Like many of us, Dillon Carter’s ultimate goal is to make more money with less invested time and effort. He started his professional life juggling his career as a personal trainer and an Amazon seller at the same time – but Dillon eventually realized that this wasn’t a scalable strategy. The only way he could make more money as a personal trainer is to charge more and get more clients, which wasn’t realistic. It was then that Dillon decided to focus more on his eCommerce career. Dillon quit his personal trainer job, became a full-time Amazon seller, went back to school as a finance major, and explored business opportunities that brought him to where he is today.
Dillon is now into wholesale and repricing as one of the founding partners of Vendrive and Go Aura. In wholesale, Dillon experienced quicker and more substantial cash flow in less amount of time than he would have spent selling retail. He learned the value of setting up a flexible pricing strategy in the get-go to allow a smoother transition when a business is ready to scale. Dillon shares his story and answers all the important pricing and wholesaling questions in today’s featured Seller Round Table episode with host, Amy Wees:
What are Dillon’s Pointers in Setting Up a Business to Scale?
Setting up a scalable eCommerce business involves the most thorough planning in the beginning stages. This includes widening your margins to the fullest to allow more flexibility in pricing. You must also look ahead and allow room for growth into B2B wholesale. Dillon graces the podcast with these pointers and more:
- Do not be involved in a price war with competitors. Compete with value, not price.
- Customers choose to spend more for a certain product if the value it provides justifies the higher price.
- A great customer experience goes a long way – always think of ways to reduce friction from making wholesale orders.
- Growth happens when you have repeat wholesale customers instead of just one-time customers who never order from you again.
The 3 Major Pillars of A Scalable Business Model
Most of us go into business dreaming of massive and passive income. Who doesn’t want to make large amounts of money while they sleep? But we also have to remember that business is hardly a get-rich-quick scheme. It really does take hard work, blood, sweat, and tears in the beginning – which with the right attitude and strategy will all pay off in the end.
How do we know we’ve set our business up to scale? Dillon narrows it down to 3 important pillars that we have to build in the beginning stages:
1 – Pricing Strategy
There exists a common pricing dilemma when you don’t think things through. If you price your product too high – your customer might choose the more affordable competitor. If you price your product too low – your product can be seen as cheap and lower in quality. Where do you stand?
Take a step back first and remember this – determining your pricing involves more than just going against the price of your competitor. Using your competitor’s price as a gauge gives them the power to control the market. You don’t want this to happen if you want to have a fighting chance to compete. Your pricing should be centered around value – which is determined by a solid branding strategy. If you can provide more value than your competitor you’ll be justified to charge more. If your value is pinned on your product’s affordability then you have to explain why this will benefit your customer more, without looking cheap.
Providing more value allows you to position and dictate the price of your product without having to hinge on your competitor’s prices. This allows you to widen your margins – which will help you set up a wholesale pricing grid to be launched at the right time.
2 – Customer Experience
Have you ever given up in the middle of buying a certain product online because of a tedious ordering process? NEWS FLASH: the same thing can happen to your customer.
One major challenge in online selling is reducing friction in the customer experience – and given that the experience largely depends on the efficiency of the sales platform, we have very little control in this aspect. In part, selling retail on Amazon solves this problem because of the marketplace’s systems that were put in place to gain the trust of your (and Amazon’s) customers.
So what happens when you venture into wholesale outside of Amazon? There are existing and trusted B2B wholesale channels where you can list your products (Faire is one of them) or you can choose to set up your website on Shopify. Remember that the customer experience is a direct reflection of your brand. Make it as easy as possible. Allow several payment options. Roleplay with your team. Troubleshoot and straighten all the kinks.
3 – Relationships
Growth is about building and strengthening relationships. One order is not a relationship. One-time orders, no matter how many multiple sources, are not enough to grow your brand.
It will be very difficult for a generic product to build a relationship with its customer. Going back to our point about value: if there’s none – there’s no relationship to keep. It would all just be a price war between parity products – and you’ll lose once your competitor with the same value goes at a price that’s too low for you to handle. It’s really just a battle you’ve already lost from the very beginning.
Differentiate your product with values that matter to your customer. Find their most specific desires that your product could address – and give it to them. A strong relationship with your brand will feel personal to your customer – and they will defend it with their lives.
Have you figured out other must-haves for a scalable business model? How have they helped you in your business’s growth? Share them with us in the comments!
Transcription
Amy: Hey, what’s up, everybody? This is Amy Wees here and my buddy Andy Arnott is not here today. He has a sick kid. So you know, he’s excused today. There’s a lot of sickness going around lately. But we’re here with our friend Dillon Carter and we are on episode 138 of the Seller Roundtable. I’m so excited to talk to our old friend Dillon again and find out what he’s been up to, and what’s going on in his world. And there’s some really exciting things. So we’re going to talk today with Dillon about pricing. Like pricing is a thing right, we’ve noticed it on the private label side, we’ve noticed it on the reselling side. So we’re definitely going to talk about some pricing trends today. We’re also going to talk about setting up B2B channels, wholesale channels for your private label products. So stay tuned. Let’s get into it.
Welcome, Dillon, please tell us a little bit about you – for the folks who don’t know who you are.
Dillon Carter: Yeah, that was a lot of buildup, I like it. Let’s see if I can live up to it.
Yeah, a bit about myself. So was an Amazon seller for a number of years. Like most Amazon sellers, I started with RA just to kind of test the waters, right. I kind of wanted to just prove that it was real, because I’m like, I heard it on podcast. And we’ll see.
At the time was a full-time personal trainer. And I would spend every free hour I could, sourcing. And that was fun. But I got to a point where with the personal training side, I decided to move away from that one, it just for me, my life always comes down to scalability, right? So it’s hard to scale your time. And I had this weird conundrum where I built relationships with my clients, but the only way to make more money was to charge them more money. And that wasn’t really a route I care to go. It just felt kind of conflicting. And so I was like, You know what, I want to find something a little bit more scalable, and physical products was that thing.
