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We've all dreamed of quitting Amazon. And it's hard to argue with 800% growth in 4 years.
That's why I was so excited to sit down with Sean Reyes, founder of ShockSurplus.com. I wanted to discuss Sean's journey of growing his business by 800% in just four years, his decision to break up with Amazon despite it accounting for 70% of his revenue at the time, and the importance of thinking like a media company.
While most brands should NOT quit Amazon, some should. And his thoughts around margins and building content are valuable for all eComm brands.
Key topics and lessons from the episode:
- Sean's strategies for managing margins and advertising costs in a highly competitive environment with intense margin pressure.
- The value of creating authentic, informative content on YouTube to build trust and authority with customers.
- The decision to move away from Amazon due to high fees, lack of customer interaction, and increased competition on listings.
- The importance of thoroughly understanding sales tax nexus laws to avoid costly mistakes and legal issues.
- Sean's advice for eCommerce store owners looking to diversify their revenue streams and uncover new opportunities for growth.
Quotable moments from the episode:
"We've got to be more like a media company that sells parts rather than a parts company that does media. Because I always felt like once you have the experience of producing valuable content, you could direct it anywhere."
"You need to get behind the product, use it to drive proper recommendations, and create a customer experience that no one else can give."
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Chapters:
(00:00) Introduction + Current Challenges for eCommerce
(05:19) Maximizing Your Marketing Budgets
(17:12) The Power of Organic Content & YouTube
(21:41) Crafting Authentic Recommendations
(23:31) Creating Value
(31:59) Consistency is Key
(34:40) Breaking Up with Amazon
(42:54) Leveraging TikTok
(45:26) Conclusion
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Show Notes:
- Sean Reyes (LinkedIn)
- Shock Surplus (Website)
- Shock Surplus (YouTube)
- Jeremiah Prummer (LinkedIn)
- KNOCommerce
- True Classic
- Fox Shocks
- King Shocks
- Alex Hormozi (LinkedIn)
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Connect With Brett:
- LinkedIn: https://www.linkedin.com/in/thebrettcurry/
- YouTube: https://www.youtube.com/@omgcommerce
- Website: https://www.omgcommerce.com/
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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more.
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Other episodes you might enjoy:
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Transcript:
Sean:
I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points, maybe of gross margin. Amazon's eating most of that.
Brett:
Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we have a merchant success story. We're talking to Sean Reyes, the founder of shock surplus.com. Such a unique story, so many lessons, so many nuggets, so many bold moves that Sean has made, and some really unique angles that I think you guys can learn from and apply to your business. And so we're going to dive right into his story. But Sean, first of all, thank you for taking the time. Welcome to the show, and how's it going? Thanks,
Sean:
Brett. It's going. It's going. A lot of other people is going right now. It's a war in retail and
Brett:
It's such a war, no doubt. Yeah, I remember when I first was introduced to e-commerce, so back in the early days I did SEO and I did other marketing. I did local TV and radio and stuff like that. When I got into working for e-commerce companies doing mostly search marketing, I remember someone saying, this is the big leagues. Everything, every dollar counts, every little detail matters. Like you win or lose in the margin. The tiny things, remember this quote from General MacArthur, Douglas MacArthur? He said, in war you win or lose, you live or die. And the differences in eyelash, right? So this tiny, and I was like, man, e-commerce is intense, but I love the challenge of that. I love the challenge of being in the big leagues, but dude, if anything, and that was 2015 or something like now, I would say things are even harder than they were, more opportunities for growth. So I think it's a great time to be an entrepreneur, a great time to be in e-commerce, but just difficult man. Tough sledding for sure.
Sean:
Yeah, the margins, everyone's been paying attention to margins a lot more in the past couple of years. I remember towards the end of 2019, going into 2020, I was really just starting to get a lot more concerned with margins at that point. The economy has just been growing for 10 years at that point, or just knowing the cycles of society, it's like you're expecting some kind of a downswing. So paying attention to margins, I think a little bit ahead of the curve has helped us out a bunch. But yeah, it's still number one priority for us.
Brett:
What are some of the practical things you do to watch margin to protect your profits, your contribution margin, things like that? Any specific tips or suggestions that you do?
Sean:
Our cost structure is pretty, we're extremely lean. We've got about 15 full-time people and we're doing low eight figures in sales, so highly efficient. But even then, margins are still razor thin. And so one of the things we've been really keeping an eye on is advertising cost and how that plays out. You can swing two to three points of your total income in advertising cost in a year, and so you don't watch that one bad month. How long does it take to claw back that one bad month to the bottom line? So advertising cost is the biggest thing. I'm very much, I definitely wear the hat of CMO, director of marketing here at Shock Surplus and just the brand voice. And so I'm always just live and die by our marketing and our ad spend. We are heavily supported by ads do support a lot of our sales. We're about 60 40 right now. I'm trying to really flip that balance to where
Brett:
We're 60% supported by ads, 40% by organic, organic or repeat.
