to Europe. So it’s Germany, France, Italy, Spain, and one other place that I can’t think of, one of the country, but it was in the UK. So we’re in Amazon Europe as well as Amazon Canada. It was Amazon US. And then also on Walmart and on And then my Shopify site, so my own e-commerce site.

 

[00:30:04.270] – Sean

I was going to ask if you had a Shopify site, which is the go-to with listeners out there. If you’re looking to create an e-commerce site, I always tell people, go with Shopify Shopify is your first play. You could go with Squarespace or Wix as a good second option for e-commerce, but you’re just going to have more features and functionality. I’ll put it this way. You’ll make your life a little easier if you go with Shopify. Yeah.

 

[00:30:29.950] – Scott

Start with Shopify. Then you don’t have to convert over or wish you had or any of that stuff. They have all the apps. It’s the place you go for that.

 

[00:30:41.850] – Sean

And do you have an idea of the revenue split? I look at Amazon as one channel, I look at Shopify as another. Would you say 80 % of your revenue was from Amazon, 20 % from Shopify?

 

[00:30:55.280] – Scott

If that, probably more like 85 or 90 from Amazon because it Amazon UK, Amazon Europe, US, and Canada. And the Shopify was just meant to be a place where people would go. Sometimes people want to just check on you afterwards.

 

[00:31:12.660] – Sean

Legitimacy.

 

[00:31:13.400] – Scott

Yeah. Exactly. And so Shopify was there to pick up those people. And it was cheaper on Shopify because I didn’t have all of the expenses that I had on Amazon. It’s an incentive to purchase on Shopify because then I had the contact information that I could do with You own the lead. I own the customer.

 

[00:31:33.560] – Sean

Yeah, there’s a few benefits there, again, to the audience if you’re creating e-commerce. And I only know this because I talked a few people in this space is you want the Shopify brand to legitimately The legitimacy, your real business. You’re not just playing, I’m going to launch a product on Amazon, and you can’t find me anywhere else. You don’t want that. You want people to come to your site, do homework on you. What have you done before? It gives you more confidence to buy the product. That’s number one. Number two is with Amazon, you’re not collecting the leads, that customer base. If you got a thousand people that buy from you and they’re all on Amazon, guess what? You don’t have any of those email addresses. You don’t have those, right? On Shopify, you want them buying from you, so you get there. And it’s not to use the email to spam them. It’s to what you did. You could do upsells as an option. You can also talk to them. What do you like about the product? What don’t you like?

 

[00:32:27.700] – Scott

And all that stuff. Sales, too. You do sales, periodic sales. We do holiday sales. Promos? Promos, exactly. Yeah. Yeah.

 

[00:32:36.990] – Sean

E-commerce is one of those businesses where you better be offering some deal or special always. I see this in consumer every month, you better be thinking of something. What can I offer my customers to stay in front of them? B2b is a different play. You’re not doing that. But yeah, you want to be pushing, whether it’s a holiday special or some flash sale discount or something like that.

 

[00:33:03.390] – Scott

Yeah. Yeah, exactly.

 

[00:33:06.050] – Sean

Another really important thing you did is you really lean into Amazon. I see people who fight back at the machine, if you will. They don’t want to give the 15 to 20 % or whatever percentage fee to Amazon, or if they list a product on the Shopify app store or the Salesforce app exchange, or in our case, we We have a mobile app coming out for Tykr, and that will be on Apple and Google. Well, they all take their percentage. You can’t look at that as a problem. You got to look at them as a partner. They already have the audience. They’re doing a ton of work. Yes, they should get a percentage. And if you partner with them correctly, you look at them as a partner, that’s when you can really grow together.

 

[00:33:50.740] – Scott

Exactly. I mean, Amazon has all the buyers. People go there to buy things. And so you want to be where the buyers are, where the credit cards are. You have to pay for that. But it would be hard to do it without something like an Amazon platform.

 

[00:34:11.780] – Sean

Got it. All right. So then we lead up to the exit of the business, I assume, because businesses are never sold. They are bought, is how the old saying goes. I assume somebody approached you and wanted to talk about buying you. Is that how this worked?

 

[00:34:25.540] – Scott

That’s how it worked. Yes. Somebody was like, Hey, we want to We’re looking to get into skincare. It’s a portfolio. So it was a venture VC firm that wound up the business. And they were wanting to get into skincare, wanting to get into Amazon. I didn’t ask a lot of questions because I was surprised at first that anybody would want this business that I had grown. But yeah, they wanted it, and I couldn’t turn down giving it to them.

 

[00:35:00.200] – Sean

And so it was good. Yeah, it’s good. And when we’re talking offline, it sounds like they purchased you for 3X EBITDA, which is not your top line revenue, but it’s closer to the net income number. So did they come at you? Did they throw out 3X and you just said yes, or did they come in lower and you negotiated higher?

 

[00:35:23.810] – Scott

No. So I wound up, at that point, I was working with a group to help me with the sale because I know nothing of it. And so I relied on them to advise me. And so they said, this is a good deal. They would not have said that. I trusted them. If they could have gotten more, they would have tried for more. So I let them do what they needed to do together, and then they presented me with the offer.

