You’re already investing time and energy in planning your business—there’s no need to reinvent the wheel when it comes to formatting your plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by entrepreneurs who have come before you.
Business plans often are used to secure funding, but plenty of businesses find writing a plan valuable, even if they never work with an investor. That’s why we put together a free business plan template to help you get started.
It’s tempting to dive right into execution when you’re excited about a new business or side project, but taking the time to write a business plan and get your thoughts on paper allows you to do a number of beneficial things:
Evaluate your business ideas. Whether you’ve got one business idea or many, a business plan can make an idea more tangible, helping you see if they’re truly viable.
Plan for your next phase. Whether your goal is to start a new business or scale an existing business to the next level, a business plan can help you understand what needs to happen and identify gaps to address.
Clarify strategy, goals, and tactics. Writing a business plan can show you the actionable next steps to take on a big, abstract idea. It can also help you narrow your strategy and identify clear-cut tactics that will support it.
Scope the necessary work. Without a concrete plan, cost overruns and delays are all but certain. A business plan can help you see the full scope of work to be done and adjust your investment of time and money accordingly.
Hire and build partnerships. When you need buy-in from potential employees and partners, especially in the early stages of your business, a clearly written business plan is one of the best tools at your disposal. A business plan provides a refined look at your goals for the business, letting partners judge for themselves whether or not they agree with your vision.
Secure funds. Securing funding for your business, whether from investors or a bank, is one of the most common reasons to create a business plan.
Why use a business plan template?
A business plan can be as informal or formal as your situation calls for, but even if you’re a fan of the back-of-the-napkin approach to planning, there are some key benefits to starting your plan from an existing outline or template.
No blank-page paralysis. A blank page can be intimidating to even the most seasoned writers. Using an established framework and guidelines can help you get past the inertia of starting your business plan, and it allows you to skip the work of building an outline from scratch. You can always adjust a template to suit your needs.
Guidance on what to include in each section. If you’ve never sat through a business class, you might never have created a SWOT analysis or a balance sheet before. Templates that offer guidance—in plain language—about how to fill in each section can help you navigate sometimes-daunting business jargon and create a complete and effective plan.
Knowing you’ve considered every section. In some cases, you may not need to complete every section of a business plan template, but its initial structure shows you you’re choosing to omit a section as opposed to forgetting to include it in the first place.
Who should use this business plan template
This template is designed to ensure you’re thinking through all of the important facets of starting a new business or growing an existing one. It’s intended to help new entrepreneurs consider the full scope of running a business, and identify functional areas they may not have considered or where they may need to level up their skills as they grow.
That said, it may not include the specific details or structure preferred by a potential investor or lender. If your goal with a business plan is to secure funding, check with your target organizations—typically banks or investors—to see if they have a template you can follow to maximize your chances of success.
Products and services. What you sell, and the most important features of your products or services.
Marketing plan. How you intend to get the word out about your business, and what strategic decisions you’ve made about things like your pricing strategy.
Logistics and operations plan. Everything that needs to happen to turn your raw materials into products and get them into the hands of your customers.
Financial plan. It’s important to include a look at your current or projected finances. This section includes three key templates: an income statement, a balance sheet, and a cash-flow statement.
In our business plan template, each section includes an overview of the most important information to cover and guidelines on how to approach writing and researching each one.
How to write your business plan using this free template
There are some high-level strategic guidelines beyond the advice included in this free business plan template that can help you write an effective, complete plan while minimizing busywork.
Know your audience. If you’re writing a business plan for yourself in order to get clarity on your ideas and your industry as a whole, you may not need to include the same level of detail or polish you would with a business plan you want to send to potential investors. Knowing who will read your plan will help you decide how much time to spend on it.
Know your goals. Understanding the goals of your plan can help you set the right scope. If your goal is to use the plan as a roadmap for growth, you may invest more time in it than if your goal is to understand the competitive landscape of a new industry.
Take it step-by-step. Writing a 10- to 15-page document can feel daunting, so try to tackle one section at a time. Select a couple of sections you feel most confident writing and start there—you can start on the next few sections once those are complete. Jot down bullet-point notes in each section before you start writing to organize your thoughts and streamline the writing process.
We’ve filled out a sample business plan as a companion to our template, featuring a fictional ecommerce business.
Our fictional business creates custom greeting cards with your pet’s paw prints on them, and the founder of the business is writing a plan to help understand the market, as well as the logistics and costs involved, to give themselves the best chance of success before they launch.
The sample is set up to help you get a sense of each section and understand how they apply to the planning and evaluation stages of a business plan. If you’re looking for funding, this example won’t be a complete or formal look at a business plan, but it will give you a great place to start and ideas about which sections to expand.
Maximize your efforts with a business plan template
Although even the best-crafted plan may not survive its first contact with reality, the act of planning is still invaluable for your business. To make sure your efforts are focused on the highest-value parts of planning, like clarifying your goals, setting a strategy, and understanding the market and competitive landscape, lean on a business plan template to handle the structure and format for you. Even if you eventually omit sections, you’ll save yourself time and energy by starting with a framework already in place.
David Barnett, on the other hand, had to teach himself how to use 3D design software so he could prototype PopSockets, the now-popular phone accessory.
On their own, these inspiring stories don’t provide an end-to-end blueprint for product development, but the similarities they share reveal some of the steps founders consistently take on the road to shipping a finished product.
The product development process
New product development is the process of bringing an original product idea to market. Although it differs by industry, it can essentially be broken down into five stages: ideation, research, planning, prototyping, sourcing, and costing.
Here’s what you’ll need to consider at each stage
Many aspiring entrepreneurs get stuck on ideation, often because they’re waiting for a stroke of genius to reveal the perfect product they should sell. While building something fundamentally “new” can be creatively fulfilling, many of the best ideas are the result of iterating upon on an existing product.
The SCAMPER model is a useful tool for quickly coming up with product ideas by asking questions about existing products. Each letter stands for a prompt:
Substitute (e.g. fur in faux fur)
Combine (e.g. a phone case and a battery pack)
Adapt (e.g. a bra with front clasps for nursing)
Modify (e.g. an electric toothbrush with a sleeker design)
Put to another use (e.g. memory foam dog beds
Eliminate (e.g. the middleman to sell sunglasses and pass the savings on to consumers)
Reverse/Rearrange (e.g. a duffle bag so that it doesn’t wrinkle your suits)
By asking these questions, you can come up with novel ways to transform existing ideas or even adapt them for a new target audience or problem.
If you’re still looking for your “aha!” moment, we also put together a list of sources for coming up with your own product ideas, from analyzing online marketplaces for inspiration to reinventing historical trends.
With your product idea in mind, you may feel inclined to leapfrog ahead to production, but that can become a misstep if you fail to validate your idea first.
Product validation ensures you’re creating a product people will pay for and that you won’t waste time, money, and effort on an idea that won’t sell. There are several ways you can validate your product ideas, including:
Launching a “coming soon” page to gauge interest via email opt-ins or pre-orders
However you decide to go about validating your idea, it is important to get feedback from a substantial and unbiased audience as to whether they would buy your product. Be wary of overvaluing feedback from people who “definitely would buy” if you were to create your theoretical product—until money changes hands, you can’t count someone as a customer.
Validation research will also inevitably involve competitive analysis. If your idea or niche has the potential to take off, there are likely competitors already operating in that space.
Visiting your competitors’ website and signing up for their email list will allow you to understand how they attract customers and make sales. Asking your own potential customers what they like or dislike about your competitors will also be important in defining your own competitive advantage.
The information compiled from doing product validation and market research will allow you to gauge the demand for your product and also the level of competition that exists before you start planning.
Since product development can quickly become complicated, it’s important to take the time to plan before you begin to build your prototype.
When you eventually approach manufacturers or start looking for materials, if you don’t have a concrete idea of what you want your product to look like and how it will function, it’s easy to get lost in the subsequent steps.
The best place to begin planning is with a hand-drawn sketch of what your product will look like. The sketch should be as detailed as possible, with labels explaining the various features and functions.
You don’t need a professional quality drawing since you won’t be submitting it to a manufacturer at this stage. However, if you are not confident that you can produce a legible diagram that will make sense of your product, it is easy to find illustrators for hire on Dribbble, UpWork, or Minty.
Try to use your diagram to create a list of the different components or materials you will need in order to bring the product to life. The list does not need to be inclusive of all potential components, but it should allow you to begin planning what you will need in order to create the product.
For example, a drawing of a purse design could be accompanied by this list:
Zippers (large and small)
Along with the components, you should also begin to consider the retail price or category your product will fall into. Will the product be an everyday item or for special occasions? Will it use premium materials or be environmentally friendly? These are all questions to consider in the planning phase since they will help guide you through not only your product development process but also your brand positioning and marketing strategy.
The packaging, labels, and overall quality of your materials should be considered as well before you continue to the sourcing and costing stages. These will have an effect on how you market your product to your target customer, so it’s important to take these aspects of your product into consideration during the planning phase too.
The goal of the prototyping phase during product development is to create a finished product to use as a sample for mass production.
It’s unlikely you will get to your finished product in a single attempt—prototyping usually involves experimenting with several versions of your product, slowly eliminating options and making improvements until you feel satisfied with a final sample.
Prototyping also differs significantly depending on the type of product you are developing. The least expensive and simplest cases are products you can prototype yourself, such as food recipes and some cosmetic products. This do-it-yourself prototyping can also extend to fashion, pottery, design and other verticals, if you are lucky enough to be trained in these disciplines.
However, more often than not, entrepreneurs will work with a third party to prototype their product. In the fashion and apparel industry, this usually involves working with a local seamstress (for clothing and accessories), cobbler (for shoes) or pattern maker (for clothing). These services can usually be found online by Googling local services in the industry.
Most large cities also have art, design or fashion schools where students are trained in these techniques. Administrators from these university or college programs can usually grant you access to their internal job board where you can create a request for prototyping help.
For objects like toys, household accessories, electronics, and many other hard-exterior objects, you may require a 3D rendering in order to make a prototype. Artists or engineers who are trained in computer-aided design and drafting (CAD) software can be contracted to do this, using UpWork or Freelancer. There are also user-friendly online tools such as SketchUp, TinkerCad and Vectary, for founders who want to learn how to create 3D models for themselves.
To get a 3D design turned into a physical model, makers used to have to get molds made for each part. Molds are typically expensive and involve set up fees, for things like tools and dies, that are used to cut and shape pieces of plastic and other hard materials.
Luckily, with the innovation of 3D printing, designs can be turned into physical samples at a much lower cost with a quicker turnaround time.
Once you have a product prototype you’re satisfied with, it is time to start gathering the materials and securing the partners needed for production. This is also referred to as building your supply chain: the vendors, activities, and resources that are needed to create a product and get it into a customers’ hands.
While this phase will mainly involve looking for manufacturing-related services, you may also factor in storage, shipping, and warehousing into your choices at this stage.
In Shoe Dog, a memoir by Nike founder Phil Knight, the importance of diversifying your supply chain is a theme that is emphasized throughout the story. Finding multiple suppliers for the different materials you will need, as well as different potential manufacturers, will allow you to compare costs. It also has an added benefit of creating a backup option if one of your suppliers or manufacturers doesn’t work out. Sourcing several options is an important part of safeguarding your business for the long-term.
When looking for suppliers, there are plenty of resources both online and in person. While it may seem old-fashioned, many business owners choose to attend trade shows dedicated to sourcing. Trade shows like Magic in Las Vegas, provide the opportunity to see hundreds of vendors at once—to see, touch, and discuss materials and build a personal relationship with suppliers, which can be valuable when it comes time to negotiate prices.
During the sourcing phase, you will inevitably come across the decision of whether to produce your product locally or overseas. It is a good idea to compare the two options, as they each have their own advantages and disadvantages.
The most commonly used sourcing platform for overseas production is Alibaba. Alibaba is marketplace for Chinese suppliers and factories, where you can browse listings for finished goods, or raw materials. A popular way of using Alibaba to find a manufacturer is to look for listings with similar products to your own, and then contact the factory to see if they can produce your specific design.
After research, planning, prototyping, and sourcing is done, you should have a clearer picture of what it will cost to produce your product. Costing is the process of taking all of the information gathered thus far, and adding up what your cost of goods sold (COGS) will be, so that you can determine a retail price and gross margin.
Begin by creating a spreadsheet with each additional cost broken out as a separate line item. This should include all of your raw materials, factory set up costs, manufacturing costs, and shipping costs. It is important to factor in shipping, import fees, and any duties you will need to pay in order to get your final product into the customers hands, as these fees can have a significant impact on your COGS depending on where you are producing the product.
If you were able to secure multiple quotes for different materials or manufacturers during the sourcing phase, you can include different columns for each line item that compares the cost. Another option is to create a second version of the spreadsheet, so that you can compare local production vs. overseas production.
Once you have your total COGS calculated, you can come up with a retail price for your product and subtract the COGS from that price to get your potential gross margin, or profit, on each unit sold.
Product development in popular industries
The product development process will naturally vary by industry, so let’s take a brief look at what you might have to consider across three of the largest and most well-established industries: Fashion and Apparel, Beauty and Cosmetics, and Food and Beverage.
These three industries have relatively straightforward paths to product development thanks to the many well-documented case studies that can be used for inspiration.
Fashion and Apparel
In the fashion industry, product development usually begins the old school way: with a hand drawn sketch, or the digital equivalent using a program like Procreate.
A sketch is then developed into a sample using a pattern maker or seamstress. During the prototyping phase, a size set is created, which means a range of samples with different measurements for each size you want to sell. Once the size set is finalized, it is put into production.
Rather than make the product, some fashion and apparel businesses choose print-on-demand to produce their clothing in the beginning. Print-on-demand allows you to upload designs to a third party app, that connects your store with a warehouse and screen-printing facility. When an order is placed online, your design is printed on an existing stock of t-shirts, sweaters and various other items on offer, creating a finished product without the need to design the entire garment.
Other factors to consider:
Hang tags: the branded tag that hangs from a garment and usually contains information like price, size etc.
Labels: the fabric tags sewed or stamped into a garment that usually contains information about fabric contents and care instructions
Wash tests: putting your product through wash tests to understand whether it holds up over time and how it should be cared for
The beauty and cosmetics industry includes a wide range of products that is constantly expanding due to wellness and self-care trends. From makeup to bath products and skincare, many beauty brands are focusing on all natural ingredients and sustainability, which makes it easier to prototype a product on your own using everyday ingredients.
White labeling is also popular in the beauty and cosmetics industry, which is the process of finding an existing product or manufacturer, then packaging and branding the products they already produce. Whichever route you decide to take, mass manufacturing for cosmetics is usually done by working with a lab and a chemist to make sure quality stays consistent at scale.
Other factors to consider:
Labels and warnings: identifying all materials used in the product and any potential reactions
Laws and regulations: researching FDA regulations and how they pertain to your product and packaging, both where they are produced and where you intend to sell them
Shelf life: conducting tests and adding necessary expiration dates to products
Food and beverage products are among the easiest to start developing at a low cost and from the comfort of your own home. Creating a new energy bar can be as simple as buying ingredients and tweaking the recipe in your own kitchen, like Lara Merriken did when she started Larabar.
In order to move from recipe to packaged goods you can sell in stores or online, you will need to find a commercial kitchen that is licensed to produce food and has passed a health and safety inspection.
These kitchens are usually set up with large ovens and cooking equipment to accommodate large batches, but if you are considering mass production and packaging, a co-packer or co-manufacturer might be a better option. These are manufacturing facilities that specialize in processing raw materials and producing food and beverage products at scale.
Other factors to consider:
Labels and warnings: ingredient lists, nutritional information to display
Laws and regulations: many countries have regulations around dietary information, allergen warnings, and health claims that you will need to comply with
Expiry dates: understanding your product lifetime and how you will produce, package and stock the product to accommodate this
During product development, each journey to a finished product is different and every industry has its own unique set of quirks involved in creating something new. If you find yourself struggling to figure it all out, remember that every product that came before yours had to overcome the same challenges.
By following these steps as you undergo your own product development process, you can break down the overwhelming task of bringing a new product to market into more digestible phases.
No matter what you’re developing, by putting in all the necessary preparation—through researching, planning, prototyping, sourcing and costing—you can set yourself up for a successful final product
Smaller creators often stand to benefit more from influencer marketing partnerships—beyond just getting paid for what they post, your promotion can help them grow. That makes these relationships easier to manage and potentially more valuable for up-and-coming online brands.
In today’s episode of Shopify Masters, you’ll learn from two sisters who leveraged micro influencers to boost their brand. Liza and Lana Mushamel started Twinkled T to sell a range of unique nail products designed to bring the nail salon directly to your home.
We were so excited for the influencer with a million [followers]. She posted it and we waited. And waited. And waited. And we never got a single order.
Tune in to learn
How to encourage customers to share their photos
How to use YouTube to drive traffic to your store
How to uncover Instagram influencers before they get huge
Don’t miss an episode! Subscribe to Shopify Masters.
Felix: Today I’m joined by Liza and Lana [inaudible] from Twinkle T. Twinkle T sells a range of unique nail products designed to bring the nail salon directly into your home, and was started in 2013 based out of Los Angeles California. Welcome, Liza and Lana.
Liza: Thanks, Felix.
Lana: Thank you for having us, Felix.
Felix: Yeah, excited to have you both on. Tell us more about your most popular products.
Liza: The most popular products. Well, we sell a large range of nail stencils. You basically put them on your nails, you paint the polish off, you take them off and it reveals a really pretty design on your nails. I think our nail stencils and definitely our holographic powder. Holographic is a super crazy trend right now, our holographic powder gives you this really pretty rainbow shimmer design on your nails. That’s definitely one of our best sellers.
Lana: Yeah, and then we’ve had from the beginning, we’ve always had nail brushes and other sorts of tools for cleaning up your nails and those sell pretty well also.
Felix: Cool, yeah, I’m nodding along like I know what you’re talking about. It only helps with that I’m looking at the website to see exactly what you’re saying. How did you get into this? How did the both of you get into this business, this industry?
Liza: Yeah, you know, we were both unemployed, and we had just left jobs we hated. We were living with our parents. Lana was in college at the time.
Lana: Yeah, I was pursuing a degree in a field that I didn’t care about anymore, and I didn’t want to just continue with the rest of my life with that. Liz was actually nail polish companies on Instagram.
Liza: Yeah, I used to love, I’ve always done my nails and I thought they were so pretty and creative. I would follow all these different nail accounts, yeah, on Instagram like she said. One day, I just went up to Lana and I was telling her, “Hey, what do you think about getting into this industry?”
Lana: Basically they were nail polish creators that from their own home they create nail polish. They have their own base, they go online, they buy a bunch of glitter and they create their own unique nail polishes. Liza was like, “Hey, let’s do this.” She approached me ’cause she knows I’m really creative, and I love art and anything related to that. She’s like, “Let’s do it together. It’d be like an awesome sister activity.” If not a business, then it’s a hobby we could do together.
Felix: What did you see about these companies on Instagram that made you recognize that, Hey, this is something that there’s opportunity, where there’s room for us to come in and do something?
Lana: Yeah, so we started looking at the materials purchase for our own nail polish. We found a base, and then we went on Etsy and we started looking at glitter. We realized there was only one company on Etsy selling glitter, it was completely monopolized. We looked at each other and we were like, “Whoa, why don’t we do this? Why don’t we offer supplies to creators instead of creating nail polish?” Which honestly the market was already saturated with.
We were like, “Let’s do this, and you know, let’s be more affordable and let’s offer more options too.” That is where the idea of Twinkle T started. That’s where they name Twinkle comes from.
Liza: From the glitter.
Lana: From glitter. We approached our parents, we asked for a $1500 investment for glitter, and it kind of just took off from there.
Liza: Our initial vision was to make the polishes and then it ended up turning into more of a supplier.
Felix: You were supplying the people that were creating and selling their own nail polish, is that correct? Or how does the business model work?
Lana: Yes, that’s how we started.
Liza: Yes, and then from there we branched off into being a nail art store for everyone.
Lana: We started looking at other parts of nail art that were monopolized or could have more options for people. Things that we could bring that would be more unique to the market, and that’s kind of how we got into nail stencils. There were only six designs at the time from this other company, and we came in and within the first week we released 40 designs. We’ve naturally been able to build a product line since then.
Felix: Got it, so you approached the business as almost like a B to B set up, which is different than what I think most store owners do. They usually sell directly to the consumer right off the bat. But you guys right off the bat were selling as a supplier to other vendors, other creators that were creating these polishes. How did you approach them? How did you find these other essentially retailers or small business to sell too?
Lana: Instagram. You know, in the beginning, we relied solely on Instagram, and we would find the other nail polish creators as well as customers. You know, we started noticing that everyone would follow us. People that would want to just put glitter on their nails, not in the actual polish. And that’s when we kind of looked at each and realized, like, “Oh, gosh.” You know, there’s a need for this stuff everywhere. Not just in B to B, but to consumers as well.
Liza: We went on [inaudible] right when we started and we instantly followed every single nail polish account that we could find. Every nail polish creator, and we’d comment on pictures, and we just kind of got our names our there, you know?
Felix: Give us an idea of this time line then. You both, you looked at each other and said, “Let’s start this business.” How quickly were you able to have an inventory? Walk us through, how quickly were you able to build some kind of inventory and then start reaching out to these initially at least these other I guess, B to B customers.
Liza: Yeah, I’d say we really only focused on the selling glitter to the companies probably only like a month. And then we branched out, we started selling to customers. Then we created a whole new product line, gosh Lana, I want to say maybe like four months from the very beginning of only selling glitter. It was about four month transition period into selling other products directly to consumers.