Sean:
Yep. So I'm trying to flip that balance and really have the business a lot more supported by our organic traffic and kind of those sources.
Brett:
Yeah, I love it, man. And I'm a longtime ad guy. I've always loved the ad business. I was fascinated by it as a kid watching TV commercials. Then as I kind of grew up, worked in tv, worked in radio, I love it, but I would be the first to jump on your side of the table and say, yeah, man, but it's got to produce predictable return and in a few points, one direction or another can make a massive impact. So we can't not spend, but we also can't overspend because that leads to negative consequences as well. So any insights there? I'm sure a lot of what we look at is what a lot of people look at, but any insights on what are you measuring in terms of your marketing dollars to make sure you're not spending too much or too little?
Sean:
Yeah, our biggest thing, one of the big things for us is so many of our customers are outside the 30 day attribution window because we have very high ticket sales in the thousand dollars, $2,000, $3,000 window, and we're talking to that customer for months, sometimes even years. And so when you're trying to reach those customers and understanding a lead gen campaign from Facebook, how long that takes to pay back and how that translates to direct search and some of those things. And so we've been really trying to make a very, very slow migration, not to rock the boat too much, but trying to shift a lot of out of bottom of funnel stuff into more middle and top of funnel. So we really look at a blended ROAS over a long timeline. We've also breaking out our spend a lot more specific in terms of brand line, like a very specific type of product and tracking those sales over a 90 or 20 day window.
That perspective and that kind of tactic has proven to lift our A OV lift specific sales and new segments for us over the past couple of years. So that's been working extremely well for us, especially trying to, we're really trying to get out of giving Google all the freaking money in the bottom of funnel and Google shopping. They're the only ones winning there, otherwise just we don't want that price shopper. So we're really trying to move a lot more of our marketing dollars towards to win on brand and to really go after a lot higher a OV customer that we call our ideal customer profile.
Brett:
It's super smart. And listen, I love Google Shopping. This is one of the first things that I did to help our agency grow, and I wrote The Ultimate Guide to Google Shopping that Shopify published back in 2016 was huge for agency. But again, I would agree with you. You can't just be bottom of funnel. If you're just bottom of a funnel, then you are never really going to grow and you potentially just compete on price. And then yeah, you're maybe giving Google too higher percentage
Sean:
Unlimited. Yeah, unlimited competition. Every single day there's a new competitor that's just bidding on blue text on a screen, right? Yeah. It's just losing game's.
Brett:
Such a good point. And we're going to dig into a couple of things that are really unique for you, Sean. One is the way you approach organic content, and we would love to keep an eye on how you get from 60% ads and 40% content to the reverse of that. And so you do some really unique things that are going to unpack that you broke up with Amazon, so we're going to unpack that as well. And then you're going to tell that bold story, which is amazing. But I also liked the fact that you pointed out, Hey, this was a pretty long sales cycle and what I will say, it's clear in this case you're selling shocks and someone's maybe selling out $4,000 for new shocks for their truck or whatever their Jeep, and they're going to research that. They're going to think about that.
They're going to maybe make a couple phone calls, they're going to talk to people in their local market and check things out before they buy. But one thing we're seeing even with things like CPG or Simple Apparel or something is that there's a number, there's a cohort of new customers take longer than you think. You look in your ad platform and everything's going to show maybe not for you guys, but for other brands it's going to show less than a week or less than a day. But a buddy of mine, Jeremiah er from No Commerce k and o, they do post-purchase surveys. They did this study with classic true classic tees, and they found that even 30% of purchasers of true classic tees had waited three to 12 months after hearing about the offering before they bought the T-shirts. Just simple white, black T-shirts, right?
So there's always going to be a percentage there. I'm sure that the numbers are way more dramatic for you for people that last wait a lot longer. But yeah, understanding, hey, we got to feed the funnel a little bit, but we still got to measure because we can't just spend a ton of money and hope, fingers crossed that it's going to come back in a few months. So what are some of the things you're doing? So you look at a longer window for roas, how else are you measuring to both give the media time to close but still holding it accountable for results?