 

[00:35:54.560] – Sean

Got you. Okay. And it sounds like you worked with an M&A firm to help with that. Yes, exactly. Yeah. And can I add, did they take a three to five %?

 

[00:36:04.720] – Scott

I think it was three %.

 

[00:36:07.440] – Sean

That’s about right.

 

[00:36:08.490] – Scott

Okay.

 

[00:36:09.490] – Sean

For the audience, key takeaways to think about there is smart play, bring in an intermediary service, M&A firm is a great point in about 3 % commissions, whatever you sell it for, then they’re going to take that percentage. It’s a win for you, it’s a win for them. So you’re both incentivized. And And then the 3X multiple, that is pretty good because I’ve talked to quite a few e-commerce startup founders, and that is about right. With SaaS, you can have higher margins because you don’t have inventory and shipping and all that good stuff. You can five to 7, EBITDA, maybe 10, but just some nice round numbers to get you thinking.

 

[00:36:55.720] – Scott

Yeah. Yeah.

 

[00:36:56.920] – Sean

Okay. Awesome. Can you share with us what the final number, what the sale number was?

 

[00:37:01.920] – Scott

Seven figures, is that good?

 

[00:37:04.510] – Sean

That’s good enough.

 

[00:37:06.310] – Scott

Yeah.

 

[00:37:09.030] – Sean

Built it to seven figures in revenue and then sold it for seven figures. Now, that’s great. And were you 100 % owner?

 

[00:37:16.280] – Scott

100 %. Yeah. Bootstrapped. Bootstrapped.

 

[00:37:20.830] – Sean

American dream.

 

[00:37:22.500] – Scott

Bootstrapped, but when you’re up in the middle of the night, until you get going, you’re responding all the customer support and all this stuff, that’s Bootstrap. Then as things go on, like I mentioned before, two, three years, then you could start outsourcing all these things. But I outsourced a lot early because I knew where I needed to focus my time. So it wasn’t three years before I got rid of customer service, but it was definitely bootstrap.

 

[00:37:48.660] – Sean

Awesome. Really, really fun success story. Before we jump into the rapid fire round, I want to talk about one more key takeaway, but I want to be specific. Usually, I leave it open-ended for the the guests. In this case, I want to ask you, were there any big lessons learned or mistakes you made along the way that you’d tell our audience to avoid?

 

[00:38:09.550] – Scott

Any mistakes? I’d say one, the main mistake is I probably started focusing on other things outside of Amazon too soon. It sounds nice to diversify, but it does take away focus from what you’re really working on and what you’re trying to do. There’s a time for it and just trying to figure out when that timing is. But you have bright, shiny objects syndrome as an entrepreneur. It’s like, Oh, there’s Walmart, and there’s Target, and there’s Shopify, and there’s all these things. And you really just need to be disciplined and just make sure one is clicking before you worry about any of the others. And that could be with anything. If you’re doing YouTube advertising, for example, for not even e-commerce, but just get good at YouTube advertising or YouTube and then TikTok and Insta. There’s 10 million places that you could do something. Just pick one and focus on that.

 

[00:39:12.090] – Sean

To piggyback on your comment, On the product side and the marketing side, that is so true with the product side, create a home run product, not 15 products that are okay. Create one really good one and lean into that. That’s especially true for e-commerce. With SaaS, focus on that one product. You can think about other SaaS complementary products to help your audience. Don’t even go there. You want to get one platform right. And then on marketing, you’re 100 % right. Find the marketing channel that really moves the needle. There are business owners that think about, well, I need to be omnichannel. I got to be here and here and here. It’s like, no, no, no, no, You talked about the key fundamentals by getting your reviews, getting as many reviews because that helps your placement. That’s where I would put all my focus.

 

[00:40:09.990] – Scott

Yeah, exactly.

 

[00:40:12.180] – Sean

Very inspirational story. I love the data. Thanks for diving into it with us. But let’s go ahead and transition to the rapid fire round. This is the part of the episode where we get to find out who Scott really is. If you can, try to answer each question in about 15 seconds or less. You ready?

 

[00:40:28.440] – Scott

I’m ready.

 

[00:40:29.600] – Sean

All right. What is your favorite podcast?

 

[00:40:31.810] – Scott

My favorite podcast is My First Million. I stopped listening to it because Bill Gates said that he ripped out the radio in his car, and he did that just so that he could stay focused. So I stay focused and think about his business. So if I’m not listening to My First Million because I can be obsessed with it, I don’t listen to anything just so I can try to think about my own business.

 

[00:40:59.980] – Sean

Good for you. Silence. All right.

 

[00:41:02.220] – Scott

I see it. Silence is good. Yeah.

 

[00:41:04.370] – Sean

All right. What is a recent book you read and would recommend?

 

[00:41:07.390] – Scott

I would recommend A 100 Million Dollar Offers by Alex Hormozy. I don’t know if you You got it on my shelf. Yeah, it’s good. It’s really good.