Felix: Got it, and this is all done through Instagram. You were finding these profiles, these accounts that were initially at least selling their own polish. You were following them, commenting on their pictures, and then they were following you back. How were they purchasing? Were they buying through Instagram, were they going to your store or your website? How were they actually transacting with you?
Lana: A lot of the time we were only on Etsy. I think as soon as we started receiving at least two orders a day. We realized that it would be more inexpensive to open a Shopify account, where I think we were paying $10 a month at the time, along with the credit card fees. As opposed to Etsy that was taking a quarter, literally $0.25 a sale, plus a renewal fee, plus their credit card fees. I think it took us about six months to open our own Shopify store. Yeah, initially we were just making sales off of Etsy.
Felix: Got it, now what were you posting on Instagram? What kind of content were you producing to get these [inaudible] potential customers interested in checking out your Etsy store, then eventually your Shopify store.
Liza: We would post pictures that we took of our glitter and our products. We would also send products out to Instagram influencers to post on their pages.
Lana: Most importantly we were posting customers and manicures. People could see actual people just like them, beginners in nail art that were creating manicures. We started a hashtag, it was just #TwinkledT and we were able to get all our pictures through that hashtag. We would just refer to that every time we needed a new picture to post.
Most importantly too, we would write really long captions. Really long personal captions, and we really tried to build a community on Instagram and make it feel like it was a family.
Liza: Yeah, we would comment back everyone. Respond to all messages.
Lana: We learned people’s Instagram handles and we knew who we would talk to the most.
Liza: It was a very personal experience on our Instagram. I think that that helped us a lot in the beginning.
Felix: You were writing these long captions, what was the purpose of that? What was the goal of creating a lot of text essentially on your Instagram post?
Liza: I think people just getting to know our personalities. The captions weren’t you know, technically about what we’re selling, but more we would talk about us. You know, we would start a conversation within in our comments. People started realizing, like, “Oh, these are just.” I think people really enjoy the fact that we’re two sisters, and we just have this small company, and they would engage with us then, when they realize, “Oh, this is just a small business. It’s not a major corporation try to sell to me.”
Felix: I like the approach of getting your customers content to post on your profile, rather than you know, creating it all by yourself. What were you doing to encourage this kind of, especially early on when you probably don’t have that many customers yet. How were you able to start producing this kind of content to put on your Instagram?
Lana: Well, first with every order that we would send, we would write a hand written note in the beginning. We’d also really encourage people to use the hash tag. I think in the beginning, that’s how we built our following. Also people enjoy getting the shout out. As our page was getting bigger, you know, people wanted to purchase our products to get that shout out, to also in return build their following. I feel like that was a huge part in making our Instagram bigger. I mean, 99% of our posts are our own customers images.
Felix: I see. Whenever you put a picture of a customers, whenever a customer shared something on Instagram, you would repost it and then link over to their profile.
Liza: Yeah, we still do that of course.
Lana: Yeah, definitely.
Felix: Yeah, I like that, because now you’re giving them value in exchange for that content. Because these people who do want to show off, what they can do with it, with their nails, they want to show them using your product, and in exchange they get this platform. You know, I’m looking at your Instagram now, over 300 thousand followers. That’s a big deal for pretty much anybody that has an Instagram to get that kind of shout out. You emphasized that there is this kind of personal touch that you try to create with the community. Are you still kind of doing this? This manual out reach with reaching out influencers, reaching out to potential customers?
Liza: Yeah, we rely a lot on social media. Actually Lana and I do everything at the company. At this point, we’re a lot bigger, so unfortunately the customers don’t get the hand written notes any longer, but we still do manage everything. Any comment that you see, like when we comment on any picture it’s Lana and I. A picture is posted, it’s us doing it. Emails, we answer our own emails. Everything is still personal, it’s just that because it’s on a bigger scale, we unfortunately don’t have the time to make every single order as personal with the hand written notes and stuff.
Lana: As for reaching out to influencers, yeah it’s still definitely huge. Liz and I, and I feel like this is really important for every new up and coming business that somebody wants to create. We realized really early on, that micro influencers are such an awesome way to create potential customers. I think people believe that you need to go big or go home, and reach out to influences with a million plus subscribers, or a million plus followers on Instagram.
Early on actually, I think it was our second year starting. We decided to implement coupon codes, specifically for each influencer. Let’s say, Liza has an Instagram. I would give her the coupon code of Liza, for all her follower to receive 10% off of their orders. We thought that way we can also see which influencers are bringing in orders, right, by tracking their names.
What we did was we reached out to 10 girls. One of them had as little as 30 thousand followers, and our biggest one had a million followers. We gave them each their own coupon code with their own handle. Within the same week, every influencer started posting their coupon code. What we realized was, our smallest influencer with 30 thousand influencers. The day that she posted it, she received six orders with her code. We were so excited for the influencer with a million. She posted it and we waited, and we waited, and we waited, and we never got one single order from that influencer.
Felix: Yeah, I’ve heard this from multiple store owners that say the same thing. Where they say they focus on micro influencers. Basically your experience, what do you think is the difference that allows someone that has a smaller following numbers wise, perform better than someone that has a much larger following?
Liza: Me personally. I follow accounts that range in all sorts of followers. I’ll follow an account that only has a thousand followers. If I’m following an account that only has a thousand followers, it’s because I care about what they have to say, or what they’re trying to sell me. It’s cause I value their opinion. I personally am more likely to purchase from someone with a smaller account, ’cause I feel like they’re being more genuine in what they’re showing and what they’re selling.
Versus larger accounts that sometimes and not all the time, ’cause I follow many larger accounts that are very honest and will only recommend the best products. Basically I feel like sometimes larger accounts tend to-
Lana: Sometimes you don’t know if something is a real post.
Felix: Yeah, I see what you’re saying. It’s almost like by the nature of being a larger Instagram account, you kind of have to be a little bit watered down. You have to be, not necessarily less genuine, but you have to start being a little more flexible in advertising, and the kind of content you’re putting out to attract a much larger audience. By doing that you water yourself down a bit. I think that affects how genuine you look when you are promoting a product. I think I know exactly what you’re saying.
I’ve seen those with again, personal accounts versus general topic accounts. Where because they’re smaller, there’s a much more personal touch and the kind of relationship that you have with them by following them. You’re much more likely to trust them and the kinds of products that they push out there. If someone that’s starting today. You know, you guys have again over 300 thousand followers. For someone that’s starting from scratch today, can they take the same approach? What’s changed between the time that the both of you started. Your Instagram accounts versus someone that would be starting today?
Liza: When we first started we relied solely on Instagram, and we were able to gain a lot of followers and a lot of sales through Instagram. Unfortunately that’s not the case any longer. Instagram has changed their algorithm, and although it’s still a great tool, great social media tool. You can’t rely solely on it any longer. We have found that Facebook ads help us a lot, as well as YouTube, YouTube is a really big driver.
Felix: Now, with Facebook ads, can you talk to us about that strategy, How do you set up your campaigns?
Lana: We actually look at our Shopify analytics before we work on the Facebook ads. The analytics on Shopify let us know where are customers are mostly from, what city, what country? What the demographics are, the ages? What platform they’re shopping from, if they’re on their mobile, if they’re on the computer. I take all that, and I implement into my Facebook app. We have 90% demographic of women. Most of them are in the US, we have some Canada, we have some United Kingdom customers.
I take all of that information and that’s how I build my Facebook ad. Then I obviously get more details. You know, I put customers that are they follow manicure pages, or they’re more likely to be online shoppers. That’s how we build our Facebook ads. But I feel like Facebook makes it very easy for an entrepreneur to build their ads.
Felix: What does the ad look like? What is it showing, what is it saying on ad itself to drive customers to your site?
Lana: What I feel works best are videos. Customers really like see how easy it is to use our nail products. I will post a video, you usually pay per view. It’ll be about a penny per view on Facebook. I feel like that works best, customers watching videos.
Felix: What are there videos of?
Liza: It’ll be one of our customers applying our nail art powder, or applying a nail stencil and removing it, and showing her final manicure. It’ll literally be start to finish from bare nails to her end manicure.
Felix: Are you helping create this video? I thought it was impressive already that you are building this Instagram profile that’s 99% your customers content. But now you’re also using their content, you’re able to get content from them to run these ads. How are you able to do that?
Liza: No, we don’t help our customer create their videos. They create them for their own page and then we their permission to use it on our pages. As long as you credit the user, it’s completely legal to use their content.
Felix: Yeah, I’m sure. That’s just really cool. I’m just wondering when they are, are these videos that they’re putting out there? Do you do any kind of editing to make it fit better for an ad? ’Cause I can imagine someone that’s applying nail polish, it might take … I’m not sure how long it takes, but it takes longer than an ad should be. How do you turn their content into something that you can use in the Facebook ad?
Lana: As long as the video is less than 30 seconds, I don’t change anything. It’s usually perfect. I also don’t like changing another creators content to find mine. I don’t want to disrupt their work.
Felix: Are these typically influencers?
Lana: Just regular nail artist. Some of them with as little as 500 followers on Instagram. Sometimes that boost from our ads helps them build their page. It’s basically a win-win situation for the both of us.
Felix: Got it, okay that makes sense. You know how there’s different types of campaigns you can run in Facebook where you’re just looking to drive traffic, or maybe you’re looking to the goal is an actual conversion. Do you have that kind of, I guess, complex set up on your Facebook ad campaigns?
Lana: Yeah we do. I keep an eye on it all. So far I’ve noticed that videos have the best conversion rate.
Felix: Usually there’s like a link in the description of the video? Or how are they clicking over from that video to your site, and then ultimately buying?
Lana: Yeah, there’s always the link. There’s also campaigns that you can set up so that people like your page on Facebook. I don’t think that’s made an actual different for us in sales. I always just aim for the link in the actual ad.
Felix: Got it, so when people are seeing the video and they’re clicking on the video. Click on the link in the description of the Facebook video. Does it take them right to that particular product that the customer is using? Does it take them to the landing home page, where is it driving the traffic?
Lana: I always try to drive the traffic directly to the home page, in hopes that a customer will see a different product that maybe they’ll also like. I don’t like to specify the actual landing page of that product. Because what if they purchase that product then they don’t have a look around your website.
Felix: Got it, makes sense. In the pre-interview, you also mentioned that you are supplementing your Instagram with YouTube. Can you tell us a little bit more about how you’re using YouTube?
Liza: Yeah, YouTube is a great driving force for visitors to the website. We have some YouTube girls that we work with that are amazing, and they post our products. Basically they’re affiliates with our website. They will earn the commission for any sales that they drive to the website. Within their videos, in their description boxes, they have their special affiliate link. When a customer clicks that, it takes them to our website, and they’ll earn a commission if they make any sales.
We have quite a few affiliates and they’re a great driving force. We don’t actually post our own content on YouTube, it’s basically we rely on the influencers there.
Felix: Can you say how many affiliates you’re working with?
Liza: That’s a good question.
Felix: Is it in the hundreds?
Lana: It’s about less than a hundred. I mean, we have really small ones that are just regular customers that post their links on their personal Facebook pages, and how that their friends purchase from their own personal likes. As for big influencers, I’d say we have about 10.
Liza: Those influencers on YouTube are great.
Felix: I see, so you have almost like a referral program that any customer can participate in, and then also you have much larger accounts, like those 10 that you work with. Are you using a specific application or anything for the affiliate or referral program? How does someone sign up for it?
Lana: Yeah, we use LeadDyno on Shopify. It’s super easy to use, the affiliate just comes on and they sign up with their PayPal address. Every month we pay out affiliates, directly to their PayPal. They can manage it, they can see what purchases are coming in, it’s completely legitimate, and it’s open for them to just watch and keep track of their own analytics.
Felix: I’ve heard of LeadDyno, I haven’t used it before. Is there any kind of customization or tips for someone that is just signing up to use an application like LeadDyno for the first time, of how they can use it to improve their referral program?
Lana: We have a page on our website, at the Twitter, that says our affiliates. You just click it, and you see the link to sign up for your own LeadDyno account. It’s fairly easy to use.
Liza: Yeah, it’s pretty simple. I don’t know about customization thou, I don’t think we’ve customized it too much to be honest.
Lana: I think ours is pink, and I think that’s the most.
Felix: Got it. I guess you can play with things like the percentage that you pay out. Is that all public, are you able to share what worked for you guys?
Liza: Yeah, we customize how much affiliates will earn. You can actually change it for each affiliate, if you only want one to earn this much and another one to earn a little bit more or less, you could do that also through LeadDyno.
Lana: Yeah, we offer 5% for affiliates starting out.
Felix: Got it. Now when you’re working with these much bigger accounts, let’s talk about them. How did you find the 10 or so large YouTube influencers?
Liza: I’ll give you an example of one of them. She’s amazing, we found her maybe three years ago, she was a much smaller account. We, you know, just reached out, we asked her, “Hey, would you like to try some stuff from our website.” And she said, “Sure, send it over.” We sent it over and she’s a complete doll, she’s amazing to work with. She liked us, and built kind of a friendship with her. You know, we would start just texting and just chatting. She actually ended up going on to create a YouTube. I’m sorry, I forgot to mention she was on Instagram at the time.
She went on to create a YouTube. Again, she really enjoyed our product, she liked us, we liked here. We would send her stuff, we gave her her own code to our website. Over the course of the last two to three years, she’s grown to become one of the biggest influencers on YouTube in general. Overall, not just in the nail community. We still work with her, and because of the friendship that we built with her, you know, two, three years ago when she was much smaller. She’s still promoting our products now. That’s just one story of one girl.
Felix: Can you say her name? How large is her following today?
Lana: Yeah, her name is Christine, Simply Nailogical. I think she has about five to six million subscribers at the moment.
Felix: Five to six million, wow.
Liza: It’s constantly growing.
Felix: She started this YouTube channel when, and how long did it take her to grow to five to six million?
Lana: She started a while ago but she started showing her face and being-
Liza: Really active and herself, and her personality and everything.
Lana: Couple years ago.
Liza: Probably like two and a half years ago. I’m sorry, I don’t know the exact time frame.
Felix: Yeah, no, that’s just super impressive just to hear about. You mentioned this also in the pre-interview questions which was that the way that you find these influences, that you focus primarily on people that you think one day will be successful and much larger. And then build a foundation or relationship with them first. This is a great example that you just gave us, of an example with that. You focus on finding smaller accounts. What do you look for these days? Is it to identify and uncover these gems?
Liza: You know, honestly we don’t look at followers or anything like that. I look at content. I like to see really how they take pictures. You know, what their videos are looking like? Anything that the content looks good and therefore we want to work with them, we reach out to them. Whether they have 500 followers or 5000, it doesn’t matter. I don’t care about the followers, I care about you know, do I see this person getting bigger one day?
Lana: And do we think that they’d be a good match with us. Because we also want it to be a personal relationship. We email our affiliates like they’re our best friends. We really look out for people that we think are personal in their posts, are genuine.
Liza: Yeah, it’s a combination of a lot of different factors. It’s not just about like, “Oh, are you going to make it big one day and take me with you?” It is building more of a friendship with these girls.
Felix: Got it. How do you work with them on a ongoing basis? Are you asking them to produce, or you’re sending them products, new products that you’re releasing? And then they’ll eventually, I would shoot a YouTube video about, how does that relationship work?
Liza: You know, Lana and I are very-
Liza: We’re very flexible. We know a lot of companies that will send product out and say, “Hey, I need a manicure done by this time, this date, whatever.” Lana and I will just send it out and honestly half the time we’ll forget.
Lana: We almost felt like we have people that are painting their nails are creative, and most likely people that like to do things on their own time, since they’re doing manicures at home rather than at a salon. We’ve always said we would hate if somebody put rules on us, or made us sign a contract to produce this amount of content for you.
I send out the products, send out a PR package, and I send an email saying, “Hey, I just sent this over. You don’t have to post it if you don’t want, but it’s coming.” [crosstalk] Whatever they choose to do with it it’s totally fine. Yeah, we’ve always approached it in a really chill way.
Liza: More often than not, they’re going to post on their own. I don’t think I’ve ever once sent up a follow-up email, like, “Hey, where’s my?” I mean, I’ve never done this. It gives them freedom, it gives us more freedom. It’s better to do it that way.
Felix: One of the interesting thing that you mentioned, was that every year since you started the business, the best selling product of the year has changed. Can you walk us through the best selling products each year?
Liza: Yeah, I think the first year we started was the nail stencils. The next year was-
Lana: This tool, it was a cleanup brush, and then the next year was nail polish, stamping polish. And then this year so far it’s been powders. It really does change every year, next year it’s going to be something completely different and we have to keep up with the trends every year. It’s fun, it’s a good time.
Felix: Yeah, why do you think it changes so much for your business, from one year to the next? A new popular product just seems to take off for you.
Liza: With something as broad as nails, there are constantly new trends coming out. It’s a really competitive field and it’s new trends, new designs, new styles and you just have to stay on top of it. It’s constantly changing.
Felix: How do you do that? How do you make sure that you are not following behind the curve?
Lana: I feel like we keep up a lot with it, score page on Instagram. With manicures on celebrities at events. And even just going out in LA and looking at peoples nails. You know, girls love posting their manicures. When my friends are posting their manicures out of the salon and I see something that we don’t carry. We instantly text each other and we’re like, “We need this. We need to carry this. Why don’t we have this?”
Felix: As I was saying, when you do find out that there’s a new product that’s just on the cusp of taking off, and you know that you have to get into your store. Walk us through that process, how do you source it and how do you make sure you get into the store in time to catch onto the trend?
Liza: We work with a few very reputable suppliers.
Lana: Yeah, we have vendors at this point that we know release consistent quality products to us. But it does take some time for us to sample everything, test everything, and we’re really thinking about what we should be carrying. I would say that, in that case with being so picky, maybe sometimes we’re a couple weeks behind in releasing it on our website. But our customers always know that they’re getting the top quality product on our website.
Felix: They’ll probably wait for it, right?
Liza: A lot of the products we make from home. If there’s a new design, I design it on my computer and we make it ourselves.
Felix: Got it. What’s the testing and sampling process like? What are you looking for?
Liza: We only carry the top quality products. I’ll give you an example, you know, our brushes. Lana had mentioned they were one of our best sellers back then. I ordered brushes from a bunch of different companies, and I tested all of them on myself. I wanted to see how they would work. I mean, in the end we only carried the best one, and even if it means it costs us more, that’s okay, ’cause we don’t want our customers to receive anything but the best product.
Felix: Got it, so you’re basically just using it on yourself as a way to test. Which makes sense, I mean, if you are the customer, you probably have a great feedback on what you should want to, and what you don’t want to include in the store. I think mentioned earlier that it’s just you two that run this business. It’s obviously a very fast run business and it’s growing over time. Can you give an idea of how quickly its grown over the last three, I guess four years now?
Liza: We’re consistently up year over year about 15%. As for our followers, they’re all built organic on Instagram, we’ve never paid for followers. We’ve been able to build that from zero. Our Facebook is rapidly growing right now since we started with the Facebook ads to. I think we’re about to reach 35 thousand likes on Facebook.
Felix: I mean, that’s impressive, 15% year over year growth. That’s impressive in any industry. What do you think is the key to each year that you’ve been able to keep on growing this number, and keep the company away from the just stagnating a certain revenue?
Liza: Going back to what we were talking about earlier. We make it a point to release new products about once a month. It’s just constantly releasing new products, staying on trends, really that’s the key to a lot of our success.
Lana: If we don’t release a product that month, a new one, we definitely notice a dip. You know?
Liza: Yeah, we’ll see it in our numbers, and then we’ll be like, “Hey, we need to get on top of this, release something new.”
Felix: Now what’s considered a new product? Is it a brand new product, or a different I guess color for an existing product? How different is each new product?
Liza: It’s a combination of both. For instance, this month alone we’re going to be releasing three new powders. You know, the same thing as kind of what we’re currently carrying, just in different shades, different colors. And then also this month, we’re release a brand new product, never been on our website before, brand new line.
Felix: I’m sure you have more ideas then you have time to release these products. How do you decide what you guys should focus on?
Liza: That’s a good questions. You’re absolutely right about having more ideas than we do time. It think it’s just paying attention to social media. Seeing what people are using more. If we see like, “Hey, I’ve been seeing this on a lot of accounts. A lot of girls are asking about this.” That’s another thing, we get a lot of request from customers themselves. They’ll email us or message us and say, “Hey, when are you guys going to start creating so and so?”
Lana: Yeah, our business is really, I think it’s community driven. For example, with the new Instagram polls feature. Last week for example, Liz and I wanted to release a rose gold powder. We thought rose gold was super trendy, we thought it would do amazing. On our Instagram I posted three different powders, and I said, “Would you rather have rose gold or this powder?” And then I said, “Would you rather have rose gold or that powder?” Nobody wanted, it wasn’t nobody but about 70% of people voted against the rose gold.
Felix: You’re using the Instagram stories polls to do this?
Lana: Polls on our story.
Liza: We were shocked.
Lana: Yeah, and we said, “Whoa, maybe this isn’t something that people want.” And our community helped us make that decision. Even two days ago for example, I posted a picture of our new nail polish line coming out, and I asked customers to help us name them. Our customers gave us … We had a wide range, we had-
Liza: Over 400 comments right now.
Lana: 300 comments within the first hour of customers providing us with ideas for a name.
Felix: Wow, this is part of your process now, to always go to Instagram and ask them to help you decide which product to release or what to name it? Is that part of the release process these days?
Liza: Yeah, I feel like it’s always been part of the process. But lately with the Instagram story polls, it’s been easier. I feel like it’s really important for companies to engage with their customers and let the customer feel like they are a part of this company.