And so I quit that, you know, tripled down on retail arbitrage and then just spent 10 hours a day sourcing, then quickly realized, okay, it’s still my time, right? Like, I might be able to get sales in my sleep, but I’m still having to spend 10 hours a day sourcing and it you know, it wasn’t a whole lot less hours that I was working compared to being a personal trainer. So I was like, what’s the next most scalable thing?
Well, in my mind it was online arbitrage – I can do it from home. Like I don’t have to jump around and you know, it’s easier to buy and then shipped to my house and deal with everything. So went that route. And it was interesting you know, I wasn’t that great at online arbitrage if I’m being honest. And then hit a fork in the road, a major one. I was like, Okay, this is cool, but it’s not something that I think I could grow into like a sustainable, great business. So I need to figure out what I want to do business model wise. And so I thought, Okay, I got wholesale, or I got private label, for me at the time private label was, you know, going to cost a lot more money than I had available. And it was gonna test right. It’s like I realistically had one at bat. And I was like, Listen, I’m paying the bills with RA right now. And, you know, not living lavishly. So one at bat, that doesn’t work for me, I need multiple.
And so that’s when I started to consider wholesale. And I realized with whole, I could cashflow more quickly, right. So I could, I could be paying myself actual money in a salary within 30, 60, 90 days, right, depending on how quickly I could figure it out. And so I set a rule for myself, I said, I’m not allowed to buy inventory, even if it’s profitable, unless it’s wholesale. You got to figure it out, burn the bridge. That’s what I did. And I struggled for three to four months. It was really tough. And eventually I did figure it out. And grew that business where I was self-sustaining. You know, it wasn’t a lavish life.
I, at that point, decided to go back to college full time as well. I had left a toxic relationship, and was like, I gotta work on me, you know. So I went back to school, full time, actually, as a finance major, at UNF. Did that full time while running the Amazon business. And it was great. Life was awesome. And then I was talking with as many 7-figure wholesale Amazon sellers that I could find. And I was like, hey, I’ll pay you for your time. It’s all good. And only one of them responded back. And that was my now co-founder, James.
He’s like: Hey, don’t worry about it. Let’s just jump on and chat. I was like, Alright, sounds good. So we started to meet once a week just holding each other accountable, kind of like a mastermind, right? Just him and I. And eventually, I found out he actually had a degree in computer science. And he was a full-time college student as well.
And so he kind of teased the idea of software. I’m like, That sounds interesting. You know, what we’ll see here. And he had built out vendrive.com already. And it was cool, because, you know, independently, we have built our own systems for managing how we find suppliers, using spreadsheets Trello, for me, and he basically built a web application that did that, but pulled in ASIN information, which was fantastic. And so we joined forces, we actually met on Instagram, which is funny. We work together for a year and a half on the business before meeting in person. And we learned a lot.
We built a Facebook group, we taught, we used to teach wholesale sourcing live for free every Tuesday. I mean for two – two plus years, I think.
So we built up a nice audience. We had learned a lot. We failed tremendously on the software side, because I had no idea what the heck we were doing with Vendrive CRM. It still exists, which is cool. You know, we stopped paying customers there. But we decided we wanted to kind of up the ante. We wanted to take on a larger challenge. And that challenge ended up becoming repricing. We realized, you know, the area that needed a little bit more innovation, and could be done better and was within the wheelhouse that we were capable of achieving was repricing. That’s when we started working on Aura.
So James pretty much locked himself away. He locked himself in a room for 80 hours a week for eight or nine months and built out the entire thing himself. Like, I’m not an engineer, so I couldn’t help. But I flew out to his college between semesters on winter break, and we launched or together and then I flew back and went back to classes. And yeah, so we that took off. We’ve been growing that like crazy. Now we’re a team of six, we got to have our own office in Boston, you know, so we’re all co like, located here. And we’ve got some stealth stuff, I guess you can call it that we’re about to launch. So it’s been a lot. It’s been a lot.
Amy: I love it. So you’re right down the road from Ecommerce Chris.
Dillon: They’re two blocks from my apartment actually. I walked by their office.
Amy: Have you met ecommerce Chris?
Dillon: I don’t think so.
Amy: He does a conference called Seller Velocity. And his company is Ecommerce Chris. And he is a former Amazonian and so he has a lot of connections and he helps sellers with reinstatement suspensions, that kinds of things. Account Management, that kind of stuff. And he’s just a really, really cool guy, you know, so I’m going to have to make that introduction.
Dillon: Yeah, give me an intro. That sounds awesome.
Amy: I mean, I just got a Christmas gift from E commerce Chris. And it was honestly the coolest Christmas gift that I’ve ever gotten. And so, you know, he’s a good guy to know, because he sends cool Christmas gifts, right? Anyway, no, he’s just a good guy to sit on the podcast a couple of times a good friend of ours, but I’m gonna have to make that I’m gonna write it down. I’m gonna appreciate it. because you got to know him and especially with what you’re working on.
You know, let’s just talk about pricing for a moment. The private label side of pricing has actually become a thing. It didn’t used to become a thing, but or just didn’t used to be a thing. But now Amazon is starting to do competitor research and starting to look at other like, if you’re selling on Walmart, for you know, whatever price and then you drop your Amazon price, or you raise your Amazon price, the you can get kind of a pricing violation alert. And this can cause problems.
The other thing with private label is if you change your price, any more than 2% of the last Buy Box price, and you’re not using the sale field, you can lose the buy box to yourself. People are like, but I’m the only one in the buy box. Amazon doesn’t care, they’re going to put you in the other sellers category. And people have to click other sellers. So that’s what’s been going on in private label. So pricing is important in private label.
