Episode 113
Gary Huang is the founder of 80/20 Sourcing and the 7 Figure Seller Summit. He has helped thousands of e-commerce entrepreneurs save time and money sourcing products from China and scaling their businesses. Gary has been selling online on Amazon, eBay, Shopify, as well as his own websites over the past 10 years, and currently owns a number of private-label brands.
Listen to Gary to know the top 3 things that successful 7-figure sellers do!
[00:01 – 09:17] Opening Segment
- Gary Huang tells us why he decided to jump to the e-commerce space
- How a failed Google experience led him to e-commerce
- He talks about his first experience as an e-commerce seller
[09:18 – 19:26] Why Register to the 7 Figure Seller Summit
- What e-commerce sellers can learn from the 7 Figure Seller Summit
- Why Amazon is a red-hot marketplace right now
- Don’t miss our discussion about manufacturing and the role of China in it
- Are any other options aside from China?
- Listen to Gary
[19:27 – 30:43] Secrets of 7-Figure Sellers
- The secrets of 7-figure sellers according to Gary
- When is the right time to outsource for your business?
- Want some Amazon refunds? Check out Getida
- Promo code: FTM400
- Ecommerce vs. Brick and Mortar
- Gary weighs in
[30:44 – 41:00] Why You Should Jump to Ecommerce Now
- The top mistake that successful e-commerce sellers have made
- So many opportunities are waiting for aspiring e-commerce sellers today
- How can they find those opportunities?
- Gary gives an interesting insight into profitability
[41:01 – 45:55] Closing Segment
- Know more about Gary in the Fire Round!
- Connect with Gary!
- Links below
- Final words
Tweetable Quotes:
“Traditionally, you hear that saying, ‘Don’t put all your eggs in one basket…’ but one thing that surprised me right now in 2022 is for successful sellers, they’re really focusing on just like one or two things that they’re they can do the best.” – Gary Huang
“I think the thing that sets apart successful entrepreneurs is when they face challenges, they find a way to get things done.” – Gary Huang
Resources mentioned:
Email garyhuang@gmail.com to connect with Gary or follow him on LinkedIn. Source products like a pro by visiting 80/20 Sourcing today.
- Register for free in the 7 Figure Seller Summit to learn the secrets of successful e-commerce business owners!
——————————————————————————————
Send us a voice message and let us know how we can help you fire the man!
Email us –> support@firingtheman.com
David 0:00
Are you looking to grow your sales on Amazon? Chances are if you’re not selling on Amazon’s international marketplaces, you are leaving some serious money on the table. What keeps a lot of people from selling internationally are all the confusing hoops you have to jump through to get started. That is why we worked with Kevin Sanderson from maximizing e Commerce on our international expansion. Kevin and his team take care of the details and guide you through the process of expanding so that you can grow your sales and reach new customers. If you would like to find out if working with Kevin and his team is right for you, head over to www.maximizingecommerce.com/fire fire. Once again, that is www.maximizingecommerce.com/fire.
Gary Huang 0:46
So it takes sacrifice guys he really locked in, he focused. But you know, the reward was he was able to exit his business and submit seven figures. He took one whole year off, no business, spent it with family, travel, you know. So I think that focus, that’s one of the key things that I’m seeing right now, for many sellers. One of the seven figure sellers we spoke to Jamie Peros, he’s based in Australia, he’s really optimizing his carton packaging. So he can maximize the number of units he can put in a container. So, if, you know previously, you can only ship 100 units per container, but you can optimize your packaging, maybe you can get 1000 units. So all of those savings will be passed on to your profitability, to your bottom line, 20% with this product, it’s a yellow flag you may want to call an audible you probably want to rehab to look at ways you can improve upon that. And if it’s 15% or below, post advertising gross, you gotta fire that product.
Intro 1:45
Welcome everyone to the firing the man podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more, then 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 hosts, serial entrepreneurs David Schomer and Ken Wilson.
David 2:09
Welcome everyone to the firing the man podcast. On today’s episode we are joined by Gary Huang. Gary is the founder of 80 20 sourcing and the Seven Figure Seller Summit. He has helped 1000s of ecommerce entrepreneurs save time and money while sourcing products from China and scaling their businesses. Gary has been selling online on Amazon, eBay, Shopify, as well as his own websites, for the past 10 years. Gary owns a number of private label brands. This is an episode you will not want to miss. Welcome to the show, Gary.