Lana: And it’s more fun too.
Liza: It’s more fun for us too, and for them.
Lana: I feel like the customer gets excited, thinking like, “Oh, this products coming out. I can wait this. Now I know this is coming soon.” Yeah, they get to be creative too. They get to think about their own names, and they help us so much. I mean, it’s just us two, I think eventually we lose sight of what’s a cute name and what’s not? Because we’re doing it all day everyday, so when we have new voices come in and give us ideas, it’s awesome.
Liza: On that note. If you go to our website, you’ll see under the nail stencil section that we have quite a few there that we have in the upper corner that says created with so and so. Those vinyls were actually created by these Instagram nail artists.
Lana: Yeah, they send us in their ideas, and sometimes we’ll name the nail stencil after them, or credit them in the product.
Felix: That’s awesome. Now, because industry and the trends change so quickly. How do you make sure that you’re not hoarding on to a bunch of inventory that’s not longer going to sell? How do you make sure that you don’t end up in that situation?
Liza: We’ve been pretty fortunate so far, where we haven’t held on to products for too long. We do a pretty good job of from the very beginning kind of knowing what’s going to sell and what won’t. If we ever really do come across that issue, we’ll just, you know. I guess we just put it on sale.
But we have been very fortunate that we haven’t really had that problem. I think it’s because Lana and I are so picky in what we release. It’s so well thought out that because of that we don’t have this issue very often.
Felix: Got it. Tell us about what your day to day is like. When you both step into work in the morning, how do you spend your day?
Lana: We actually just signed a lease on a office space yesterday. We’re so excited for that, but actually the both of us work from our own home. We both [crosstalk] We have our routine, we drink our coffee and we head straight up stairs, and we get straight to work.
Liza: Basically, day to day, I answer every single email, every single email. I start my day off with answering emails. Lana is more the creative one. Any sort of creative, anything on the website, she’s constantly updating that. I answer emails. And then everyday, honestly every single day we pack orders. Every day, seven days a week, we never stop packing orders.
Lana: Packaging, shipping.
Liza: That’s our day to day, and then every now and then obviously we’re testing new products. But you know, it could be twice a week, it could be twice a month, it really just depends on what’s on trend at that time.
Felix: I want to talk a little bit about the website. Is this all done in house? Did you guys hire someone to help you build out the Shopify store?
Lana: No, Shopify made it so easy for me Felix. I completely made the website on my own. The only help I have ever had was with some SEO analytics and stuff like that. No, I built the website completely on my own. We just bought a theme from the Shopify store.
Felix: Do you remember the name of the theme?
Lana: I think it’s Testament.
Felix: What about the application, what kind of the other apps are used on this site? You mentioned LeadDyno, any other apps they use to help power the website and the business?
Liza: This is going sound really silly but one of my favorite applications is called Yo Recent Sales Notifications. Basically when you get on the website, there’s a small window that pops up in the bottom left hand corner, like every twenty seconds or so. It would say, “Lana from Los Angeles just purchased your glamor map.”
I really like this feature, ’cause I feel like if a customer is focused on one page and then they see that little pop up. They say, “Oh, what’s that?” And then they’ll click it and then it’ll take them to the other link, to the other page with that product in it. I feel like it just kind of gives you more. I don’t know.
Lana: Liza loves it.
Liza: She could love it, she’d love it.
Felix: Have you seen, has it played out in terms of actually driving more conversions?
Lana: It doesn’t have the analytics, it’s essentially a free app for anybody that owns it. But I like it in the sense that I feel like it’s showing customers new products that they otherwise wouldn’t have looked that. It’s also showing customers that it’s a legitimate website that other people are purchasing from.
Liza: I’ll be honest, I saw it on a different website and I really, really liked it. I actually did click the little window. That’s when I went to Lana, and I said, “Lana, you need to put this on your website.”
Felix: Yeah, I think it generates some kind of, like there’s activity going on in the website. Doesn’t feel like you’re just here by yourself. I think that that does make a difference in terms of social proof, like, “Hey, there’s other people that trust this website. There are other people that are buying from this website. I can trust them too.” I think that there is certainly value in that. Anything else that you guys like using on the Website?
Lana: We also use S Loyalty. It’s basically a rewards program where whenever customers spend one dollar they receive two coins. The app gives you the capability of setting up whatever deal that you want. If a customer reaches a hundred points, they get a free sheet of this. Or if they reach a different tier points, they receive a bigger free item. They’re really flexible with that, I really like S Loyalty. It’s just a little pop up at the bottom of the website that the customer can click. It tracks all their orders, it tracks their account. It’s all set up for you.
Liza: We also use the product reviews app.
Lana: Yeah, the free Shopify product reviews app comes in a lot of handy. I feel like that also provides a ton of legitimacy, and customers can submit their own manicures. They can submit pictures on the product reviews page. That helps other customers see, “Oh, this nail stencil actually does have this effect and this holographic powder actually does have this effect on this customer.”
Liza: Lana, what’s that one app that you use? When we have the promotion and it says, “Buy two get one free.” And then it automatically adds it to the cart.
Lana: I think it’s by Supple and it’s called By One Get One. It’s about $15 a month. But it comes in handy because the Shopify coupons section, the discount section, doesn’t really offer that many options.
Liza: You know what I’m talking about Felix, have you ever used it?
Felix: Yeah, so the buy one get one, what does it offer?
Liza: It offers so many more things. If you buy X, it will add Y to your cart. If you ever have a promotion that say, “Hey, buy this glitter or get this second glitter for free.” With the current Shopify set up, we the sellers would have to manually go in and say, “Oh my gosh, okay, this person qualifies for a free glitter.” But with this app, you just put in the promotion and it automatically adds it into every cart that qualifies for it.
Felix: It’s like a bonus gift that comes with a purchase they made. How do you decide what that gift should be?
Liza: You know, I don’t know. That’s a good question.
Lana: You know, on Shopify on the home page it tells you people that are likely to buy blah, blah, blah, are likely to buy blah, blah, blah. You know what I mean?
Liza: Yeah, I see that.
Lana: We offer those as bundles. If we see that Shopify is recommending this person buys this with that, then we offer that as the free gift.
Felix: I like that.
Liza: Sometimes it’s random on our own whim, but Shopify analytics does help a lot with that.
Lana: Yeah, and it’s changed so much over the years, and it’s been incredible.
Felix: Awesome, thank you so much Liza and Lana. Twinkled T, twinkledt.com is the website. You mentioned that you signed the new lease on a office. What do you want to focus the attention on next? What do you want to see the business grow to next?
Lana: Now that we’re going to have more room, we’re like, “Yay, we can fill it up with more products.” We’re looking to expand our products. We also have a room in the office that we want to dedicate to creating our own YouTube content from here on out. We feel like that would be so helpful to our business. Hopefully we can hire maybe one employee to start helping us out and growing.
Liza: It’s kind of awkward right now if were to hire an employee to come to our homes. Hopefully with the office then that’ll mean some more help.
Felix: Very cool. Thank you so much for your time again. Thank you.
Liza: Thank you Felix, we appreciate it.
Lana: Thanks so much Felix.
Felix: Thanks for tuning into another episode of Shopify Masters. The eCommerce podcast for ambitious entrepreneurs powered by Shopify. To get your exclusive 30 day extended trial, visit Shopify.com/masters.
Digital products can’t be held, tasted, or touched, but everyone consumes them—from music to videos, ebooks to online courses, and more.
Due to their popularity and ease of distribution, many entrepreneurs build entire businesses around these intangible goods or launch digital product lines to complement the physical products or services they offer.
What makes them especially appealing, however, is that digital products can be created once and sold repeatedly to different customers without having to replenish your inventory, making them ideal for creatives, artists, educators, and freelancers looking for new income streams that require less effort to maintain.
What you need to know about selling digital products
Digital products come with many advantages that make them uniquely attractive to sell:
Low overhead costs: You don’t have to hold inventory or incur any shipping costs.
High profit margins: There’s no recurring cost of goods, so you retain the majority of your sales in profits.
Potential to automate: Orders can be delivered instantly, letting you be relatively hands-off with fulfillment.
Flexible products: You can offer products for free to build your email list, monthly paid subscriptions for access to exclusive digital content, or licenses to use your digital products. You have a lot of options as to how you incorporate digital products into your business.
But digital products also come with specific challenges you’ll need to watch out for:
You’re competing with free content: With digital goods, consumers can probably find free alternatives to what you’re selling. You’ll have to think carefully about the niche you target, offer premium value with your products and build your brand in order to compete.
Susceptible to piracy/theft: You need to take precautions and reduce these risks by employing the right tools to protect your products.
Some restrictions on how you sell: For example, you can only sell physical products through the Facebook and Instagram sales channel, according to their commerce policy.
Most of these challenges can be overcome, however, if you employ the right tools when designing your digital product business.
5 apps for selling digital products
If you’re building a digital product store or are looking for ways to add digital products to your existing store, there are a number of tools you’ll want to consider depending on your needs:
Digital Downloads: This free app by Shopify offers a simple way to sell digital products in your store. Upon purchase, customers can download their file immediately and receive a link in their email.
Sendowl: For more complex digital product businesses, Sendowl comes with a variety of features and useful automation, like expiring links and auto-generated license keys, to power your products.
Single: If you’re a musician, Single was made with you in mind. Not only does it bridge the gap between physical and digital music sales, it also lets you easily include clips on your product page for customers to sample.
FetchApp: FetchApp is another digital download delivery app that offers fewer features than Sendowl, but has a free plan available (5MB of storage) and gives you the ability to attach multiple files to a single product.
Sky Pilot: This app is ideal for building a membership program, letting you sell files or exclusive video streams to customers. Customers can then access all of their previously purchased files through their own customer accounts.
Beyond these digital product delivery systems, there are other Shopify apps to power and protect your digital goods, such as:
Charge Rabbit: This app lets you implement recurring billing, which is necessary to sell your digital products as part of a subscription. You can integrate it with Sky Pilot, mentioned above, to enable subscriptions for exclusive digital streams or downloads.
Photolock: If you want extra protection for visual products like stock photos, this app offers most of the security measures you may need, from watermarks to source code protection.
Disable Right-Click: When your content is your product, this app helps you protect it from theft. You can lock images and text so they can’t be saved or copied without your permission.
Depending on your needs, these apps and more can be used together to help you incorporate digital products into your Shopify store and execute any of the digital product ideas below.
1. Sell educational products like ebooks or courses
If you consider yourself an expert on a particular topic, digital products are a great way to package that information and sell it to others looking to learn.
If there’s an abundance of free blog posts or tutorials on YouTube about what you’d like to teach, you can compete by delivering content that promises not education but transformation. In other words, don’t sell the product—sell the customer’s own potential after buying your product.
You can leverage an existing reputation as an expert to garner attention for your products, or if you’re starting from scratch, you can create and give away free content to generate interest and leads for your paid digital products.
2. Sell licenses to use your digital assets
From stock photos to video footage to music and sound effects, there’s a global ecosystem of licensable digital assets uploaded by creatives for other creatives to use in their work.
By offering licenses to individuals and businesses, you can charge for the use of your photos, videos, music, software, and more in your own store and through online marketplaces, such as stock photo sites. In exchange for exposure, some of these marketplaces can take up to 50% in commissions for every sale, however. If you want to build your own destination for digital assets, you can use Sendowl to power this type of business with unique auto-generated license keys.
When coming up with assets to create, it helps to work backward from the needs of your intended audience. Start by thinking about what kind of assets they’d want to use in order to create products that are actually in demand (and thus easier to sell).
Also, be sure to protect your digital products with watermarks and other security measures, especially if you’re selling photos.
3. Sell a membership for access to exclusive digital products
Instead of selling individual digital products, you can bundle them together and lock them behind a paid subscription to generate recurring revenue.
This approach is ideal if you plan to maintain a growing library of premium content and nurture a community of passionate members. In some cases, paid digital subscriptions can even create an opportunity to directly monetize your existing content marketing efforts.
Since this content is behind a gate that only paying subscribers can access through their customer account, you can also host exclusive content that can be streamed rather than downloaded.
You can build this type of business by using ChargeRabbit for recurring subscription billing and SkyPilot as your digital delivery system.
4. Sell digital templates and tools
Digital products can also come in the form of intangible tools that equip professionals to do tasks that either fall outside of their skillset or take up a lot of time. You can sell digital solutions to the common pain points and needs of a specific audience.
If you already have a freelance business, it might be worth considering how you can turn your skills and services into digital products to create passive streams of revenue.
5. Sell your music or art as digital products
If you’re a musician or an artist, chances are you’ve explored ways you can monetize your talents or the audience you’re building. While t-shirts or prints are always an option, there are also plenty of possibilities in digital downloads.
A musician can sell ringtones of their best songs alongside their merch. Or a cartoonist could turn their art into purchasable phone wallpapers. Since you don’t have to hold any inventory, you can experiment with different formats to see what your audience wants without much risk.
6. Sell your services through digital products
Services tend to pair well with digital products because customers often receive digital products as part of their purchase. A designer will deliver logos. A personal trainer might deliver a workout plan. Leaning into this, you can position certain services as packages containing valuable digital products.
For example, you could offer a consultation for a nominal fee, along with a personalized report or Excel spreadsheet, and then upsell your customers on your services or other products. Or you could offer a free downloadable product to generate leads for your email list, a tactic that many online businesses employ.
If there are common tasks you complete as part of your service business that are easy for you but difficult for your customer, you can consider productizing them to create revenue streams that require less of your time and effort to maintain.
Get creative with your own digital products
Without the need to hold inventory or the overhead associated with selling physical products, businesses based on digital products can be launched and tested with little risk.
There are countless ways you can create your own digital products and incorporate them into your business. With a little ingenuity and upfront investment of time, you can serve up irresistible value that can more than pay for itself over time.
Sell digital products in your own Shopify store. Start your free 14- day trial today.
Think back to the last time you visited an ecommerce store. Do you remember how it looked?
Maybe not, but I bet you remember how it made you feel. Excited? Confident? Happy? Or maybe it made you feel confused or frustrated because it was difficult to navigate.
Ecommerce design is about more than how a website looks—it considers the way a site actually works, the flow from one page to the next, how it tells a story, and the mood it triggers.
Design trends come and go, but there are four timeless visual elements fundamental to creating an effective ecommerce website. But before we get into them, there’s one question I want you to keep in mind:
How do you want customers to feel when they come to your site?
Marketing and design, after all, really boil down to helping your customers experience a feeling that leads to taking action (ideally making a purchase, or three).
Let’s explore the four pillars of designing a modern ecommerce store: trust, visual appeal, format, and navigation. I’ll start off this video talking about trust and 3 indicators I think you should add to your online store today.
Prefer a written version of this video? Below you’ll find a slightly edited overview of the four pillars of effective ecommerce web design.
The pillars of ecommerce design
When someone visits your store for the first time, they may not know anything about your brand, the quality of your products, or your commitment to making the customer happy. Deals might earn their consideration, but they’ll need to trust you before they actually go through with a purchase.
Customers need to know that when they buy from you, they’ll receive the product as advertised. There are three essential trust indicators I recommend every entrepreneur include on their website:
Nothing throws potential customers off more than a website without contact information. Include an email and, if possible, a phone number and a mailing address. This type of information, along with an About page, helps potential customers feel they’re buying from a real person.
A return policy
A return policy not only makes it easier for people to bring back products that don’t satisfy them, it actually increases sales by instilling the customer with a sense of confidence and trust that they can send back an item if they need to.
By adding Shopify Payments, you’ll have a powerful payments service featuring the latest security technology for protecting your customers’ information. Don’t hesitate to use graphics or badges to show your security compliance and all the payment methods you accept.
Perception is everything when selling your products online. People form their first impression of your site within a mere 50 milliseconds. With your Shopify store, making that impression count rests largely on the quality of your images.
Think of it this way—your product photography is like an ambassador sharing the promise of your product online. Your customer can’t try, taste, feel, or wear your product before they buy, so they’ll rely heavily on your visuals to decide if that product is right for them.
Generally, I recommend including product photos with a white background, as well as lifestyle photos of your products in use. Outdoor Voices’ home page features both lifestyle images to communicate the brand side-by-side with more product-centric images to entice the visitor to learn more.
You may have noticed when you purchase a product on a big-box retailer’s website that there’s almost always a white background photo included for every lifestyle shot. Products photographed on a white background are the gold standard of ecommerce photography. That’s because the white background makes it easier to see the item in detail and strips away the branding so your product can appeal to different demographics.
Check out Shopify Academy’s free course on product photography to learn more. Jeff Delacruz will show you how to take your own product photos in a quick and inexpensive way.
Lifestyle photos are important because they allow customers to envision using a product in their day-to-day life by picturing themselves as the model being shown.
Your product photos are a key factor in your store engagement, conversion, retention.
Beyond product photos, you also need to consider your site’s colors and fonts. You may have the most incredible product, but if the aesthetics of your website—specifically its colors and fonts—don’t work, your customers will be put off and may not make a purchase. The look of your store plays into the overall experience of buying the product.
Color is one of the most powerful tools you can use to spark interest and emotion. It can also be used to draw attention to specific sections of your website and lead your customer down the buyer’s journey.
I recommend limiting your site to two main colors—a primary color and a secondary color. To choose my colors, I like to refer to two great resources. I typically go to Dribbble to search for a color palette. For example, if I type in “red” I can see examples of websites that use red in their color palette and decide which options are most visually appealing. I also like to check out Adobe’s color wheel to find out what colors best complement each other.
Here’s an example where the business used simple black on white text with shades of green as their accent colors.
Another key consideration is your website’s accessibility. You want the colors you select to contrast enough that people of all ages and abilities can read and see your text.
Lastly, you’ll want to give some thought to typography. Customers expect to see dynamic and interesting typography on websites, not stale fonts like Times New Roman. While the words you write share information, it’s the typography that communicates the emotion behind that information.
The good news is, with the Shopify theme store, each template comes with recommended fonts. You can use these fonts on your website, or choose fonts from another source.
Like with colors, it’s a good idea to stick to two fonts and create a hierarchy between them. Managing multiple fonts can be tricky for non-designers, and your website can become very messy looking. Using just two fonts simplifies things. Choose one font as your header or title font and another to be your body font.
Supergoop does a great job of selecting a title font that reflects their brand while the body font is simple, clear and easy to read.
A unique header font can be add some flourish to your brand, while the body font will be your workhorse, used for all the other copy on your website, from product descriptions to checkout instructions. While display fonts can have a little more flourish because of their size, whatever body font you use it’s important to pick one that’s readable. Not every font is designed for screen reading and picking the wrong one (a thin sans serif, for example) could drive customers away if they can’t read your site.
Format (desktop and mobile)
According to comScore, nearly 70% of digital media time is spent on mobile devices. Unfortunately, many ecommerce websites and platforms are built with only desktop browsing in mind. This can result in a fair number of lost new sales.
If you’re building your business with Shopify your store is “responsive.” This means the site adapts to different devices and screen sizes, whether customers view it on a desktop, smartphone, or tablet.
When choosing a theme based on mobile-friendly design, it’s best to personally test the purchasing process to see if you’re happy with the transactional flow. If you’re not, there’s a good chance your customers won’t be either. Elements like cart drawers and easy-to-follow mobile navigation are crucial when finalizing your choice.
Your website navigation should help customers find your products quickly and easily.
Good navigation improves the online shopping experience and helps merchants increase their sales and profits. Navigation can also influence the theme you choose. For example, if you have a large catalogue of products, a theme with a bigger menu might be best for you.
Here are some guidelines to follow when designing your store: first, try to stick to only a few menu headers in your navigation. Be clear and direct when labeling these headers—this is no time to be clever. Here are the headers I recommend for top-level navigation:
Shop [Product Category]
Here are three great examples of menus that make navigation simple. The visitor knows exactly what they’re getting each time. As a beginner, I still think you should start with the four listed above but over time, you’ll learn what your audience gravitates to.
Additional navigation links can go in your footer—the section at the bottom of your website. Here are the labels I recommend for your footer:
Shop [Product Category]
Terms of Service
You can always change your headers if you notice they’re not being clicked on, or add a sub-navigation menu to include links to other important pages or product collections.
The fundamentals go a long way
It’s important to keep these four fundamental design elements in mind as you build your store. I’ve worked on dozens of businesses, from startups to massive brands, and these are the constants throughout the process.
Build trust. Make it visually appealing. Think about the device your visitors are using. And keep site navigation simple to get the visitor to the product as quickly as you can.
If you’re interested in learning more about design for ecommerce, enroll in my new course on Shopify Academy.
Shopify Academy Course: How to Design Your Online Store
Creative director Stephan Peralta demonstrates how to design a brand people love and an online store even the most casual browsers want to buy from.
Felix: Today I’m joined by Saadiq Daya from VanGo Vapes. VanGo Vapes creates liquid for inhalable flavor connoisseurs. It was started in 2014 and based out of Vancouver. Welcome, Saadiq.
Saadiq: Thank you, Felix.
Felix: So what are inhalable-flavor connoisseurs?
Saadiq: So we have kind of branched off from vaping. Vaping has a term, and it’s been around for years and years, and so we technically create liquids for vapes, but the way our liquids are a bit different is we really put a lot of emphasis on flavoring, and personally, I believe that the flavor has a lot to do with the journey from cigarettes to e-cigarettes to nothing. I believe flavor is very important, and it kind of ties with almost aromatherapy, where the flavors and the smells put you in a certain mindset, or a certain state of mind.
Felix: Got it, so you mentioned that you wanted to go down this path because you wanted to create the business to create those flavors that you’re talking about, but also leave the consulting world. Tell us more about that. What was the story behind why you guys started?