Sean:
Yeah, I would say we're not even doing a great job on measuring that. We do post-purchase survey and a lot of our $2,000, $3,000 customers have basically pegged at six months or more for the research, a lot of anecdotal stuff of, I remember looking at our live chat and a couple of weeks back I saw that one of the first conversations with one of our customers was two years ago in March. And so it's great to be able to stay top of mind with these people because we backtracking a little bit, we're just a retailer. We're selling so much of what other people are already selling. We don't have our own brand. That's the only place you're going to get it is from us. We don't really ever have exclusivity deals. And so for us, it's just been building brand from the very beginning of education and trust and knowledge and experience is our only product, and I feel like that's what we do the best.
So, but as far as measuring the long cycle, it's been one of our biggest challenges here in order to, we know it happens a long time, but through for the listeners, we grew 800% in the past four years. And so it's crazy. We've been just trying to hold on, not hold, yeah, we've been a little bit holding onto that growth and trying to transition away from bottom of funnel stuff where a lot of this growth came from and migrate more towards longer sales cycles, less addicted to the immediate cash cycle of bottom of funnel stuff and being more efficient on the long tail, but also not disrupting the business too much and pulling back too hard, which can happen. And we've seen those consequences before when we try to make shifts too dramatic. But there's so many attribution tools out there right now that just, they actually don't even bother to attempt to track these longer sales cycles or longer windows. They're just like, we can't do it officially. So they're not even attempting to, some
Brett:
Are even trying. And that's one thing I will say about third party attribution tools, and I do support them and we have a few that we like and so that our clients use and stuff, but they are not your savior. They do not make everything crystal clear. I think they can make things clearer or they can help you triangulate the truth. But to your point, they don't necessarily solve a six month attribution window does, but they can be useful in some ways. And so what we've seen some brands do that have a longer sales cycle is they're measuring engagements along the way. So what kind of leads am I collecting, kind of engagement am I getting with this video and how long are people watching and different things like that. That's often what we'll do when we're launching a new YouTube campaign and the beginning weeks or a couple months of a new YouTube campaign are a little rocky. And so we're looking at, okay, how do we make decisions then based on other engagement metrics? So if we're evaluating three or four videos, let's say we really want to measure both the view rate and we try to simplify that and we look at the retention rate on that video, we look at the clickthrough rate on that video, different things like that that can kind of begin to say, okay, this is appealing to our audience is likely sending people back to us. So any thoughts there on micro conversions or things that you measure? We've
Sean:
Been doing, I mean we've been getting a little bit more aggressive towards on YouTube channels, just having this seems like obviously a no brainer for anyone that is trying to craft a YouTube strategy. We never really our YouTube strategy out the gate when we started in 2019, which is let's just regurgitate all the knowledge we have into a video format with some parts in front of us. And that was our strategy. And we had a number of videos that have crested quarter million views and half a million views since the get go. But more recently we've been a little bit more targeted towards here's a landing page for this YouTube video, let's track the clickthrough rate to the lens. Doing some of these, in retrospect, very obvious things, but nowadays it's tracking all the efforts now because one thing that I never really took into account before was how much man hour, how many man hours and time has gone into the content in terms of backtracking all the way to the very beginning of the conversation of tracking margin is what is your true marketing spend and taking into account your manpower, all the content hours and all this stuff going into the true cost of your marketing dollars.
So thinking from that perspective, we're a lot tighter now on the true performance of this video is, and are we expecting sales out of it or is it just going to be one of those things that we're going to be hopefully that we start to start building audience? Some of the things we've been doing recently is really just trying to get into a new audience that we maybe not have talked to before. And so now this whole series is a trust building exercise to talk to a new segment that is not our usual bread and butter. And so in that regard, it's like we're not really tracking the performance there, but we're trying to build these organic pages on our site, build that audience and build authority there. Whereas others, it's like a product reveal or a product release. And then now we're doing discount codes and tracking the discount codes and all that kind of stuff. So we segment it in that regard. We're usually aiming for about a video a week on a review schedule, which feels aggressive. We may be pulling back there, but that's just kind of how much knowledge we just want to get out. And it's not videos, it's really just talking heads and some manufactured, not manufactured virality, but kind of manufactured a head to head versus this versus that brand
Brett:
Versus Got it. You know what I'm saying? So good. Yeah, yeah, yeah. And really, man, I think simple there is great. And one cool thing about your categories, I think it lends itself well to that people really enjoy the research process. Before I bought my new-ish, I guess I've had it for almost two years now, but a Toyota Tundra, TRD pro, I found myself just for entertainment after the kids go to bed, I'm on YouTube and I'm watching four by four videos and the Fox shocks are the ones that are on the TRD pro. And I was like, Hey, listen, most of the time I'm just driving in the office or driving around. I'm not using these shocks, but it was evaluated, I was looking at this versus that. It's fun, it's entertainment, but then it also does lead two purchases. And so I want to dive into this a little bit and hopefully my notes here ripe, but you guys have 25,000 subscribers, maybe more. You said you've got some videos that quarter million views, whatever, you've really built this channel. So yeah, I know you already alluded to it a little bit, but how are you deciding what content to create and then who's kind of in charge of that? Are you just doing all this content? Do you have a team behind it? How does that work? We've
Sean:
Got a pretty small team. It's literally been me and my creative director and a couple guys on staff that take part in the content. We've had a videographer on staff for most of the past five, six years, but we sell global brands with tons and tons of Google search juice.