Gary Huang 2:41
It’s great to be here. Thanks for having me, David and Ken.
David 2:44
Absolutely. So first things first, tell us a little bit about yourself and your background.
Gary Huang 2:51
Absolutely, well, I’m not going to give you my my life story. I can put it into just a few chapters. So I’m originally from LA, born and raised, went to school there at USC. I guess the first chapter of my professional life was when, in early 2000s I worked as a contractor at Google and in Mountain View, and this was pre IPO, I believe it was oh, four I’m kind of dating myself. And I worked in their online Google AdWords department purely in editorial, I was a contractor, I was not a full time employee. And basically, my job was to sit down and review those little three lines, Google ads all day long. So I noticed some interesting things. There were a lot of companies advertising for like supplements like Tahitian noni juice, online poker was big back then when it was still legal, and probably more porn stuff that you would want to see in a lifetime. Just the nature of the internet. But long story short, I did not get the job at Google. I would be, I probably would be a millionaire, at least with stock options. I probably wouldn’t be talking to you guys now if I did get the job. But I was let go. And I took away from that experience that hey, maybe there’s something here in terms of E commerce, all these companies are advertising, you know, putting all this money into Google ads. So it was about 05 I moved back down with my mom, went back home and I started selling on eBay. So that was the first chapter of my E commerce journey. Feel free to interrupt if anything resonates with you guys. So back then, my mom is a retired fashion designer in Los Angeles and she had a lot of contacts within the fashion industry and one of them was an importer from China that imported women’s shoes. So I thought hmm, maybe there’s something here and I thought why not just take some pictures with my old school camera. I had like a digital Canon camera back in 05. You know, I just listed them and put them up on eBay. You know, I bought like this book eBay for Dummies, and I just put it up and lo and behold they started selling. And then I’m like, hey, you know there’s something here and I started going to like Craigslist, estate sales, we would go to like Beverly Hills and all the rich neighborhoods to get like, you know, good stuff that people didn’t want. And I did a ton of like, photography, like shoes, women’s clothes, jackets, you know, the whole gamut. And basically that’s like the second chapter. That’s how I got started in ECOM. Just doing pick and pack myself before Amazon FBA I probably shipped 1000s of packages and drove to the USPS post office, dropped them off at the loading dock. I thought I was the man I had my own little e commerce business. So that was chapter two. Chapter Three was I made a pivot, I decided to move to Asia to China. It was 2008 Beijing Olympics was a big deal at that time. And I was listening to NPR and you know, I’m like, you know, I really want to make a move. And, you know, I actually majored in Chinese in college, you know, so I studied abroad. And you know, Shanghai, was like New York City on steroids was the place to be super cosmopolitan, and a lot of cool people, a lot of opportunity. So I made a pivot 2008, no job in hand, I had one really good buddy, he let me crash on his couch for the first month. And I ended up finding a job opportunity in the whole sourcing realm China sourcing. So that’s like the third chapter of my life. I was able to leverage my language skills, but at that time that was totally new to me. So I literally learned it from my old boss, he was like a very savvy old China hand spent, like probably 30 years in China, he’s really taught me a lot of the like, the tricks of the trade, you know, stuff like nobody really teaches you back then. I mean, you can see a lot of stuff online with Alibaba, but back then it was still like, in the early days, so literally, I visited like hundreds of Chinese factories, you know, I was like the point person for my foreign suppliers, I sourced you know, the whole gamut, you know, auto parts, soda, water heaters, exercise bikes, spinning bikes, you name it, right? Noticed a lot of things, learned a lot. So that was the third chapter. And then fourth chapter was, it was about 2016. I had recently gotten married. And then I started listening to a podcast, and they were talking about Amazon FBA. I am like, hey, this sounds a lot like the eBay stuff I was doing before. I had stopped the business when I moved to China, because we didn’t have you know, remote fulfillment options back then. And then I was listening to Scott Volker, the amazing seller. And I’m like, hey, you know, I’m on the ground in China, I know how to source and I did ecom before. So I put two and two together. So I started, I partnered up with a business partner at that time. And then I started getting selling on Amazon FBA it was about 2016. The first product that we did was Amazon watch bands. So we, at that time, we timed it right when Apple Watch, I’m sorry, not Amazon watch, Apple watch bands, Apple Watch. So we timed it back then to launch with Apple Watch. So there weren’t really prevalent tools like we have now. So we really, you know, hypothesized that, hey, iPhone has this whole ecosystem, right? All the iPhone cases, accessories, it’s like probably a billion dollar business. Probably if Apple Watch catches on, there’s gonna be something similar, right? So we designed these like nylon watch bands, you know, kind of like, you know, like, you know, James Bond. And you know, there’s like watch enthusiasts. So we designed this whole line of nylon bands. And long story short, we were able to grow it to a six figure business in year one, which we’re very excited about. So that’s kind of the whole how I got started with Amazon. The fifth chapter, I don’t, again, I’m sorry if this is too long. The fifth chapter was I started multiple brands. And I would always go to conferences, because I really love learning from other sellers, what they’re doing right, what’s working, what’s not working. And my wife and I got pregnant in 2018 with our son, and I was grounded. Obviously, she was like, seven, eight months expecting I couldn’t fly out to Hong Kong like before, so I thought, I don’t want to be left behind. So why not invite the seven figure sellers to teach me online, and to teach everyone else online, what they’re doing to build, scale and grow their businesses. So that’s the genesis behind seven figure seller Summit. So the first summit was in August of 2018. And it’s really designed to help Amazon sellers, ecommerce sellers, learn from other real sellers and ecom experts how to build, scale and exit their businesses. So yeah, that’s kind of my long winded intro.
