Steve Chou shares the strategies he used to create numerous online businesses that gave him and his wife the freedom they wanted. Steve is the founder of MyWifeQuitHerJob.
Transcription Episode 92: How Selling Handkerchiefs Online Has Given Him The Lifestyle He Only Dreamed Of – With Steve Chou
Welcome to the Project Ignite Podcast, a podcast designed to skip all the hype, skip all the BS, and just give you guys you real actionable tips and strategies from real entrepreneurs, digital entrepreneurs, to help you grow your business and income on the internet.This is your host, Derek Gehl.
Today we’re going to be diving deep into setting up e-commerce shops and creating e-commerce business online. I know this is a business model a lot of my listeners ask me about, a lot of my students were asking me about, and so today we’ve got a special guest to share their vast wisdom and experience on this exact topic.
He’s the founder of bumblebeelinens.com, an e-commerce store that specializes in selling linens and handkerchiefs, as well as the founder of mywifequitherjob.com, which is a brand I absolutely love, where he shares his successful e-commerce strategies with budding digital entrepreneurs through his blogs, training and podcasts.
If that’s not enough, he’s also the founder of the Sellers Summit, which can be described as the ultimate e-commerce learning conference. Without further ado, I’d like to welcome Steven Chou to the show.
Steven, thank you so much for being here.
Yeah. It all started with our e-commerce store. My wife and I, we got married. She knew that she was going to cry at our wedding. We ended up looking all over the place for a handkerchief because we paid a lot of money for photography, but she didn’t want to be seen using these nasty tissues.Looked everywhere for handkerchiefs. Could not find any except for this factory in China. We ended up buying a couple of hundred of these handkerchiefs because that was the minimum order. We used maybe a handful of them and then we sold the rest on eBay and then they sold like hot cakes. That was the end of that.
Then later on, when we became pregnant with our first child, she wanted to quit her job and we live in Silicon Valley which is a very expensive area. You pretty much need two incomes in order to get a house in a good school district, and so we got back in touch with that vendor, started importing these handkerchiefs and we threw up our own website.
It started going really well because we kind of already validated the idea on eBay. Within an year we had already supplanted her six-figure salary just selling handkerchiefs so my wife quit her job.
Yeah. You know, what’s really nice about today as opposed to when we started is there’s a lot of tools and there’s a lot of data out there, right? For example, if you wanted to look at all of the completed sales on eBay, there’s this tool called Terapeak that basically scrapes all of the complete listing so you know the exact sales of a particular item on eBay.Likewise for Amazon. Amazon is pretty transparent also in terms of how much money each seller is making. You can use a tool like Jungle Scout to get an idea of how much everyone is making, selling these goods on both of these platforms. Between the both of them, you can just go in and just start brainstorming stuff that you might want to sell to see whether it’s competitive or whether it’s saturated and whatnot..
… and just tapping into it. I can’t tell you how many people I’ve talked to that were like, “Yeah, it sounded awesome, so I sourced iPhone cases and started selling iPhone cases.”It just falls apart, right? You can obviously see what demand is and yeah, is there a lot of demand for iPhone cases? Sure, there are, but there’s a bucket of competition out there, right? What are you looking for specifically when … I mean, demand is just one piece of the puzzle.
A lot of people ask me this question. In my eyes, even if something is pretty competitive, as long as you have a pretty good unique value proposition, you can probably go through and still stand out amongst the crowd, but let’s say your value prop isn’t as strong.Let’s take eBay, for example. Let’s say you wanted to start a business selling on eBay. For Terapeak, there’s this number that they provide called the sell-through rate, which is the percentage chance an auction will actually complete if you list a particular item on there.
You can use that number to judge how many people are selling that item to determine how saturated that environment is, but in general, I think the most important thing is to not just sell a “me too” product online or something that everyone else is selling. Make sure you have some sort of value add and as long as you can present that value add to your market, you should do okay even if it’s a competitive environment.
Yeah, so the way we did with our handkerchiefs is one, we decided to become the largest selection of handkerchiefs, so we carry the largest selection. Second of all, a lot of people, they just sell handkerchiefs, but they don’t frame the product. What we decided to do is we decided to target weddings specifically, we target funerals and that sort of thing, and we do custom embroidery.A lot of people don’t want to be doing this, and because we do of all this stuff in-house, so we have these industrial-strength embroidering machines in-house, and we can turn these things out on a dime, because everyone waits until the last minute. Our key value propositions are the largest selection and we will bend over backwards to make sure your stuff gets delivered on time because we do everything in-house.