Brett:
So they're already awareness. People are already looking for these shocks, they're looking for reviews on these products. So that's already kind of built in.
Sean:
So they're highly technical products, very much of a black box. Think as a gatekeeping as you can get behind the true guts of a product. That's exactly what shock absorbers are and suspension systems are. And it's why I got into the business. I really got into the business to change the industry and change the conversation around this segment of products because I just saw how clueless everybody was back in 2013 when I first started it. And it's almost become even more confusing with how many different brands there are and what the differences are. So starting with that in mind, there's always, when you're out researching, you're researching Fox or King or this versus that. And so we get those questions all the time through live chat and email. And so for us, when we see repetitive questions, we're just going to turn that into a video.
And when you already have a lot of search behavior on Google for brand A and a lot for brand B, you just put them together in a video and boom, your comments explode, your views explode because anyone searching for that is eventually going to see your video. So that's kind of one strategy that we've had since the very beginning. The other strategy is very much like you have a tundra and we know all the shocks available for the tundra, and so we can make a video that's a one-stop kind of research stop for your vehicle to explain all the differences, talking specifically to the tenure customer. So just those two perspectives have served us extremely well because you get the brand advocates on one side and the other and they go at it in the comments or what we hope to do and what we've helped brands do now is if you're trying to enter the market, put yourself up against the incumbents or incumbents because now you're getting all the exposure based on their existing search history.
And so we've done that with a couple brands and I would say we blew them up. I mean just through three YouTube videos and content pieces, we went from basically zero sales in 2022 to about $1.2 million in sales of this one brand with only $20,000 of paid advertising to promote that content and then the content pieces. And so we've kind of proven out that model and we use the strategies I just discussed here for that. And so we really try to keep it basic. We found that when we do really well produced stuff, sometimes it works, but oftentimes it's more of a brand building exercise and people like it, but it's a 5,000 view video or 10,000 view video and not like our 50 to a hundred thousand view videos when we do the really basic, here's your buyer's guide for a Bronco or here's your,
Brett:
Yeah. And I think a lot of times we overcomplicate things, one simple answers, and especially in this case where people are searching for things, they're searching for a head-to-head competition or they're searching for a solution for my vehicle, my Bronco or whatever. And so being simple is key. A couple of questions on how you approach things. So say you're comparing Fox shocks to Kenny or whatever, you're comparing two products and potentially you sell them both. What's your approach? This is a little different since you're a retailer and it's not like this is my product and these others are not my products. Are you trying to be a little more neutral or are you just going full on? No, this is great, this is not great. This is really useful. This is when you don't want to buy this thing. How transparent or ruthless are you in those evaluations? I
Sean:
Think we're both ruthless and transparent, right? One of our mottos is we're not trying to tell you what to run. We're trying to help you figure out what to run. And so that that's kind, we see each brand or option as they have their own pros and cons and how much does it overlap with your own thing? And so we're able to do that because we have so much experience with each of these brands that we sell. Any retailer can do this, and that's what we advise. I've been advising a lot of retailers that do do this. You need to get behind the product and use it in order for your sales staff to really be able to drive proper recommendations and create that customer experience that no one else can give. And so we do it from that perspective. We really try to remain neutral. Very rarely is there something that we steer people away from. And we have found that if we are doing that, then we're actually just removing it from the site site because it's very much like, well, if we can't recommend this product anymore,
Brett:
I recommend it. Why are we selling it at all? Then
Sean:
Why are we selling it anymore? Totally
Brett:
Makes sense. Totally makes sense. So if you look back at some of the early days of creating content, and I know one of the benefits of YouTube is you created a piece of content years ago, it's probably still getting traffic and closing sales today. But as you look at those early videos versus what you do now, how have you improved? How have you maybe restructured your framework or your approach to videos? How have you gotten better? And the goal here is how can we give people shortcuts or allow 'em to benefit from your learnings? How are your videos better now than they were before?