Ken 9:18
Yeah, no, that’s awesome. And I really like Gary how you kind of summed it up in like chapters or phases. I think, I really relate to that in terms of like, and you can also see like your progression of kind of how you’ve learned and like built on those chapters as you went along. So excited to have you on the show today. Got a wealth of experience, you know, 15 20 years in E commerce and a lot of different areas. So I just want to dive right into it. You mentioned the seven figure seller Summit. You know, David and I had the opportunity recently to present on that and was really cool. Can you share with the audience kind of what the seller, the seven figure seller Summit, what does it cover and like who is it for, who should attend, who’s going to benefit the most?
Gary Huang 9:58
Yeah, definitely, definitely. So we’re launching the sixth edition of seven figure seller summit this February, February 28 until March 4, and it’s really designed to help Amazon ecommerce sellers. Maybe they’re already doing about six figures really bump it up to seven figures. So I’ve invited over 25, seven figure Amazon sellers like yourself, Stephen and Karen, as well as other ecommerce experts to really show how they’re doing it. This year’s theme is the wild west of ecommerce, because as we’re seeing, on one hand, we still have the tremendous growth opportunity, you know, we’re still kind of exiting the pandemic, nobody knows for sure. But you know, one thing is for sure, you know, ecommerce here to stay, we’re seeing explosive growth. Also, in terms of selling an Amazon business is hotter now than it’s ever been before, it’s probably like the property market, it’s like a red hot market, we’re seeing multiples like 5x to 7x from aggregators like Thrasio. On the other hand, there’s a lot of uncertainty, right, things are changing very quickly, you have the whole supply chain uncertainty, as everyone knows, with high shipping costs, the delays, PPC costs are going up, increasing competition. And you know, Amazon TOS changes, you know, it’s very unpredictable. So the goal is to really help sellers navigate through the Wild West and really survive and thrive. So that’s kind of the theme. And we, it’s a five day online event. So we’ve always been online ever since before the pandemic. So I guess we’re very fortunate to be in that position, because we already have been doing this for a number of years. And you know, we were voted favorite Amazon conference in seller poll for two years in a row. We’re really thankful for our community, every event, we have about over 3500 people that register for a pre pass from all over the world. And yeah, it’s a five day event. So I really structured it, kind of like the natural progression and growth of Ecommerce business to seven figures. So day one is all about the mindset, the fundamentals of a seven figure seller, day two is all about marketing, PPC, and branding your business. Day three is about scaling your business to seven figures from real sellers who are doing it. Day four is about profitability, keeping more money in your pocket. And then day five is about exits. So structuring your business to sell it and maximizing that exit. So that’s kind of the picture of the summit.
David 12:26
Very nice. We were honored to speak at the seven figure seller summit this year, and also are very excited to be in attendance, in particular that profitability day, I will be tuning into every session because as Ken will tell you, I’m a bit obsessed. So anyway, switching gears, let’s talk about the current state of affairs in regards to sourcing out of China. What are your thoughts here? You know, there have been a lot of topics that have come up on this this year, you know, obviously lead times with COVID, container shortage. So what are your thoughts now? And what’s your three to five year outlook?