Saadiq: So, a few years ago, back in 2014, me and my brother actually, we were both working at a consulting firm, and I had been doing that for a few years, and it’s … I started vaping at the time when I was a little bit tired of the consulting side. To be honest, I did it for quite a few years. I found it to be extremely … it was extremely tough. It was a constant challenge to constantly be out there networking and selling yourself, and it was a different style of business, and through the consulting, I found myself.
I enjoyed the industries and the e-commerce quite a bit, and so when I personally started vaping around that time, there weren’t a lot of options in Vancouver for suppliers, and so I started looking into the numbers behind it and looking into the logistics and all that, and one of the most interesting things was that it was a brand new industry. There really wasn’t much out there. I was heavy on the software side, so even on the software side, there really wasn’t anything out there, and so the challenges were very intriguing to me. I wanted to kind of just dive in and see what’s it all about, both with the flavor side, and starting in an industry that doesn’t have … the business practices or the software or the commonplace flow that other industries do have.
Felix: Got it, so you had this experience from the consulting world, and you recognized that a lot of the players that were in the vaping space, vaping industry didn’t have the kind of expertise that your more established world had, so you figured that you come in and apply a lot of your kind of business experience and learnings and essentially dominate or compete in the marketplace.
Saadiq: Exactly, and another thing that we really brought to the table was the innovation aspect. So, internally, one of our, one of the cores that we pride ourself on is the fact that we have a fully custom ERP system that is, for this industry state-of-the-art, and so that’s what has kept us going through the years, and it’s given us the ability to have so many SKUs, but still produce, manufacture and distribute them efficiently enough too that we’re obviously turning a profit.
Felix: Got it, so this is the first business that you’ve started or have you launched other business in the past?
Saadiq: This is the first business that I’ve personally started. It’s the first one I’ve started. I worked with a lot of different startups when I was a consultant, and then one of the largest ones that I worked with was a steel fabrication company. They did structural steel, and I was with them from six months in till about four and a half years, and through that time, we were able to increase revenues tenfold, up till the seven digits, and it was a quite a journey. Learned a lot along the way, and it really taught a lot about the growth, and growing is really where I saw a lot of companies having issues with this.
It’s not a huge challenge to run a company with two or three people. I find that the challenge is going from two to 10 to 20 to 50, because each stage requires different structure, different aspects of the company that you have to constantly keep implementing, and not implementing these things or thinking that it’s the same is usually where the problems happen because you can’t treat a company with 10 employees the same as you’d treat a company with 30 employees. There’s other things that have to come into play, and if they don’t come into play, that company ends up just burning itself out.
Felix: Could you talk about scaling up a business, and it’s not hard when it’s just you yourself, but then once you start scaling, you have to put things in place. What are these things? What do you have to start doing differently as you go from just yourself to maybe another person, then to maybe 10 people? What are some things that you want to put in place?
Saadiq: Well, first thing is procedures and documenting the procedures. I find that as size grows, it’s more and more important to document more and more procedures and housekeeping, so again, in going back to the example you have two employees, and you’re hiring a third. It doesn’t really make sense to have a huge manual with everything about the company in there. Policies online, which policies … it makes sense to have your framework there, but to spend so much time creating a whole huge document for someone that it would be just as easy just to quickly tell them a few times is totally fine.
But, once you start getting into, you know, 10 employees, 20 employees, even things like processing payroll, if you’re using time sheets and you’re using other ways of manual submission, that’s really when you’re going to start to feel those pains, so implementing software for payroll tracking, implementing payroll for HR management, implementing your benefits and stuff like that, so as it gets bigger, it’s more like problems start to get bigger until the point where there’s such a big problem they need a solution.
So, do you need an HR software when you have two people? Personally, I don’t think so. When you have 20 people, you’re just really starting to get into that area, and once you hit 50 people, if you don’t have that HR software, you’re going to have so much headaches that, again, if you’ve a headache in HR, then you’ve got these similar headaches across your company. You’ll feel those pains.
Felix: Got it. So, when you are ready to start doing these documenting procedures, what do you find are some of the most important procedures to document that you maybe, if there’s a low-hanging fruit, like something that all businesses should start documenting when they are starting to scale?
Saadiq: One thing that I always advise people is when you start your company, really imagine where you want the company to be. Of course, there’s some stories where they start, and they never imagined that they would have the success that they did, but I find it’s very important to create that goal, or create that image in your head, because that will help you work towards that. If you are starting your company, and you have no plans on going more than five employees, then you have to build your company around that. It’s the product that you’re creating.
For example, if you’re a baker, document every single step along the way on how you want it, or how you want the work done, and I find it’s extremely important that the person in charge makes sure that it only happens in that way that they’ve asked it to be. When there’s variances from procedures, or when people go off procedure, that’s always when problems happen, especially when looking back. Three months later, looking back at the history of what happened over the last couple months, it’s much easier to find problems when you know that there’s a defined, specific way of doing things, but when you have multiple people doing multiple things, that’s when you’re opening up the doors to way more problems.
Felix: Okay, so you had, well you mentioned you had these business practices that you took from more established industries, and that you wanted to come in and apply it to the vaping industry. Can you dive a little bit deeper into what particular advantages you saw that you had that you wanted to bring into this industry?
Saadiq: So, the manufacturing aspect is where I did a lot of work with before, and so that’s really what I brought into this industry. I created the first version of the software that we use for the manufacturing. Now, the manufacturing is an interesting one, and that was one of the biggest challenges I found when we first started is it has similarities. Creating liquids or creating e-liquids has a lot of similarities to a bakery in the way that there’s multiple ingredients, they have to be specifically measured, and then they have to go through a process.
Now, the thing that a little different about this industry, especially when you have lots of flavors is the number or SKUs. One flavor, for example, blueberry, will come in 30, 40 different SKUs because we have to offer it in multiple bottle sizes, multiple VG ratios, and multiple nicotine strengths, so there’s, all with these factors, one flavor could easily by 40 SKUs. We can’t sit and make every single SKU that we offer, and so the original software, basically it would calculate both the forecast, as well as it would plan out the production in the most efficient manner.
Let’s say for example we have 20 flavors. Each of them has 40 SKUs. Now, each flavor will have a unique set of flavorings that we use in them, and so what the software does is it collects the list of all the unique flavors from the batch you’re creating, and it gives you an easy way of creating all of the flavors at the same time using the flavors one by one. So, it’s kind of a process of manufacturing. Instead of going by batches, we went according to … by work order, and so by just switching that, the software facilitates this, and has increased … the efficiency goes through the roof. It’s not even really feasible to do it any other way, in my opinion, and so that’s, because we’ve created the system, we’re one of the only companies that is able to offer the variety that we do at the level of quality that we offer.
Felix: So this gives you a larger catalog than your competitors?
Saadiq: A much larger catalog, and it gives us much more access to our capital. We’re not tying up a huge amount of capital in inventory just to be able to offer all the SKUs. We have a good mix of on-hand and made-to-order, but it’s like the mixed is taken care of by the computer, by the software, and so through that, it still guarantees or ensures that we’re able to ship out everything within 24 to 48 hours.
Felix: Got it, so you had this software for scaling up the SKUs from the very beginning, or did you add this in after launching?
Saadiq: So, we started at the very beginning. That was the first thing. I knew that that was imperative on the company actually being able to progress, especially also on the R&D side. There’s a lot of R&D that we do. It’s a brand new industry, and so what we do is we take food flavors, and we mixed with vegetable glycerin, and turn it into a form that’s vapable. Now, that whole process takes a lot of R&D because of the different flavors you’re working with, so playing with the flavors, playing with the combinations, all that stuff, and so being able to with the software, we’re not only able to manage the operations, but we’re also able to facilitate the R&D, and so we’re constantly working on new flavors.
We’re constantly putting out new flavors, and again, it’s not a huge strain on the organization, where I feel like what we have found is that other companies have a huge struggle with the balance between R&D and production that R&D is really kept back to the second, on the back-burner as a secondary project, and when they do come up with projects, they’re very restricted with how many flavors they can release, and so we’ve kind of established ourselves as the flavor company because we have a few very unique, very interesting mixes that come out twice a year. People have recognized that, and so as the flavor company, we’ve started to sell our actual concentrates, not the liquid, but the actual concentrated form of the flavors as well.
Felix: So you, what you’re describing so far is about efficiency, right? How do you make your business as efficient as possible for you guys to invest more in operations and R&D and scale up the business, but how do people find out about, that the business and all of your products and all your SKUs to begin with?
Saadiq: So, at the beginning, we … there’s, we were very restricted. This industry is very restricted on how we can advertise, and so the two main things that we focused on, there was a few online forums like Reddit that we became active in, just letting people know that we’re out here, we’re creating flavors, and we found quite a few active members within the forums, and so we sent out the liquids to them to get their feedback and their review, and so that kind of kicked it off.
People were starting to hear about it, that there’s this company that’s creating flavors. They’re focused on connoisseur flavors, and they’re always so focused on kind of the variety, and a lot of other companies would focus on just, you know, oh we have these few candies, or we have the strawberry and cream. We went the other way where we wanted to go more off the spectrum, so we wanted to make sure that we had fruits, but at the same time, we made sure we had tobacco flavors, and we had mint flavors, and we had kind of like the world of flavors, and so through the forums we started getting known.
There were also quite a few Facebook groups for vaping. Each province has its own group, so we were fairly active in there, and that helped us both network and get the product out, and then through those two in combination, we started getting into retail locations, and so we would reach out to them, and a lot of times, they had already kind of heard of the name.
Felix: Because of your activity in the community.
Saadiq: Exactly. So that, the activity in the community, the activity in the forums and the Facebook groups, those were really the base, the backbone of the beginning in getting out there. We’re not allowed to do Facebook ads. We’re not allowed to do Google ads, so it’s very restricted, so we really have to be out there, be active, and get people’s feedback. That was a huge part of it is working with micro-influencers on getting their feedback, and helping us get the product out.
Felix: So how are you approaching people, let’s say, we’ll start with Reddit. How are you approaching them to get that feedback early on? Were you just creating a post or were you direct messaging people to see if they were interested? How were you beginning down that path with Reddit?
Saadiq: So, for Reddit, we didn’t do as much, but what we is there were a few members that were identified as being vape specialists or vape reviewers, and so we would reach out to those people as well, anyone … as well we would keep an eye out for people who were very active. They were constantly posting about different liquids they had tried, different hardware they had tried, and so we would reach out to these people as well, so we’d look for either people that were publicly doing reviews or people that seemed to go through quite a few liquids, and who kind of knew what they were talking about.
Felix: Got it. So you would approach them, and then you would just, how would you present yourself?
Saadiq: Oh, we would just tell them, like most of the times we would just reach out, very straightforward and say, “Hey, we’re a manufacturer in Vancouver. We’re releasing a few liquids, and we’d really like it if you were able to try our liquids and give us your thoughts,” and 99% of the time, people would say, “Yeah, no problem.” I mean, it’s very rare people are going to say no to free. So we would … Yeah, we would reach out to them directly, and message them, and they’d try it, and then usually we wouldn’t really have to ask for much more, as after they’ve tried it, they would usually give their feedback to the public. So in a way we were taking a risk because if they didn’t like it, they would say that. “You know, these guys sent me some liquids. It was terrible. I didn’t like it,” but we rolled on, we stood behind our product, and we hoped that they would take it as well as we hoped them to.
Felix: Got it. So they would post a review back onto those subreddits, and what was your interaction there? Were you guys jumping into the thread and responding back to comments? What do you do usually after an influencer leaves a review publicly?
Saadiq: It really depends. A lot of times, we would, we wouldn’t really comment on it. We wanted everything to be as organic as possible, and so especially with the Facebook groups, commenting on it would bring it to the top of the group, and so sometimes people looked at it like too much. We try to keep the groups as organic as possible. They don’t want it to be full of spam, and so we tend to keep our activity to being authentic, so if we have something to put in, if they put up a review, and there’s something for us to say, we will say it, but we don’t just go in there just to say something for the sake of it.
Felix: Got it, and then these Facebook groups, were they, were you also approaching individuals, or were you just posting in the group itself for feedback?
Saadiq: So, at first we started posting in the group, and then we ran a few contests, actually. The contests, we did quite a few at the beginning, so the way we would [inaudible] the contest is we would first approach the admin, make sure that they’re okay with it, and make sure that they’re okay with us running the contest, and then we’d create a graphic, and it would be very simple. At the beginning, we did try a few more. We put up a picture and say, “Like our page, and comment on this post, and tag two friends,” and so we’d have all these requirements, but over the years, we’ve kind of scaled the requirements back.
So, the recent contest we did in August, it was simply just comment on the picture. What we did is we put up a picture of nine different bottles. There was three sets of three. One was a minty path, one was fruity, and one was decadent, and then we told them, “Look, just comment which pack you’d like to win,” and so they were just going on commenting that, and then at the end of the contest, we will just pick however many people at random, contact them and send them a discount code for the website, so that they can go on and claim their prize, and then they’d go onto to the website and collect their prize.
Felix: How long were you guys doing this for, this initial outreach through Reddit and the Facebook groups?
Saadiq: So, we actually have never stopped. We’ve … that’s one of our core marketing strategies is through the Facebook groups and these forums. We don’t, we’re not as active on Reddit any more, because I find that it really requires an authentic or organic … It requires authentic content, and it requires constant engagement. With the Facebook groups, it’s a little bit more informal, and we’ve been working with them for many years now. A lot of them are the same admins, and so we’ve established fairly good relationship with them, so usually every, let’s say two to four months, we’ll let them know that, hey, we want to do a contest, and then we’ll run the contest similar to what we did before, and like I said, we’ve gotten … become simpler with the contests, making it easier for people to join, and then in between the contests, we try to stay active in the groups.
We, you know, we’ll give feedback. The groups will have anything from a new juice to someone posts a picture of their vape, and they say, “Okay, I don’t know what to do. It’s not working,” and so we try to be active, and stay on top of the groups and kind of just remain visible in the groups, and then every, let’s say one to two weeks, we’ll do a product shout-out. So, we’ll put up a product of ours, we’ll put up a little description, and we’ll ask for some feedback or thoughts on something related to the product. We might ask people who’s tried it or what do you think of the white grape that we put in here, or something along those lines.
Felix: So, you can sustain a business just focused on Facebook groups?
Saadiq: To an extent. I mean, we would, like on the other side, our main business is wholesale, so we do trade shows and we do quite a lot of events, and we work fairly closely with the stores that we do, so I feel like our success has been a combination of our efficiency, our relationship with our customers, our commitment to the brand, and then the marketing strategies we’ve done through the blogs and through our Facebook groups.
Felix: Right. I guess another way to ask this question is if someone out there is looking for a marketing or sales channel for themselves, is Facebook groups a profitable kind of long-term plan if you were just to focus on just that channel? If you weren’t looking to scale up and go down the avenue of wholesale, and you just wanted to build a profitable business, can you just focus on Facebook groups based on your experience?
Saadiq: Yeah, yeah it’s very possible. It would depend on the number of groups that are out there, and the type of groups. One thing that was interesting about this industry is because there were no, there were not that many other avenues, and because it was such a new industry, people were attracted to these groups, both for information and as almost like a news source of what new products are in their local market, what are people doing, what are they talking about.
So, to be honest, I don’t know how well they’d do in other industries, and the one thing I have noticed though is that over the years, the groups have become less and less active, so they were a lot more active when it was subculture, when it wasn’t a mainstream. Now that it’s becoming more and more mainstream, I’m finding that the activity is going down less. It’s getting less than what it was once upon a time.
Felix: Right. Now, how large are these groups that you’re working with?
Saadiq: The average group is about 1,500 to 2,000 members, but I have seen a group, there’s one group in the U.K. that we work with, they have 25,000 members.
Felix: Have you guys ever thought about, hey, let’s just create a group of our own. Is that something that you would do?
Saadiq: We’ve played with the idea before. We were planning on launching something called startvaping.com, and so under that banner, we were thinking of launching a group to be like a support group for anyone who is starting to vape, so anyone who’s got questions, anyone who wants to start, anyone who has, you know, they’ve been vaping for a bit and now they’re kind of confused, just kind of a support group, not tie it to any geographical region. A lot of the groups that are out there right now is like, for example, BC Vapers, Edmonton Vapers, Alberta Vapers, Ontario Vapers, and so with startvaping.com, we may start a group, and that would be more of a national group for support.
Felix: Now why are the groups so geographically … I guess designated?
Saadiq: I think for, again, for this industry, especially a few years ago, there was so much saturation in the industry where every locality was totally different, even actually from a manufacturing point of view, it’s interesting to see that for example, in BC, we sell the most tropical fruit flavors, but then you go to Alberta, we sell loads of heavy menthols. You look at Ontario, we sell loads of creams and custards and stuff, so I think the preferences vary province to province, as well as the products available. Four years ago, we were only available in BC, and so we were mainly focused on BC vapers.
When we started to go into Alberta, then we started to reach out on to the Alberta Vapers page, but I find that a lot of these groups, they want it to be products and people that are more local, right? So they’ll put up a question saying, “Where can I find this juice?” For example, they might see a VanGo juice, and they’ll put up a picture, and they’ll say, “Hey, where can I find this juice locally? I want to go pick it up right now.” So, it kind of causes itself to become localized groups. There are national groups, but I haven’t found, I’ve found that they were never as active as the localized groups.
Felix: Makes sense. It’s probably more specific to that group’s problems or questions. That makes sense why the more specialized ones are more popular, or more active. So, is it worth targeting all Facebook groups, or is there some kind of criteria that you like to look at to determine if you should be working with a group or not?
Saadiq: It’s … It really comes down to resources. You know, I find that just finding groups and putting up pictures doesn’t really have much value. It’s just spam. I find that it really only brings value from the groups if you’re an active member of the group, if you’re a known member of the group, so being active and contributing to discussions, contributing to questions, contributing to the overall activity in the group, commenting, things like that.
That makes you a valued member of the group, and then you’ve got some more credibility, where, for example, on BC Vapers, John Smith comes in and posts his product, and we don’t hear about him ever again, it doesn’t really have any value. Yeah, okay, we saw ads, but it doesn’t really have any value, and if he was to come back every week and just post up a picture, it would be considered spam, and oftentimes the admin would just kick them out.
Felix: Can you just delegate this to a team member, hey, you’re focused on … Can’t you just, can you just hire out for someone to be responsible for that? Can you scale that up that way?
Saadiq: We have. We do have someone in-house actually that part of his job is to stay on top of the groups, so once a day, he’ll kind of summarize, in a way he’ll summarize kind of what happened in the groups that day, and then he himself will make sure that we’re active, so we have an account called Vinny Vango, and that’s the account that is our kind of anonymous face company. So, me, myself I’m fairly active, as well as my brothers, and then we have Vinny, who is more of like associated with the company as the company face, and he himself is active in the groups as well.
So. he’ll comment and he’ll give suggestions and stuff like that, and it’s a user that we kind of bounce around. Sometimes, I’ll use it, but there is someone who is assigned to it full-time. A big thing is really though knowing what they’re doing, so if they’re going to hire out, they can do that, but just make sure that they remember that this person is representing them in that group, so making sure that even what they say, the comments they do, the comments, that the type of comments they put reflect the company’s goals and values.
Felix: When you approach a group, the administrator, how do you, what’s the pitch like? How do you get them to essentially agree to work with you?
Saadiq: Usually, to be honest, we’ll reach out to the administrator first, and we’ll say, “Look, are you interested in trying some of our products out?” I find that if the administrator is behind the product, and they back the product, they support the product, it goes a lot smoother. So, oftentimes talk to the administrator first, see what their thoughts are, and definitely don’t step on their toes. Some of them will say things, like there’s a group that we’re in.
It’s a good group, fairly active, most of the time there’s a lot of good content, and they have a rule that you’re only allowed to post company-related items before three o’clock on Thursdays. Obviously, make sure that you respect their … you respect their boundaries, and respect whatever they ask you. Just to get into a group … To get into a group, anyone can join a group. If you want to work with the group, I would say talk to the admin first. Try to get them on your side. Make sure that they’re happy with what you’re trying to do, and then go from there.
Felix: Yeah, I’d imagine that there’s probably your competition or other people that are selling to the same customers that are also wanting to work with the administrator, and promote their products in the group. How do you, how does that work with what you’re trying to do?
Saadiq: Yeah, we have no problem with other people advertising, and none of the groups are exclusive to any one company. So, there are, the competitors do promote in the similar groups as well.
Felix: Got it. Now, this approach of focusing on Reddit and then mostly on Facebook groups to the point where you were able to get the backing of the community to eventually approach retailers and sell wholesale, how long did this take? What was the timeline between getting started with your first micro-influencers through these communities on Facebook and Reddit, to the point where your product starts to show up in stores?
Saadiq: They were both very, there were roughly around the same time, to be honest. We joined BC Vapers in, I believe it was about October of 2014, and in December of 2014, we … There was a new member in that group actually, Digital Vaper. They were also a member in that group, they announced that they were opening up their shop, and so being members, we saw that obviously, and so we approached them, and we said, “Hey, can we work with you? This is our product. We’d like to see where we can take this,” and so we started working with them.
So, it was about two to three months, two months after we had joined the group and start soliciting that we were able, that we got into a store, and then from there it kind of grew. Again, the group helped, the groups helped a lot because a lot of the store owners were in the group, and so as more store owners came on board and were saying good things about the company, good things about the product, it became easier and easier. People would see it, and then customers would go to these stores. They’d take a picture of the bottle, they would put it in the group, and so the more visibility we go, the more traction we got.
Felix: That’s awesome that the customers, and the business owners that you’re going to sell to are both in the groups, so they’re seeing that kind of … that validation from the community that they like your products.