Dillon: So it’s less about what I’ve seen, it’s just more like, what I’ve what I’ve noticed with a lot of sellers, so I’ve never done private label. So take everything I’m about to say with a grain of salt, please. I know a lot of private label sellers that do it full time. And there’s this interesting issue where people, somebody will say I’m a private label seller. I don’t fully know what that means sometimes. Because sometimes it can means you’re building your own brand. It’s good. Sometimes it means white labeling, meaning you took the exact same product and you threw your label on it. And that’s like there’s no differentiation, right? So let’s talk about that. Because that fundamental assumption is incredibly important. A brand exists, the term brand exists for a reason. That’s why people pay other people for brand marketing, it increases the perceived value. So here’s what’s interesting, you have I think a lot of people that are really doing white label, they’re not really creating a company a brand. And so
Amy: Taking a commodity product, and they’re slapping their label on it, which is white labeling an existing product. And suddenly you have many people competing for the buy box.
Dillon: And it’s not even just that it’s like, now you’re competing solely on price, and reviews. So here’s an issue. Here’s an issue, I jumped on my podcast this morning talking literally about wholesale pricing strategy. Right? You don’t just sit down and say, Okay, well, my colleagues are this, I want to charge X and like, that’s a cool gap. But you need to think that through a little bit more strategically, especially if you want to go B2B. Now, you got to factor in that that margin hit right. And that’s okay. But what I find is a lot of people get a little too focused on the Amazon side. And they basically create a brand that is overfit for Amazon. And that becomes a problem.
Anchor started on Amazon. And they did it right. But they also got off Amazon, as well. Right? It wasn’t just like, I’m gonna be on Amazon, like that’s the whole shebang. I think that’s a great launch thing, right? It’s a great way to build a brand, get buzz, there’s demand built in, you don’t have to go build that out yourself. But here’s the thing, when you transition, when you shift over from white label to let’s not even call it private label, let’s just call it building a brand. That’s really all you’re doing. When you do that you approach things completely different. It’s like what I tell people with Wholesale, when you just approach a brand, say I want to give you money and buy your things and sell them. Good luck. When you approach it as a relationship and you go more deep into the business aspects of it. The game is different, you’re playing a different game, right? So a lot of people say, oh, there’s so many sellers on Amazon. It’s saturated. No, it’s not. There’s a ton of sellers, but there’s nobody really competing. It’s a very small number. And we got to keep that in mind.
So your price because you’re offering something that a customer cannot get elsewhere. And that’s something matches a pain point. And that something is something you can protect you now own your price point and you own your strategy. And you can build in the margin to be able to scale very quickly.
You can position the brand the product right so I’ll give you a great example I just bought or just bought a new dopp kit because I want to talk a little bit smaller because I travel once a month and I’m like I’m sick of packing the suitcase. I’m just going to do it all it’s a weekend trip anyways, I’m gonna pack it in to a briefcase, and I was looking Listen, there’s there’s a ton of private label options on there that are 12 and 15 bucks, I paid 50. Why? Because I went to, I found Bellroy, which is a brand. And I could tell that the quality was good. And it felt like a brand, not just some something somebody put up. It’s different. I literally think about that, as a consumer, I literally paid dramatically more money for a product. It’s not it’s not cost anymore, right? That used to be the case, and I don’t think it is anymore. But think about what that enables brands or Bellroy. To do. They can go wholesale now. It probably cost them 15 bucks to manufacture. They’re selling it retail for 50. Absolutely, a retailer will say hey, I’ll buy it, and I’ll make a $20 profit on it. Cool. There’s they still have profitable margins. Right? So your pricing strategy, when you’re when you’re talking about creating and bringing on a new product line needs to take a little bit more time, in my opinion, I see a lot of sellers, when I ask how do they approach it, they go, Oh, I see the market. And then I see the price point. I’m like, I get it logically. But I think you’re missing the point A lot of times, right? It’s not just well, they seem to be around 20 bucks. But like what could you do to make it worth 50? And people be excited for it? That’s interesting. Right? So and
Amy: You also have to be careful with that too, though, because Sure, you’re certain there’s certain markets that that don’t do well, if you’re just because you’re building a brand doesn’t necessarily mean somebody’s willing to pay $30 more for your particular toiletry, correct? Absolutely. Yeah, it’s very important to make sure that you are you that you can actually meet that price. And what I love to tell people is look at the market price, the the you know, if I’m selling something that is, you know, a fancy coffee mug, or something or a fancy water bottle, whatever, right. And if I’m selling this, I’m going to look at the market price for stainless steel really nice, okay, probably around 20 bucks for something like this, right. And now I’m going to differentiate it in a way that matters to the customer in a way that I can protect my brand and my price. And I’m going to make it a little bit higher price. But what I want to do is I want to make it so easy for that customer to choose me. Yes, absolutely. I want them to go. Oh my gosh, look at that. Yeah, it’s almost the same price. It’s just a little bit more, but it meets my need. And it’s a real brand,
Dillon: Right? It’s the value relative to what I’m paying. Right.
Amy: Exactly. If you feel like they got what the value that they paid for that product. So you know, if if their unboxing experience and they get it, you know, it’s like that expectation versus reality thing. Yeah, exactly. Oh, what is this? It’s terrible, right. So I love it. And how was your unboxing experience with Bellroy? Was it?
Dillon: It was great. Yeah, honestly. Yeah. Honestly, it was fantastic. Like, I no point was, was I like, pay too much for this. I was like, No, it’s about right. I’m not like ecstatic. It’s a toiletry kit, right? But I’m like, No, that’s, that fits my needs. I’m good. Like, and I’m happy with it. And I’m glad I didn’t get something cheaper, because that’s what I currently have.