Gary Huang 13:01
Yeah, I don’t know if I have a crystal ball, David. But you know, as we’ve seen, in the past few years, ever since the pandemic, the shipping container costs are just an all time high, it’s very volatile, prior to the pandemic, because everyone kind of remembers the good old days, your container would cost, you know, 2 $3,000 to ship from, say port of Shanghai to Long Beach. Now, you know, it’s up and down, we’re seeing it was past $20,000. And, as you know, David and Ken are very familiar, you know, it does make sense to explore different options, right. But at the same time, China is still the world leader in manufacturing. I don’t think any one place can replace China, just with the depth and the breadth of the products that can be manufactured there. But the other factor is the delays, right, the delays in getting a container and logistics, shipping. China has a zero tolerance policy when it comes to COVID. So even if there’s just one case, they literally could shut down the whole port and like, you know, it’s like a top five port in the world, like Ningbo, I just spoke with one of my contacts on the ground in shinjin, there were like six truckers that crossed border from Hong Kong to shinjin, and one of the truckers, literally, you know, met someone in his apartment complex, and his whole, and these guys were later tested positive for COVID. They literally locked down the whole apartment complex, just because there was some contact. So it’s really, it’s really hard to say, but I do feel that, you know, for many sellers, you really have to run the numbers when it comes to especially the the whole shipping and supply chain. Going forward, hopefully we can find a way out of this. And I do see that, you know, China will still be you know, an important player for sourcing, obviously, but it does make sense to have a backup plan. So in the whole supply chain world, this is not new, right? Nobody wants to put all their eggs into one basket. So, you know, even 5 10 years ago, a lot of big companies had a China plus one strategy. Right. So you may be sourcing some products from China, but you may be sourcing others from Vietnam, you know, from India or even from Mexico if it makes sense. Right. So it does make sense to have some contingency plans. But I do, I don’t see, you know, China totally going away in terms of sourcing, long story short, because of just the whole depth and the breadth. But it does make sense for certain products and certain sellers to look at other options.
Ken 15:36
Sure. Well, I forgot to ask you, Gary, you mentioned you’d studied language. Are you fluent in Mandarin?
Gary Huang 15:42
Yes, yes. So I’m kind of like a, like an outlier. Because even though I was born and raised in the States, my family’s from mainland China, we spoke exclusively 100%, Mandarin Chinese at home. So I was kind of blessed to be in that position to have some fundamentals. But I really, I studied abroad in college for two semesters in China, and I did a Graduate Studies program for another year in China as well. So yes, I am fluent in Chinese, and it was a tremendous advantage that I have that I’m very fortunate to have.
Ken 16:17
Yeah, that was my next thing was that, you know, that is a huge advantage in terms of, you know, kind of sourcing and navigating, you know, sourcing out of China,
Gary Huang 16:27
It’s actually a double edged sword, if I could quickly share it, because most people think that’s great to have. But because I’m ethnically Chinese, if I go to a trade show, and I speak to them in Chinese, some of these booth owners, they think I’m a competitor, like spying on them, because like, who’s this guy? I mean, this, this might be our competition. Are you like a trading agent? You know, like, some people don’t even want to talk to me for that reason. So it’s just funny how, you know, it is a double edged sword. It’s not just like all good, but it is, I think on the whole, it is beneficial.
Ken 17:00
Yeah. On the other side of that coin, is you could go to the trade show and speak in English. And then whenever the shop owners are kind of communicating in Mandarin about trying to up the price or lower the price, you can, you know, you can pick up on it. So, it could be helpful in that.
Gary Huang 17:17
Yes.
Ken 17:17
Yeah, no, that’s awesome. And so, you kind of mentioned just to follow up on the sourcing piece, you had mentioned China plus one, where are you seeing a lot of the big players. We’ve looked at a few other countries to source from, and a lot of countries they don’t have, you know, kind of the Belt and Road, right? Like they don’t have, they’re not used to the exporting. And so, where do you see the main countries that the big players are exporting out of and making it happen?
