On today’s episode Ken and David do deep dive into their own businesses and brands to examine the impact of the COVID-19 outbreak. Ken goes into detail about the switch from FBA to FBM, PPP loans, and sourcing products. David discusses making connections with bankers, remaining positive, and focusing on things that are in your control. This is a great episode you will not want to miss.
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And times like this, it’s really crucial to have a strong mindset and a strong focus on your why. Why are you doing what you’re doing?
One thing that I’ve done is called several different Banks One, you know my current bank that I’ve won credit through, however, I’ve, I’ve reached out to a couple of banks that I don’t do business with and one ancillary benefit of that is in forming new relationships with bankers.
Welcome everyone to the www.firingtheman.com Podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you were capable of more than join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your host serial entrepreneurs, David Schomer and Ken Wilson,
Welcome everyone to the firing the man podcast. Today, Ken and I are going to do a deep dive into our businesses and our brands to examine the impact that coven 19 has had. So Ken, how’s business?
You know, David business is up and down. It’s very fluid and it’s changing by the day, you know, just like just like everything else around us. Um, yeah. How about yours?
You know, sales are up. However, today’s April 8th and currently I cannot send in any inventory. Uh, cause I have a nonessential item. That’s what I’m selling. Nonessential items. And the fulfillment isn’t, is not going through. It’s going to be about two or three weeks. If someone orders today, it’s going to be about two or three weeks until Amazon ships out as of today. And so it’s been really interesting. My sales have never been higher. I think you’ve got a lot of people spending time at home with nothing better to do and so they’re, they’re shopping online and, and so I think that’s, that’s a huge advantage.
I also think you’re seeing a flood of people who have never ordered on Amazon and are realizing, Hey, this is super convenient. I don’t need to go to the store. If I want something I just can buy it on my phone. And it shows up two days later. And so I think you’re seeing a lot of people going to Amazon. And going to online shopping, it’s the fulfillment that that is causing issues. And so fortunately I was in a category that at one point was deemed necessary. And so I created an order for a huge amount of inventory. And so I should be doing pretty well for the next month or two. Um, but to the extent that I can’t send an inventory, uh, this show is going to come to an end at some point. Right. And so hopefully the economy recovers and, uh, fulfillment gets back in line and I can bounce back from this. But, you know, honestly, sales are, are at an all time high, so I can’t complain.
That’s awesome. Yeah, no, that’s, that’s really good to hear across my two brands. I have, I have a, a really, you know, there’s differences, wild differences. So on one brand I sell in a patio, lawn and garden and Amazon, if you’ve seen the chart, they’ve ranked all of their categories from essential to nonessential and how long the shipping times are. And again, you know, we’re taping this, you know, early April and it’s, it’s day by day with Amazon. So, uh, but the patio lawn and garden, which is one of my brands I sell in that category is about midway through the S through their priority list. So their ship times are about seven to 10 days and I’ve seen a sales increased slightly on that brand. And so no real change there. However I can, I can only ship in for that brand. I can only create a shipping plan for four skews that have a BSR lower than than a thousand. I’ve noticed that because I have multiple skews in that brand.
Some of them sell really well and some of them don’t. And so I think what angle Amazon is coming from is, you know, the 80, 20, right? They want to focus, they want, they want to focus all of their energy on the 20% of the products that they’re making the money on. Right? So, which is a smart strategy. So on, on my other brand that I have, it’s kind of all over the place. I was out of stock for a while cause I’m doing a design switch over. And luckily I created, like you had mentioned, I created a shipping plan in February cause my, my shipment was coming from overseas, so it was already in route when they put that halt in place. So that hit and they scanned in the products. Like we were talking earlier, like two days ago and without PPC even turned on and, and with no, no units in inventory, it said we’ll ship two weeks from now. Sold several hundred units in one day without PPC turned on. So it’s, it’s just really all over the place.
That’s awesome you and I had a call last week and I’ve really seen a division of sellers, uh, in my masterminds and just people that I’ve been talking to. Um, I think there’s a group of people that are bearing their head in the sand saying this sucks and not taking any action. And then I’m seeing other people view this as an opportunity and kind of going in the other direction, just, just marching forward. And you’ve taken a couple of specific actions that I’d like to talk about.