Amy: You bring that up, though, in terms of pricing. I agree, like so many people are. The other problem that I see people do with pricing, especially when they are white labeling or private labeling, is they’ll pay too much to the supplier. Yeah. So they’re basically shopping on Alibaba, right? And they’re reaching out to all these suppliers, and they’re like, How much is it? That’s not the conversation you want to have with the supplier. And then you’re immediately telling that supplier that you’re a noob. And they’re gonna give you the price, because they’re not going to expect to get a reorder from you. And you’re gonna pay this crazy price. And then I have people coming to me going, I hope I can sell it for $50. And I go, Well, wait, this toiletry bag looks the same as this $12. One, what makes you think you’re going to be able to sell it for 50? I don’t know. I’m hoping I can do better photos. Yeah. Strategies is $12 for this type of toiletry bag, right? Yeah, that’s the that’s the other thing that I see people doing. So when you’re, when you’re thinking about your pricing, you need to look at the market price, you need to look at the value offering, you need to make sure it matters to the customer. And then you need to we do in our program is divided by seven. And if we can’t source that product at scale, divided by seven, then we go. This is not the product for us, right unless it’s an expensive product, then we’ll go down to like a 5x. Right. Makes sense. Yeah, totally makes sense. But that way we have that that built in margin to not only Amazon margins now like It’s like 40% For fees and everything else, it’s crazy. So,
but but pause on that for a moment, right? So a lot of people complain about fees, and listen, I get it, I’ve paid them a lot as well. My thing is like, it’s all about perspective, right? Like, what you’re really doing is you’re giving Amazon a b2b commission to get you sales. That’s all you’re really doing. So it’s like, if you look at brand to retailer margins, it tends to be 40 to 60% of a markup. Sounds about right. So actually, it’s only it’s actually on the cheaper end of what it would be if you go b2b. But But what’s interesting is, we have no no qualms about saying, Oh, well, this retailer that’s brick and mortar wants a 60%. Margin. Yeah, I’ll pay that all day long. Wait, hold on. There’s no difference. The only difference is Amazon can command far more demand than your average retailer can.
Amy: Yeah, so your perspective, but they can’t command as much demand demand is a major retailer you get are totally different. So like, that’s life changing money that will make your sales look like a penny.
Just like we did on Amazon with one product, one, you know, one little market, you know, we’re gonna start with one little brick and mortar retailer, online retailer, one small online retailer. So I love that. So as far as pricing goes on the you know, you guys have the or repricer um, what’s going on, I want to know what’s going on on the reseller side, because I’ve noticed that Amazon really is putting a a premium on making sure that you’re a registered brand. Like if you’re not a registered brand on Amazon, your life is hard. You can’t advertise and half the places you can’t and now they’re starting to really lock down brands and make it very hard for resellers. So what are you seeing in that market? And how’s that? Yeah.
So less on the brand registry side more on? I mean, this is just everybody would like the insurance side. I think everybody kind of got caught off guard where they’re like, prove that you have insurance right now. So there’s a lot of anxiety right?
Dillon: Yeah, sure. So for us, the interesting thing is during COVID, the algorithm for the buy box kind of shifted. So you started to say okay, well, people can’t ship things into FBA. So that’s a no go. Merchant Fulfilled is an option. So we’re gonna prioritize merchant fulfilled. So we had a lot of sellers that were basically what the strategy used to be is, if you’re FBA, and the current Buy Box price is FBA, you would either match or reprice below my opinion, we can talk about that. And why that’s not a bad thing. I know it’s a misconception. But if it was merchant fulfilled, you would actually reprice above by two to 3%. And you’d be able to pull the buy box up because technically, you’re a better offer base, at least on the shipping time, right shipping and handling time. That change, though and COVID. I mean, most of our users transition from FBA to merchant fulfilled, and they’re like, I can still offer two day shipping. I can’t do it nationwide, obviously. But there is such thing as a regional Buy Box. Yes, we typically only see the one like for us, because we’re using the Amazon NWS API. We only see one Buy Box. There is no like concept of regional but they exist. And so what’s interesting is a lot of sellers once that started to shift back over in favor of FBA, once once the the logistics problem was was kind of solved sort of flooding inventory in, well, why would you do that, you get more distribution, which means you get more access to regional buy boxes. So Wholesale is a great example. If you’re, you know, moving, let’s say 100 units a month, on average, bump it to 151 75. Most likely, you’ll find as as long as you’re going into new fulfillment centers, you get access to new regional buy boxes, which is super important, right? If you look at the algorithm there, it hasn’t changed a ton. I mean, you know, the biggest thing that that we recommend, and we’ve unfortunately had to tell a few users, hey, like, no repricing tool can help you right now because your seller feedback is so bad. Right. So repressing is a thing where it’s not a silver bullet. Nothing ever is. It’s a multiplier, right? So if you have amazing seller feedback, if you have, you know, good buy costs, if you have enough skews. It’s a no brainer. It totally makes sense. And it’s gonna pay itself off within a few days. Yeah. But if you come in, you’re like, I have two skews. I overpaid on all of them. The Buy Box is below my buy cost. And I have 20%. Seller feedback. Yeah. Can’t do anything for you. You have deeper problems. Right. So like most things in business, it comes down to the fundamentals. Right. It’s just getting
Amy: Where you can move the needle, right? Yes, absolutely. Okay, that makes sense. And then the other thing that I wanted to ask you, oh, something that’s really cool for private label sellers and brand registered sellers, is the pricing strategy that is a lot of fun is you know that big red banner that shows up over a price. That’s when something is at its lowest price in 30 days. So if you guys want the banner over your, over your sales, you can and that can sometimes make a big difference. Just make sure you just lower the price slightly so that it’s the lowest price in 30 days. If you’re going to lower the price more than 2% of the last Buy Box price, though, make sure that you’re using the sale the sales field in the offer tab of your listing so that you don’t lose the buy box to yourself. So that is something to think about in terms of pricing. We talked about wholesale pricing, like leaving enough margin, how you should think about pricing your products in the market. Awesome. Anything else about pricing that we should know, before we move on to adding a b2b channel?
