Mastering Amazon's Numbers Game: Expert E-commerce Insights with Matt Remuzzi

Step into e-commerce mastery as we delve deep into Amazon strategies with Matt Remuzzi from CapForge. 🚀 Matt, a business expert, author, and startup consultant, joins us to unveil the power of meticulous bookkeeping and accounting in deciphering your true profit numbers. 💰

Navigate complex profit margins, optimize costs of goods sold and ad spend, and tap into the hidden potentials of your brand. Matt’s wisdom extends to exploring the crossroads of direct-to-consumer vs. Amazon approaches, and discovering how to create a resilient brand ecosystem. 🛒

Hold on for a game-changing revelation – discover how shifting your focus from products to customers can transform your e-commerce success. 🎯 

Ready to revolutionize your Amazon strategy? As a special gift, Matt is generously offering a limited-time discount of $150 off for our listeners! 🎙️🎁

Don't miss out on this exclusive opportunity. Tune in now and seize the power of numbers!

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Transcript

Speaker 1: 0:00

That, to me, is 100% the wrong way to build an e-commerce business. You should not start with the product.

Speaker 2: 0:13

Hello, my name is Ben and I am your host. Welcome to season two of the Amazon Strategist show. So this is the show. That's all strategy. No hacks, no silver bullets, no magic pills, just real, practical strategy for Amazon sellers.

Speaker 2: 0:29

I just finished an amazing first episode for our season two opener with Matt, the founder of CapForge, and we went over all kinds of really interesting things, everything from his interest background story of getting into standup paddle boarding, getting his start on Amazon and ultimately starting CapForge. And we also talked about some of the kind of most common questions that get asked to him from people that he's worked with and has worked with over the years, everything from talking about should you expand to Walmart and Etsy and other marketplaces to when is it time to actually go and seek financing lending from Amazon or one of the other borrowers financiers out there in the world, and is it really ever time to do that. And if you guys watch all the way through, wherever you're watching YouTube or listening, make sure you listen till the end, because Matt does go over. What his controversial take is about one of the most common things that is said on YouTube and by all of the kind of gurus in the space right now. He has a really unique, controversial take on how to do something. I'm not going to go into the details, so make sure you watch or listen to the podcast wherever you normally listen to it, and let us know in the comments on socials what you think of his controversial take. So again, matt from CapForge was an amazing, amazing first guest for season two and I'm looking forward to many more exciting guests to come Joining us.

Speaker 2: 1:48

Today we have a true e-commerce expert, matt from CapForge, whose wealth of knowledge and experience will inspire, revolutionize and ultimately change your approach to selling on Amazon. So we've got some bold claims, really excited to get into this with Matt. He's a seasoned podcast guest as well, so I know he's got the speaking voice to be here. But real quick, matt, before I fully bring you on, I just wanted to go through a little bio for you. So Matt Ramuzzi is a small business and bookkeeping expert. He's also wears multiple hats as an author, a startup, a business consultant, and he has founded CapForge, which started out originally as a consulting business, and it really has not strayed too far from those roots. But outside of that, matt's also a seasoned world traveler, dedicated blogger, and when he's not immersed in that whole world, the finance, entrepreneurship and everything else he's doing, standup paddleboarding, which I want to hear a little bit more about. But, matt, without further ado, thank you and welcome to the Amazon Strategist Show.

Speaker 1: 2:46

Oh, thanks for having me. It's great to be here. I appreciate it. I always love a chance to kind of chat about this world that we all kind of live and work in and, you know, hopefully share some good content, help people out to improve their businesses. As they all you know, we all spend tons of time working hard on our businesses, so we want them to do as well as we can, and if I can share some info that will help people do even a little bit better, I feel like that's a win for everybody.

Speaker 2: 3:12

Love it. No, that's awesome. I appreciate it. But before we get into all the nitty gritty I want to ask you a little bit more about standup paddleboarding. I actually have a few friends. So I grew up in the San Francisco Bay Area but went to school in Southern California, so I think not too far from you. But I've got a bunch of friends right now that are actually training for the not standup but the paddle out to Catalina Island, so kind of in the same realm. But I'm kind of curious how you kind of got into standup paddleboarding. I know it's a great workout, but tell us a little bit about that.

Speaker 1: 3:40

Yeah. So I went to UCSD, university of California at San Diego which you know, if you're not familiar which no reason most people should be is literally right on the coast in San Diego and we could walk from our dorm down to world famous Black Beach and go surfing. So I started out surfing traditional surfing there, really enjoyed it, but you notice, as I got older, the laying down, paddling in just was a little harder on my body a little bit, you know, less enjoyable over time. And at about the same time, you know, laird Hamilton and some of those other guys over in Hawaii started to really popularize standup surfing, which is really just a slightly bigger surfboard that you can stand on. It's got enough flotation, you can stand on it, you can paddle it but still catch waves.

Speaker 1: 4:30

So when that came along I thought, man, this is the ticket for me to get back in the water, be able to get back to surfing, which I love doing, but just in a slightly different format. Other plus side to me with all these great white sharks swimming around in the Pacific lately, I figured they come up from underneath to attack. So if I'm standing on the board, the worst I get from a shark attack is a cut on my foot, whereas these poor guys lying on their boards, half submerged, they're toast. Yeah, that's true, I didn't even think about that.