Gary Huang 17:44
Yeah, yeah. Vietnam is one of the big ones, a lot of the apparel brands are moving there. If you look at your footwear, your Nikes, your under armours, they’re moving out there. But the thing is for Vietnam, those factories are used to like big, big orders from like, these big brands, they’re not as used to like, you know, smaller Amazon, FBA sellers. So it’s a little bit more difficult in that respect. India is another opportunity, especially for more handmade type products, you know, they’re very strong in like raw material, like wooden products, like some certain metal products, but less so with like, machine, you know, refined, like automation products. And besides that, you know, there are some opportunities with Mexico, obviously, you know, Mexico has the the free trade agreement with the US if you’re selling in the US, so immediately, not only are you eliminating all the tariffs from China, but you’re also, you know, eliminating the duties as well, right. So even if the product cost could be higher, like the net landed cost, that could be another, it could be lower. So you really have to know your numbers. But yeah, you’re right, Ken, about the whole logistics, because China does have the experience because, you know, they got started a lot earlier than, you know, a lot of these other countries. So they just, you know, it’s more like a well oiled machine. I mean, it’s not flawless, but you know, they’re more experienced any time you’re talking about, you know, fob and exports, and, you know, going through the whole customs thing like, let’s say, an Indian supplier that might be doing this for the first time or even like a Mexican supplier that isn’t as familiar with, you know, the FDA requirements and all that.
Ken 19:28
Alright, Gary, we’re kind of pivoting into you mentioned, you have interviewed 150 7 figure sellers, and E commerce experts. So I’d like to dive into that and really, and like, study that and figure out, have you noticed any common traits, and what are they doing that other people are not? Why are they so successful?
Gary Huang 19:50
Yeah, yeah, I think the things I really am fortunate with being in my position is the fact that I can interview and kind of like, analyze how these seven figure sellers built up their business, both their successes and also some of their failures, you know, quote unquote, failures and mistakes and how they were able to overcome them. So one of the key things that I’m seeing right now in 2022, and this thing kind of surprised me, and I’d like to hear what you guys think about this as well. Traditionally, you hear that saying, right, don’t put all your eggs in one basket, you should diversify, you need to spread out your risk. But one thing that surprised me right now in 2022, is for successful sellers, they’re really focusing, they’re focusing on just like one or two things, that they’re, they can do the best, right? Maybe it’s their superpower, you know, they can be world class at this, and then they outsource the rest, right? So they’re not like chasing after all these shiny new objects, right. So because, again, I feel like 2022 is the Wild West in ecommerce. And, you know, all the costs are up. So you really got to focus on one to two things that you can execute into much better than your competition. And one example is a seven figure seller that I spoke with recently, John Elder, and he recently exited his business for mid seven figures. And in his session, from seven to five job to a seven figure exit, he shared that it took him five years to build up this business, and to exit. And you know, his main focus, I mean, not only that, he had a full time job the first three years, and his family had a newborn the first three years, so you can imagine what he was going through. And you know, you know, my son just turned three, and it’s been a struggle for me to manage. Obviously, I want to put family first, but also, you know, the business side, right. So going back to focusing on one or two things, his main mission was to research the right products to add to his product line and launch them successfully. Right? That was his number one thing, you know, he did it the right way. He didn’t do any black hat tactics. And also he wasn’t distracted by shiny new objects. But not only that, you know, the day to day Amazon stuff, one thing that I found very interesting is once he hit a certain level, he outsourced all of the things away from the focus one to two things. So he outsourced PPC, he outsourced his booking, he outsourced his accounting, right, he wasn’t distracted on that he hired an employee to help with some of the administrative tasks, right. So he wasn’t, this way he could lock in focus on growing his business. And he built multiple brands, it took him five years. And the first three years he was working full time in construction. So it wasn’t just nine to five, it was seven to five, because he had to go on site early. And he also said that he sacrificed a lot, right? He sacrificed his lunch breaks, on his lunch breaks he was in front of the computer checking Amazon messages, even evenings he cut Netflix, he had to cut aside time with his wife, you know, like he said, Hey, honey, I got to spend one hour you know, getting to, you know, talking to the Chinese suppliers, right? He got the gym. So, it takes sacrifice guys, he really locked in, he focused. But you know, the reward was he was able to exit his business and submit seven figures. He took one whole year off. No business, spent it with family, traveled, you know, so I think that focus, that’s one of the key things that I’m seeing right now, for many sellers.
David 23:23
I really like that. And it’s something that I think, as I think about how Ken and I are running our businesses, an area that that we can improve on. In fact, like right now, we’re hiring a lot, which just that takes a lot of time. And so there’s time investment on the outsourcing but I really do think the juice is worth the squeeze and you hear that a lot of people that identify their superpower. And that’s what they do. And so I really like that answer. Yeah. What about, you’ve likely interviewed people that are doing drop shipping people that are doing wholesale, people that are doing private label. Does there seem to be a particular area within e commerce that stands out from the others?