Yeah, for sure. So, uh, and I got to give a shout out to Carlos Alvarez on this one. I was following on his group Wizards of Amazon. If anybody doesn’t follow that, you know, go follow Carlos on WOA. Uh, and you know, on one of my skews, the, the ship time went out 30 days, right? And, and you know, I, I was selling maybe 50 units a day, you know, and when the ship time went out to 30 days, that those sales fell to like five a day. But this is a skew that I actually have on hand in my warehouse. So what I’ve done was like, like I figure this out, right? Like my sales just dropped off 90%, right? So I created a FBM listings and married them to my FBA listings since I had the product on hand and I started fulfilling FBM. I started getting sales, I increased the price on the FBA listing. And, uh, Amazon has made a change where they’re giving the buy box. to the FBM listing, if the ship time is faster than the FBA listing. So I was able to generate sales that way. And now I’m fulfilling sales out of the, out of the warehouse instead of Amazon’s FBA warehouse.
So a couple of things I want to unpackage there. Um, for those of you who are not familiar, FBA stands for fulfillment by Amazon and that’s when you’re sending in all your products to an Amazon warehouse and they are doing the fulfillment. A FBM stands for fulfilled by merchant and that’s where you, the seller are packaging up the product and selling it to the end user. So just, just wanted to touch on that for anybody sitting in the car right now saying, what the hell is FBM. So, um, so are you getting out the tape gun and the label maker and, and you know, individually packaging these things?
Yeah, so, you know, David, we talked before and uh, when I was first started selling online, I kind of, I kind of dipped my toe in a lot of different things. Retail, arbitrage, RA, online arbitrage, OAA and wholesale. So luckily I had some of those supplies and I’m in a corner of the warehouse, all dusty, right? So I had to bust out the dymo label printer and I got onto you line’s website. I ordered some poly bags busted out to tape gone and yeah, I’m fulfilling them myself.
You had mentioned some profitability implications that are swinging towards the positive. Can you talk about that? Yeah. So in terms of increased sales or, so you’re saving on FBA fees, right?
Oh, got you. So, so for the listeners, soF four, with, with fulfilled by merchant, the FBM you, you don’t pay the uh, pick pack and prep fees. So you know, if it takes me a minute to fulfill an order and I save $3 or you know, $5 on that FBA, pick, pack and prep fee, then there’s more margin as well as I, you know, not to get too far in the weeds, but they’re shipping templates and shipping plans and I’ve just basically charged the customer for shipping. So I’m, I’m actually making about 25% more on the FBM listings than I did on the FBA listings.
All right. So tell me this, when you get back, when things get back to normal, are you going to switch completely back to FBA?
You know, I might run them simultaneous for awhile and see what happens. Uh, you know, this, this pandemic, you know, nobody, nobody can predict a pandemic, nobody can predict a disaster. Right? And, and I think this really showed me, it opened my eyes on, on being more agile and luckily I had several skus on hand to do this. Um, so it, it, it definitely opens my eyes to having more, more channels open and, and, and trying to be more agile in the future and have more opportunity. Absolutely. So David, what are, what are some things that you’ve done in your business since the, uh, pandemic COVID-19?
So one thing I’ve noticed is a lot of my suppliers run a pretty lean inventory model, which I think for those of you who are unfamiliar, lean inventory means you know, the bare minimum amount of inventory without going out of stock. It usually requires more frequent orders in smaller quantities. And I generally run pretty lean inventory. However, I could see things going in a negative direction. And so I placed one giant order when I was in a category that that was still allowed to ship in supplies. And that got me about two to three months of inventory on most of my products. And so that was a great move. That was super speculative. However, it’s, it’s tending to pay off. And what I’m seeing is that a lot of my competitors are going out of stock. And so what I’ve actually done is I’ve went in and raised all my prices, five to 10%, right?
If you think of supply and demand, the supply is, is decreasing as people cannot send in any more inventory. And you know, if you think about like the supply and demand curves, that natural response to that when supply is decreasing is to raise your prices, right? Uh, assuming a constant level of demand. So that’s been something that I’ve done and I have not seen any, uh, decrease in conversion at those higher prices. Now, I didn’t want to make giant jumps. Uh, just cause you know, the, the, the Amazon’s algorithm is really a black box. Uh, and no one really knows and if anyone tells you that they know they’re lying, but I have heard some anecdotal evidence of people making large price increases and having negative implications from that. So I thought five to 10% would be reasonable. Uh, and so far so good that that’s been going well.