Felix: Now, what’s your approach to growing this wholesale business, other than people just kind of discovering and wanting to carry it. Do you actively try to open up more accounts that might not have found you through the groups?
Saadiq: Yeah, no we, so we have hired a few people over the years. Right now, so we have one person in-house. He’s our Director of Sales, and so he basically reaches out to people to help them kind of get on board. At this point now in Canada, I’d say most of the shops or most of the vape shops have heard of the brand, so it’s more of a, it’s more that the … someone from internally we’ll reach out to them, introduce ourselves, send them some samples, but the process is much smoother because it’s a known brand.
It’s a recognized brand, so we are constantly outreaching, and another thing we do is trade shows. We do all the Canadian trade shows, and now we’re trying to, we’re starting to branch out, so we’ve done three in London, we did one in Atlanta, we did two in Seattle, so we’re starting to reach out internationally now, and so the groups were more a Canadian thing. As we go into the international market, we’re shifting more to trade shows and distributors.
Felix: Right, so now that you are … really started off by being part of this exploding subculture, and now it as you mentioned is becoming more mainstream, what does this typically mean for how you run the business because it’s gone from a subculture to becoming more mainstream?
Saadiq: Well, we’ve always tried to run the business as business-like as possible, so right in the first set … In our first software, we’ve always been keeping track of batch numbers and expiration dates and all these kind of different things that we thought would be necessary, and now as the industry has become mainstream with the regulations, a lot of these things that we project, predicted many years ago have actually been put into the regulation.
So, for example, on the bottles, we’ve always had little poison symbols, and we’ve had the warnings, both in English and French. We’ve had the nicotine value, we’ve had bar codes and batch numbers and stuff. These are all being required by November, I mean, sorry. In May, April or May, the government released their regulations, and as long as you were pretty close, you could keep your products on the shelf, and so we were pretty close to what they required.
They gave us the six months window to get everything up to standard, and so in November, it’s a strict deadline. Anyone with any sort of content, any sort of products that are not compliant will be disposed and potentially fined, so as it’s become more and more mainstream, we’ve definitely tried to make sure that we’re always professional, but overall, we’ve always tried to keep that since the beginning.
Felix: What about the marketing and messaging when your category does become more mainstream? How does that change?
Saadiq: I think it just, it opens the doors to more avenues, as the market size has grown, it’s … you know, four years ago, it didn’t make sense to do things like billboards, where now it’s starting to get to the point where there’s enough of a market out there where we can justify some of these more, larger projects. So, in December we’re launching startvaping.com. It’s a website that’s geared around helping people to start vaping, so information, FAQs, some myth-busting, kind of just a basic resource, and so with startvaping.com, we want to do more of a mainstream approach with some … with ads and billboards and stuff like that to just get the name of vaping off the ground, especially right now.
I think that there’s a lot of, one of the biggest problems, one of the biggest challenges this industry has is the misinformation, and so getting into the mainstream age, I think it’s very important that the true information is being spread out there, especially for vaping. It’s been tarnished so many times in the past. I think that the biggest problem is just the misinformation.
Felix: Got it. Can you give us an idea of how successful the business has become? How much has it grown to?
Saadiq: Yeah, so in 2014 when we opened the lab … No, sorry. So 2014, summer 2014 is when we officially started. We started getting the recipes, the R&D, the logo, all that stuff. 2015 is when we got the lab that we’re at right now, and from there we’ve grown to about 20 employees. We’re in the seven digits revenue, and we’ve got four websites. So, we’ve got a U.K. website, a U.S. website, Canadian retail, Canadian wholesale, and then in the next few months, we’re launching vangoflavors.com, that will be just selling the actual flavor concentrates, not the e-liquid, so this is for both manufacturers of nicotine liquid, as well as CBD liquid. They’re very interested in the flavoring aspect of it, because we’ve been doing flavoring for inhalation for so many years.
Felix: Now why do you need different websites rather than just having it all concentrated onto one website?
Saadiq: For the regions?
Felix: Yeah, for the regions and then also you mentioned your new product line. What’s the advantage of having multiple websites?
Saadiq: Well, so for the regions, we had no choice. I mean, we were playing around with the idea of switching over to Shopify Plus. I think that that’s in the next few months, we’re going to be looking at that. Right now, the reason we have multiple websites is the U.K. and the U.S. both have different regulations for the products, so the products have to look a bit different. The products are different, the pricing is different, so we found it easier just to have several websites to take care of all this.
Felix: Got it, and how’s the websites, how are they designed? Do you have an in-house team or do you hire out to an agency for that?
Saadiq: Yeah, so we have a … we have an artist that we have full-time working for us that just creates art, and then we have a marketing firm that does the actual web, the website creation. There’s also a firm that we use, an agency. They’re a Shopify Expert, and so they do the actual … any time we need to do coding or anything unique, they’ll help us with that.
Felix: Got it. Now, when you look at the design of your website or the ones that you want to launch, what are some of the key things that you want to make sure you have on your site?
Saadiq: The most important thing for us is it has to be visually appealing. When you come on to the website, it has to be inviting. It has to be a look, it has to look beautiful, and so we’re really anal about artwork. Artwork is, you know, we’re constantly working on new art work. We’re constantly working on new content. We change our banners on our website at least once a week. We’ve got flavor of the week, and I feel like one of the biggest, the most, one of the most important things of a website, of course it has to be fast, but it has to be very visually appealing.
It has to be when you come in there, you feel like you’re almost in a museum or a art gallery. You’re like, “Wow. I just,” you’ll take those few seconds just to take it all in, and if you come to a page that looks garbage or it just looks ugly, it doesn’t matter how fast it is. You just, you don’t have any … you just don’t feel like staying in that website for long, so I feel like the visuals have a lot to do with it. Just nice colors, nice graphics, nice pictures. Yeah, images and pictures.
Felix: Got it, and what about applications? Do you use any other Shopify apps or just tools to help run the business?
Saadiq: Yeah. We do a lot. Actually, that’s what’s kind of kept us, that’s what brought us to Shopify and has kept us. We tried many different platforms before, and the plugins and the apps were just not that good. Shopify has a huge, awesome ecosystem of developers who are creating amazing apps, and so we use, for example on the wholesale website, we have a pricing one, and the pricing one is really awesome because we can just tag different customers with different tags. They all see their own pricing.
Felix: Is that Supple Pricing? Just want to make sure I get the app.
Saadiq: That’s, yeah, Supple. So, we use Supple quite a bit there. Their wholesale pricing is amazing. It’s the best one we’ve played with. They don’t create new and different variants. We used a few of the Bold apps for pricing and for sales. They have a few that we use, actually, even the Upsell one. We have Liquid Lotto, or Liquid Loot, I believe. It’s a points program. That one does really well. We’ve got a couple sliders, we’ve got an Instagram plugin. Shogun is another one actually that we use quite a bit for creating the actual pages. It helps go around kind of like the overall restriction you have, or the way that the product page looks like by default. With Shogun, you can create the page to look like whatever you want.
Felix: Got it. Now, what are you focused on these days? You mentioned the Facebook group and the activity there. You guys jump in every once in a while, but your main focus now is in wholesale. How do you just spend your days though?
Saadiq: Myself personally?
Saadiq: For me personally, my day is split between in running the company, so meetings. A lot of meetings. Accounting, marketing, production, shipping, kind of just watching over everything, making sure that the … operations are going well, and then whatever time I have left for R&D and reaching out and talking to our customers, making sure that everything’s going smooth, that they’re still happy. I do a lot with R&D nowadays as well. We’re always working on new flavors, and the flavor side of it is … it’s quite a process. So, for example, just one, like the flavors that we’re releasing at the end of October, we’ve been working on them since last August.
Felix: Wow, so it’s not just like something that’s easy to do. You got to spend a lot of time on R&D. Now, what do you want to see the business be this time next year?
Saadiq: Hopefully we’ll be in four more countries. We’re, this year in November we’re doing our big official launch in the U.K., so that’s going to be huge. There’s a massive trade show that’s happening, and so we’ll be doing a huge thing over there, and then as we go into 2019, we’re going to be going into France, Germany, Spain. So, we’re starting to get into more of the European countries. So, the goal by next year at this time would be to be in four more, four to five more countries between Greece, I mean Spain, France, Germany, those kind of places.
Felix: Beautiful, so vangovapes.com again is their website. Thank you so much for your time, Saadiq.
Saadiq: Appreciate it. Thank you, Felix.
Felix: Thanks for tuning in to another episode of Shopify Masters, the e-commerce podcast for ambitious entrepreneurs powered by Shopify. To get your exclusive 30-day extended trial, visit shopify.com/masters.
Felix: Today I’m joined by Misha Tanenbaum from Edit Stock. Edit Stock provided unedited film projects for students to practice video editing and was started in 2013 and based out of Las Angeles. Welcome, Misha.
Misha: Nice to see you.
Felix: Nice to see you too. So we were just talking off air about how you launched this business with $4,000 in 2013. You said that it was the most you would put in, too, because you weren’t sure it was going to work out. So tell the story. What did you, first of all, do with the $4,000 when you first started the business?
Misha: So I’ll just start with what I did with the $4,000. I actually didn’t even want to spend $4,000, I wanted to spend $1,000. I had built up the Shopify site to sort of look the best that I could. Then I hired my close friend to create a logo, to create, to rebuild the look of the site, to make it sort of presentable, and to work out any kind of technical portion of it that I wasn’t capable of doing in Shopify. Shopify was very different five years ago, it’s changed a lot. It’s gotten a lot better. Basically, my goal was to spend as little as possible because I was fairly certain that I wasn’t going to be able to make a living out of it, and I was fairly certain … I just thought to myself, like, I don’t want to lose any money on this. I was really just trying to hedge my bets. I think that was probably the best decision I made.
Felix: Interesting, because I think it’s a little bit different, maybe polar opposite, actually, than what you hear a lot from the entrepreneurship kind of circles, which is you’ve gotta’ just go all in, put all your money into it, dive right in and basically have no backup plan. But you had a safety net, you had a safety net and you didn’t want to overinvest and then lose everything. So what do you think was the advantage of that approach?
Misha: Yeah, and I also want to say that it was a fairly reasonable and small amount of money. It’s not like $4,000 was my life savings at the time. I had a $100,000 a year job, I was doing well. So it wasn’t a huge deal. It wasn’t a huge investment. Mostly, I was pretty sure … I definitely did not want to leave my job until I felt pretty comfortable that my store was going to make money. I don’t know why, I didn’t exactly believe that it would. But I just wanted to do it so bad.
The reason I wanted to do it, there is an important entrepreneurial lesson here, I had the idea for Edit Stock years before it started. Probably three years before it started. I did an interview, a webinar, about how to be an editor with someone, and I told them my idea, and I said, “Boy, someday I’d really love to do this.” Then I did nothing. Then three years later, the person that I told the idea to did it, essentially. They opened a website called Film Dailies.com, or Stock Film Dailies.com, something like that.
I got the newsletter from them, and actually, what I felt was not … I didn’t feel any anger towards the other person. I felt shame because it was that I felt sort of like I was a coward about it. It became, in that moment, more important to try and fail, than it was a fear of failure. That’s … It’s just so important for entrepreneurs, which is basically like there is no such thing as failure. You just really … You gotta’ go for it and try, but also don’t waste all your resources. But absolutely go do it. I can’t believe that it took me that long to get started, and the other website, the competitor, at first I begged them to join me and do it together, and he said no. Then like a week later, he closed his company, and that was it, that was the end. It literally only lasted one week. Mine has lasted now for five years.
Felix: Wow. I like that, that you’re saying that feeling of shame and cowardliness is what drove you … It basically stuck with you where you’re more fearful of that than the fear of never having tried at all. So when you were making this decision that I’ve got to at least give it a shot, what were some of the first things that you did to start setting up the business?
Misha: I highly recommend reading the book The Lean Startup, which probably every entrepreneur has heard of at this point. Basically, I read that, and then my college roommate became quite an impressive entrepreneur himself, and was building a business at the time. We talked about what would be my MVP, my minimum viable product, and I built … The website started out with just one commercial and one short film. The short film … So just to clarify, I sell movies, but I sell the raw footage, the unedited footage.
So a company hired me to shoot a film once, and they gave me $6,000 to shoot the film, but I spent 10. I don’t want to be a director, I don’t want to be a producer or anything. I just like editing. So I didn’t want to lose the $4,000. I sold the movie back to my film school, the raw footage, for basically $4,000. I thought, my god, there has got to be other film schools out there. So that’s where the idea came from. Then to build the actual … The idea for Edit Stock. Then to build the actual MVP, I spent that $4,000 to set up what the site would look like and then just posted two films, my film, which I got access to for free, and then a filmmaker who I was introduced to gave me their commercial which was shot for nothing, you know, just a few hundred dollars. I just started selling it right away.
I guessed on the prices. The first customer that I had buy something from Edit Stock said, “I want to buy this for my school, your price si $50, is that per student, or for the whole school?” I said, “No, it’s the whole school.” She said, “Do you have any more? I want like 10 of these.” So the second customer I talked to, I said, “The price is $100.” They said, “Do you have any more?” The third person I talked to, I said, “The price is $200.” Again, they were like, “Do you have any more?” So finally I settled on a price of $400 a project for a school. I found that price point, basically, through trial and error, basically through hiking the price until someone said no.
I actually did the same thing with the individual projects, because the way … I sell a digital product, so that means that my cost of goods isn’t fixed, it fluctuates. So I pay the filmmakers a percentage of whatever I take in. For example, they earn 30% of the sale price. So if I sell it for $100, I get 70, if I sell it for $10, I get seven. So for me, the goal is, always, make the sale, and collect the most amount of money possible. So anyway, it was a whole process of trial and error. Also, I had no infrastructure, I had no other monthly service fees, other than just Shopify, which I think was $20 or $30 a month or something like that. So it was pretty easy to not fall into a pit of debt.
Felix: I would think it’s a positive, because this approach to figure out pricing, a lot of people are always stuck and aren’t sure how much to charge. You took a very … It sounds like a very manual approach, but direct feedback from the customers. Were you talking to them on the phone or something? Like, how were you able to kind of throw this price out there, and then get the feelers out of it? How long did it take you to figure out the max that you could charge?
Misha: Well, the first three months of Edit Stock I earned $100 in sales, total, in three months in sales. In part, nobody was visiting the site, but also because my prices were just ridiculous. I was selling short films to people for, you know, $999, or something. Okay, the way that you would do it nowadays, and the way that we test, for example, coupon codes, is of course, ABB testing. With just Google Optimize you can do it for free. But the way that I did it then was talking to customers. A great piece of advice that I got early on was to talk to 100 customers. The reason that you pick a number, the reason that you pick 100 is because it has to be more people than your direct circle of friends. It has to be people you don’t know, it has to be real, actual random customers who are coming to your store. You have to speak to them in person, and just try something. Just put it out there. You know?
Felix: What if you don’t have 100 customers yet? Is there a way to kind of get the ball rolling, even before then?
Misha: You gotta’ kind of man up and go find 100 people. You have to have … If you don’t feel like you can get 100 customers, you don’t have a company anyway. So you gotta’, whatever it is, go out on Facebook, or go to a conference. For example, I went to a lot of conferences, like the University Film and Video Association, UFVA, the National Association of Broadcasters, the … I don’t know. Oh, the Student Television Network, which is high school teachers.
So I went to a lot of conferences, I had face to face interactions with hundreds or thousands of teachers, thousands of students. You have to get in their face. The idea of … I also had this idea early on, I don’t want to pester people with my newsletter. Now, it’s such a ridiculous concept to me that you wouldn’t build a newsletter immediately. Now, I’m actually building a new company, and I’m starting to collect email addresses for the newsletter and announcements. We don’t even have an MVP yet. Even with Shopify, as you’re building your store, you can lock your store and collect email addresses on the face of it.
You should absolutely be doing that, because as important as it is to figure out your actual product, you will not know what marketing messages work on your audience unless you’ve literally delivered the pitch 1,000 times. So I’ve refined my pitch, some people call it the elevator pitch. But just from discussions at conferences, I have such an approach, such an answer to every question. The answers to my questions are based on hearing form so many customers from doing surveys for people. If you have no product to offer, which I think was part of your question, which is how do you get 1,000 customers … Or, how do you talk to 100 customers if you don’t know 100 people?
Basically you have to offer them something of value. So for Edit Stock, for example, you could write a blog post that, you know, you want to learn about what the best computer is for video editing? Sign up for my email and find out. Or, interview me for five minutes and I’ll share that with you. In the case of Edit Stock, actually, we gave away a free scene, just three clips, and it was three clips in exchange for your email address. Then we started sort of a set of welcome newsletter campaign, which, again, you can set up in Mail Chimp for free. First 2,000 members on Mail Chimp is free, unless they’ve changed that.
Felix: I just want to kind of recap. So you, if you’re starting from scratch, you have nothing yet, or maybe you do have a business, but you just don’t have a good way to communicate with them, you offer them something of value to get their emails, get them to opt in. Now you have the channel of communication to talk to them. What are you asking them? What are some key questions that you asked early on that were kind of game changers for your business and the direction that you took the company?
Misha: Basically I asked people … The first question is like, who are you? Basic demographics, how old are you? Are you a student? What’s your job? How do you see yourself as an editor? Are you a beginner, is this a hobby for you, are you a professional looking to advance in your career? Then you would ask them questions like what’s your goal in editing? What’s your goal in life/ What’s your biggest obstacle to that goal? I know these questions may sound sort of broad when you’re thinking about your product. But one just terrific piece of advice that I got from … Actually, from the Shopify blog, which I get, you know, every day, or every week, I think it’s every day, is this formula.
The formula is Mario plus flower equals fire power. So Mario is your customer, flower is your product, and fire power is what they want. What you gotta’ sell is fire power. You don’t sell the product. So like for example, I may say something about my films that I sell, like this footage was shot on the fanciest camera in the industry. But that doesn’t necessarily resonate with the customer the same way that if I addressed the fire power portion, right? The best camera is talking about the product. But if I say something to them like, build the career you’ve always been looking for, that speaks to the fire power. That’s what they want.
Felix: Right. You want to sell the transformation and what they’re getting on the other end of getting and using your product, not the product itself.
Misha: That’s exactly right. That was something that I did not understand initially. I wish I had gotten to that understanding faster. But now I feel totally, I look at … It’s like I can look at a product offering in a totally new light.
Felix: Got it. Okay, so you are using these kind of questions to understand your customers, and how do you implement this into your marketing? Where does it actually spill out into the marketing and the messaging back out to your prospective customers?
Misha: On the Edit Stock main landing page, if you were to go there now, it says, “Build your editing demo reel” which is the thing our customers want the most. The tagline below it says, “stop waiting for your big shot, and own career opportunities.” So what we heard back from our customers is actually not that they feel insecure about their abilities to edit, which is something that you would maybe hear from a student. But what we heard back … That’s what you would think Edit Stock customers are, they’re the students. But they’re not. The students receive the footage from the schools. So the schools, the teachers need to hear a different message.
The individuals buying things on Edit Stock, the person that they were is usually someone who is already a professional in another field, like maybe they’re a graphics designer, or maybe they’re an editor already working in, say, reality shows, and they already feel capable of editing a scripted movie. But what they feel that they’re lacking is the opportunity to show a director what they can do. So by buying Edit Stock footage, what they’re doing is giving themselves the opportunity, as opposed to needing to go out into the marketplace with no demo reel, and try to convince someone just verbally, I can do it.
Felix: So there is a couple of different customers, is this what I’m hearing? Different customer types? Because it sounds like you’re saying that a lot of the …
Misha: We have basically two different market segments. Market segmentation is a very important thing for your audience to hear, for the audience of this podcast, because if you … So the more you understand who wants your product, the more you’ll understand that there is a pattern among them, that they fall into different groups. So for example, telling a teacher that a teacher needs to build a demo reel isn’t a message that resonates with them. A message that resonates with your teacher is when the class ends, give your students inspiring material so that they want to stay after class and work, so that you’re not just giving them something they can throw away. You’re giving them something that they can build their career out of.
You want to give them the message that their students are going to get real world training, real world examples of things. So that’s a very different message than to an individual. Or a school might be interested in hearing something about multi user licensing, right? Or that you can place an order with a purchase order, which takes a month for me to receive. That kind of messaging an individual doesn’t need to hear. If you put that all on the same page, on the same webpage, you could very easily turn off half your audience. You want to be as focused on each segment as you can be.
Felix: How do you do that? How do you set up the segmentation so that you’re hitting the right type of customer with the right message?
Misha: One good way to do that is by making different landing pages. One piece of advice I would give someone is one page, one purpose. So each webpage that your user goes to has to have a very specific purpose of what you want them to do, or who the person is and what information you want them to garner. So for example, on Edit Stock, we have in the upper right corner, a button that says EDU. Actually, during the site rebuild, one of the main things that we did was get rid of all of the top navigation to the website. There is none. There is only one button that says EDU, or on the landing page, there is only one place you can go, which is view the films.
All the links on the landing page go to view the films. If you were to set up a new site, the only navigation you should have at the top, specifically for a service, is pricing. That’s it. Whatever helps you sell. You could have a tab for testimonials, you could have a tab to request a quote. You could have a page for just schools, or business to business. But what you don’t want up in your main navigation is like your blog, or like your tutorials.
The reason is I spend all this money, and time, and effort, and advertising, and focus to try to get the user to do a very specific thing, which is walk through a very specific funnel, and answer very specific questions that we know that they have along the way. For example, our landing page, the purpose of it is to educate the customer about what Edit Stock is, because we don’t have a product that you would just by default know what it is. When you go buy a Tshirt, you know what a Tshirt is, you don’t need any explanation. When you go to Edit Stock, you don’t necessarily know why it’s different than other stock footage, or why it’s … Or even why it will help you become an editor. So there needs to be some explanation.