Gary Huang 24:10
Yeah, that’s a good question, David. So with the different business models, drop shipping, wholesaling, and private label, I feel the, you know, dropshipping may have been a stronger opportunity, let’s say five years ago, and nowadays, I mean, the opportunities still exist, but it’s just very competitive. Wholesale, there definitely are opportunities. But if, in terms of the end game, a lot of sellers really want to sell their business. I feel that a private label brand would have the best exit opportunity compared to a drop shipper and a wholesaler. You know, day five of the summit is all about exits and how these sellers exited their business, right? So I feel like private label to me, in my opinion, is the most lucrative opportunity because if you look at a seller’s salary, or you know, take home over the life of running a business, normally most of that will come on the exit, right, it will be much more than your salary that you pay yourself. I don’t know how much you guys pay yourselves, so I could be wrong. But most of that would come from the exit and the end game, because we are seeing multiples, you know, very high right now, you know, five to 7x multiples from Thrasio. And even you know, when I first started interviewing sellers in 2018, and 2020, at that time, a 2x, or 3x multiple was considered good, right? In 2018, if you thought about selling your Amazon business, people thought you were crazy. I mean, who would buy an Amazon business, right? It’s not like a real business. And now it’s totally different. And this may change. But as of what we’re seeing right now, Amazon businesses are very high in terms of exit opportunities.
David 26:06
Sorry to interrupt the episode, you may have heard Ken and I talking recently about a new tool that we’re using for Amazon refunds. Now I have used other refund tools like this. However, I can tell you in the first seven days, they scrubbed the back end of my Amazon account going back 18 months, and found $5,000 of refunds. And the nice thing about this is, it’s my money, Amazon made a mistake, and they are just auditing my account. The other thing I really like about this tool is there is no monthly fee, they only charge a commission if they are successful in getting you your money. Go to www.GETIDA.com GETIDA and enter promo code FTM for firing the man FTM 400. This is an awesome tool. I can’t say enough good things about it. Now back to the episode.
Ken 26:58
Yeah, one follow up there, and then I’ll kick it over to David. I think it’s great. Like, I think you’d mentioned, or I saw a stat somewhere that Kevin Flaherty from thrasio, who we’ve had on the show before was was saying current multiples are like 5x to 7x. I think that’s the same compared to just 12 months or 24 months ago. And David, you know, he was in a former life, he was in an m&a environment a lot. And he was always shocked at how the brick and mortar multiples for brick and mortar businesses were so high compared to ecommerce. And I wonder if there’s not a level set now of them even going higher? You know, just because of each
Gary Huang 27:38
I’m curious brick and mortar? What sort of multiples are you seeing? Or what do you expect?
David 27:44
I’ve been waiting first time to chime in on multiple so and I’ll get to that answer. But I think multiples are getting to where they should be or should have always been. And so I’ll give you an example. I, in my eight years at this consulting firm, I probably saw about 50 deals. And I would say the average multiple on that was between five and 7x. And these were, our clients were primarily private equity funds that were some manufacturing, but really all kinds of businesses. And so why do I think multiples should be higher than where they were a couple years ago? Well, if I’m an investor, I’m concerned about cash flow and ROI. That’s it, you know, if you boil it down, that’s what I’m concerned about. And, you know, are there differences between an E commerce company and a brick and mortar entity, certainly. But $100,000 of cash flow is $100,000 of cash flow. And we’ve seen this in the business line of credit side of things, where we’ll approach a bank, and they will say this is an unusual business, it’s hard for us to wrap our minds around, we’re looking at your balance sheet, and the only thing that you have his inventory and your laptop. And I would argue that that means that we’re incredibly lean, you know what I mean? And, you know, we don’t, it’s not, most of our input is into inventory costs. And so it is, is a very lean way to operate a company. And so I’m happy to see multiples where they’re at, and, and when I heard of people selling at one and a half or two times earnings, you know, using that cash flow and ROI example, it just didn’t make a lot of sense to me. And so anyway, I would like to see them stay where they’re at. And I do think that there’s still, from a buyer standpoint, there’s still value of buying a 7x company.
Gary Huang 29:37
Yeah, that makes sense.