Yeah, absolutely. Let’s assume that you can get a small quantity of your product, whether it’s just sampling quantities. The easiest way is just go ahead and try to sell it, so what I advise that people do is, if they want to be extra careful, they’ll sell this stuff on eBay first just to make sure that they can unload it.I’m not a huge fan of eBay as a major platform because it’s a lot of trouble, but if you sell it on eBay first just to make sure that you can unload the item in the event that things go wrong, then that’ll make you feel better.
Then you want to sell it on Amazon because there’s just huge built-in marketplace on there. If you can get traction on Amazon and you know that you can unload this stuff on eBay in case the stuff does not move, then that should make you feel comfortable enough to actually make a bulk order.
Well, you can, but that’s putting all of your eggs in one basket. Amazon has been changing the rules a lot, which I’ve heard. I’m sure your audience has been hearing about. They changed the way incentivized reviews work, they’ve increased the prices of FBA.Essentially, if you are just selling on a single marketplace that is not controlled by yourself, you are in very great danger in case Amazon decides to change the rules or even decides to ban you.
Just to give you an example, let’s say you have one bad batch of product that you accidentally ship to Amazon. As a result, the customers get this bad product and you get a string of negative feedback. That could lead to your listing getting suspended.
All of a sudden, you’ve got all this product inventory over at FBA and your listing is suspended, and you got to beg Amazon to un-suspend you. This could take a period of weeks or even months and meanwhile you’re just losing money, whereas if you have your own property, you can collect your own email addresses, build your own customer base.
Doing B2B stuff is a lot easier when you have your own brand as well. There’s a variety of reasons why you need to get off Amazon.
Yeah. Again, when I go to Amazon now and you start drilling into these really specific product categories, you’re seeing all of these random brands you haven’t heard of and you buy it.You never hear from that company again, because you bought off Amazon, and there’s no additional marketing material in the product when you receive it. There’s no incentivization to try and capture my lead. I scratch my head going, “Am I missing something with what I’m seeing in some of these commerce businesses?”
That’s the problem, right? People who shop on Amazon think that they’re buying from Amazon and not from your brand because Amazon does not allow you to contact the customer.Sure, you can put some sort of insert in the package. Once a customer sees it and have them register to get their email, but Amazon polices everything. You cannot have an ounce of marketing in any of the emails that go out to their customers and they act as a go-between as well. They’re purposely trying to limit your contact with the customer.
Right, exactly. For everybody that’s listening, I really like how Steve’s positioning this because, Steve, my issue with a lot of these Amazon businesses I’m watching people start is the pure and simple fact that they’re entirely reliant, as you said, on that single platform and at the mercy of Amazon’s policy changes. They could shut off their business overnight.Let’s go back to your website then because I think this is the part where I see a lot of the new generation of e-commerce people failing, because us, old school guys, have been around for a while. We’re just programmed. Create websites, market those websites, find channels for customers.
The new guys are saying, “Why do we even need websites?” You create a website. First of all, let me ask you, do you have any platform of choice? Are you a Shopify guy?
Yeah. The first thing that I would do for most people is to start out with Google Shopping. I’m not sure if your listeners are familiar with it, but if you do a search on Google, there’s usually a picture and then a price.What’s nice about Shopping is that they actually see the picture of the product and then they see the price and then they see your store name, and so that if they actually click on that link, there is a strong purchase intent, so those ads tend to convert pretty well as opposed to just buying keywords for regular search.
On Amazon you just have to worry about one thing. You get the product. You put it on Amazon and then Amazon marketplace is so large that you’ll get sales. With your own store, you have to have a way to bring people back as well in addition to getting them to your site. All these links have to be in place in order to make sales.In your example of just buying AdWords and paying a dollar per click, the average conversion rate for a store online is on the order of 2% or 3%, which basically means that you’re paying money to drive traffic to your site and 97% of these people are not going to be buying, right?
So you got to have all these other things in place. You got to have an email sequence. Try to get their email so you can bring them back on a consistent basis until they are ready to buy. You also need to do retargeting. For your listeners, these are ads that once you land on the site, you can buy specific ads specifically targeting the people who already know your brand, who have already been to your website. It’s just this process of having all these pieces together, driving traffic to your site and bringing them back on a consistent basis, and then making consistent sales that way.