Sean:
Well before it was really, I knew that our team knew that we had experience. Our sales proved that we have experience, but a new person visit, I had conviction. So a lot of people just, there's a certain amount of people that are just going to believe you based on your
Brett:
Conviction. They can feel the conviction and they're like, okay, this guy believes in, he knows what he's talking.
Sean:
And then there's some times where it's just like, but then how do you went over those other people? The more recent kind of thing that we're always really thinking about is all the B roll, all the B roll to show and prove that we have that experience that drives these recommendations and why we have those recommendations. And so we've really gone, I want to say overboard, but as to extreme links of having all the B rolls of us in the dirt or on the trails or with this vehicle or any of the situations that we usually always talk about. And so our framework is very much just like we have three major use cases of our product, which is in the dirt on the highway or towing. And so we're always trying to cover those three bases with all of our experiments and tests and then getting it on video.
So anytime I'm talking about it or one of our staff's talking about it, boom, it's on the screen. So that just goes such a long way so that because so many people now are using stock footage in their faceless YouTube videos and just using borrowed knowledge and stock footage and affiliate marketers, it's that's flooding or Google right now. And so there's a desire for authenticity. And so I've always had that in mind just to try to be as genuine as possible, authentic as possible, because I'm also, one of the things, I'm really trying to take the audience and learning with us and not be like, Hey, I'm a pro and I know everything, but it's like we are just as clueless about this new product and we're going to learn about it and you guys get to watch us. And so going more in on the experience and the learning and bringing the audience along, it has kind of been where we've migrated a little bit to, whereas before I had a little bit more of an ego as far as I've done this all, you should just trust me. It works for a little bit, but my more genuine self is transparent in my ignorance and must be,
Brett:
Let's test this thing. Let's put this thing in the dirt, let's tow something with it, see how it does. And I think that adds kind of this little bit of tension too, a little bit of drama or intrigue like, Hey, how is this going to turn out? I want to stick around and watch and find out.
Sean:
Yeah, we've had some huge viral pieces of just blew up a shock, and it's on Instagram live and the brand's calling my cell phone to take it down. I'm like, no, I'm not going to.
Brett:
Absolutely not. This is gold. Can you talk about maybe some pieces of content that you created where you were genuinely surprised at how well it did, where you make a piece of content and you're like, why did this blow up? I don't get it.
Sean:
Well, I guess, let's see, in retrospect, I don't know why one of my very first videos blew up because I was deadpan just a bunch of products on a table, and we got a quarter million views in the first three months, and it's almost reached a million views at this point, but very basic, very just unassuming. I'm just sitting here talking about my vehicle and what I've done with it, but it's a Toyota Tacoma. So I knew that I already had a Tacoma and a surge in massive popularity. So I already know there's a huge audience there. There's other stuff where we put a lot of work into it. One of our more recent pieces, we put probably 3, 4, 5 months of work into it in terms of assembling the B roll and doing the script and recording and redoing footage and stuff. And right now it's only at about 10,000 views where we were expecting more of a 50 to a hundred thousand view kind of thing.
Brett:
And it just kind of shows sometimes you don't know. It's like the piece has to really land and it's got to be answering a question and media. And actually I want to unpack that a little bit more, see if you got any theories as to why that's not taking off. And I'll kind of contrast it with speaking of the tundra. I had it serviced not long ago, and when I got it realized that the dealership did not reset the maintenance light. So I was like, it still said maintenance due call the dealership. I'm not very technical. So I called the dealership and the lady, the answer was like, Hey, you're welcome to bring it in, so sorry. Also watch some YouTube videos. It's really, really easy. And so found this YouTube video of a dude with giant hands, he's holding his cell phone. He is like, click on this, you scroll here, you click on this, and then you click here and then you do this, and it's the worst shot video ever. But I solved it and it had, I don't know, 50,000 views maybe more. It was so simple, but it did. It solved my problem quickly. That's all I wanted. And so I was happy. Any thoughts on why did this video that took months to produce and B roll and really thoughtful creation here, why do you think it's not taking off some of the others that are more
Sean:
Simple? Yeah, it's a very niche kind of topic. We thought there would be a little bit more of a broad, so it's a brand versus brand on the new Ford Bronco.
Brett:
Okay, dude, love the new Broncos.