Dillon: Yeah, there’s, there’s a handful of things. There’s, there’s, you know, I did a podcast this morning, and I pretty much laid out all the potential options. And it’s a lot and we’ll cover a few, right? It’s not necessarily just choosing your wholesale pricing, you got to have it. But what’s within that, right, it’s not just a price, right? It’s not just 50% off of retail, you need to think through that long term strategy. Where do you really want to take this? Do you want to be in Walgreens? Fantastic. That’s a different discussion. If you’re like, hey, you know, not really, but I do want to be in a ton of independent retailers, because that’s kind of my brand. Fantastic. That’s a different version as well, you’re trying to think through what’s the volume that you can expect on average, right, because you might want to have volume based discounts. This is very common, when I was a retailer, right? Zero to 100, you’re paying 10 bucks, 101 to 250, you’re paying 950, you need to think through that, right? This is why coming into your wholesale pricing and having enough margin is incredibly important. If you get this too low, you run the risk of a very large regional retailer, as an example, coming in, say, hey, we want to buy 1000 units, it’s ton of money, you’re super excited. But the price we’re willing to pay is x. But one, you’re a small brand compared to a massive regional retailer. So they have the power in this power dynamics situation. So it’s pretty much like either accepted or don’t. And you don’t want to find yourself in a weird position where you go, I could accept it and get the cash flow. But the issue is I’m not going to make any money. And by the way, they’re probably going to want net 30, net 60. Net 90. So now you got to cover the cash flow within that period of time. That’s a problem, right? So we want to think through like are you really positioned and ready to go for going b2b. So I tend to recommend like the average benchmark, and every industry is different luxury tends to have much higher markups and margins, but 40 to 60%. It’s very common in b2b as a margin. So I would say try to be a little bit on the higher end there either through reducing cogs or getting your retail price in a good good spot there. And obviously, that’s a lot of strategy there as well. The point here is you want to be able to have a flexible pricing structure that makes sense for most retailers, because you don’t want to have a million dollar contract on the line and not be able to take it simply because the pricing doesn’t make sense. Um, I’ve talked to enough brands that listen, like I talked to one the other day where they had a massive grocery chain come in and negotiate and she was like, I’m taking that money like it overnight. They were 75% of their wholesale b2b orders. I mean, that’s huge. And like, of course, they want that terms and special discounted pricing, because the volumes that they’re going to pull, right, you’re talking about going from an average of, let’s say, 250 units, b2b wholesale order to 1000. I mean, it doesn’t seem like that big of a leap, but it can be sometimes
Amy: Containers full of progress from your supplier, which is correct. It’s huge, you know, has a deal with a distributor and in another country and that distributor straight from there. They’re one of the major distributors for their line of products in in all of Europe, and that distributor just orders straight from their, their supplier.
Dillon: Yeah, right. Get a check.
Amy: Like it’s just like, money, right? So now, you know, they’re starting to compare their what they sold on Amazon with what they were able to do in wholesale. And it’s just, it’s like 8020 and they’re like For all the extra work that Amazon is compared to the work that we had to do to get in with this distributor, like it’s a lot of work upfront with your pricing and with getting everything ready. But now, once they get that that pipeline going and they can keep it filled up, it’s like mailbox money. It’s stupid, right? Sure,
Dillon: And a lot of the brands we’ve talked to. So all the brands, we’ve talked to our direct to consumer, but they also happen to directly sell wholesale to retailers. That’s like our sweet spot with the new product we’re working on. You tend to see a process and systems issue as well. Right. So you know, Amazon, you know, direct to consumer, you get that figured out your good. Wholesale is a little different. Right? So we already talked about, you got to figure out pricing and make a few decisions there. But the process for a retailer to pay you money oftentimes gets overlooked. There’s so much friction, right? Listen, I’ve been a retailer, a small online retailer, buying directly from brands, every brand was different. And that was a problem because I would forget to be honest, like, I don’t even know if like my pricing is up to date that this is an issue. And so some I’m like, Oh, that’s right, I have to call you and give you my credit card number to place an order this other one I have to effects then this other one, there’s a web portal. And so it becomes a problem, right? The simple fact is you are in competition with other brands that that retailer could carry. So which one do they prefer? Assuming profits and all that stuff is equal? They prefer the one that has great communication that has a very clear process and structure in place for placing orders to where there is no guessing there is no, I know your price sheet says 20 bucks, but we negotiated an extra 10% off where do I see that? Oh, we’re just going to remember, okay, I hope you’re you don’t miss a day. And then your team member doesn’t apply that for me. Now we gotta go back and forth. And now we’re risking potentially the relationship itself. There’s a whole lot here, right? Like you can you can see, I mean, do you want to accept net terms? Can you afford to? Is it net? 30? Net? 60. Net? 90? What makes sense here, right? When do you When don’t you? Are you going to run credit checks? Great. How are you going to do that? Right? How are you invoicing because you’re not just getting an order, you’re getting a purchase order, you gotta convert that over to an invoice. And that’s going to come back and get paid. But it’s a lot. And so what we’re trying to work on with the new product is streamlining that process. So it is standard. And it’s just way easier. I mean, listen, placing a b2b order should be just as simple as placing a direct to consumer order. If I’m on Shopify, it should feel the exact same as if I’m on vendor, I placing an order. And that’s kind of what we’re looking at here. Right? We’re trying to say, Listen, if you already have, you know, the relationships and wholesale in place, that’s fantastic. come on board, we’ll streamline things for you. But if you’re brand new, we have a little bit of opinions built in so that it is much more clear cut, and you don’t have to worry about it as much, because there was a lot to manage
Amy: Oh, yeah, definitely. I mean, what we do when we get wholesale orders, we just manually invoice in QuickBooks. Right? And that’s very combat, it’s going to be in getting those repeat orders and remembering to follow up. And all of that is it isn’t easy, you know, it’s a process. So yeah, I think making it easier is good. There are I know you guys are working on a product where you’re building a wholesale side of Shopify so that people can basically take b2b wholesale orders on their Shopify, which is really, really powerful.