Nice. Yeah, I definitely agree. You know, supply and demand it, it has to work right? It has to flow. But I have heard rumors of Amazon shutting down accounts for price gouging. I mean they made it pump, you know, the, the government came down on them and they made it public that they were shutting down accounts, but five to 10%. It’s definitely reasonable. Yeah. Yeah. I, I’ve seen quite a bit of of the same where, you know, competitors going out of stock and increasing sales. It’s just a really, really crazy time.
Absolutely. Absolutely right now, there’s a $2 trillion stimulus package being put together and just a flood of applications going in. And I’m not going to go into the specific details of all these programs, but if your business has been negatively impacted, if you’re supply chain disruptions, you would potentially be eligible for these. And one thing that I’ve done is called several different banks. One, you know, my current bank that I have a line of credit through. However, I’ve, I’ve reached out to a couple of banks that I don’t do business with. And one ancillary benefit of that is I’m forming new relationships with, with bankers. And so, you know, in the future say I want to get my line of credit increased at my current bank. And they say, no, well I’ve got a pocket full of contacts that I’ve reached out to in the last week that I’ll be able to go to and see if they can provide capital or cheaper capital.
And so I think, you know, that’s one thing that I think is always good to have in your back pocket is you know, five to 10 awesome relationships with capital providers. And that can be your traditional like hometown bank that can be a larger bank like us bank. I would say I would sprinkle in at least one credit union. Um, there are some special lending rules that apply to credit unions that don’t apply to banks and sometimes they can offer more favorable terms and that relationship, you know, even if you don’t use it today, you know, in the future if you have a a money machine, right? If you have products that are selling really well and you put in $2 and you get $4 out of that money machine, well it’s time to get on the horn and call the bank and say, Hey, let’s establish a line of credit.
And so I’ve been forming those relationships and I’ve been doing so through zoom, just a face to face call, like kind of like FaceTime. And that has been, I’ve had mixed results on that. I’ve had some people really appreciate it. They like that face to face contact. Um, I’ve had a couple of people that it really caught them off guard and they thought it was just going to be audio in there. They’re sitting in their pajamas and uh, I have one lady, she put a post it note over camera but it was like a, it must have been a white post it note. And so you could kind kinda like see her moving in the background. That’s creepy. It’s, yeah. And so, uh, mixed results with zoom. But anyway, kind of long story short, been reaching out to lenders and establishing those relationships. And the last thing is, uh, scrubbing through my expenses.
I went through all my credit card statements for the last three months and I’m looking at anything that’s not essential. I don’t know how long this is going to last. I don’t think anyone has a really good idea of how long this is going to last. But you know, we talk about profitability all the time. You know, you can do that by increasing revenue or you can do that by cutting expenses. And at the end of the day you end up at net income, which is what’s going in your pocket. And so, uh, there were a couple of subscriptions that I hadn’t used in a while, uh, decided to uh, cancel those and just seeing where, where do I have non-essential spending? And I think running a lean company is good, but especially in times like this, and that’s one of the reasons that the economy’s contracting right now is because everyone’s sitting on their hands in not wanting to do anything cause they were just kind of unsure about the future. And so I think you see a lot of America doing this right now is cutting back on expenses and trips and vacations and new vehicles. I saw GMC the other day. They have 0% financing for eight years or seven years. I mean, just awesome. It’s because no one’s buying cars right now. Right. And so kind of a long winded, uh, explanation for I’m cutting expenses right now and just preparing for the future.
Yeah, no, that is great advice. It’s perfect to build those connections with bankers and have them on speed dial. And you know, using zoom, kind of just being agile and figuring things out on the fly is, is crucial, um, to survive, you know, especially in a, in a crisis and a Pandemic. Uh, one thing I would like to circle back on before we move forward, uh, is the money machine. You talked about that, that’s the unicorn, right? Where you put in $2 and you get out $4, we need to go unicorn hunting and
for sure and find a bunch of those for sure.
You know, you’ve covered building a relationship with, with bankers and stuff like that up. I’ve been using this time to not only to reach out to family and friends and stay connected because I think that’s important to check in on people. You know, if you have, you know, friends, relatives, just give ’em a call, checking on them, see how they’re doing. It lifts their spirits that lifts yours. Uh, as well as reach out to other people in your space, in e-commerce. Find out w you know, find out how they’re doing, what’s changing in their business. You know, your, your, your Facebook groups, your private groups, your masterminds get, get together, you know, have, have meetings more often. Uh, find out what’s changing. This space is changing rapidly every day. It’s, it’s evolving and changing and, and it’s really good to reach out and find out, you know, what kind of pivots other people are making. Um, you know, what’s hot, what’s not. Just staying connected in network I think is huge.