Speaker 2: 5:00

And we just had what shark week like a couple of weeks ago. So I know my friends were sending me videos from shark week, which, yeah, just an extra reason. I totally get that. I hadn't thought about that before that went through my head.

Speaker 1: 5:13

I'm like it's better for the shark situation, which is only its shark week every week here. Well love it.

Speaker 2: 5:18

No, it's awesome. It's cool to see that you've kind of evolved with the sport and doing it even as you change and grow older and still have something to really keep you in shape. So that's amazing too. I'm on the other hand, I need to start with stand up paddleboarding. I cannot surf at all. I've stood up like one time. I am a swimmer, though I used to be, so maybe I should try out some more stand up paddleboarding. That being said, matt, I want to get into it a little bit here. I want to be cautious and we're really grateful for your time. So I want to hear first, kind of the common question that everyone gets started with, which is how did you get started with your Amazon journey and, ultimately, the journey that led you to starting Cat Forge and working today with tons and tons of different Amazon sellers and beyond?

Speaker 1: 6:01

Well, I mean, I had always wanted to be an entrepreneur. I just wasn't sure how to go about it. I'd worked in restaurants for most of my pre-college. In college, even after college, as restaurant manager, I finally decided if I really want to have my own business and get on that path, maybe I should go back to school. So I went and got an MBA. After the MBA program was over, I got hired at a consulting company and shortly thereafter laid off. It was all part of that sort of dot com bust era. But I'd been working with small businesses, helping them put together financial projections and business plans and things like that. I thought, well, I can do that on my own until I get a real job. Well, 23 years later still haven't gotten a real job.

Speaker 2: 6:41

Yeah, that's what I was going to say.

Speaker 1: 6:43

But continued to work with small businesses and it kind of evolved. I could see that one of the real needs that a lot of small businesses have was quality bookkeeping. It was just something that wasn't institutionalized. There wasn't a set standard for it. It was anybody could kind of call themselves a bookkeeper, where they had zero experience or a lot. I thought it was a good opportunity.

Speaker 1: 7:05

I kind of got into that and not very long after I really started focusing on bookkeeping as the primary thing that we were going to do at CapForge, I got a call from a guy whose name was George Carlin not the George Carlin, but a guy named George Carlin who happened to have an Amazon business and he said, hey, can you help me with the bookkeeping? This is what I do. I still on this website called Amazon. Of course I've heard of it, I've been a shopper there, but I never really put it together. From that experience he was super happy. We learned a ton about how to do e-commerce bookkeeping and accounting. He said hey, by the way, I'm in this Facebook group. People are asking do you mind if I put your name out there? I was like, no, that would be great. Here we are over 1,000 e-commerce clients, later 70 employees, cpas, tax department, the whole thing.

Speaker 1: 7:54

It's been a phenomenal ride. We got to see e-commerce grow up, going from guys like him who were just experimenting with it to now people who make an entire career out of being an e-commerce entrepreneur. It's been a great ride. We've seen development of it over the years, all the new platforms coming online, all the new challenges that come with it, the changes that are constantly happening in the industry. It's been fun and getting to work with so many entrepreneurs. To me, that's my happy place. I love entrepreneurs. They're doing their own thing, their own way. That, to me, is always fun.

Speaker 2: 8:31

That's awesome, it's funny, I feel like that's it. It's just crazy how life weaves into taking you into these different paths you never would have foreseen. Like you said, you've still never had a real job of you into this day, but you probably had something that's much, much better. That's amazing, thank you.

Speaker 2: 8:47

The other thing I was going to say, to be honest, jumping into this call with you, I always jokingly say on my webinars and things that I do, that we normally talk about different things that you look to kind of delegating, get rid of and off your plate. And the thing that I always use as my example is hey, one of the things I hate doing is anything related to bookkeeping taxes. That stuff is a foreign language to me, so I always say I want to get that out of my way immediately. So my experience pretty much starts and stops at QuickBooks, and I don't even remember what the tool was that I used to pull orders back in the day and it was a whole nightmare. So we are grateful for people like you that are doing this stuff so that people like me do not have to. So really appreciate that too.

Speaker 1: 9:29

Yeah, no, I mean, and I always say, right, I'm the first to admit, right, this bookkeeping is not sexy, right? I never tell people at parties I do bookkeeping or accounting, I don't, I don't even bring that up, right? But profits are sexy, right? That's what we're all working so hard to generate. Is the something left over after all the sales and after you subtract all the expenses? Hopefully there's something left over, and that's the part that we're all working towards, and the bookkeeping and accounting is sort of the necessary evil. That helps you understand where you're at, make good management decisions, see that you know fruits of all that hard work and labor and it is a key piece and we try to make it as painless as possible and as helpful as possible without you know any of the drudgery of the grind and the foreign language. Like you said, that you know most people. That's their perception of it. So I get it. Bookkeeping is not sexy, profits are sexy, but let's talk just about profits.

Speaker 2: 10:26

Yeah, there we go. Well, yeah, and that's. It's funny too, I don't know, for were you at Prosper this year in Waspace?

Speaker 1: 10:31

We were.