Dillon: So not necessarily Sorry to cut you off, not necessarily on Shopify. So basically, we’re, Shopify is just an assumed thing for direct to consumer, right, you’re gonna go build your E commerce site, you’re using Shopify, we want to build the the b2b version of that. So it’s its own application. It’s its own whole thing. And so there’s, it’s a platform really, and so there’s two hemispheres. one hemisphere is the platform where you’re able to manage your current relationships, your retailers are able to see pricing specific to them, if there is volume discounts, if you’ve pre negotiated anything, they can see inventory levels in real time if you have that connected as well, right. So that’s why we’re trying to reduce the friction of them placing a wholesale order, while also reducing the friction for you to process it, right. So we’ll integrate with QuickBooks as an example. So you know, a workflow here would be you would receive a wholesale order, you would review it say this all looks good to me, approve it, create the invoice and then that could be automatically sent over and handled in QuickBooks if you wanted. We’re actually doing payment processing on platform. The second part there is how do you find retailers? This is listen, this is a major major.
Amy: Talk about that. Okay. So what I do right now is I have a wholesale section on my website, everybody, create an account all of that but most retailers that I work with don’t use that like they they prefer to not have an account somewhere that they have to manage Ah, right? Do you prefer to just you invoice you follow up with me? It’s all good, right? So what we’ve actually found to work really, really well. But there’s there’s a, there’s a kind of a, either use a platform like fair where, where there’s a lot of retailers that are already looking for you and they can place an order right on platform, they can find you and place an order right on platform. But a lot of retailers are not on welfare. So then that’s when that outreach comes in. And you have to like find those things. So we use a system where we search, we scrape different platforms, right? We look at like Yelp, for local businesses, that kind of thing. And then we have this database called any biz that has over 15 million businesses in it. And we can search for various types of retailers around the world. It actually sends email campaigns out nice. Okay, it’s still you still have to follow up, you still have to do. I would love to hear how you guys are finding the buyers?
Dillon: Sure. So this is interesting. This is hemisphere two. So this is a marketplace. You mentioned Fair, fair is going to be one of our competitors. So fair is very similar to Amazon, the customers, the retailers, unfair affairs customers, not your customers, hence why they charge commission. Right? That commission eats into your margins, right? We already talked about margins already being slightly tight. We’re not taking that approach here. So we’re fundamentally against commission, we’re saying hey, that’s not the case. Here. What we are instead doing is a is a, like a Slack model, if you will. Right. So it’s based on active retailers. And so we you know, like Shopify, you don’t say hey, go to my Shopify site and buy my things it talking to into consumer, you say go to my site, we want Vin drive to be that as well, we want you to say buy directly from me. So a lot of the brands we’ve talked about will say you can buy directly from me, or you can buy on fair, what we want to say is, you know, when you say buy directly from me, you’re actually talking about the VIN drive platform. Right? So there’s some white labeling going on.
Amy: Here, the Shopify, correct. As of correct,
Dillon: Exactly. Now we do have a marketplace. I think this is important. A lot of the brands we talked to when we ask them, how do they go about finding retailers? Like I kind of Google. But here’s the thing, a lot of retailers don’t have websites, massive ones do but that’s, you know, you’re not going to just go to walgreens.com and be like, hey, like to talk to you guys. And they have a completely different process, right? So you have good inbound on sites like fair because retailers are trying to find you what when we looked at the data after talking with like 300 brands, is you have a lot of first orders. Hardly any recurring, second, third, fourth, fifth orders, and the order volumes, as well. And here’s here’s the interesting bit, I would ask you, okay, so how much is your average cart total, if you will, for direct versus they’re dramatically different? We’re talking like 1500 bucks. 150 bucks. Okay, that’s not a that’s not a wholesale order. 150 bucks is not a wholesale order. That’s just a very large bulk in retail discounted order. Right. So we don’t have that incentive. Because we don’t make money based on commission, we don’t need you to lower to increase sales. Don’t need it to I don’t really care. So what we’re saying is we charged based on active retailer, so if you work with 300 retails retailers in a year, but only 20 of them tend to place an order every single month, we only charge you for the 20. So now we’re incentivized to say hey, you tend to place an order every month, but it’s been three months. Maybe you should place a restock order here. Right. So you mentioned retailers don’t want to have an account. Let me explain that. Because I’ve been there. They don’t want to have 1500 accounts. This is the problem. Because like, what was that login? Oh my gosh, was it this way? We are structuring Vin drive so that a retailer has a retailer account. There’s a retailer side and a supplier side or a brand. A retailer can have connections just like a supplier can. So a retailer came,
Amy: Like fair where they have that account, and they’re able to then search and they’re able to pay right there and they don’t have to.
Dillon: Yeah, but we have connections. But here’s the interesting bit fair says you’re taking the order, right? Unless you can, unless you’re gonna cancel it like you don’t there’s no relationship. It’s purely transactional. But you know, as well as I do b2b Is relationship based. It’s not transactional based. So for us, we said, okay, there needs to be a layer where you both opt in just because somebody’s willing to give you money doesn’t necessarily mean it’s good. This is a lot of what we heard with with the fair people we talked with, where they’re like, Yeah, I’m getting orders, but it’s like going to a farm. I sell things that are not farm related. And there’s buying it in bulk, right? It’s not wholesale, I’m really helping my brand. So for us, we say okay, a retailer can find a brand but a retailer or I’m sorry, a brand can also find a retailer. So it’s very difficult for a brand to proactively go find new retailers to have conversations with in certain sort of relationship with, it’s easy for a retailer to find brands all day long, right? I can just go on Amazon and find brands but do the inverse. Hence it Why do you have to scrape so much data?
Amy: Out on LinkedIn, we do different things, you know, you make phone calls, but you have to find the right person who’s going to be interested, you know, so it’s, it is very difficult.