Sean:
Yeah, they're pretty sweet and we love ours, but I think part of it is the Bronco market and Broncos content is very saturated. And so that's one perspective. Another perspective is a lot of those Bronco buyers are not in the modification mood or cycle. Usually we see second, third, fourth owners to be the most
Brett:
Makes
Sean:
Modification makes sense. So we kind of knew expectations are the number one cause of disappointment. So totally, it was kind of a soft expectation, but also no big deal. It's going to live there forever and it'll be a good resource. It's going to live
Brett:
There, it's going to be better over time, likely yes.
Sean:
Where I knew one where I had I high expectations that matched the actual performance is A, B, A versus B versus C of the top three brands in our industry. And that right now is sitting at about 300,000 views. So I kind of knew that was going to kick off correctly, and it has. So yeah, but that one is very not produced at all, whereas the 10,000 view one is heavily produced, so many great shots, so much work. And so you see the dichotomy there and you're just like, I've made the decision now for the next year, just back to basics. Let's just translate all this knowledge that's stuck in our brains on simple talking heads and showing the features of the product because that's giving the most value to those people, totally to the broadest range of people. So yeah, that's awesome. Adapted.
Brett:
So you and I were talking about this earlier. You guys are just consistent. I think you said you're creating one piece of content a week, kind of that pace. I enjoy watching Alex Ozzi videos. He's cranking out hundreds of pieces of content across the various platforms and stuff like that. I don't think it's so much about quantity necessarily, or quality in the sense of it's got to be highly produced, but I do think there's something about being consistent and being authentic. How have you created this consistent schedule where you just create videos week in and week out? I guess it's probably just part of your culture now, but any tips there? How do you just create this consistent machine?
Sean:
Yeah, it does take a lot of effort to get effort. A few years back, I was very much like we've got to be more of a media company that sells parts rather than a parts company that does media. I always felt like once you have the experience of producing valuable content, you could just direct it anywhere, whether we're selling shocks or whatever. So we use Trello as a project management tool, and we have a pretty small team to execute. And I've never been afraid of just picking up the camera and just putting it on a tripod and pointing at myself and talking about the things, because we have so many customer engagements that I'm like, I'll look in customer service and find a really good live chat thread and be like, Hey, let's just go turn this into a three minute YouTube video because we're answering this question all the time, and they always, were going to get it in the future, and the parts are sitting right there in the warehouse, so let's just boom, boom, boom, love
Brett:
It quickly identifying this is a video, let's shoot it now. This is what we do.
Sean:
Exactly. So the speed and no one, so many people are scared of getting in front of the camera, but no one cares,
Brett:
Right? No one
Sean:
People that you think are going to care
Brett:
Way your hair looks or the tone of your voice as much as you are or none of that stuff. Yeah,
Sean:
Exactly. No one cares. Just really hone in on your expertise of the product or of your brand and just try to deliver the value to the customer in the best way, how It could just be a podcast or it could just be written a word. And so we try to do a bunch of overlap there, but speed. But when you're inspired to do it is when you should do it and just turn on the camera to do it because that moment is very fleeting and you try to plan for it. You're just like, I'm not feeling it, I'm not feeling it. And soon enough it's just like gone. You just lost it.
Brett:
Just turn on the camera. Love that. So I encourage everybody, go to the shock surplus YouTube channel, check it out, consume the content. Even if you're not in an off-roading, you're not in shocks, you're not into modifications, whatever. Still check it out and see the way they do things. Look sort by highest views to lowest and kind of just learn as you peruse there. And so next big topic, and this is a big one, this is going to cause lots of gasps. People are going to veer off the road as they listen to this, as they're driving and stuff. But at one time, Sean, if I'm not mistaken, 70% of your revenue came from Amazon. So 70% let that sink in. And then Sean, you broke up with Amazon, you made that 0% of your business. So tell us that story. Why did you do that? How did that go down and are you still pleased with that?
Sean:
Yeah, so backing up to 20 13, 20 13, I started on eBay and we got our start because automotive searching for automotive parts has always been a pain in the butt. And if you think about a vehicle and a shock absorbers, you got two different part numbers on the front, maybe one part number for the front, one part number for the rear. So anyways, the customers are having to search for two to three different part numbers for their vehicle in a catalog through some data that these brands just engineers never. So
Brett:
You're probably going to get something wrong, just so many.
Sean:
So I started listing on eBay back in 2013, just bundles, one click purchase for your vehicle, whether it's lifted or lowered or whatever. So I got my start making just bundles every single day, literally just making bundles until two o'clock in the morning and all these bundles were selling the next day. And so that's how we really exploded on eBay. And then in 2015 ish, 2016 is when we got started on Amazon and we were basically transferred all of our bundle listings on eBay over to Amazon. And we had a system in place to where we can scale up all these bundles and making these bundles in our catalog. And so we created probably, I don't know, 20,000, 30,000 fresh listings in Amazon that never existed before. And so we got a really nice headstart there, but then over 20 16, 17, 18 competitors caught wind and started jumping on all of those listings and 2, 3, 4 people on a same listing. And everyone's repricer is now fighting each other. So we were at using the buy
Brett:
Box now on something you created.