Felix: So you set up the specific landing page, so that each landing page is targeting one customer type, and has only one outcome that you want them to leave with. How many … How much segmentation do you have? How many landing pages do you usually create?
Misha: We have two main ones that … There is also, have you heard of the 80/20 rule?
Felix: Mm-hmm (affirmative).
Misha: Very common, I think, problem that new entrepreneurs have is that they have all these different ideas, maybe 10 different ideas, but only one or two of them, or only 20% of them are going to lead to 80% of the revenue. The other 20% of the features you want to build are only going to lead to 20% of the revenue. You shouldn’t build that stuff at all. So when Edit Stock started, I had a sound library where you could build projects for sound effects, for sound design. I had a project called the camera film database, where you could download one example piece of footage to test in your editing software. It was all free.
Then, you know, nobody bought the sound products. Nobody bought the camera footage database stuff. People were only buying the footage. Ultimately, I actually decided that the other things were a distraction. So even though you could in your mind think, well, but they lead to 20% of the profit. But they take so much time to develop that your time is much better spent focusing on the part that works. So to answer your question about how many landing pages we have, two main landing pages that deal with 80% of our customers. That’s the main landing page and the educational one. The main landing page for the individual segment.
Felix: Individual meaning people that are not from education or institutions?
Misha: Correct. Then we have a separate landing page for each one of our partners. So for example we’re partnered with a company called Avid Technologies, which is a $500 million company, which has 500 schools using their official curriculum, and Edit Stock is used in that curriculum for those 500 schools. So we built a landing page just for them. So if you’re an Avid teacher, you go to Editstock.com/Avid, and there is all the information, very specific to those teachers, including specific offerings for those teachers.
Felix: Got it.
Misha: Yeah, we have a similar thing with another company called The Foundry, where we offer some footage for a tutorial that they’re teaching. But in order to get that footage, you have to sign up for our newsletter. That page only has one spot, just to sign up for our newsletter and that’s it.
Felix: So these landing pages that you’ve created, how does the traffic get to the landing pages?
Misha: Great question. I don’t know if this is a good thing or a bad thing, I’m certainly working on it, but Edit Stock basically doesn’t advertise. We do pretty well organic traffic wise.
Felix: You have these landing pages set up, and they’re very targeted to a customer type. So how do you make sure that the right customer type actually falls into the right funnel?
Misha: Right. Okay. So for something like Avid, which is this is a, that’s B to B. Whenever you’re doing B to B, you don’t need to worry as much about something like SEO, what you really need to worry about is how does the customer find out from my partner that I exist? So in every single … As soon as a school becomes an Avid certified training school, they get a link in the email that says visit Editstock.com/Avid to download the materials you need and hear about offers. So that is very specific. In terms of the main landing page of Edit Stock for the individual segment, I’ve absolutely used Google Webmaster tools and Google Keyword planner, which is in Ad Words, to make sure that my page is showing up to relevant searches.
I mean, basically, I spent a lot of time, and actually made some investments on SEO. I do not recommend hiring an SEO person. I recommend becoming educated on how SEO works, and becoming diligent about making sure all of your product images have alternate text, making sure that in your product pages on Shopify, when you go down to the bottom of the product page, product building page, that you have included really good headlines and really good descriptions of your links, because you can hire an SEO expert all day long. But if you, as the CEO, don’t … If you don’t know what they’re doing, how can you lead them towards success? You have to understand it yourself, and then later on, I can hire an SEO person and say, reread my product descriptions, check my product descriptions against Google Keyword Planner, and make sure that I’m making smart decisions there. But if you just say go do SEO, then you are just a ripe target for one of the [inaudible] nonsense people who will be contacting you.
Felix: So you mentioned that you partnered with these two companies, Avid Technologies and Black Magic Design to have your product used for training classes. How did you come across these businesses? What is the … How did you begin this relationship?
Misha: Well, in part, I know people who work there personally. I want to say, about entrepreneurship, boy, I had such a good lesson fairly recently about this. So I had a meeting with someone, just a phone call meeting with someone who owned a company that, let’s say, doing $10 million a year in revenue. My company does significantly less than that. Before the phone call, I had read about their background, I had created a document where I just thought about, ahead of the phone call, key points of the phone call that I’d like to have with them. What do I want to get out of the phone call? What do I have to offer them?
Actually, Felix, I did a similar thing before this podcast, because what you do when you do that is you’re showing respect for the person’s time. You’re not wasting their time. You are providing something … You’re bringing value, and you know what you want, because you don’t have too many opportunities to have important phone calls like that. But what really surprised me, and the sort of moral of this story is that the person on the other end of that phone call did the same thing. I wasn’t expecting that. I was expecting them to say, who are you again? What’s your company again? What do you guys do?
I think what I realized is that professionalism goes such a long way. All the partners that I’ve worked with, the reason that I’m allowed in the door to talk to them at all is professionalism. You know, you don’t just call a company with hundreds of million dollars in revenue and say, we should partner. I’d love to work with you guys, what can I do? You go to them and say, I have a very specific thing, I want to have a contest, I want to give you guys X, my customers, I want in exchange, you know, your platform, how can we make this work? Right?
You’ve got to bring something of value to them. You don’t just come up to a company and say, oh, please, please, please, because that’s not how … They don’t care about that. Oh please, please, please is worthless. So for Avid, for example, they used to deliver their footage on DVDs in the back of the book. What I told them is I will make this a downloadable process that is instant, and you will not have to pay data transfer fees, my company will take care of that. That, to them, was enough.
Felix: I think one key thing you bring up here is that you’re not coming to them and adding more things to their to do list, giving them more work. You’re trying to see how you can make their job easier, by bringing this kind of value. Even if there are things that you guys need to partner on, you make it very clear what they need to do, what you’ll be doing, to accomplish that. So it makes that yes a lot easier to get to.
Misha: Exactly. Also, have some confidence in yourself, man. They don’t know, when they talk to your company, when you approach it as a professional, they don’t know how big or small you are, they don’t even care. They literally don’t care. They care about what do I want? So just have some confidence in yourself, if you’re that entrepreneur, and you feel like … You’re a new entrepreneur, and you feel like, if I could only get into Bed, Bath, & Beyond, then I’ll be successful, make your plan and call them. You know? Don’t be shy about it.
Felix: Definitely. So you also mentioned that most of the business right now, or a lot of it is B to B, and you want to transition more towards B to C, sell directly to these individuals, which is an interesting challenge, because a lot of times, we have guests on this show that are going the opposite direction. What has that been like? What has is the strategy here to make this transition from B to B over to more B to C model, or at least expanding the B to C model?
Misha: I don’t actually … So just to give you some sort of loose statistics, about 75% of Edit Stocks revenue comes from B to B, from directly from schools. It’s not because there is more of them than there are individual customers, it’s because they place much larger orders, just literally they spend more money. So the reason that I want to … I don’t want to shift to B to C and get rid of my school customers. Actually, I’m focusing on improving both avenues. There is no limit to how well you can know your customer, or how specific a message you can be sending to them. If history has shown us anything, it’s that over the last 10 years, it’s gotten more and more and more refined as you add things like retargeting of ads, or just the … You can get such much granular knowledge of your customers nowadays.
The reason that I want to grow the B to C segment of the company is because there is a lot more of them out there. There are about 20 million editors out there who own editing software, and are editing projects. They might not all be looking for training, but some portion of them is, and there is only 6,000 colleges in the country. So it’s, there is a lot more opportunity, I think, in B to C. So what we’ve been working on lately is actually our very first Google AdWords testing, and we’re placing our introduction video in front of very specific YouTube channels, and we’re doing just five dollar a day mini experiments to hone what works and what doesn’t work, and finding a lot of things that doesn’t work.
Felix: Well, I think because you are so experienced with educational institutions, that this is an interesting topic here about how to do that. What is it like to sell to educational institutions? What do they typically care about that maybe an individual might not care about?
Misha: A school cares about … So for example, very early on, I learned from feedback from schools. What they care about is that there is no swearing, or violence, or adult themes in their movies. That the movies have to be rated P … Sorry, G, or PG–13. That was something that I never considered, especially because most of my movies come from 20 to 35 year old filmmakers who mostly want to push the envelope. Actually, 20 is a little young. They’re mostly like in their 30s. They enjoy pushing the envelope.
So I actually get a lot of submissions where I say, you have great actors, you have great film festival awards, you have great footage, but your total revenue is going to be low because you have a subject matter that isn’t going to sell well to schools. One example of that, we have a movie here called Ashes, which does sell to individuals pretty well. People love it, it’s beautiful. But it’s a horror movie. At one point, somebody shoots themselves in the head with a shotgun, and their head explodes. That’s just like, it’s really cool if you’re just some guy that wants to become an editor. But that’s not really cool if you’re the dean of film studies at Paramount University, you might not want that to share with your class. You know? So yeah, anyway, they have different needs.
Felix: Makes sense. So I want to talk a little bit about scaling up. So you mentioned early on that you are the core of the company, and most of the other people that are working on it are contractors or people that you hired part-time. Talk to us about this, when did you start looking to expand outside of just yourself?
Misha: Not for a long time, and maybe I waited too long, actually. My web designer, like I said, I put that $4,000 into the company, and I just said to myself, from now on, everything that goes into the company has to be from the revenue of the company. That idea is called bootstrapping, but it was something that I just didn’t know what that even was. I was mostly doing it out of fear of the risk of losing money. So actually, for the first, say, maybe six months, I used to mail out, physically mail out, every single months, checks to my filmmakers, and when I did that, I hand wrote on the envelopes their addresses, and my address. My address, specifically, over, and over, and over again, and I refused to buy a $12 stamp with my address on it, because I just said, I will not spend another dollar that this company doesn’t make on its own.
So I’ve had these sort of mini celebrations along the way. Some of the mini celebrations were like I hired a bookkeeper, who now works all the time, and I receive quarterly PNL statements. I don’t know that that was necessary early on, when there were no sales and no expenses, but now that’s absolutely necessary. You know, when you’re spending thousands of dollars a month. I hired an assistant editor. So when I first, my first movies, I only had one or two movies, and I had no customers. So I spent my time preparing the products.
But as now we’ve grown, and now I’m spending my time making quotes, and answering customer questions, and you know, dealing with sort of a more busy day to day, I hire an assistant editor to come in when I have new movies, and prepare the movies for sale. Other people that I hired, not just my web designer, but also a web developer who does more hard core coding. So for example, and this is cool, this is really cool to talk about, if you pick any product on Edit Stock, the number one request that we heard back from customer surveys when we were doing this rebuild was that customers wanted to see the footage first. So this is the equivalent of trying on the clothes before you buy them.
Felix: Mm-hmm (affirmative).
Misha: I hired my web developer to make the view footage button. When you press it, a sort of, a new tab opens up, and you can actually look at all of the footage inside of the product before you buy it. One cool feature we added in is the buy button. So in Shopify you can make a new channel, the channel can be a buy button, which is essentially HTML text that you can embed inside of another website. So now when a customer presses view footage, not only does this new webpage open up, but they can actually buy the product right there using the HTML snippet from my site.
We’ve done a similar thing with other companies that we’ve partnered with. One specifically called Master the Workflow, they teach editing assistant … Sorry, assistant editor training, and we provide the course material for them. So I’ve got a partnership with them where using and embedded buy button, when a customer places an order, I actually receive the order, I fulfill the order, and Master the Workflow, my partner, gets an email, I’ve set them up as if they were a vendor, as if they were providing a hard product item. So they get an email saying what the sale was, who it was to, and then I fulfill the sale, and at the end of the month, I send them a report with what their percentage of the sale is. We split the profits.
Felix: Got it. One thing that I think might be custom on your site that I like a lot is this section called compare edit stock to traditional editing practice footage. It lists Edit Stock, traditional stock, YouTube, online training, freelance client, and then all of these different features that Edit Stock has that other, I guess, methods do not include all of. Where did the idea behind this come from?
Misha: The idea from this came from my second web designer. So I had my first guy, he’s a graphic artist living in Las Angeles, and a close friend of mine. He has rebuilt Edit Stock every single time. We’re on version 4.0. So about every year we massively overhaul everything about the website. Actually, initially when we did this rebuild, we were only going to rebuild the product pages. We were only going to start from sort of the bottom of the funnel, and work backwards.
But it became quickly clear to me, this time I hired a marketing person to help me with the process. So the marketing person came in, we did the surveys, and we realized that the problem … Actually, we also used an analytics company called Hot Jar to record user, visitors, and record heat maps, so we could see, and mouse clicks, so we could see where users … What they were clicking on, what they weren’t clicking on. We were trying to determine where are people falling out of the funnel? So in that process, we came to a pretty good landing page, but I kind of felt like it wasn’t quite right yet.
So I hired a second opinion web designer, and I think we kept about maybe 30% of his ideas. The most important one of them, by far, was this chart. The chart does a good job of answering the question why don’t I use just regular old stock footage? Or why don’t I pull something off of YouTube for free? These are common questions that when people talk about my product on places like Reddit, there is … You might have five people say, oh, we love it. It’s the greatest footage ever. But you’re always going to get one or two people saying, yeah, but you could just rip something off YouTube for free, or yeah, but you could just use traditional stock footage and pay less, or yeah, but you should just go get a job on Craigslist for free, and then you don’t have to pay anything, and you have a real client. Right? So we wanted to lay out for them, for everyone, why Edit Stock really is the best approach. This sort of helps answer all of those questions.
Felix: Yeah, I think any business out there has the same type of questions that their customers are asking. Why should I buy from you? Why shouldn’t I go for a free solution? Why not buy from your competitor? I think something like this really lays it out very clearly, and answers that question for them, that almost makes it no longer an objection.
Felix: So other than these changes that you’ve made to your site, talk to us about how it’s all run. What kind of apps do you use to keep … You mentioned Hot Jar is one of them that you use. Are there any other apps that you rely on to run the business?
Misha: Yes. I do. First of all, Mail Chimp or another newsletter platform is just absolutely essential. I’m going to run through, I’m on my apps page. So I’m just going to run trough some of the apps-
Misha: That I use. These are also very practical. I don’t have any … I’m not going to name any names, but I don’t have any gimmick-y apps. I don’t have any apps that are like, you know, spin the wheel, or sign the, or play the game, or whatever. These are all super practical, needed day to day. Not that I’m poo-pooing the value of those other things. It just, this is my approach. So even though I don’t use it even more, or not very often, the Digital Downloads app. It’s free, it’s built by Shopify, and it was how I delivered all of the footage on my website until I ultimately decided I wanted a more robust solution, because the Digital Downloads apps has some limitation, like it can only do five gigabyte downloads, and some of my downloads are more like 20, 30 gigs.
So I ultimately … But it was great, because it was free. So I used it for a long time. I’ve replaced it with Send Owl. Send Owl is amazing. Send Owl can do subscriptions for you, or it can do multi part downloads. It can track … It can create, if you’re selling software licenses, it can create IDs for those. I use it to deliver … Let’s say a customer buys three movies from me, they’re going to get 20 download links. Now it can all be spread apart on one nice page. Okay, I know that was a lot about Send Owl. I just really like them.
I use an app called Locksmith, which only allows certain users access to certain pages. For, if you think about my B to B customers, for example, Avid, I don’t want every customer in the world to have access to the material that their customers are paying for. So some pages are locked, and the only way to get access to those pages is with a password. So Locksmith makes that possible.
A great app for developers, and this is not for the everyman, this is for if you have a developer, and you need a very specific thing, Medifield’s editor, which is free, allows you to … I’m not going to explain this as well as my developer would, but it allows you to access, I guess, more of the Shopify API. So we used it, for example, we used to have a sound effects library, where you could press play on a sound, and it would play, and you could press download, and it would download. Those sounds needed to be connected to a cloud storage solution. One way to make that possible was to use Medifield’s editor.
We’re using product filter and search, that has become essential to Edit Stock. That was a big part of the rebuild. So I used to have Top Menus that had all my different product categories. So for example, if you wanted a movie that was a horror film, you would go to the genre menu and pick horror film. Then if you wanted a movie that was rated PG–13, you would go to the ratings menu and choose PG–13. But if you wanted a horror movie that was rated PG–13, you couldn’t do that. So Product Filter and Search allows you to do that. It also allowed me to not use a main menu navigation for this purpose. I actually made a menu on the left side of the screen. So that allows me to declutter, take away noise from my funnel, because I don’t want that menu on my landing page. I only want it on the collections page.
Felix: Got it, so this helps customers really narrow down what they’re looking for.
Misha: Exactly. Then finally, sort of the last … Well, I guess I’ll talk about two more apps. I don’t know if this is too many apps to talk about.
Felix: I think the more the better, especially if you can tell us about your experience with it and how it’s helped you with your business.
Misha: Okay. Okay, great. You asked earlier about how do you find those first 100 customers.
Felix: Mm-hmm (affirmative).
Misha: The answer to that question is by installing Pure Chat. Pure Chat is free. You can … I mean, people will use it. So you can literally sit there and just, as you’re working on X, Y, or Z for your company, if a user comes by and they have a question, they’ll ask you. What you’re looking for in their questions is not any one question, it’s a pattern in their questions. If 25 people ask you, is this a multi part download, or is this a one part download? You may think the first customer’s question was a stupid one, but if you heard it 25 times, it’s not them who aren’t being clear, it’s you who is not being clear.
Misha: Pure Chat has been great for us.
Felix: This is like a live chat in the corner of your website?
Misha: That’s right. Sometimes I turn on the chat function, usually I don’t, because it can be a little overwhelming. But I do leave up email us and download us. Email us and download us, I’m sorry. Email us and call us. People do absolutely take advantage of those contacts. That’s especially true if you’re doing the B to B sale. You’re going to convince someone to spend $50 or $20 without a phone call. There is no way you’re going to convince a person to spend $1,000 without a phone call or an email. It just won’t happen.
Felix: They want to talk to a human.
Misha: Yes. Even if they know, 100%, even if you made your landing page as clear as day, they might just call you and just read to you the landing page. This happens to me a lot. They’ll call and they’ll say, okay, so your package deal is any three projects for $1,000, right? I say yes. They say, and students can use this on their demo reel, as it says in the grid? Yes. They can … I can do X, Y, or Z? Yes. Okay, great, we’d like to place an order.
Felix: A big part of it is that as a customer, it’s a lot more palatable to give money to a human than to a faceless website like a machine, essentially. I think just being able to talk to someone allows people to be like, okay, they’re exchanging money with someone that is a real person, on the other end, like you mentioned. Especially as the price points get higher, that expectation to talk to a human gets even more necessary.
Misha: Yes. You’re 100% right. The last app to talk about that I think is worth mentioning. I have others in here, but I’m kind of giving you the ones that are my day to day beasts of burden. Another app that I think is really worth it, and I’ve used it a few times, it used to be called Hey Carson, but now it’s called Store Tasker. You can hire someone for 60 bucks, 50 bucks, I think it’s … Maybe you can do three small projects for $150. You can hire a developer to handle some little thing, like my newsletter is not working, or my … I can’t figure out how to change the menus, how they look, or where they are, or whatever.
Unless you are a developer, every entrepreneur on Shopify is going to run into something, some little thing that they wish they could do. I don’t have a full time in house developer. So generally speaking, from my web developer, I have a task list that I assemble over a period of time, maybe a couple of weeks, and then I say, hey designer, here are the 25 things I want you to do, and then I hire them to work for a week straight. But every now and then, there is one little thing I need to get fixed, and when it’s one little thing, I’d rather just … I just do a little one off whatever. When my designer isn’t available, I just do a little one off thing.
Felix: Got it. All right, so Misha, thank you so much for your time. Editstock.com is a website. Where do you want to see the business go over the next year? What are you focused on?
Misha: I am actually building a second business called Edit Mentor, which is going to be an interactive game that teaches people the creative art of editing, and solves what is now my customer’s biggest question, which is for not just the physical materials, but also the actual curriculum. So I have a super interesting way to do curriculum, and that’s … Yeah, that’s where my business is going.
Felix: Awesome. So is that editmentor.com?
Misha: Editmentor.com. Literally nothing is built for the website, and you’ll notice that you can already sign up to join the beta.
Felix: Nice. Well, definitely following the advice that you gave. Again, thank you so much for your time, Misha. Editstock.com, editmentor.com, coming soon. Thank you so much for coming on.
Misha: Thank you very much.
Felix: Thanks for tuning into another episode of Shopify Masters, the eCommerce podcast for ambitious entrepreneurs, powered by Shopify. To get your exclusive 30 day extended trial, visit shopify.com/masters.
That’s why we’re introducing new and more affordable ways to ship with USPS through Shopify Shipping. As a Shopify merchant using Shopify Shipping, you get access to the lowest shipping rates available, whether you ship domestically or internationally.
Shopify Shipping has negotiated rates with popular carriers, including USPS, DHL, and UPS, so you can pass on shipping savings to customers while keeping your costs low. Here’s how we’re helping you manage this year’s USPS rate increases, and how you can get the lowest prices on some USPS mail classes with Shopify.
Priority Mail Cubic Pricing now available
If you’re on the Shopify, Advanced, or Plus plan, you can now use cubic rate pricing for USPS Priority Mail with Shopify Shipping. Cubic Pricing is available for packages weighing less than 20 lbs, and it’s based on the dimensions of your package and where it’s going. Through Shopify Shipping, Cubic Pricing offers up to a 90% discount off Priority Mail retail prices.