When you’re on Facebook, for example, the ads that point directly to a product tend not to do that well because people are there just to see what their friends are up to and that sort of thing. They’re not ready to buy.What’s worked for us is we’ll send a Facebook person over to a piece of content and then retarget them at that point with offers once they’re familiar with our brand. During that first sequence where we’re sending them to content, we’re trying to grab their email address.
Okay, so dynamic ads is when you upload like a product list over to Facebook and based on whatever product a person looks at, they’ll actually get an ad with whatever product they looked at, and so it’s very powerful.For us, we retarget both ways. If someone actually looked at a product, they will see an ad on Facebook with a picture of the product that they looked at. If they didn’t see a product, they will see an ad, whether it be a video ad or just a regular static image ad, which will take them to a page that really just shows off our unique value proposition and that at the end has links to the various product categories.
Yeah. You know what’s funny about a lot of those mentions is, for example, on the magazine mentions, those are great for social proof. They don’t actually bring in that many sales or if they do, it’ll spike like when the issue comes out, but then it’ll just slowly trickle out and die. Really, it’s for social proof reason.The way you get those is you find out what the publication calendars are like for some of these popular magazines and then you just write a quick and dirty pitch. You find out who the editors are and you just pitch your products. Over the holidays, if you’re lucky, they’ll choose one of your products. It’s like a volume game. You send out a lot of pitches. Most of them aren’t going to get accepted, but the ones that do, it’s great. You get published.
Got you. Got you. I agree. My experience has been that there’s not a big bump in sales, but it’s the long term value of being able to use that in your marketing to build credibility. When I went to your website, I was drawn to that. Wow, look, they were in Bridal magazine and stuff like that, which I thought was very, very cool.Now we’re going to shift gears again. I want to bring it back to the actual logistics of running a physical product business.
I would just start with Amazon. I strongly believe that you should validate on Amazon to begin with because there’s a marketplace right there. Once you get some traction on Amazon, you start your own site.In theory, if you already have your own site, if you’re following my methods, you probably have stuff on Amazon FBA. The next logical step is to just simply fulfill your goods from Amazon FBA so you don’t have to carry any inventory.
Right, right. Excellent. Okay. We’re just about out of time, so I got a general question for you. You’ve been an entrepreneur for a while now and you started, like you said, back in 2007. You’ve had great success with this.Looking back to when you first got started, knowing what you now know today, what are some of the things you would have done differently?
It’s just very obvious to collect emails and run them down the sequence and that sort of thing. For some reason, when it comes to physical products, it wasn’t that obvious to me.I remember that first question that you asked me, like, how do you put together a compelling lead magnet for a physical product store outside of giving away physical products? That was just one roadblock that prevented me from taking action on that. I didn’t want to give out coupons. I’m actually not a big coupon fan.
It wasn’t until I’ve racked my brain a little bit to figure out what to give to the customers, and that’s when it all started clicking and we started gathering emails. Email is actually a significant portion of our business today.
Well, it’s never too late to get started. It’s interesting what you said about the email there too because I’ve always come from the internet marketing side. We were doing email marketing back in the ’90s. I’ve always been baffled, because I’ve watched the e-commerce world grow … We used to have one of the very first courses on how to sell on eBay. We did a lot of eBay stuff back when … The early days of eBay.I was always fascinated watching the e-commerce guys. They would never build a list. They were always just working on chasing the next new customer.
If I’m on a website and I’m about to order and I see a field for a coupon code, I stop. I’ll go out and I will search for coupon codes for that specific offer. If I found one, because as you probably know, there’s websites out there that specialize in coupon codes, boom, I’ll take it and I’ll get the discount.Yeah. I like your philosophy there. I’ve never been a fan of that either. I think that’s a very good approach.
Fantastic. All right, everyone. That was e-commerce expert Steve Chou. As always, any links mentioned in the interview will be included in the show notes along with the entire transcript of the episode. As always, you’ll find it at projectignite.com/podcast.If you guys liked what you heard here, make sure you head over to iTunes. Leave me a rating, leave me a review. If you’re an Android user, leave it on SoundCloud.
Now it’s time to take the e-commerce tips, tools, strategies that Steve shared with you here today and apply that final essential ingredient to actually making this stuff work for you. That ingredient is action, so go forth. Take action. Even just take one thing and apply it. Apply what you learned here.
Stay tuned for more info-packed episodes of the Project Ignite Podcast.
This is your host, Derek Gehl signing off.