Dillon: But what if on the platform, you go and you find a retailer, and you know, the types of retailers that your brand and products do very well with, it could be a certain category, a certain size, certain geographical location. And you can go in search and find as many of those as you can, that are on the platform. And you reach out to the person who’s in charge of that. It’s no longer about trying to use hunter.io, to find the right email address, and you know, hacking LinkedIn to figure out who’s in charge here, the person who’s running wholesale, is running that account. And so what’s great is you get to reach out and say, Hey, I’d like to request to connect a connection, once you both agree means you have a relationship now. And it can be severed at any point, right? So if things go wrong, you’re like, hey, like, this is not good, you can no longer buy from me. But you get to reach out. And so there’s this interesting problem where when you’re getting started, especially as a smaller brand, and you’re wanting to get one to go b2b wholesale. You don’t have enough brand recognition yet to have retailers search for you. They might be looking for products like yours, but we want them to look for your brand, your products, that’s different. But how do you get there? It’s a lot of outbound, to be honest. It’s a lot of sales. When I talk to brands, they’re like I hit up the trade shows I do sales, I hired a salesperson to do it. Right. But what if you could just sit down and have a straightforward process where you can say, I know what does well, what kind of retailers we work with that has super high throughput, all that stuff, and just go find morons are having great conversations. And eventually, over time, they start to find you as well, because you’ve built up that brand recognition. Here’s what’s interesting as a second order effect, you do that enough with the small to medium retailers, large box retailers start to take notice.
Amy: Yeah, because you’re getting traffic to your store that they’re not getting, because they have interesting products. That’s the reason that they all hate Amazon. There’s so many cool products that are not available in their stores. And the brands that are on Amazon are not big enough to sell in their stores and are not set up to sell in their stores. So that’s, it’s really interesting. So you’re still in beta. We are yes, we can. I love your passion about this platform. A lot of our listeners are going to be excited about checking it out when it comes. But what is your advice for you know, we’re almost at our hour today? What’s your advice for folks right now? where they’re at? About getting getting started in that b2b relationship? Like what do they need to do? So when your platform is up and operational? And great, what do they need to do? What are some DIY methods for getting started and getting moving in selling your products b2b?
Dillon: Yeah, there’s three major pillars in my mind that that really will set you up for success and that don’t need to be perfect, but need to be at least somewhat thought of. One is your pricing strategy, right? This this is like fundamental, if you get this wrong, a lot of second order, things start to go wrong as well, right? You don’t want to find yourself saying, Oh, this is an incredible opportunity, I want to go that route sounds fantastic. And then realize you just don’t have the margin for it. It’s not going to work. Right. So if you’re, if you have a current product line, and you want to make the wholesale work, they’re great. Start there and see if you can make it work. If not, unfortunately, you might either need to raise your price, which you might have needed to do for a while anyways, lower your cogs, maybe you are paying too much, it’s always a good conversation to have and to think through, or launching new products that are a little bit more tailored to be able to go. So a second, you know, kind of strategy here is you have wholesale items that are really meant for branding, to get people to like your brand to then search for other things and then buy your other things directly to you as in consumer right. So you have a lot of opportunity here. But I think you need to get it right. You need to think it through it right. And it’s not just the price. It’s recommended MSRP Do you want to have something like a map if you’re you know, at will anywhere really map is applicable. But you know, that makes sense if you want to have volume based discounts because you anticipate being able to sell 1000 units a month to a retailer. Great think that through and you don’t have to get it perfect, but think it through and there’s a lot of different methods here but there’s no need to make it super complex. Dual pricing is very simple, right? I this is why we charge for retail across the board, whether you’re buying it from me or one of my retailers, and this is what I charge for wholesale. And it all makes sense where you know, everybody’s getting enough margin. Number two is really the systems you need to think through. How are you going to receive a order? What you don’t want to have happen as a reseller get excited that you use sourced yourself and say, Great, how do I how do I submit an order? You send me an email? Right? It’s like it, you know, it can work. But listen, you’re stepping into a different world. Now, this is not just Amazon, this is you’re talking to professionals. Now. You right? So like every interaction is a reflection of you and your brand that you’re building? And you got to think through that, right? Because if that retailer is like, yeah, it wasn’t really that good of an experience, it seemed kind of risky, well, maybe they’re not going to come back. And that becomes a massive blow one to you know, what you’ve been working on, but to the business itself. So you want to think through how do I make this easy as possible in roleplay, right, set up a simple process and be like, Okay, that was a retailer, I go to pay me money, or, you know, submit a PIO, what does that look like for me? How many steps Am I having to do it? Let’s work to reduce that. And obviously, you’re going to do a basic beta, if you will, and you’re going to launch that. And you’re going to say, okay, retailers that I’ve found, you can submit orders, and then you have feedback with them. Hey, what did you like about the process? What did you hate? What was too time consuming? Right? You got to think through all these things. And then the third one is really thinking through how you’re finding retailers, right? You got to go get them. You know, it’s sales one on one, it’s not the sexiest thing. But if you want to jumpstart that, you’re gonna have to put in a lot of time and a lot of effort to find retailers. It does take time, and it’s not just get a retailer, you’re trying to find the right types of retailers, right, you don’t want hundreds of retailers that place one order and then never come back. That’s not how you build a sustainable business. And that’s what we’re seeing a lot on with the brands that we’ve talked about with some of these marketplaces. Like, I get a ton of orders. But if I look at the second and third, they don’t exist. I’m like, great. That’s not a relationship, right? Because now you’re constantly have to find new retailers. And instead, it’s kind of like a portfolio, right? You really want to build a nice relationship with a handful of retailers that are consistent.