Speaker 2: 10:32

Yeah, yeah. So my experience being there this past year I don't think you and I bumped into each other, but it was a lot of the conversations a lot of the speaking topics were about profitability, the year of profitability versus, kind of this mentality that we've seen over the past. You know, like this couple of years and maybe even decade of growth at all costs, but I think, with a lot of the changes in the industry and some of the aggregators and things mixing up there, that definitely seems to be more and more of a trend. Right, Like you know, we could, we see constantly these people calling out the gurus who post their revenue screenshots and this, and that we know. Now more than ever, you really have to have a good sense and understand what your true numbers are, which is remarkably hard, at least for someone who does not have the same expertise that you might as well. So, yeah, what I think what I want to get into is just some of the questions that you talk to a lot of people.

Speaker 2: 11:23

I think you said you've helped over a thousand plus e-commerce, Amazon sellers, so you have had a lot of people come to you and probably ask all the questions, all the dumb questions that I would be asking you, and those are some of the things and some of the more advanced things I want to kind of get into a little bit of that and kind of some of the frequent questions that you know both the seasoned entrepreneur and, you know, just starting out Amazon seller might be asking for. So if that's okay with you, the first one that I really want to know is if I'm an Amazon seller or an e-commerce seller. The biggest question is how do I really know if I'm making money? Right, I know what I'm selling my product for. I know my costs of goods, or I think I know them. You know, but maybe maybe there's some more of them, Maybe there's some more that goes into that that I need to understand. So do you have kind of a really simple way of breaking that down when you're talking to clients that ask that question?

Speaker 1: 12:11

Yeah, and it's not an easy question to answer with e-commerce, because there's a big gap in the timing. Right, you might have bought inventory three, four months ago. Right, you finally sell some of it today and then you don't get paid for two weeks so, or more, you know, depending if there's. They're holding reserves and so on. So if you just go and look at your bank balance, it's very hard to tell am I making money or am I not making money?

Speaker 1: 12:41

A month where you had a bunch of sales and they didn't buy any inventory, it looks like, man, I'm killing it. You know, look at all this money flowing in and I didn't have any expenses. And then a month where you're buying inventory, you're like, oh my God, why am I even doing this business? This is ridiculous. I'm just bleeding money here. So and I talk to people all the time who aren't just starting out but have six figures, seven figure. I've even talked to some eight figure sellers, eight figures of revenue, who say, matt, honestly, I'm not sure if I'm making money or not. What? Yeah, that's kind of scary.

Speaker 1: 13:16

That is scary, that is very scary. So that's the number one thing to start with is understanding. Okay, how do I figure out if I'm making money? The first thing you have to really appreciate is you can't just look at your bank account because of that very thing the timing of when money's coming in and money's going out makes it almost impossible to look at your bank statement and figure out if you're making money or not. What you really need to do is have a cruel based accounting bookkeeping that tells you for this month I sold $50,000 worth of products. The cost of just those products was 20,000. My Amazon fees were 15,000. My ad spend was 10. At the end of that, I made $5,000 or $7,500 or whatever it is, or I broke even or I lost money. Then, once you understand that and you do that each month, then you can see okay, here's what I need to do. I need to try and get my ad spend down, or my product cost down, or my sales up, or adjust my pricing or cut some of these other expenses, or I'm doing okay, but I need to keep doing okay If you fundamentally have those numbers and I get it.

Speaker 1: 14:26

Most people don't want to be a numbers person. But we make it so easy. It's literally just looking this month versus last month. I'm comparing. It's just like Sesame Street level. Which one's bigger? We want it to be that easy.

Speaker 1: 14:40

Then you can see okay, I'm doing well or okay, I need to keep an eye on this, or I'm not doing as well as I want. What can I fix? It's not hard, it's not expensive, it's not time consuming and you can outsource almost all the work if you find an e-commerce provider that knows what they're doing. But it's really, really critical and putting your head in the sand and kind of saying I don't want to worry about that, I just want to make cool logos and cool product images and write neat copy. You know you can spend a lot of time for very little reward or end up losing money if you don't keep track of it. So I think it's just it's super important to understand that you need to do it or you need to have it done, have it done right and then look at it, and just a little bit of effort makes a huge difference to your business if you're doing it.

Speaker 2: 15:30

Yeah, that's awesome. I have two small follow-up questions. Well, I think they might be small, maybe they're not, but one is at what point? And I'm going to tell you, you're not allowed to say the ideal answer to this question, which is you should be doing this from the beginning, but at what point is this something where you really need to start thinking about it? Like, if I'm just starting my Amazon business, I've just launched my first call at three private label products variations Maybe I'm only making like three thousand dollars a month in revenue. The least of my concerns right now well, maybe maybe the least of my concerns is that piece. Yet at the same time I mean cash flow obviously is very, very important, especially when you're small. But I guess, at what point do you really have to be saying I need to get very, very serious about, like my books, my numbers. I need to get that external person that really has the expertise.

Speaker 1: 16:16

Yeah, I mean, and I would say, look, if you're just starting out, your money is better spent on maybe some ads, maybe getting your inventory going and turning it into a viable business. To start, right, you don't need bookkeeping right off the bat. But if you get to the point where you're, you know five to ten thousand dollars a month of sales, by the end of the year you could be over a hundred grand. Right, that's not nothing. You want to make sure that you're handling that correctly, if nothing else from a tax standpoint. Right, so you're not paying taxes. You shouldn't have to, because your CPA doesn't really understand what he's doing or doesn't understand e-com.

Speaker 1: 16:54

So when you get to five to ten thousand dollars a month in sales, it's definitely worth having the conversation and a lot of times what we'll do for somebody like that is we'll say okay, look, in January we'll do a catch-up project for the prior year.