Lowest prices on First Class Package International
Despite prices increasing everywhere else, the rates Shopify Shipping offers for USPS First Class Package International will remain unchanged—you’ll pay the same discounted 2018 rates for all of 2019. That’s a savings of up to 21% off of retail shipping prices, and the best First Class International Package rate available from any shipping platform or app.
Parcel Select Ground is an affordable alternative to Priority Mail when your order doesn’t need to get there quickly, and it’s a good option for bulky or heavy packages weighing up to 70lbs.
Media Mail is a cost-effective way to ship media materials like books, music, and videos.
Review your shipping strategy to stay competitive
When prices change for shipping services, it’s a good time to review your overall shipping strategy, including the tools you use to get your products to your customers. With the addition of multiple mail classes with USPS and some of the lowest prices available, Shopify Shipping is here to help you use your low-cost shipping options to convert more customers and grow your business.
When you think of owning and operating a business, you might think about renting commercial real estate, commuting to an office, or managing employees.
But with the rise of home businesses, more and more people are discovering ways to use remote work to pursue entrepreneurship with their headquarters at home.
In today’s connected world where technology affords us more flexibility in how and where we work, home-based businesses come in a wide variety of forms.
Some require you to convert a spare room into a mini-warehouse for products, while others can be run completely online. But generally, you can start these types of businesses using your existing space and means.
What makes a “home-based” business: The pros and cons
A home-based business is a venture—whether full-time or run as a side hustle—that you can start and operate using your own home as your base of operations. A few home-based businesses, especially those that sell online and don’t buy and hold lots of inventory, can even be run on the go—you don’t necessarily need to be bound to your home.
Naturally, there are pros and cons to consider when deciding whether a home-based business idea is right for you.
Fewer overhead costs (such as warehousing fees), plus potential tax deductions you can claim.
The option to sell products or services locally or internationally.
Flexible work/life balance, which is ideal if you’re a stay-at-home parent or a retiree, for example.
You can create a family business where your relations or your spouse can chip in as needed
You may need to convert space in your home to support the needs of your home business (e.g. holding inventory, creating a home office, or storing equipment). The challenge can be doing it without disrupting your life at home.
You still have to comply with federal, provincial, and municipal regulations that pertain to the business you want to start (e.g. you may still need to rent a commercial kitchen if you plan to sell food products or a license/permit to hold inventory).
Your business may outgrow your home and require you to rent additional space and hire employees.
Working from home offers you a lot of freedom, but it can also be lonely. This might be difficult if you enjoy being around other people.
Home-based business ideas you can start today
1. Buy products in bulk and sell them online
Many businesses center on the simple concept of importing products in bulk and selling them individually for a profit.
Maybe you recently traveled abroad and came across unique products that aren’t readily available in your market despite an appetite for them. Or maybe you’ve zeroed in on a niche and know the perfect products to serve its customers.
Either way, if these products are relatively easy to store and ship, you may have a solid home-based business idea on your hands. Blue light blocking glasses, for example, are small and durable enough to store in your own home.
Your home can even be used as an initial showroom—which is how Artemis Design Co. got its start—to sell locally, giving you the option to expand with additional storage space and employees as you validate your idea and sales start to ramp up.
“I was living in the south end of Boston, and I had my living room just full of these products. I would have people come over if they wanted to look at something or try something on, and that’s how I made my first sale.”
2. Sell homemade products
If you’re a maker yourself (or know someone who is), you can also consider turning a hobby into a business. Even if you have to create your products elsewhere—in a studio, commercial kitchen, or workshop—you may be able to store them and sell them in your own home.
With the ability to control nearly every aspect of the products you sell, you can make them more cost-effective, improve their quality, or cater them to a certain audience to target demand in the market.
Whether you choose to start on a marketplace like Etsy or want to build your own branded storefront, selling your creations is a great way to share your passion with others and make money too. Just be wary of regulations concerning products that customers ingest or put on their skin.
Examples of handmade products you can sell include:
So far, we’ve covered business ideas that require you to hold inventory in your home. But there are a variety of online businesses you can start that take inventory and shipping off your hands.
These businesses employ a dropshipping model, where a third party produces, stores, and ships your products on your behalf, leaving marketing and customer service as your chief responsibilities.
Your dropshipping supplier can be local or overseas, but you need to ensure you find a supplier you can trust to deliver a consistently great customer experience after the sale. Always do your due diligence or you might put your business’s reputation at risk.
There are even Shopify apps, such as Oberlo, that can connect you with suppliers to import products into your own store while streamlining order fulfillment.
At its core, dropshipping involves becoming a distributor of a third party’s products, taking on the costs of marketing (time and money) to be rewarded with the margins when you make a sale. This can make your products a commodity in many cases with limited opportunities to brand your customer experience. Luckily, there are a few different ways you can still compete even when there’s no shortage of your products in the market you’re selling in:
Curate products, from different suppliers, to create a store that serves a specific niche.
Compete through quality content and customer service that creates value beyond your products.
Target an underserved region of the world (be sure to pay attention to your shipping costs).
Target a new audience with the same products (e.g. LED shoes can be marketed to music festival goers or runners).
Using a similar dropshipping model, a print-on-demand business doesn’t require you to hold any inventory or ship it yourself either. Print-on-demand even offers you more flexibility to customize white label products with your own creative designs.
And there are a wide range of products you can sell: books, t-shirts, hats, backpacks, blankets, pillows, mugs, shoes, hoodies, phone cases, watches, and more depending on the supplier you choose to work with.
Many print-on-demand businesses focus on serving a specific niche or, better yet, a shared identity. What are people passionate about and proud to share? What about yourself? From pet owners to vegans to gamers, there are plenty of passionate communities you can create products for.
Services are even simpler than products to start selling at home, but the challenge is allocating your limited time. “Time is money” is never truer than when you’re running a service-based business.
Creative professionals, like designers or marketers, might freelance or consult with other companies, juggling multiple clients, often remotely from their own home office with the occasional travel. Others might operate based on appointments and bookings to offer their services to individuals directly.
Service-based businesses often require a lot of networking and word of mouth referrals to find suitable clients, but satisfied clients will likely retain your services over time and continue to give you their business.
For this reason, you don’t necessarily need a large number of customers to do well, as you would with a product-based business. Depending on the service you’re offering, a handful of high-quality clients can be enough to support yourself full-time while working from home.
6. Productize your service or expertise
As we just discussed, one of the biggest downsides of running a service-based business is that you are being paid strictly for your time, skills, and effort.
“Productizing” your service—creating digital or physical products that package up your expertise, and streamline or complement the service you offer—can add additional revenue streams to your business. You can cater to your current customer base or even find a new target customer in the same space.
Some ideas for adding products to your service-based business include:
Licensable assets (stock footage, music, etc.)
As you can see, most of these ideas involve digital media packaged as products, which means no inventory to keep around the house. If you’re running your home business on Shopify, you can sell digital products seamlessly using the Digital Downloads or SendOwl app.
If you want an example, you can hear how the owner of Retro Supply Co. productized his design skills to generate passive income below.
7. Grow an audience you can monetize
If you’re a content creator, have a sizable online audience already, or have always thought about starting your own blog, YouTube channel, Instagram account, or podcast, then you can potentially grow and then monetize your following using any of the previous ideas on this list.
On top of that, you can also explore becoming an affiliate—selling other products or services for a commission—or accepting payment for sponsored posts to give brands a chance to connect with your audience.
Building a loyal audience requires patience, consistency, and focus. This is not the easiest way to start a home-based business, especially not in the short-term, but if you’re able to build a following around something you love it can be one of the most fulfilling and enduring, giving you the flexibility to pursue multiple revenue streams at once.
The potential to monetize your audience often depends on the niche you choose to serve. If you’re starting from scratch or are in the midst of growing your own audience, be sure to check out the following guides to learn how to best grow and monetize the most popular channels:
Last but not least, if you’re more interested in simply investing in a source of income that you can maintain while at home or on the go, then you can consider buying an established ecommerce business.
Prices can vary greatly based on a variety of factors, from total revenue generated, profit potential, available assets (like an email list or social following), inventory, and more. Some sellers will even onboard you and teach you the ropes of running their store.
Exchange is a marketplace powered by Shopify for buying and selling ecommerce stores. You can browse the listings for businesses that are suit your budget, level of experience, and needs. Maybe you want to buy a proven business and are willing to invest more money to acquire it. Or perhaps one catches your eye with untapped potential that you’d like to grow.
Just be sure to vet each listing and consider everything that’s included in the sale. Revenue and other data can be verified through Shopify so you can rest assured that those numbers are accurate. If you’d like some more guidance, be sure to check out our guide: How to Buy a Business on Exchange.
Find a home business idea that works for you
A home-based business is simply a remote-friendly business in today’s world where technology can close the gap between you, your suppliers, your employees, and your customers. Altogether, this makes for an opportunity to start small, grow nimbly, and invest conservatively—especially when you can cut out the costs of renting an office.
As you would when starting any type of business, think carefully about your goals, what motivates you, and what you enjoy working on in order to create a home business that works for you.
YouTube is arguably one of the top destinations for product reviews. Having your products covered by the right reviewer, especially if you’re confident in what you’re selling, can be a huge win for your business.
On today’s episode of Shopify Masters, we talk about how one company leverages reviewers in the tech and gaming space to get their products in front of customers who are ready to buy.
Joe Lieberman is our guest and the Director of Marketing for Antlion Audio: a company that manufactures the world’s leading attachment mic, turning any pair of headphones into a gaming headset.
I think a lot of people make a mistake…They care about reach in volume. But there’s value to be had in the quality of an individual contact. Ideally, an individual contact who has a lot of reach.
Tune in to learn
How to find and get the best product reviewers to work with you
Why you should think about layout last when designing your site
How they use live chat groups like Discord to do market research and create happy customers
Don’t miss an episode! Subscribe to Shopify Masters.
One of many YouTube reviews about the ModMic from Antlion Audio.
Felix: Today I’m joined by Joe Lieberman from Antlion Audio. Antlion Audio manufactures the world’s leading attachment mic turning any pair of headphones into a gaming headset. Was started in 2012 and based out of Portland, Oregon. Welcome, Joe.
Joe: Hey Felix, thanks for having me.
Felix: Yes, appreciate you coming on. One thing that you mentioned to us in this pre-interview was around the idea of meeting your customers where they are rather than forcing them into a funnel that gives you the greatest margin. This really stood out to me. I think this is a really important point. Can you elaborate a little bit more on this? What does it mean to meet your customers where they are?
Joe: Sure. So when somebody wants to get a ModMic, we want to make that frictionless. Ideally frictionless, that’s impossible. But we’ve got to come as close as we can to being frictionless. One of the big hurdles for international customers, if you don’t have a global logistics system, is they order from your U.S. warehouse and they have to deal with international shipping, they have to deal with customs. If we can handle all that on our end by either having warehouses around the world or having distributors in their country, then that step is removed. They can go directly to their local distributor, their local retailer and say, “I’d like to buy a ModMic”, and it’s there in two to three days as opposed to a couple of weeks, sometimes even more than a month due to customs snagging their package, adding on fees, that kind of thing.
Felix: Got it. So before we start going on this route of talking about this kind of distribution where you have warehouses around the world. Let’s rewind to the very beginning. Where was the very first, I guess, distribution point? Where did you guys start this business?
Joe: Sorry I have to laugh because the story about how it started is so, we’ll use the word strange. It’s almost unbelievable.
So Jim Console, who’s the inventor and founder of the ModMic, which by the way works not just for gaming but for businesses. So if you’re going to be doing a company that involves making calls, you really do want to put your best foot forward and your best foot is your voice in this case. So a good mic, whether it’s ours or someone else’s, is a great investment as you’re starting out.
Felix: And you’re on one right now, right?
Joe: Yeah, I am currently using the ModMic 5. You’re listening to it live.
So, as I was saying, as it started was Jim, he had a pair of Bose QC 25, a noise canceling headphones and was just annoyed at the fact that he had to put his nice headphones down and pick up a crappy headset in order to play some games with some friends. So he came up with the idea of what if I just created a high quality mic that you could attach to my Bose headphones. So it started as a Reddit post, “Would anybody else be interested in this thing”?. He got so many replies, he started making them by hand. Like pouring plastics and stuff in a spare bedroom in an apartment. Then he met our now CEO Eli and they worked together, still making them by hand for two years, hand producing microphones. Finally we of course reached a point where we needed mass distribution and more staff, things took off from there. That’s the beginning.
Felix: Where do you enter into the story? When did you get involved?
Joe: I only came along in 2016. So in 2014, we went to mass production. They went two years without really having any marketing staff. I’m the director of marketing. So, yeah, between 2014 and 2016 they grew the company ad hac without a lot of direction. In 2016, I and several other people came onboard in an attempt to globalize the company.
Felix: Got it. This is not the first time where I heard someone got their start on Reddit. But then, like you mentioned, two years of hand making this before they decided to scale this out a little bit more. Do you know the story of how that began? What kind of steps did they take to make this a little bit more scalable, more manageable rather than just making it by hand?
Joe: James, Jimmy, James Console. James is a perfectionist when it comes to engineering. So those two years, I think the most important thing they did wasn’t selling the units they made by hand, which was clearly unsustainable in the long term. But using it as sort of a test bed to try different designs, to try different attachment methods, to try different microphones, both the capsule and the way it was constructed.
By 2014 when they were ready to go to mass production for the ModMic 4, the process was basically nailed down. We finally had what I would call the winning product. Before that, I think it would have been too soon to go to scale. This two year period, you could almost consider it entirely R&D, sort of funded by fanatic fans.
Felix: Got it. So what kind of marketing were they doing at that point? In 2014 they figured out what the ModMic 4, this fourth [inaudible] of the product. They figured out what was going to work. What kind of marketing did they do before you came onboard?
Joe: I think, I wasn’t there and there’s no written record of it because they weren’t very good. Which is a really important marketing task is to keep tabs on what you’ve done in the past and make a nice spreadsheet with all the info for all the people you talk to. All the clippings or articles or videos so you have them all in one place and you can easily reference them and reach out to those people in the future. So, one, that’s a great lesson and they did not do that. So there’s isn’t a great written record of all the things that were done.
But I have, one of the first things I did when I came onboard is try to figure out what has been done. From what I can tell, a lot of the success both came from Reddit, as their beginning place, and also from YouTube tech reviewers.
Felix: Got it. Once you came onboard, what were some things that you knew that you wanted to implement right away?
Joe: The first thing we wanted to implement was improving the website. The original site was fairly simple, Shopify template. So the first thing we did was overhaul that to what you currently see, which is a much more professional looking website. We did that not to increase conversion rate. In fact, I don’t think it made any impact on conversion rate at all. But to present ourselves as a true company, as opposed to a Shopify reseller. I wouldn’t say there’s a stigma against that, but there is. You want to present yourself as more than just a shop template. You want to build a brand.
Felix: Yeah I think what you’re getting at is that you want to represent yourself as a brand that exists beyond just a website. What are some elements that you made sure to include or that you recommend others to make sure to include on their site to give off that kind of messaging?
Joe: I think that is as much art as it is science first. So I think there’s a lot of different ways you can tackle that problem of presenting a professional image. I would say templates tend to look like templates. So that is a thing you want to get away from immediately. That said, good templates, they work. They’re designed specifically to achieve something. So first you have to understand what it is you want to achieve. Are you pushing somebody to sign up for a newsletter so you can send them information in the future? Are you pushing somebody to make a purchase? Are you pushing somebody to learn about your product? These things are not all mutually exclusive but they are fighting each other. There’s only so much time and energy that somebody’s going to put into looking at your website. You need to get yourself in a position to capitalize on what you want to do. So first is to define what that goal is of the site.
Then I’m a big fan of consistent visual theme. So you want to present a consistent story visually from where you want them to start to where you want them to finish.
Felix: Can you say more about this? What is your story, where did you want them to begin and where do you want them to finish?
Joe: So in our site, what we want them to do is to go to the product page to learn more about it. That’s sort of our end goal is to eventually get them to reach the product page. Along the way we want them to learn about the benefits of a good microphone. So the original design had them flow through a learning page. The front page, then a learning page, then the product page. We still sort of keep that theme today with several revisions.
For instance, you go to Shop ModMic, you end up either at gaming or business which tells you about a different story for each of those to customers. So gaming, of course, we’re focused on competitiveness, we’re focused on the quality and the respect you get from other players and that kind of thing. Nobody wants to play a game with somebody whose got a bad mic. It’s very annoying. But also for people who are into streaming and podcasting. Having a good mic is really essential. So talking to those people. Whereas of course business, we care more about Skype calls and that kind of thing. It’s still the same problem. You don’t want to make a business call and have a bunch of background noise and have a bunch of interference. So we tell that story both visually and through text as you go from front page to shop page to product page. Then ideally they buy the thing.
Felix: I think you mentioned this briefly, I think you’re talking about this now too where the goal of the site you had redesigned wasn’t even so necessarily concerned with them making a purchase on the website. What you cared more about was getting them to learn about the product. I guess why this approach?
Joe: For us, this approach is because our product is not simple. There are products in the world that are self-explanatory. I was just listening to your last podcast about the guy that makes wallets, right? Wallets are self-explanatory. Everybody knows what one is. A headphone, a pair of headphones, those are self-explanatory. Everybody knows what it is. A microphone that attaches to any headphone requires an additional statement. If I just say that, 99% of the time somebody says, “Why do you need that?”, and I have to go, “Because great headphones, the really good ones, which are not that expensive, don’t come with microphones”. And they go, “Ooh”. So we need that step to tell that story. Other products may not need that, I don’t know. But ours certainly does so that’s why it’s important. The information thing is important to us.
Felix: I see.
Joe: Don’t get me wrong, we do want to sell things from our website. We do make more money when we sell things from our website. That’s nice. But to us, that is a nice to have.
Felix: So once they are complete the story on your site, what’s typically the rest of the journey. If they were not to purchase from your site directly, where do they end up, where do they see you again and where might they purchase again?
Joe: We’re sort of all over the place. Most of our sales do happen on Amazon. So that’s the biggest by far. We’re in retail shops in the U.S., like Micro Center. We’re internationally in a variety of retail shops, everywhere from the United Kingdom to Japan. So they might encounter the product all over the place.
Of course, we’re also very active on social media. So it’s very likely they’ll see something either by us or by an influencer who’s using our product or promoting our product. So they encounter it in the wild pretty frequently. If you are into gaming and you are watching streams, you will probably come across somebody reviewing or covering one of our products the same year you first learn about it for sure.
Felix: Is there any way to track or do you know either anecdotally if a lot of your traffic comes to your site, learns about you and then leaves to buy on Amazon? Or are they just sometime later searching around for microphones or headsets and they come across yours and remembers the experience they had on your site?
Joe: As far as I know, there is no way to do that. Not directly. Amazon is a black box as it were. You cannot, as far as I know, have somebody follow them out of your site and then pick up a conversion tracked metric when they check out at Amazon.
We can track, however, the fluctuant in traffic to our site, like organic traffic to our site and sales on Amazon. There is a correlation there. As people learn about our products more, sales on Amazon go up. Not a shock I know. That is the reality. In that way, we can indirectly see that yes, people are learning about the product and making a purchase. It does make it a challenge for us to metrically say, “Yes, this visitor’s worth this much”.
When you came onboard and you recognized the need to redesign the site, talk to us about this process. How did you appreciate redesigning an existing site.
Joe: How did we do it? It feels like a trauma actually. You don’t really remember what happened. You know it happened.
It was not easy. Redesigning a site from the bottom up is, it is an undertaking for an established site with a lot of pages. The first thing we had to do was determine what that flow was going to be, as I mentioned. The next thing would be the visuals of color. So what colors are we going to want to use. I think the last thing is about the layout. I guess if I had to say the mistake people make is they focus a lot on layout first. But that’s the least important thing because it’s easy to change a layout and it’s very difficult to change the brand color once you establish it.
Felix: Got it. So you mentioned three things. There’s flow, visuals and layout. How is flow and layout different or related?
Joe: So flow is the first thing I was talking about where what is the goal. What’s the flow of the user going to be. That’s the first thing you need to know.
The second thing you need to know is what are the colors and what are the styles that our brand is going to use. A tech company for gamers is going to be wildly different than, say, a food company for young adults. They’re just going to look, visually, very different probably.
Felix: Is this a subjective approach?
Joe: Oh yes it’s totally subjective. This is why I said it’s as much art as it is any science in my mind. You need a vision for what brand identity you want to create. Really, Antlion in 2016, as I came on board, didn’t really have one. It was just microphones on a page really.
Felix: Right. I think having that brand can allow you to do things like get away more dedicated customers and also perceived value goes up, right? You can charge more for a product if you have some kind of identity around it.
Was this all done in house? It’s not even just a redesign of the website. You guys redesigned the brand or gave it an identity, is probably the better way to say it. Was this all done in house? Are there ways to hire help with this if you’re not someone that is well versed in this area?
Joe: Yeah it’s that classic trade-off of time and money right? We definitely did not do all this in house. We definitely managed a lot of people who helped create this. We did a photo shoot and we did not shoot the images ourselves. We had a professional photographer shoot them. We hired actors to play the roles and so on and so on. The design, we hired a company Money [inaudible] is their name, out of Portland. So we worked with them to create the website.
But when it came to the decisions about flow and about color and about how we wanted to create it, that was internal. So internally we knew what we wanted from the photo shoot. We knew what we wanted from the colors and the style and the flow of the site. Then we went to these places and said, “This is what we need. Build it for us”. I think it is a trap to allow somebody who does not know and love your product to dictate what your website should be.
Felix: I think this is an important point and I think there are two questions here. One is: do you have an example of something that you see a store owner, brand owners, entrepreneurs doing that’s interfering too much with the help that they’ve hired. I’ll start there and ask the question after.