 

[00:41:20.380] – Sean

Awesome. All right. The movie question, what is your favorite movie?

 

[00:41:23.940] – Scott

My favorite movie is old school, The Matrix, number one. The very first matrix is just It blew my mind, and it still blows my mind, considering what it was for when it was. Nowadays, you’d see it and you’re like, I don’t know. But for me, it was maybe what the kids are experiencing with Avengers and whatnot now. That was my Avengers moment, the Matrix.

 

[00:41:48.240] – Sean

Matrix still holds up, and it’s hard to believe it’s 25 years old. Crazy, right?

 

[00:41:54.590] – Scott

It is crazy. I’m old.

 

[00:41:58.030] – Sean

All right. What is the worst advice you ever received?

 

[00:42:01.840] – Scott

Probably build a better mousetrap along those lines, build a better mousetrap, and they will come. It’s not just that they will come. You have to You have to do something. That’s a great thing. So, yeah, I think that’s the- That’s a good one.

 

[00:42:22.250] – Sean

Look at that equation. What’s the best advice you ever received?

 

[00:42:25.350] – Scott

Is that you don’t know what business you’re in until you start. You always think you’re doing something, but until you get in and try to sell something to someone and figure out what they really want, then you really don’t know what your business is about.

 

[00:42:42.300] – Sean

I love that advice. You think your business model is one thing, and if you listen to your customers, it can be something completely different.

 

[00:42:49.760] – Scott

Completely different. And don’t be afraid to pivot to that thing. Don’t get stuck on your recipe because people may not want that much salt in it.

 

[00:42:59.260] – Sean

The restaurant A restaurant metaphor.

 

[00:43:01.310] – Scott

Yeah, exactly.

 

[00:43:03.870] – Sean

All right. Time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?

 

[00:43:10.660] – Scott

I would go back to probably 25 to 30, and I would tell myself that it’s all going to work out, that it will be just fine. If you don’t have the end in mind, if you don’t know what the end is, that’s okay because you just take the next step. Just take the next logical step for you and you’ll get there. We just think that I’m going to be this and I got to get there. And it’s not a straight line at all. It’s okay to zig, zag left, zig right, and then you get to where you’re supposed to be. Right on.

 

[00:43:44.140] – Sean

All right. We didn’t get it I wanted a chance to talk about your current business you’re working on, but why don’t you take a minute here, tell us about what you’re working on today and where people can reach you.

 

[00:43:54.150] – Scott

Sure. I will do that quickly. So after I sold my skincare brand, I wound up acquiring the manufacturer that made my skincare brand, so a US-based manufacturing company. I acquired that to help entrepreneurs start their own skincare brands. I own a skincare manufacturing company. We make skincare, hair care, body care, and pet care products. So that’s my business. Now, entrepreneurs come to us. We help them from start to finish with product ideas and the formulation and the labeling, packaging, trademark legal stuff. We manufacture, obviously, or clearly, or surely. We fulfill on the back-end, sending things to Amazon, holding on things to sell them for your Shopify site. Then we help with marketing and sales as well. What’s hot now is TikTok Shop. The influencers there are incentivized to make videos and sell your product. Some other cool places like Flip Shop and things like that. This is more than just a manufacturer. Since I’m involved with it, I know what entrepreneurs need, I know what they’re struggling with, I know what obstacles, all those things. Then I help people, I hold people’s hand through all of that. The manufacturing company is called Novian Skincare. It’s N-O-V-I-A-N, novianskincare.

 

[00:45:25.400] – Scott

Com. We’re Novian Skincare Manufacturing. Then my personal brand with helping people through this whole process is the Skincare Sherpa. So I am the Skincare Sherpa because I am your guide to building a successful skincare brand. It’s like climbing a mountain. You need a little help when you’re going to climb Mount Everest. And so I’m there to guide you through the whole process as the skincare Sherpa. So I’m scott@theskincaersherpa. Com.

 

[00:45:54.330] – Sean

Or-email.

 

[00:45:56.250] – Scott

Yeah, that’s the email. Exactly. And then Novia Skincare is the manufacturing.

 

[00:46:01.550] – Sean

That’s awesome. I’ll put all the links down below. If you guys are interested, just scroll down to the show notes. You can reach out to Scott there. But really appreciate this story. You gave us so many good takeaways on how to build a B2C brand. The B2B listeners out there, you can certainly apply some of the strategies. But those of you starting an e-commerce brand or B2C SaaS, subscription-based end-user-facing platform, a lot of great tips here. Thank you so much, Scott, for your time.

 

[00:46:31.250] – Scott

All right. Well, glad to be here.

 

[00:46:33.400] – Sean

All right. We’ll talk to you soon. See you.

 

[00:46:35.330] – Scott

All right.

 

[00:46:35.750] – Sean

Take care. Hey, I’d like to say thanks for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. And if you have a moment, could you please head over to Apple Podcasts and leave a five-star review. The more reviews we get, the higher this podcast will rank. All right, stay tuned for the next episode. We’ll see you.