Speaker 1: 17:08

We'll take all the months and do it all at once. Just give you nice monthly bookkeeping, but as a one-off project, and then call us again in June and then we'll do six months and then at that point you might be ready for a monthly. Or maybe wait one more quarter, do three month project and then do monthly. I don't need to take anybody's money and have them pay us or any provider for a service they don't really need. But once you get to that level, you've got enough money coming through that it it will add up and you really want to start making good decisions and make sure you're not wasting money or losing money that you don't want to be losing or didn't realize you were losing because you were keeping track of it. So day one no, first sale no, but five to ten thousand a month. That's time to check in.

Speaker 2: 17:55

Cool, no, no, that's a great framework for me. The other, the other question I'm just selfishly curious about but what are kind of average margins that you're seeing? And I know this is gonna widely vary, right and but you know, with a, let's say, let's call it a private label business, that's kind of at the point where they're stable. They've gone through some, they're the real rapid growth and now they're just kind of stable but growing. What like what do you actually see that the profit margins can be with an Amazon brand these days, or Amazon business?

Speaker 1: 18:22

So I mean you're right. It varies all over the place because of the margins on the products and the power of a brand. But if we're just kind of ballparking generally, I would say a mature e-commerce business should be netting not less than 15% and really you should be optimized at 20% or higher. Now, anything higher than that now you're starting to get into pretty rare error and you're doing well right. Either you have a strong brand or, for whatever reason, maybe you're the manufacturer of your own product or you're in a secret niche that no one else has figured out yet and you're able to get a higher price or have a lower product cost than other people. I mean, I've seen as high as 50% profit margins, but that is a unicorn type business. But 15% really should be sort of your floor goal. If you're less than 15% profit, then you're probably not where you should be. If you're at 20%, give yourself a pat on the back. That is a very solid profit margin. And 25-30%, you're really doing well. You're really doing well.

Speaker 2: 19:33

Love it. So, with that kind of just kind of on the topic of profit in general, if we're looking at it, so if we've kind of broken down our numbers or you've helped a client that's broken down their numbers, their next question is probably going to be okay, I know what my numbers are. Now Maybe I'm not making as much as I thought I was. So do you have suggestions that you normally go to them with in terms of how to actually go and increase their profit, to improve that margin?

Speaker 1: 19:58

Yeah, definitely. And again, if we're talking about private label sellers, let's say you know the two biggest categories that we look at. That you have control over. Right, amazon charges a boatload of fees but there's really nothing we can do about that as sellers. Right it just it is what it is. But cost of goods sold and ad spend those are two places you have total control over what you're doing there.

Speaker 1: 20:23

I actually just did a YouTube video recently on six different ways you can bring down your cost of goods sold. And if you think about it, you know a 20% reduction in your cost of goods sold is a huge bump to your bottom line. That may be the difference between a 5% profit and a 15% or 20% profit. And it's the difference between if a product costs you $5 and you can figure out a way to get it for $4, there's your 20% cost of goods sold. Savings right there.

Speaker 1: 20:50

And there's a lot of different levers you can pull from. You know, looking at different sourcing have you, you know, shopped other suppliers A lot of times? Just that move or even just threatening to change suppliers? Suddenly the prices are more negotiable when they told you before they weren't changing packaging? You know, looking at different weights and sizes If you can get into a cheaper shipping category. Sometimes just building some brand strength allows you to have more pricing power.

Speaker 1: 21:19

There's a lot of different things you can do on cost of goods sold. And then same thing on ad spend. And I know a lot of people you know get into situations where, without really realizing it, they're dropping a lot of money on keywords that barely convert or don't convert. But it's very right Because they're looking at the overall Overall. My ad spend is not that bad compared to my revenue, but when I tear it apart, 50% of your ad spend is obviously and completely wasted. If you just turned it off, you'd be just pocketing that money instead of spending it.

Speaker 1: 21:49

So you know, those are the two places I almost everybody needs to look first and then, if you've got those as optimized as possible, then you can run through. You know your insurance, your VA cost subscriptions, all that stuff that you know there may be. Subscription bloat is another one. You know people start out I got one subscription. Oh yeah, a year later they've got 12, you know monthly recurring subscriptions and they're like I haven't logged into that in six months. Well, it's costing you 250 a month. Maybe it's time to turn it off, oh yeah, 100%, I'm uh.

Speaker 2: 22:19

Yeah, I'm all over those. I literally check for that stuff so much because I'm like where does HBO max subscription come from? You know, obviously that's not for my Amazon business, but you know.

Speaker 1: 22:28

But those free trials right 14 days. You know, put your credit card in, but don't worry, you can cancel it. And you're like, oh my God, six months later. I'd never used it and I, you know, they get you.

Speaker 2: 22:40

What you said. I just had this similar conversation with you know one of our partner varsity, at the other week and it was kind of the same thing of like you have to first understand your numbers. But once you do you know especially if you're a seller, that's really asked some volume and momentum behind you. Then you can really go to work and find those areas where you can save an extra one, two, three percent. You know, like you said, in some of those areas and those can have such a significant impact in terms of now you've freed up capital you can reallocate towards, you know, buying more inventory, you know running more ads, all of those kind of cool things.