Absolutely. And I think on that topic is when you’re connecting with people, I try to stay away from people that are negative and in, there’s a lot of people right now, you know, on the news in the media, in Facebook groups that, that really like to talk about doomsday scenarios and talk about the, the world imploding. And that’s one thing, you know, covert. No one saw this coming, but uh, we will have something like this again, you know, who knows what it is. You know, no one saw, very few people saw the, the mortgage crisis coming in 2008 but it happened. If you watch the business cycle, it goes up and down, up and down. And if you’re new into business, you’re going to see this again, you know, for people. We talked to Carlos Alvarez, we had an awesome interview with him yesterday and he was talking about 2008 and you know, how he saw a similar pullback in 2008. And so I think, you know, we will snap out of this at some point, but, but understanding that this is just a current challenge and if you’re going to run your own business, it’s going to be full of challenges. I mean, that’s just, if, if you don’t like challenging things, running your own business is not good decision for you. It’s just you’re constantly putting out fires and, and I think just having a good mindset really helps.
Yeah. I, you know, I’ve heard this analogy a couple of times. I don’t know who to give credit to. Uh, but it’s, uh, the entrepreneur roller coaster, you know, the, the life of an entrepreneur, it’s like a roller coaster. It’s ups and downs. It’s constant up and down. And as an entrepreneur, we, uh, we get thick skin, right? Like one day we wake up and you know, our warehouse burned down. We have no inventory. Or one day we wake up and Amazon shut our account down. It’s just, it’s constant problems. It’s constant, you know, challenges. But you know, it is the, the lifestyle of an entrepreneur, you know, and I think in times like this, it’s really crucial to have a, a strong mindset and a strong focus on your why. Why are you doing what you’re doing? And at the end of the day, the way I see my entrepreneurial lifestyle, it’s a long game and I’m not, I’m not in this for the three months, six months, lean on my Lambo on my garage. This is long game for me. And if you ask yourself, okay, well this is a pandemic, nobody predicted this, try to predict what’s going to change. Like, like the world’s going to change. There’s going to be monumental changes in the way people go about their daily activities. There’s going to be shifts and changes, right? More, I would suspect more people’s going to order food from a grocery store and have it delivered. Right? Like, like those changes are going to happen. Nobody really knows. I, you know, we can guess. But what we’ve already seen the statistics come out, like the, uh, Amazon has signed up. I, I can’t remember the exact amount of people, but lots of more people are shopping online now. And so if you’re an eCommerce seller, there’s never been a better time now and it in the future, right? Because when this kind of settles out, you know, in the next six to 12 months or 18 months, then people are always going to have it in the back of their mind.
Like, eh, you know what, I can just order that online. You know, and if you’re in a good space now, and the other thing I also, I want to point out too, is there are going to be people that they’re not going to manage. You know, they’re going to be, entrepreneurs are going to be like, they can’t come back from this. So the space is going to be opened up and there’s going to be opportunity for people that are still in this space. So there’s opportunity to expand. And if you’re in the right mindset and you know you’re in for a long term, then I think it’s a, it’s a good space to be operating in. What do you think David?
That’s right. Th the goddess of good luck favors the man in motion. There you go. And, and I think you just keep taking steps forward and focusing on things that are in your control. You know, right now I was in a Facebook group this morning and someone was saying, you know, I sell such and such an it’s, I know it’s an essential good, but Amazon doesn’t have it listed as an essential item. And that’s bullshit. And you know, unfortunately for that person that’s out of their control, Amazon they’re the big brother, they’ve, they’ve laid down the hammer and they’ve said, what you’re selling is a non-essential good. And, and I think spending time and energy on that is not productive and it’s not helpful. And so, you know, I think you make pivots, you look for opportunities and only focus on things that are in your control.
Yeah, yeah, absolutely. Go test other channels, eBay, Etsy, you know, any other marketplaces. Expand your website, work on, like you had mentioned, going through your expenses, find stuff that has been sitting around that you haven’t worked on in a while and get it out and you know this and stay in motion. You know, I think that’s crucial for sure.