Ken 29:39
Yeah. Just a follow on to that. I you know, I think with ecommerce penetration is still very low compared to retail. I think there’s space to grow with that proper business model, growing a brand that with an audience, I think is crucial. And so just to kind of sum up, Gary, the top things that you’ve, you know, you’ve kind of called out of interviewing, you know, 150 7 figure sellers. So, the four things to kind of sum it up is like, we covered the business model, kind of that private label. Brand building is a good solid business model. Sacrifice, you have to sacrifice you know, whether you’re a full time employee or you know, you have to find time and sacrifice time. You have to focus on just a couple of things. Just focus on just laser focus on one or two things that you’re good at. And it’s the long game, you know, that five year approach, like nothing is going to happen overnight. Nothing’s going to happen in 12 months. Give yourself that roadmap of like five years to accomplish what you want. Is that a pretty good sum?
Gary Huang 30:44
Yeah, that’s a pretty good summary. In terms of the timeline, different businesses may move at different speeds, I wouldn’t expect someone to be able to exit their business in six months, I would say at least, you know, a couple years, we have seen that happen. But yeah, I think that’s key. And it’s something else that you guys mentioned, that resonated with me as well in terms of hiring, and this is actually one of the the key takeaways. And recently when I polled a group of about 30 7 figure sellers, I asked them, what was their top mistake, and a number of them admitted that they hired too late. Right. So for example, eglo Roddick, a seven figure seller based in Estonia, said that not outsourcing quicker, trying to be a superwoman, which results in working your business working in your business rather than on it, you know, trying to do too much myself, that’s still a problem. But you know, she said, that was one of the top mistakes she made on the way to seven figures not hiring soon enough. But, you know, she realized that, you know, this was a bottleneck. So she started to list anything that was repetitive, within her business, anything, she did like, three, four times a month, and it became a list of tasks for future employees, she created standard operating procedures, and taught them to her hires. So she shared that, you know, we as entrepreneurs are creators in our roles to always bring more money in or hire to bring new money so we need to buy more time. That’s why we need to hire people to help us. So I think that’s something that is one of the common traits of successful seven figure sellers.
David 32:20
I like that I really, really like that. And it’s just a good reminder for everyone listening, who gets stuck in that in, you know, I know, I’ve experienced this where, you know, you kind of think of your business as like a baby, right? And when you hire someone, they’re taking care of your baby. And so it seems like there’s a little bit of a hurdle that at least I needed to get over mentally, to bring someone in and help take care of my baby. And, of course, standard operating procedures and good reporting makes that easier. Anyway, let’s switch gears. You know, Gary, with the amount of experience you have in sourcing and then E commerce, especially in those early eBay days, you have seen ecommerce grow as an industry and likely it was an infant when you got into it and it is maturing. So curious, in your three to five year outlook on ecommerce in general, what do you believe the smart sellers will be focusing on? And just the overall industry as a whole?
Gary Huang 33:20
Yeah, yeah, I still feel we’re early in this game. I think maybe we’re still in, you know, the first or the second inning. I don’t think we’re, I don’t think it’s matured at all, because there’s still so much opportunity. You know, my outlook, I think it’s fascinating we’re seeing kind of like, offline, like marrying with online, you know, I interviewed the PPC expert, Reetou Java, and, you know, she gave a behind the scenes look at Amazon, and you know advertising like DSP. And then it’s fascinating, because now you’re able to actually look at the data from Whole Foods, Whole Foods Market offline, you know, the supermarket, right? So you can actually target Whole Foods, shoppers, like let’s say, you know, one of my niches is in kitchen, you know, it’s a coffee related product. I can actually target offline Whole Foods Market shoppers, because Amazon owns Whole Foods, they have all that data, like someone that’s bought like, you know Folgers Coffee, hey, I can retarget them with my ads. Right? You know, before just like, a few years ago, that’s impossible. Right? So I think there’s still so much more opportunity that we can we can tap into. So I think there’ll be more of a hybrid model like, you know, offline to online. You know, we’re seeing like, obviously, there’s like curbside pickup and all that stuff. I still see a lot of growth. Will Amazon continue to dominate? You know, eBay, if we looked at history, eBay was the number one player back in the 2000s. Right. eBay was just like in Amazon’s position. There were like eBay live like conferences that, you know, I would go to in Vegas, just like there’s all these Amazon conferences. So I don’t really know. I mean, I don’t see one player taking out Amazon right away unless something happens maybe like the government splits up Amazon, you know, Walmart’s up and coming but they don’t have the same, you know online experience and you know they have the offline infrastructure so maybe, you know, we’re seeing tremendous growth from Walmart. So that could be another opportunity. But like, yeah, again, I don’t have a crystal ball. But I still think, you know, we’re still early in the game. And you know, a lot of sellers have a lot of opportunities. And, you know, we’re seeing sellers exit their, maybe their first brand, and you know they get back in the game in the second brand, right, I mean, it’s not end game, you know, after you exit. So yeah, I still see a lot of opportunities.