Speaker 2: 23:11

So yeah, but it's a lot harder to do that if you don't really know your numbers. So all good tips, I think that you know. We have another question too, but what is overall? Do you have any advice for what's the best way to grow a business, the business? I think you've kind of touched on some of the levers there, but do you have any tips that you kind of give to clients when they're at a stage to kind of get to the next level?

Speaker 1: 23:34

Well, the first thing is just to make sure that you're doing the most with the products that you already have. And one of the tips that I've seen work really well and I know some other people talk about it, but it's really true is, you know, sometimes you have a general product that is appealing to a general audience, but you can take the same product and essentially rebrand it into specialty categories and really pick up two, three, four times more business and sort of the generic example of that is you know, you have aspirin, right, and that's sort of like pain relief, and people go, okay, I've got a pain and I'll buy aspirin. But then you go okay, well, now we have aspirin for headache relief. And so somebody who maybe wasn't going to look at aspirin before goes, oh, headache relief, it's the same product, right, it's just differently marketed. And then you've got one for joint pain, still aspirin. But you know, now there's one for, and you've sort of taken one product and by putting different labels on it and different sort of marketing direction for it, you've taken something that you were selling 100 units a day, now you're selling 300 units a day. It's the same thing.

Speaker 1: 24:45

But somebody with joint pain goes, oh, this is for me and somebody with a headache goes oh, that's my product and you know you're able to really maximize it. So sometimes I think people's automatic response is I've got to find a new product. Well, okay, but hold on. Have you done everything you could with what you already know works? You've already got a supply chain for you, you've already got experience with. Are you sure you've tapped out on that?

Speaker 1: 25:12

So that's one of those things that gets easy to overlook, but you may really be able to do a lot more with what you've already got. That's already working.

Speaker 2: 25:21

Yeah, that's awesome. Double down, go all in on the products you have. Make sure you're getting everything out of them. That's amazing. One second, I know this question's coming up a little bit more at least. You know I talk to a lot of sellers every week and a lot of them do ask about, you know, maybe, the US Amazon marketplace their primary marketplace but they've either been pitched by Amazon about expanding into the European markets or maybe they're even kind of buying. You know some of these other marketplace, like Walmart at Sea Fair, some of these other ones that are out there. So do you have kind of a framework for talking to clients that maybe come to you or where that opportunity makes sense, and just kind of serving that up to them or breaking it down for it? I guess?

Speaker 1: 26:03

Yeah, and you know, I would say just generally, 75, maybe even closer to 80% of our clients who take a successful product in the US and attempt to sell it in the EU fail. So the stats right off the bat are not promising. But what I tell them to think about is who is your customer and are they in those other markets? And, first of all, a lot of them don't really know who their customer is, right? So you're like I'm not really sure who buys our stuff. We just, I just sell 15 units a day, but I don't really know who the buyers are. Okay, but thinking further than you know who would be the customer. Are those the same people in those other places, right?

Speaker 1: 26:45

So one of the other questions is you know, oh, I'll sell on Walmart, I'll double my sales, walmart's huge Walmartcom. Well, ask yourself this simple question, right? Would you find your product on the shelf in an actual physical Walmart? No, no, my product doesn't really fit with Walmart shopping. Well then, walmartcom isn't going to work because it's the same folks that are shopping there as going into the actual Walmart. So a lot of people open up a Walmart store and then they're disappointed to find it's like 2% of their Amazon sales, because it's just not a fit.

Speaker 1: 27:21

And the EU is the same thing. It's not just another US, right, it's really 30 plus. Different countries, different languages, different consumer mindsets, different. I mean they live in different Compliance issues, everything right, you know compliance issues. The voltage is different, the labeling is different. You know everything is completely different and the cost to localize and figure out and pitch to the different people with the different buying criteria.

Speaker 1: 27:51

You really have to think through that and there's not a lot of products that translate. Well, right, if you're selling, you know aftermarket Toyota truck parts, okay, that might work. Right, if they have the same model Toyota over in the UK or in Germany or whatever that they have here, it's a generic part, fine. But if you're trying to sell, you know a knife block set. Right, a nice wooden knife block with nice knives. Well, in Germany they already figure they make the best knives there. They're like why are they gonna buy something from here that you actually imported from? Like, it's not gonna work. So you have to understand who your customer is, why they're buying, and can you effectively find those customers on these other marketplaces at a price point that you can still be profitable at? And if the answer to that is no, or I'm not sure. Don't try it.

Speaker 2: 28:39

Yeah, I feel like that was a tough lesson for me to learn because I, you know, I've both through managing client accounts like years ago in the past. You know where they'd come to us and be like I want to expand to Canada or I want to get into Europe, and not only do they normally get let down, but the other thing that I think is really important there is just like the amount of distraction that that then in really opportunity costs, that that's going to pull you away from your main market or platform. It normally ends up being massive. That being said, like you do have to, as a business owner, take kind of some of those calculator risks and test new things so that you're always trying to grow. But yeah, it is challenging.

Speaker 2: 29:15

I always tell people you know, when it comes to Amazon, like, do enroll in, like the NARF program or something else, first do like a very soft test of Canada and Mexico, you know something like that before you go and go all in.