Sean:
Yep. So classic story there kind of occurred. And so we also started doing some experiments of like, well, let's just price Amazon at 1 99 and we'll price our website at 180 9 so that anyone price shopping obviously is going to choose our website. We started seeing thresholds there of like, well, if it's 1 94, they're still going to choose Amazon because that $5 delta is the Amazon trust, right? Easier trust. So we started doing some of these experiments, and then we started seeing just how much, once we got up on Shopify 2.0 or once we got over to Shopify in 20 18, 20 19 is when we launched Shopify, that's when we really started to understand how much Amazon and eBay was cannibalizing our website sales. And so once we made that connection along with Amazon is a 12% fee, and we were achieving five to 6% cost per sale on the website through Google. And so that's one obvious, well, the feed over here is better for sure, and then Amazon started doing this whole thing of don't contact the customer or penalizing you for too much contact of the customer, or you can't see the customer's phone number anymore, you can't text them. There's an intermediate intermediary phone number thing, and we're like, oh, that's no good. And then you start to see that Amazon's return rate is 12, 13, 15% on you. Yeah, you
Brett:
Can't contact, somebody can't confirm that they're getting the right product, right? Again, this is a product category where people make mistakes in ordering so
Sean:
Many mistakes.
Brett:
Now you can't help them or fix that, prevent that from happening,
Sean:
And they're trying to get you to give free returns. And we've got 20, 30 pound products. And so a free return means we just lost a ton of money on 15% of our sales, and so we have 5% return rate on our own website. So versus 15% plus all the other administrative hurdles on Amazon. I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points maybe of gross margin. Amazon's eating most of that.
Brett:
Amazon is making money without a doubt. You are probably not. And so what was that like when you came to the realization that I think I just need to stop this, that feels like, and I guess if you realize you're losing money or whatever, but that seemed like a pretty big bold decision.
Sean:
There was just a string of $2,000, $3,000 A to Z claims that we just had to eat. And it was like, okay, well, we're removing that entire brand. Oh, well, if we remove that whole brand, we should probably remove this whole. So it was just like a slow slide. We were all competitors. Were also basically filing non-genuine product complaints. And so you're always fighting literally the administrative state of Amazon, prove this, prove this is genuine, prove this is A to Z here, A to Z there. You're like, oh my God, I don't want to deal with any of this anymore. And just the math was just so obvious too, where it's like, well, for all the only ones with this in stock, we would see nationals. I know we have stock here. Let's just remove our listing off of Amazon. People are going to buy from our website.
So we started making those connections a lot more frequently. And so we're like, eventually you just let your Amazon account slide so much that there's too many hurdles to get back in good graces and then good standings and all of that stuff. There's so many hurdles you have to jump through now as a, I don't even know. I can't speak to too much truth about it. We really just have not paid attention to it in the past couple of years. And we may go back when we have our own brand branded box, brand registry and all that.
Brett:
Better margins. Yeah, I mean, listen, Amazon's a wonderful place as a shopper. It's a way to potentially get growth fast as a brand, but I'm firmly in the camp of man, you got to have pretty hefty margins to make Amazon work. And yeah, I mean, I think one of the reasons why our Amazon practice is so successful and why we're growing so much as a brand, as an agency with Amazon is because that administrative toll of just keeping listings up and just fighting with fake reviews and competitors and getting listings back up when they're taken out, when they should have been taken out, that's a huge part of what we do. And it's just the tax cost of doing business on Amazon. So it can be wonderful for a lot of people, but it's also a bit of a slog. A bit of a grind for sure. And
Sean:
You've got to have a really unique product to not get copied also, because the sellers, I know there's companies out there that just monitor the sales rank, and if you break into a certain threshold,
Brett:
Outsource Totally makes sense. Totally makes sense. Well, cool, man. Well, this has been super helpful. So man, dig into the shock surplus content. Check that out, learn from that. Hey, don't be afraid to make some bold moves on Amazon. If you've got stuff that's not making any money, why are you doing it? What else, Sean, as we kind of move into the final portions here, the show, what else are you excited about? What are some things that you're about to test or where are you kind of headed as a brand here in the coming months?