I think there’s a, and I know we’ve talked to some of our listeners, there are a lot of people that listen to this that have a full time job and either have started an eCommerce company or are on their path to firing the man. And some of those people are probably laid off right now. And I think that this is a really important time to reflect on, you know, what does it mean to work for somebody else? And when the machine stops and they no longer need you, unfortunately you’re collecting an unemployment check, um, and you’re not working anymore. You know, my, my brother-in-law, um, he, uh, he’s laid off for a month and hopefully where he works, that’ll reopen soon. But you know, that’s, that’s unfortunate. But you know, when you work for somebody else, they control your time and ultimately they control your destiny.
And so again, COVID-19 or something like this will happen in the future. There will be mass layoffs. And I think having a backup plan or having your own business is, is a smart play. You know, I’m not going to fire myself as a CFO cause I’ve seen a little bit of pullback this month. I’m in control and I like that. And so, you know, people should, especially if somebody’s laid off, use this time to learn, to grow, to start something. I think there’s a lot of people sitting on their hands right now with idle time not spending, but there’s a lot of things that you can do that don’t require any money, right? Start building an audience, start building content, uh, start doing product research, start forming relationships and uh, set yourself up for success the next time something like this comes along.
Yeah, absolutely. And I, you know, a couple things that I would like to add that you can take action on right now today. Depending on where you are in your journey, go through your house and your garage and all your stuff and grab anything that you, that you haven’t used in six months or a year that’s worth value. Grab it, put it on eBay, you know, I mean you might be able to generate some cashflow like that if find stuff that you’re not using and just sell it and get rid of it. Everybody has extra stuff. And if you are already on your journey and your, and you have a business and you know you’re operating, there are, there are government programs right now, there’s the EIDL and the PPP. We’re not going to go into them in depth here, but we will put the SBAs website in the show notes. I would really, really highly recommend calling your banker, uh, an SBA approved lender. Call them. Explain your situation, what kind of a setup you have for your business and in, in, in find out what your options are. Because there are a lot of programs out there right now that the government released to to help business owners, small business owners. So definitely recommend taking advantage of that. any closing thoughts, David?
Diversification? You know, simply put if, if you think of your overall net worth as a bucket, more hoses you can have going into that bucket to fill it up. I think the better, and this has been something, you know, there have been some lessons learned for me, you know, one, maybe it’s not the best option to have all of my inventory in Amazon warehouses because when Amazon flips the switch, guess what? I’m out of luck. Maybe it’s time for me to start looking at, you know, with a third party logistics company. Also, I think there’s, there’s importance in looking at other sources of cashflow outside of e-commerce. And I know that this, and I don’t want to stray too far away from our topic, but if you have $20,000 in, you’re looking to deploy it on more inventory or you know, buying a duplex, a rental, that’s a totally different market, right? Right now, you know, real estate and, and that’s an additional hose filling up your, your net worth bucket. And so I think that having diversification in all aspects of your life is good and especially in cashflow. You know, right now between Ken and I, we probably have 10 to 12 different hoses going into our net worth buckets. Collectively. Some of them are small, but some of them are larger. all right, to wrap up today’s show, check out the show notes for links to all the SBA loans that we mentioned in this episode. And also take it, take some time to, to think about all the things you have going in your favor. You know, gratitude lists. Man, that was a hot topic. Uh, in 2019 you saw a lot of social media influencers talking about a gratitude list. And honestly, I kind of thought it was bullshit.
Um, but I have been writing down things that I’m thankful for and I’ll tell you what it, it’s not bullshit. It is, you know, if you’re healthy, if you’ve got two legs and two arms and you know, freedom and you live in a democratic country, I mean there’s just so many things to be thankful for and, and that’s been one thing that, that has helped me get through this kind of struggling time. But I’d encourage everybody to take a step back. Think about your why as Ken mentioned. Uh, write down some things that you’re grateful for and keep taking action. Keep moving forward. This is not the end of the world. We will bounce back from this and the actions that you take today are going to set you up for success and to ultimately fire the man in the future.
Thank you everyone for tuning in to today’s www.firingtheman.com Podcast. If you liked this episode, head on over to www.firingtheman.com and check out our resource library for exclusive firing the man discounts on popular e-commerce subscription services that is www.firingtheman.com/resource. You can also find a comprehensive library of over 50 books that Ken and I have read in the last few years that have made a meaningful impact on our business or that head on over to www.firingtheman.com/library lastly, check us out on social media at firing the man in on YouTube at firing the man for exclusive content. This is David Schomer and Ken Wilson. We’re out!