Speaker 2: 29:25

So, yeah, that's great, though, do you feel that there are a lot of people who are coming to you still and, mentioning that they are on Amazon, they really want to go out and hit the pavement and really build that direct to consumer brand, because I know there's. You know, in the past there's always that kind of end goal, you know, assuming you start on Amazon, if Amazon's great for building a brand, for having the traffic there. But Amazon, you know, they always say they own the customer, they own all of that stuff, and the ultimate end goal has always kind of been this thing of like we're going to build the direct to consumer site and ultimately get those people over there, so we own that relationship. And now recently I've been, I've heard a couple of big brands and you know people that work behind them saying, hey, we're doubling down only on Amazon, we're not even doing direct to consumer anymore. So I'm just kind of curious if you've seen any kind of shift there at all or if it's been really the same.

Speaker 1: 30:14

I think it's. There's always been a certain amount of frustration for anybody that sells on Amazon for a while. Right At first it's cool. It's like going to the world's biggest flea market. You can throw up a space for pennies and be in business and literally hundreds of millions of potential customers there. But pretty quickly you realize you know you're paying a price for that one, just in the fees that you're paying, you know out of every sale to be there.

Speaker 1: 30:40

And then you don't get to build that customer relationship and you are at their mercy, right. Somebody can file a complaint or your account gets suspended. You've got to fight with a bot you know to start, and then an outsourced person to. If you get past the bot and you realize you know there's a lot of downsides. I'm giving up a lot to be in this marketplace, so maybe direct consumer is the way to go. And then you realize the grass isn't necessarily greener, right? Well, now I got to set up a 3PL and I've got to drive traffic. And how do I keep that traffic from? Kind of they come to my website, my Shopify store, and like, oh, that's awesome, let me see if it's on Amazon. You know you paid all that money. You drove the shop and then it was. They went to Amazon anyway. So it kind of just comes back to you know what is your end goal, what's your game, what's your you know your business strategy.

Speaker 1: 31:32

For some people, putting up with the limitations of Amazon is fine because they've got a supply chain of products that they can make a good margin on and they're not interested in trying to build that larger brand collection right. And for other people it's almost like I want to get all the way off Amazon. I really just want people to come to my place and love me for my brand and my product and I don't need Amazon once I get to a certain size. And that's their game plan. Neither one is right or wrong. It's just that you really should figure out what you're all about and then that'll help you determine your strategy. But flopping around a little of this, a little of that, throw some money at Facebook gas, drive to shop five, then go back to Amazon, because that's where the customers are, and you end up, just you know, burning yourself out and spending a lot more than you needed to because you didn't really know what you were doing.

Speaker 2: 32:22

Yeah, that makes sense. Cool, I want to get to the controversial take question. But before we do that, I know this is a common question that you have. Sorry, so I'm going to leave. I'm kind of building the suspense here, but before we get to that, I do want to ask you because you know I get this question, I know you do too, but people asking about just how they can manage cash flow and kind of the common follow up question there is at what point do you consider you know some sort of lending, borrowing option to kind of help fund your business? You know, we know Amazon loves sending you emails all the time to borrow funds from them, but there's also this whole ecosystem of amazing borrowers, or sorry lenders, out there. Rather, you know all kind of doing various different things, but at what point is that really a conversation that you need to have?

Speaker 1: 33:06

So my general advice is don't borrow a dime until you have your numbers dialed in and you know with some certainty that your predictions are going to be valid, right. So if one month your sales are up, the next you're down. You know, you're not sure what's coming. You're not sure if you're good in the summer, dead in the summer, big at Christmas, you know, dead at Christmas. When you're not sure, it's much, much riskier to borrow money to then buy inventory and hope for the best right. The best time to do it is one when you know okay, every time I sell product X, I make 20%. They want to charge me 6% interest. That math works. I know if I buy a thousand, I'll sell all thousand within ninety days. I make twenty percent on each one. I can afford six percent interest. Now, it's just math. It's a calculated risk. It makes sense, cool.

Speaker 1: 34:06

But when people Aren't you with your numbers, are, aren't you with your sales are gonna look like other sales are fluctuating all over the place, that is a much riskier time to borrow and a much greater chance that you borrow and you're selling products that you're not making money on. You're not making enough to cover the interest. Are you losing money or you end up sitting on this product. You can't pay it back for much longer. Then you thought, and you know it just ends up really crushing the business, like we were saying. You know profit margins, even when things are running well, aren't that high an interest rates are high, so it really squeezes your margins.

Speaker 1: 34:44

So if you're not sure if you're profitable, or you're only profitable three or four percent, buying more growth by borrowing is a bad move. It takes you from barely making money to absolutely losing money and to your point earlier. Profitability is really where it's at. If you're making money with your business, you can be in business year after year and continue to grow. If you're losing money, you have a finite amount of time before you just run out of money. You can't even borrow and that's it. The business is done. So borrowing should only happen, in my opinion, when you're clear on your numbers and you've got a predictable, steady state of business. You're not fluctuating all over the place. Then it's just a calculated risk and I want to give up margin to get some more sales or not. But if you're not sure what's gonna happen, don't do it with borrowed money.

Speaker 2: 35:35

Makes sense, so I'm sensing a theme. It all comes back to knowing your numbers right at the end of the day.

Speaker 1: 35:40

It sounds self-serving for me to say that, but it really. Whether you work with me or you do it yourself, you work with someone else. Knowing your numbers is critical to running the business well. I'm not just telling you that because I'm hoping for more business. I'm telling you that because 23 years in business, it's what makes the difference. It's what makes you a successful business owner.