Sean:
Yeah, TikTok shop, we're getting TikTok shop kind of, we've been approved for a while now. We have a pretty decent, I mean, we've got like 15,000 followers on TikTok, and TikTok was built more. We do a lot better on TikTok than we did on Instagram before Instagram, before Instagram copied TikTok as far as the interest graph versus social graph. And so our TikTok stuff, which is blowing up, which is just educating straight to the camera with some action in the background or product in our face. And so we're going harder in on TikTok. We're firing a TikTok shop for our own private label brand stuff. So we're getting going there for
Brett:
Sure. Are you running TikTok ads as well? Are you focusing mainly on organic and then TikTok shops
Sean:
Mainly on organic. We tried ads before and in platform reporting was showing absurd Tencent clicks. But what I think was happening, and we see this sometimes, I see this in our Facebook portal as well, which is like you get a thousand clicks, but you only get 700 page loads, right? Because 30 50% of your people aren't sticking around past 1.5 seconds for that page to load. And so there's that. I noticed that behavior with the TikTok audience quite a bit, and we weren't really getting sales and traffic there, but now, so we just use it as a brand building kind of situation. We're not doing any paid traffic there just yet. What we really want to try out is our private label and incentivizing through the affiliate. The affiliate. Now we're being able to give away 15%. I don't know what we're going to settle on, but try to really go in on the affiliate side of things because the products that we see right now that are available to us, no one else is selling on TikTok as a shop. Nice. And so I think there's open
Brett:
Door, open opportunity. Love it. I think it fits. I think your product is visual. People are researching it on TikTok, I'm sure, in similar fashions to what they're doing on YouTube and stuff. So I think that's a very obvious place to be. Sean, as you're trying to draw inspiration from other brands, other retailers, who are you paying attention to? Who are you learning from either other brands or other resources? How are you leveling up?
Sean:
Yeah, Alex or Mosey is, I think he's,
Brett:
What
Sean:
A legend. He's changed my business a lot just because over the past couple of years, new revenue streams have just been such an important part to uncover bigger revenue streams with bigger margins than what we e-commerce margins have just been pressed so much. And so as we try to uncover new opportunities, he's been a really big inspiration for me to uncover new opportunities, uncover new ways to provide more value to the customer, understanding, really looking at the business from different perspectives to challenge your beliefs and some stuff. So he's been a huge inspiration and legitimately changed my business. Totally agree. Yeah. So him and I don't know, I've been reading freaking sales tax books just describing, because
Brett:
That will get you some funny looks. I'm sure you're reading that after dinner. Some people are like, why are you reading a sales textbook on vacation? Funny looks.
Sean:
Yeah. If you think someone else is handling your business's sales tax, think again, never ever assume someone else is going to handle what is essentially a brand new system for the entire United States. No two states are the same on their sales tax administration for your business. And so can't have one playbook for the whole for all 45. And so that's really bitten us in the butt in the past couple of years. And I've, we've got people on it right now and it's a lot better going forward, but we're paying the price of past mistakes there. And I know, like I was saying before, I know nine figure brands that haven't been collecting correctly and they've got auditors on their door step. We
Brett:
Need $1 million in issues that they got to pay for now. So you got financial burdens, financial hardships, legal burdens and hardships. You combine those two, that is, that's not the game you want. That's not where you want to be focusing as a brand owner for sure.
Sean:
Yes, that's a big thing. I would just advise anyone that thankfully have it settled to triple check that wisdom is learning your lessons from other people. And I'm the other person that made those mistakes,
Brett:
Dude. I love it. I love it. Well, Sean, as people are watching this, listening to this, how can they connect with you? How can they go buy some shocks if they want to up their off-road game? How can they connect? Yeah.
Sean:
Shock surplus.com. We got live chat there, email, we're all over the place as shock surplus.com. I'm on LinkedIn if you guys, I get it after some podcast people reach out and ask a little bit more specifics. I'm super transparent on all the things we do, the marketing of things, operation side of things, always willing to help out. So yeah, hit me up anywhere you guys want and love to help out.
Brett:
It's awesome, man. Really appreciate you being transparent here. Love your story, love the success, and looking forward to watching you continue to grow on the organic side. And best of luck to you in the future.
Sean:
Thanks, man. Really appreciate
Brett:
It. Awesome. Thanks Sean. Tons of fun. And as always, thank you tuning in. We'd love to hear from you. What would you like to hear more of on the show? If you found this helpful and inspiring and other merchants who would benefit from Sean's wisdom, please share this episode. Also, leave us that five star review if you've not done so already. And with that, until next time, thank you for listening.
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