Amy: And that’s Amazon, because sales are consistent. Yes, we want to have the consistency off of Amazon, we have to work towards that. And I’d love to think all the way through the process. Okay, someone wants to make a wholesale order for me today. What the heck do I do? Right? Inventory located? Yeah, how do I even invoice for that? How do I collect a credit card payment? What
Dillon: if they ask you for net? 30? What if they ask you for net? 30? Are you going to be like, Oh, let me figure that out? Or hey, actually, we don’t do that. Right? You got to think these things through. You know, I was talking to that retailer, or the brand I was talking about earlier where they had a massive regional brand or retailer come through place a huge order and they want net 60. And she’s like one cashflow is going to be tough to inventory. That’s dramatically more than like, they doubled basically the volume she moves. And she’s like, I don’t even have that right now. And it’s like in COVID Right? So like logistics supply chain issues exist. And she’s like, but this is my only shot. I’m making this relationship work. Right. So if you can foresee some of those pitfalls, you can put things in line like the you know, having a cashflow buffer, you know, slowly starting to increase your inventory levels
Amy: Help you write those orders so that you exactly think through what if I got an order it actually got an order from Walmart on the shelf and we couldn’t we could not fulfill it because it was too much for our logistics team. We were not set up to keep this shelf stocked. So that was the thing is they really wanted us to like stay in and keep visiting and keep this shelf stocked and I was like huge opportunity but we’re not ready for right we would have to change a lot of our supply chain would have to change the way we handle logistics. And so you know, for us the smaller retailers are better because we can we can fulfill small bulk orders, right yeah. And but then that allowed us the opportunity to really think through okay, when we grow to this level, what does that even look like you know, and how what would we need to change in order to fulfill a container load especially one of our products that’s partially made in the USA partially made in China our packaging comes from somewhere else it’s like yeah, I Yeah, you know, a lot. We have to change all of our operations, move everything over to our factory in in Dallas, Texas and get all that going. Right. So I love what you’re the example you gave a think all the way through it, run a beta, get it going start small All get moving. Think about your pricing strategy first, what are your quotes look like all of that? Okay, and then start making your first sales, right? Yeah, pretty much watching out. But you sometimes only get one chance to make that first impression. So you want to think all the way through this before you go ahead and start, Dillon, it’s been so great having you on today. I’m so stoked about what you guys are working on in this unique market opportunity. And I love that you thought all the way through this. And you’ve really thought what is going to make you different from the fares of the world? And those types of things. And I think that you’ve nailed it. I’m excited to see where it goes. So tell everybody, how can they find you? How can we check that follow this opportunities rather than drive his building? Tell everybody how they do that.
Dillon: Yeah. So if you’re if you are a reseller, by happenstance, come check us out at goaura.com. That’s geo au ra.com. For the wholesale side, it’s just vendrive.com. New Site is launched, you can’t join quite yet. Basically, what we’re doing is we’re in closed beta with a handful of brands that we’ve been having beta test, as we’ve been building out prototypes, but we have a public launch date for two to 22. So in February, early February, we’ll be going live where any brand any retailer is able to jump in. And that’s when we’ll really start pushing for attraction. So you know, just keep keep an eye out. We don’t have a forum for you to sign right now. But keep an eye on the dr.com. We’ll do a big push, of course. Antutu 22.
Amy: Amazing. And we’ll have to have you back on the show. Can you get that going? But your advice today has been incredible for brands, I think that all of us, you know, we want to make more sales, especially where a lot of us are trying to get all of our eggs out of the Amazon basket. Yeah, exactly. I love that, that you’re offering this opportunity, and that you’ve given us a lot of great advice and some things to think about. So that we can be more ready to do that. Yeah. Awesome. Well, anything else? Any other piece? I love to ask what is your your, we always ask at the at the end of our shows? What is keeping you motivated right now? So are you listening to any podcast? Did you read a book recently? That was just like, Aha moments?
Dillon: Yeah. Interesting. I really like it’s going out of style. It’s actually a spinning problem. It’s like just books arriving. You know, the biggest thing that has been helpful for me is building the right routine. So I’m going through a flow course right now. So Steven Kotler talks a lot about flow. Mihai Trixie Mihai was a researcher and discovered the flow in flow with just being like in the zone. So he has this incredible course. And a lot of it’s related to flow, but a lot of it also covers like productivity and good habits. And so one of the things that they talk about is the motivations stack. And so basically, what you’re doing is you’re taking your MTP, which is a massively transformative purpose. This is like, if I can do this in my lifetime, holy crap, life is amazing, massive, then you break that down into a high heart goal, which is like within the next five to 10 years, right? So you’re reverse engineering from a very high level. And so my process there is each week, each month each each year, I set another layer here, and then I’m trying to make sure that my weekly goals, basically linked all the way up. So I know that I’m on the right path, Even when it’s tough. You know, listen, we’re all in business. It’s tough at times. But it’s nice to know that I’m not just working for today, I’m working towards this incredibly massively transformative purpose. That gets me super fired up.
Amy: Yeah. Which research has shown if your goals aren’t big enough, you’re just gonna procrastinate. So I what I do is a is a best year ever exercise every year. Every year I look at okay, what would make this the best year ever? Yep. Really think through that on a personal and business and you know, and then I work backwards from that. And I set up my goals and then I do map quarterly planning, monthly planning, weekly planning and even daily planning. Yeah, to get things moving. So I love that I’m gonna definitely look that up. What was that call the program that you’re going through?
Dillon: It’s called 00 to dangerous. Zero to dangerous. It’s pretty it’s like eight weeks. So it’s like, very intense. But it’s great. It’s been insane actually. Yeah, it’s really cool. Like it goes super in depth on a lot of things like burnout proofing. You know, it goes a lot over, you know, positive psychology basics, like it covers quite a bit. So it’s pretty cool.
Amy: I love it. Anything that challenges your thought process and your goals, I think is a really positive awesome thing. All right, everyone. Thank you, Dillon, for being here. Thank you all for being here on the show. And thanks for listening. Thanks for waiting, reviewing subscribing to the podcast. And we will see you guys next time on the seller roundtable. Bye
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