Joe: So, yeah, like when you don’t let somebody do their job? I’ve seen that before. It’s always a trap because you don’t want to override the opinion of an expert if you are not an expert. So on the one hand, you need to recognize where your expertise ends and theirs begins and defer to the person who you’ve hired. If you say, “I want my brand colors to be pink and green”, something terrible together. That’s probably the new color that everybody loves, but what do I know. This is a good point. This is where my expertise ends. The guy goes, “Those are not going to work well together”, then you should take a moment and listen and say, “Alright why not?”. If you don’t believe it, then you need to do the research and discover who’s right and who’s wrong. At the end of the day, you are the client so you get to decide. But generally speaking, if I hire somebody, for instance, to create a brand color palate, then I’m going to listen to what they say.
Felix: Right. So what’s an example on the other side where it’s something that you see in other entrepreneurs doing where they’re outsourcing the decision-making where they should not be doing that?
Joe: It’s going to vary entirely based on what your expertise is. Basically, if you were the expert, don’t outsource the work unless you are so distracted with other things going on that you have no choice but to do so. This is especially true about things that are related to your product and your product understanding. If the task at hand requires an intimate knowledge of the product, you can’t outsource it. At least not quickly. I think, for instance, this is why it is so hard to get a good public relationships person. A lot of my time, as marketing director, is spent doing PR work, getting reviews and getting people to talk about our products. It is very hard for an outside agency to come in and be experts about your product. Talk about it with a passion and the understanding that’s required to get somebody else excited about it.
Felix: Let’s talk about this then. So you mentioned that a big part of your job is to get the community that you’re selling to get excited, to talking about it. How did you approach this when you first came on board and that was one of the mandates that you either gave yourself or the company required. How do you being to build this momentum inside a community so people want to review or talk about your product?
Joe: I think the first thing I did was be excited about the ModMic. I keep using this, you’ve just got to love your product. There’s a certain amount of enthusiasm that will come through in everything you do if you really are excited about what you’re doing. If you’re not, you should really question why you’re doing what you’re doing.
Felix: Can you get excited if you’re not excited? Or is this something that you show up on day one, if you’re joining a company or if you’re starting a business and you’re not excited, can you get yourself there? Or if you’re not there from the beginning, you got to get out.
Joe: I can only speak for me, but I think I have to be excited at the very start. If I come in with a sense of skepticism with the company or with the product. I owned a PR company for 14 years before I joined Antlion. Sometimes people would pitch products to me and it wouldn’t excite me. Every time I accepted those clients, it didn’t go well. This is where I’m coming from.
Assuming you are excited about your product, you got to enter in with that passion. The ModMic story is I was looking for this product and I couldn’t find it. My pair of headphones broke and I was looking for a new headset. I was like, “Why can’t I just get nice headphones and a good mic that attaches to it?”. I don’t want one of those big desktop mics. I had a small desk at the time. So I was like, “Man, I wish somebody made that product”. Three months later I was at a job interview for this company and I’m like where were you?
So that’s how I knew that both I was interested in the product and that other people would be also. If I’m looking for it, certainly other people have to be. Clearly, they need marketing help since I wasn’t able to find this product. Anyway, that’s my anecdotal story.
Felix: The original question, sorry I distracted you. The original question was how do you begin to build up this community or support this community so that they want to do things like product reviews or want to spread the word of mouth about your product?
Joe: Once you’ve got the excitement thing down, you just meet people in their place of interest. We talked earlier about meeting people where they are. This is, I think, also a figurative thing. We can meet people where they’re going to be interested in our product. So it’s an individual thing.
I think a lot of people make a mistake in audience building that they care a lot about reach in volume. But there’s a lot of value to be had in reaching the quality of an individual contact. Ideally, an individual contact who has a lot of reach. So in the tech world, for instance, Linus Tech tips, one of the largest tech reviewers in the world, really, really like the ModMic product. He did before I came onboard. Establishing a rapport with those types of people, the influencers of others, and doing so at a very high level of contact and relationship building, that is essential. Doing so for an individual who’s a customer is also essential. It’s just harder to dedicate a lot of time to it. But I would take that over plastering an ad that’ll reach 10,000 people very passively. I would take one great interaction with a person over that.
Felix: Especially someone with an audience, like you said, that has their own kind of reach.
Joe: Certainly with an audience, but even just a regular individual who might be a customer, I would take one good interaction with them over 10,000 ad views any day.
Felix: Good meaning someone that is already super excited about the product, or that could be super excited about it?
Joe: Yeah just curious about the product is all I need to talk to them.
Felix: So there are two types of contacts. I’ll start with the first one which is the one basically, the influencer. How do you guys identify influencers that you want to work with that maybe have not heard of the ModMic before?
Joe: A lot of Googling. I go after people who look at similar products, might be looking at headphones, headsets. Or people who are in our goal demographic. For instance, in the gaming world, live streamers and that kind of thing. People who are streaming game content or doing YouTubes about games. So, one, just finding those people. Or, on the business side for instance, people doing a Shopify Podcast for instance. Finding those people and reaching them with the message that is specifically crafted for their audience. What is it about your product that will appeal to their audience and that will be interesting to their audience. Nobody wants to shield somebody else’s product, right? Not without good cause. So you need to craft the message that’s going to convince them that working with you is not only interesting for their audience, but also in their best interest and easy. You got to make it as easy as possible for them.
Felix: Got it. So how does that engagement usually begin? Let’s say you find a YouTuber or a streamer that’s talking about video games. How do you approach this? I’m assuming they’re getting pitched a lot to, right, from different products or maybe competitors to yours or other people that sell headsets?
Joe: Oh yeah. They are constantly inundated by pitches from people.
First of all, grow a thick skin before you start this because you’re going to get a lot of rejection. Don’t take it personally. That’s the important thing. As an example, I’ll send out 100 emails. That’s the first thing I do usually, just email somebody. Cold email, introduce myself, introduce the product. I might send out 100, I’ll get 15 replies, 20 replies. That’s good, that’s a good number for me.
Felix: What are you saying in those emails? How do you begin to even get them to, 50% reply rate I think is good. How do you get them to respond?
Joe: Be personable. Be individual. So if you can, craft a message about them, about their channel. Whatever they’re doing that has caught your attention. Send them a real message. Don’t just copy and paste something to them. Yes, you should probably copy and paste the stuff about your product because that’s not going to change. But when it comes to saying why you want to work with them, take that extra step and be personable with them. Be human. I think that’s the biggest thing.
Felix: Got it. What about length. Does that matter? Do you want to be quick and give them something short. How much detail should you go into? Why you want to work with them, why your product?
Joe: I guess length matters. I’ve gotten to this point where I don’t really think about it. You certainly don’t want to write them a book and you don’t want to give them too little information. So there’s definitely a happy medium in there. I don’t have a word count specifically. Less than a page probably is about right.
Felix: Got it. So they respond back and say, “Yes I’m interested”. What’s usually the next step?
Joe: Well the first step would have been to figure out what your offering them. So in that first email, you need to be clear with what is being offered and what is being expected of them. Don’t be vague. They don’t have time to have a long conversation about what it is you want from them. I want you to review the ModMic on your channel as either a dedicated video or as part of some other style feature that you can do. That’s what I want from you, that’s what I’ll say.
Felix: Are you hitting them with this in that first email right? You’re not giving this thing where you’re like, “Hey if you’re interested, email me back for my details”. You’re not doing that. You’re giving them all the details up front.
Joe: The trick is you must give them a reason to reply. So I will always say, “If you are interested, please send me your shipping address”.
Felix: I like that.
Joe: Now they have a reason to reply. It is an action item for them. I will reply with my shipping address. A lot of emails I get is literally just a shipping address. Name, shipping address, bam.
Felix: I like that because it leads to a reward essentially for them if they reply because a lot of times it’s reply to get more details. I’m like, “Man I don’t want to reply to get more things to read”. If I reply and send them my shipping address, I get the product. I think that that is important where you’re incentivizing me or incentivizing person that you’re reaching out to to reply and not to reply then get more work.
Joe: Right. That’s exactly it. It also gives you an opportunity to reply back. They send that shipping address and that’s when you can reply with something else. Hey I’ve sent it off and you tell a little story. Whatever it is to begin building that relationship. Tell a story, ask a question, maybe both. Put in a few extra items about the product that maybe got glossed over or you want to really focus in on.
Felix: Makes sense. So once you are able to get that far, what do you usually expect. What’s an example of an ideal product review?
Joe: They love the product and tell everybody to go buy it immediately. That’s the ideal.
Felix: Is there certain things that you want them talking about usually. I think a lot of times when people are thinking, “I want to go the route of getting reviews for my product”. They either go one way where they kind of give all the free reign essentially to the reviewer and don’t give any guideness or direction. Or the other way where they really want to control the entire messaging and give them a script even or certain things to hit on. Where do you fall in this spectrum?
Joe: I would definitely advise not trying to dictate to a reviewer what they should say about your product. Not only is it rude, I think it turns them off your person. It turns them off your brand. They don’t want to have somebody tell them how to do their job. Nobody wants that.
So that said you can, of course, nudge them in the direction you want them to go. For instance, in that follow up email, one of the things I mentioned is after they send their address you reply back and you include some key points about the product. For instance, our product is vegan. Don’t forget. Hey, we really want you to compare our microphone to other microphones. You lead them in that way. You should definitely try this. As a result, a lot of our reviews are comparing our mic to other mics which we compare very favorably. But you don’t want to say, “Hey I’d like you to review our product by comparing it to other microphones”. Then talk about how it attaches and then talk about the mute module. Those are things, you don’t want to be too direct I guess. You just want to just nudge them in that direction. They’ll get the message.
Felix: So you give them a menu of things to pick from or just some information essentially that gets them thinking about how to craft the review. So how do you usually work with these reviewers. Do you usually work with paid reviewers, do they get a commission? What’s usually turns out to be the best approach if someone wants to go down the route of product reviews?
Joe: Oh man, now you’ve done it.
I come from a journalist family. Everybody in my family is a journalist. Ironically as a PR person, I’m on the opposite side of journalism which is weird. But it’s still very connected. I draw a very hard line between editorial content and paid content. A review is an editorial piece. I’m not going to say I’ve never paid for one. But I am severely against doing so.
Felix: Why’s that?
Joe: The moment a reviewer is paid to review an item, they lose all credibility for not only the item they’re currently reviewing but all future items they review.
Felix: So you don’t even want to work with reviewers that have gotten paid or at least currently are taking paid reviews?
Joe: I wouldn’t say that. But I don’t think it’s in their best interest to do it. It’s not in our brand’s best interest to be associated with paying people to review products. I will pay people to do advertisements about our products. But to pay somebody to review a product calls into a lot of question their credibility. Basically, there’s no way somebody’s going to get paid a bunch of money and then trash your product. If they can’t say negative things about your product, then why would you trust them to be honest about anything they do?
Felix: Says a lot about them basically.
Have you taken the other approach where it’s not editorial but it’s an advertisement? What’s an example of something like that?
Joe: We run advertisements frequently. On video, we do a lot of pre-roll and post-roll and product inclusions. Those are clearly stated as hey this video is sponsored by Antlion ModMic. Check it out at the link below. Yada, yada, yada. It tells them about the product. We’ll advertise on Facebook. We’ll send people to our blog pages and then use that post usually about audio and getting better audio gear to bring them further into learning about our products.
Felix: How do you decide whether you should work with someone as a sponsor for them or you’re paying them for this advertisement where they are kicking off the video by saying, “Sponsored by Antlion ModMic” versus a review. How do you decide which one to go with?
Joe: You go with both is the answer. I like to tell reviewers, that, “Hey I want you to review our product and after you are done reviewing the product, I would like to talk to you about advertising”.
Felix: Oh okay. So you kick off at the review first and then if they seem to be excited about the brand, then they’re probably going to be a good fit to be sponsored by you.
Joe: That’s right. You can usually see from the review how much they get the product and how excited their audience is by the product. That’s a really great measuring stick for whether an ad is going to be successful or not.
Felix: You’re not the first one that I’ve heard that this idea of making sure that your reviewers or your sponsor, influencers get the product. What does that mean to you, what does it mean for them to get the product?
Joe: Not really sure I have a static definition of that. I keep coming back to this ideal of excitement on this call. But do they appear to be actually excited by what this product allows them to do is the thing I’m looking for. Is in genuine? Are they using the product correct, of course, is very important. Do they install it correctly. Is the quality of the text good? It’s more like did it click in their head that, oh my god I can finally use my pair of Sennheisers to make Skype calls and to play Call of Duty? Did they have that ah ha moment. It usually comes across very clearly for us. Then we can see in the comments or in the interactions they have with their audience, did their audience also get it.
Felix: Got it.
I want to switch topics a little bit about this approach to building this business that is stable. This is something that you mentioned in the pre-interview which is around controlling the capital structure of the company so you’re not forced to go big or go home. It allows you to [inaudible] stable growth without a lot of pressure. Can you explain what this means and what is the capital structure that you guys have been able to set up so that you’re able to approach business in this way?
Joe: Well, we’re a weird company, I guess, in these days because we don’t have any debt or any investors. Jimmy and Eli in 2012 to 2014 made the mics by hand. They just bootstrapped everything from there. They took the money, they invested it into doing the first mass production run, I think it was 5,000 units. Those sold out very quickly. Then that money was taken to do another production run of 10,000 units and so on and so on until we are here today really.
Felix: I think I spoke about it when I asked a question that you’re obviously speaking about, the benefits of being a bootstrap and not taking on any debt or have any investors that dictate the direction of the business. What about opportunities that potentially could be missed by not taking on debt or taking on investors?
Joe: Well you’re missing out on the opportunity to basically leverage debt for faster growth right. So if we needed, say, a 50,000 unit production run and we didn’t have the capital to do it. If we really believed we could move 50,000 units very quickly, then we need to be able to do that. So you need to take on debt when you can immediately turn that debt into capital. Roll it very quickly back into capital. We’re a very steadily growing company and we’ve never had that explosive growth.
Now, we may be missing out on the ability to just have explosive growth because we can put out 100 times more advertisements about the product. Or maybe missing out on hiring 20 people that can do these various tasks that we have to outsource and we are slower to do. So we can produce more stuff then we might be able to grow quicker. But, the comes with the implicate risk for debt, of course, that you won’t be able to do what you imagined you’ll be able to do and everybody will suffer in the end. Or for venture capital of having somebody holding your purse strings and potentially changing the direction of the company.
Felix: Can you give us an idea of how much the company has grown by just taking this kind of bootstrapping model? What’s possible without having to take on investments and investors.
Joe: I believe this year, I don’t have the exact number. But I believe this year we have passed a quarter million ModMics sold.
Felix: Wow. That’s an amazing milestone.
Joe: So you can get pretty far.
Felix: Speaking of getting far, how many countries do you guys have distribution in today?
Joe: It’s definitely over 30 now. We’re basically available in every country in the EU. Obviously the United States and Canada. Australia, Japan, India. Thailand I think has now launched. I think that covers most of the countries. We’re not yet available in Latin America, Africa, China or Korea.
Felix: How do you guys decide where to ad new distribution?
Joe: So I built a list basically the size of the gaming market and the overall strength of the economy. I basically created my own formula for determining what are the most important places that we need to be next.
Our product is a premium product. It’s not cheap. It’s not super expensive either. The ModMic 4 starts at $42 U.S. and the ModMic 5 is 70. There’s a middle product at 50. In a developing nation, that’s a lot to pay for microphone. People don’t have super fancy headsets in Sudan, just picking a place randomly.
Felix: I think you’re right. Are you allowed to change up pricing depending on who’s buying from where?
Joe: I’m sure we can, I don’t think it violates any law. I don’t think it’s a good idea to have variable pricing because you begin to lose control over the pricing of your product. The more control you can maintain, especially when dealing with international sellers. The more control you can maintain over price stability, the less often you’re going to have people racing to the bottom on price for your product. You really want to avoid that because it really messes with your whole distribution network. So somebody in the U.K., for instance, drops their price $10 unexpectedly, then every other distributor in the EU gets mad.
Felix: I think it makes it a lot easier to manage something like that in a sense too. So speaking of that, how is [inaudible]. Do you have a team working on this, a person working on this, you have applications that you recommend for anyone that needs the help with this kind of distribution?
Joe: We’ve got an internal guy here that handles it. His name is John. Does a great job. Basically, his job is managing our partners. That is one of his, and probably the largest primary role he has. John manages all the partners. Interestingly, actually, I am the one who goes out and finds new partners. I vet them, I establish contact and we begin that discussion and then I hand it over to John who becomes their brand partner.
Felix: Got it.
So you mentioned that there’s also this new live group chat platform that you’ve been able to implement onto, is the site or where the customer’s able to ask questions and also be able to communicate with them. Can you tell us a little bit more about this? What is this platform that you guys have been using?
Joe: We use Discord which is huge in the gaming community, not so huge outside the gaming community. So it really only applies to game companies, I think, for now. I’m sure you can use it for other things.
It is straight up just like a live chat. So not like the live chat you get on a website where it’s like a one on one experience. This is a community building tool more than it is a support tool.
Felix: Most of the audience is most familiar with Slack. So this is like Slack for the gaming community, is that a fair?
Joe: Yeah, yeah. Imagine if you could just give a link to anybody and they can just join your Slack channel, a specific Slack channel. Obviously not the one about private stuff. Just like a community Slack channel, yeah.
Felix: Got it. I think this is cool because I don’t think anyone that I’ve had on the show has talked about using Discord or live group chats like Slack or any other platform like that to build a community. How large is a [inaudible]? Is it unwieldy as a certain point?
Joe: We haven’t hit the unwieldy point. We’ve probably got about a thousand people in the chat. At any given time there’s probably only a handful, four or five people talking. So it’s not just a flood of messages. It sort of self regulates I think, a chat like that because at the point a lot of people are chatting, people don’t want to be involved with that. If it’s moving too fast for you to read, then you’re not going to say anything. Usually, it doesn’t get too crazy in there.
Felix: Got it. What are people talking about in there? I can’t imagine they come in, just talking about the microphone only.
Joe: We have three channels that are really busy. We have a general chat which, as you can imagine, just about anything you can imagine. Just people chatting, a lot of people just talking about their day or whatever. That’s the general chat.
We have tech talk which is people talking about specific tech things that are not related to our product. We are a tech brand. So people come in, they ask about raspberry pi devices or something and goes in there. It’s interesting because our fans are all tech people basically. We don’t answer questions in there really unless we know the answer, which is not often. Usually, somebody will ask a question and somebody else in the chat will know the answer. So it’s fun to see that happening.
Then we have a support channel which is, as you can imagine, people are having questions about our products. So whether that is pre-purchase questions or actual support, something is wrong with my product questions.
Felix: Yeah I can imagine this is a hotbed for live and tons of valuable customer feedback right on how to talk to your customer, what kind of concerns they have, product research for your next iteration.
Joe: Yeah. It’s been super valuable in learning about our customers and converting unhappy people into happy people. To come back to that earlier topic of I’d rather have one really solid conversation with one individual person than a passive ad. It really is valuable for that. So people come in and they’re mad because their mic isn’t working the way they think it is. By the time they leave, they love our company.
Felix: Got it.
Now other than Discord, what other apps or tools do you guys use or rely on to run the business?
Joe: Well, other than Discord and Shopify?
We use UserVoice as our actual customer service management platform. We use Rakuten is our warehouse provider. Within Shopify itself, we have a bunch of apps we use.
Felix: What are some of your favorites?
Joe: Bold makes a bunch of really good stuff if you’re familiar with them. Specifically, product upsell and product discount have been very valuable tools. The ModMic 5 works best when it’s paired with a USB device that we also make when you’re using it on PC. So being able to provide that, the buy the ModMic from our site and then we say, “Hey, don’t forget to add this item”. Adding that plug-in shifted our attachment rate of those USBs from about 10% to nearly 50%.
Felix: Wow. Pays for itself.
Joe: Yeah, definitely. It’s been a super worthwhile tool.
We also use a followup email program called Follow Up Email. That’s been very handy. Again, because the ModMic is a bit of an odd item, we use it to give them a quick tutorial on how to best use their product as well as offer up a customer survey. Not about, “Hey review our product”, although it has links to that too, but about what they wanted from our product and what they want from future products. So very valuable tool and learning about our customers. We spend a lot of time trying to learn what our customers use our product for because it is a really flexible product.
Felix: So what’s next? What do you guys have planned for 2019. What are some big goals you guys have?
Joe: We’ve got a wireless product coming up. As far as beyond that, I can’t really say. As far as growing the company goes, we are probably going to continue to expand into new markets. I think we’ll see a couple new markets open up in 2019. My priority being Russia if I could find a way into Russia but that’s an interesting challenge in and of itself. There’s a few other key places, Korea is another big one. So we’re going to see that.
We’re going to be attending fewer events actually. We’ve decided that attending events has not produced a really positive ROI for us. That does give us that really great one on one interaction but the price is simply too high. We can get better use out of those dollars. So we’re going to be reinvesting into more digital, stronger touchpoints there.
I think that’s what we’ve got planned for 2019. New products and refocusing into digital interaction with people over physical interaction.
Felix: Definitely plenty on your plates. Thank you so much Joe. Antlionaudio.com is the website. Again, thank you so much for coming on and sharing your story and experience.
Joe: Oh it’s been really fun Felix. Thanks for having me.
Felix: Thanks for tuning into another episode of Shopify Masters, the eCommerce podcast for ambitious entrepreneurs, powered by Shopify. To get your exclusive 30-day extended trial, visit shopify.com/masters.