Speaker 2: 36:04

Okay, so controversial take should we get into it? I want to know kind of what is the most debatable controversial opinion related to Amazon kind of the e-commerce space. You know we're talking the pineapple on pizza kind of question here. So what is that for you?

Speaker 1: 36:22

So I'll tell you, this has been something that's been a frustration for me for years and I see it over and over again. I see it today, I see people teaching it today, and that is Almost every person who starts in Amazon business or is coached on starting an Amazon business. Or you go on YouTube and you know how do I get it started with an e-commerce business or an Amazon business. Over and over and over again, what I see is people say, okay, here's how you do it. Start with product research, get jungle scout or helium tan or the software like that, and you look for a gap. There's a where's a product that you know has searches, but there's not a lot of products billing it. Maybe there's low reviews or three or you know two or three star reviews and you figure out a place you can insert a product that can do well. It should be between twenty five dollars and fifty dollars in price and you should be able to. That, to me, is a hundred percent the wrong way to build an e-commerce business. You should not start with the product, and I talked to people all the time, who I was just talking to somebody the other day and I won't mention names, but you know, she was Selling a product that was basically a vinyl record holder. And I said and she was like you know, I'm making a few sales, but it's not really so. Why did you, you know, do you love vinyl records? Oh, no, no. What do you did you, you know, plan to? Why did you come up with this as well? I actually I paid a VA to do product research for me and they thought this would be a good product. There's nothing different about it, unique about it, brandable about it. There's no price power. There's no reason for somebody to pick your vinyl record holder over the 700 other options that they have when they surge. Vinyl record holder. What? Why would you possibly think this was a good business idea? Because they started with product research.

Speaker 1: 38:16

What I believe that you should do if you're starting an e-commerce business today If I was starting an e-commerce business day or you're launching a new brand, is First start with who is my customer. Figure out who your customer is. Where can you find them, where can you talk to them, where can you understand what motivates them? And once you know who your customer is, then you can find products, a product to start, products to add that they're gonna be interested in. And you build an Ecosystem around that customer and then you follow on by asking what else would you like to buy for me, what else could I offer you that you'd be interested in? And you build an email list and you have people who are waiting for you To bring them products so they can buy them. They, you could have them pre-ordering from you Before you've invested a dime, because you have the audience, you have the customer, and then the questions like should I sell in the EU or should I sell on Walmart, become instantly Answerable.

Speaker 1: 39:19

Well, I know who all my customers are. Are any of them in the EU? No, all, right, that's done. Do any of them shop on Walmart comm? No, well, that's the end of that. Right, if you start with your customer, then you have they. They are loyal to you. They're not shopping price, they're shopping your brand and you know exactly what to offer.

Speaker 1: 39:37

Right, if you said, okay, it's gonna be people who live in high-end homes, who have a flair for interior design, who want to have cool, different looking bathrooms Great, so I can sell them sinks, I can sell them. Faucets, I can sell them shower curtains, I can sell them, you know, towels, and they're all gonna be unique and branded to me and I'm gonna build this whole following of people who love my high-end designer bathroom stuff and and Amazon can raise their fees, I don't care, you know I get. But I can find my people on Facebook groups. I can find them, an Instagram I can find them with. I know who the influencers are and I know they're not on Walmart. I know they're not in the EU.

Speaker 1: 40:14

Like it just all becomes so much easier if you start with who's my customer. But I talked to so many e-comm sellers who say I'm not really sure who buys my stuff or I'm not sure what the connection is. Well then, what's your second product gonna be? I Don't know. Like I sell a garlic press and I sell traffic combs, what the hell's the connection with that? I don't like so. I don't know that's controversial, but 99% of the e-comm sellers I know started by doing product research and, in my opinion, that's backwards.

Speaker 2: 40:47

You know there's a so many nuggets to pull out of that. I have just so many side comments I was trying to hold back in my head to because I literally one. I watched a video this morning that was like a you know, one of those guru tear down videos and it was literally saying the exact same thing. As you know, everyone says you go find a product, here's the criteria less than X number reviews, blah, blah, blah. You know, and to be honest, that's even what I did when I got.

Speaker 2: 41:10

I did my first private label product, I want to say five years ago I did webcam covers. It was a 10 out of 10 like opportunity score on helium 10s extension. By the time I had it landed here and launched on Amazon, it was Flooded and I was, I just I barely sold through my inventory. So I've been there, I've been on that side, and then you know a couple other things that just come to mind for me. I thought that one thing you really mentioned Sticks out, which is a lot of people, even if they're seasoned sellers, they can't really define who their customer is. And I Just another one I was at.

Speaker 2: 41:47

I was at the amazing event in Austin recently and Ryan Holiday was speaking, famous author and all that kind of thing, and he was saying two. There were two things that really stuck with me. One is he said write the press release first. And it's essentially like, the idea being that before you even go, create the product or do any of that stuff or get that far down the road, you should be able to write the press release as if your product has already been launched. That literally talks about your product and the audience and all this stuff. And the second one was he just said you know exactly what you said. Most people can't, most entrepreneurs cannot answer the question or the the kind of sentence my blank, sir, it does this for blank audience. You know they just can't answer the simple, simple statement and if you start with that, it makes all those subsequent decisions a lot easier. So I think that's amazing advice and something that I definitely need to learn, since I have made the mistake in the past too. So, yeah, super valuable.

Speaker 1: 42:42

I it's easier to start there, I think, with the product research, because there's a database already. Pull from the software, sort of all points in that direction, but I just think it's it's not the route to building the most profitable, most successful customer focus business. You can still get there, but you're just you're making it that much harder for yourself and I think there is a better way, which is to just and you know focus on a very clearly defined each right. Like you just say, I'm gonna go for fisherman. Well, cover so much.

Speaker 1: 43:16

How about going for, you know, northwest pacific salmon fish? There might only be fifty thousand of them, but I know exactly what that dude looks like. Right, and I know, and I know what is challenges are standing in cold water. So let's make waiters that have fleece inside them and you know he's trying to catch these kind of salmon and these lures are exactly what he needs. Let's make a better lure and that's. This is when, pretty soon, like, oh my god, these guys get me all their products are just what I wanted. I don't care what the price is, I'm gonna buy them and finding that guy Like you are pacific northwest salmon fisherman or you're not, only the guys are, so my marketing dollars are not wasted on People that don't fit my ecosystem like. Fifteen thousand customers, that doesn't sound like a lot. Well, if I can get most of them and they spend a hundred bucks with me, that's pretty solid.

Speaker 1: 44:12

Yeah, and they normally aggregated right, well, I'm just you know, okay, once I've mastered that and I've got recurring revenue, I've got that audience. Then, fine, go after you know atlantic bone fisherman and then go after you know main lobster, dudes or whatever. But Take the customer first and learn it, know it, find them, understand them, and then the whole bevy of products that you can offer them will be immediately clear. What I saw next it's like what. I've got a list of ten, which one I start with, but I think that's going for the next ten years the e-com successes, the success stories that will be seeing. I think we'll be focused that way versus just trying to find product gaps.

Speaker 2: 44:59

Yeah, I agree. I mean, we're already seen that too. And for anyone who's watching, just think back to the bio. We already we've got one for matt stand up paddleboarder. He likes laird Hamilton, ex surfer and never had, or hasn't had, a real job in a long, long time. Okay, sure, there's a product somewhere in the mix there, sure, no, I want it. And the other thing I was gonna say, matt, honestly, if we go and we edit this perfectly, we could actually take the first part you said about the whole going and doing the product research and launching that way, and probably turn that into a mini course. So, yeah, I'm just telling our editors, watching this will sell a mini course, I get an affiliate.

Speaker 1: 45:40

Cut that then.

Speaker 2: 45:41

That's all I ask you are the guru now. Now, jokes aside, that was awesome. I really appreciate it. Before we kind of go into just closing this out, I do want to ask. First of all, I just always like to ask you this question is there anything I haven't asked you that I should like? Is there any question that I is an amazon seller, or is that the host this podcast? I should ask you. I miss anything.

Speaker 1: 46:05

No, I mean, I think we had a great conversation. I think we could probably talk for hours more and cover all kinds of other stuff, but no, I nothing jumps out me that you know we didn't cover within this topic range. I think. You know you're always learning, you're always improving, you're always sort of picking up new nuggets and thinking of new ideas. So no, I'm I'm happy that we have this opportunity to chat and I think we've shared some great content. Hopefully people think so too.

Speaker 2: 46:32

Well, amazing. Thank you, matt, I really appreciate you being here. Thanks so much, and again, this was a special upset for me because you are the first guest on season two of this show, and also my first ever, I guess as well. So thanks so much for being here and being an amazing guest. I do want to give you a second to just kind of tell us In the audience, where people can find you, what you're kind of working on now. If you have any special deals, just I'm gonna give it back to you for a second here.

Speaker 1: 46:58

Awesome. No, yeah, I think the best place to find us is cap forage dot com. That's our website. You can find out, you know, the services. You can learn more about us. Got blog stuff on there. We've got lots of free Training and materials. We recently kind of kicked off the youtube channel. Got some great stuff on there. You know, instagram linked and you can find us on all the usual places. But start with the website cap forage dot com and and just learn more there.

Speaker 1: 47:22

If you think there's something we can help you with, you want to just have a conversation, I'm happy to talk to anybody anytime. You know, no obligation, no sales pitch. Just let me know I can help you with something, your questions about something awesome. So check us out there and you know, let's connect. Oh, love it. Oh, and sorry I forgot. Yeah, I completely spaced on the promo. If you're somebody who listen to this podcast and you know would like to connect with us on service, I'm happy to give you a hundred fifty bucks off right off the top of whatever service it is that we can help you with, just for coming through from listening to this and just let us know you found us on the podcast here and we'll do that for you as well.

Speaker 2: 48:03

Amazing, that's awesome. Thanks so much for being awesome. Offer guys go check man out, go check cap forage out. That kind of brings us to the end of this episode. So again I just want to say thanks, matt, really appreciate you joining us today and we hope that you coming on here just someone watching this is going to at least get a couple insights, look a few nuggets here To take away with them. So again, thanks so much. We really appreciate it, and to everyone watching, I think. With that being said, please remember to like, follow, subscribe, share this to your audience. If you have any comments, questions, let us know down below. And don't forget to check our social media pages. We will put some behind the scenes stuff out there as well for any bloopers or any anything else that we talked about today. So that's it for today's show.

Speaker 2: 48:47

Be sure to mark your calendars. Join us again in another week or so for another captivating discussion. We will bring another expert and some insights and game changing tips. Until then, this is your host, ben Smith, signing off and happy selling.