Ken 35:48
Yeah, I definitely agree. And it’s exciting, it’s an exciting space to be in, it’s always changing and growing. So really cool. So before we head into the fire round, is there anything else that you want to you want to cover Gary or David?
David 36:02
Yeah, absolutely. So Gary, I’m really interested to hear your thoughts on profitability. Obviously, as our listeners know, I can’t make it through the entire podcast without talking about it. And so curious what you’re seeing on that end?
Gary Huang 36:15
Yeah, definitely. I mean, you nailed it, the costs are really high right now with the shipping costs, with the PPC costs, the raw material costs, and I feel there really isn’t a silver bullet. But one of the key things to focus on this year is to focus on profitability, especially with your supply chain. Right. A lot of sellers have not renegotiated with their suppliers recently, I know some sellers may not have talked about this in years with their suppliers. So you know, pricing is one thing, if you’re able to, you know, have economies of scale, you know, going to larger orders, you may be able to get some price discounts, but on the other hand, anticipate price increases as well, you know, at the time of our conversation, we’re just past Chinese New Year 2022. And traditionally, for Chinese companies is their start of the new financial year, then that’s when they adjust pricing. So the, you may want to anticipate some price adjustments, and be prepared to negotiate that. Other than that one thing related to profitability is your packaging sizes, right? Because if you’re able to optimize your packaging, fit more products into a container, you can save money on your bottom line, right, one of the seven figure sellers, we spoke to Jamie peros, he’s based in Australia, he’s really optimizing his carton packaging. So he can maximize the number of units he can put in a container. So if, you know, previously, you can only ship 800 units per container, but you can optimize your packaging, maybe you can get 1000 units. So all of those savings will be passed on to your profitability, to your bottom line. I also love what you guys share, Ken and David, you know, look at ways to cut your cost of goods sold, you know, with your complete roadmap, how you self manufacture in the US. Previously, you sourced from China, but you found a way to move sourcing to US. And even though the labor cost was higher, you’re able to cut your product landed costs, right? I mean, with all the things like the, you know, the looking at all the details, right? And also, you saved a lot on your delivery date times, you know, we’re talking like, you know, four days instead of four months, right. So I feel that, you know, the focus today, we got to focus on profitability to offset, you know, all these increased shipping costs and all of these other factors to be successful.
David 38:32
Very nice, very nice. I’ve got one more question on the profitability front. And then we can get into the fire round. You see in Facebook groups a lot, people will say, oh, my profit margin is 50% or 40, you know, high 40s, or 50s, sometimes even 60, or 70%. And when I read that, I think to myself, well, they’re either lying, or they’re not considering all their costs, or I am bad at operating my own Amazon business, because I tend to end up around you know, that 15% mark. If you were to give a rounded average for, so I’m seeing net income divided by revenue for profit margin after everyone gets paid, what do you see? What would you place that number as?
Gary Huang 39:21
Yes, that’s a really good question. In fact, I actually, I asked this question to the seller, accountant, Tyler Jeffcoats, and he works with many, many successful ecommerce entrepreneurs. And then his recommendation, the key metric to focus on is the post advertising gross margin, post advertising gross margin. So what does that mean? So that is your gross margin, and then you would subtract all of your Amazon advertising PPC expenses, as well as your non Amazon advertising such as Facebook ads, Google ads. So, according to him, in terms of the post advertising gross margin, the best products are getting 35%. Okay, 35% is really good, good products are getting close to 25% post advertising gross margin. If you’re at 20% with this product, it’s a yellow flag, you may want to call on audible, you probably want to rehab to look at ways you can improve upon that. And if it’s 15% or below post advertising gross, you gotta fire that product you, if it’s non performing, it’s, you know, it’s not it could be you know, outside the 80 20 of what you should be focusing on. So I think that was a really good metric that Tyler shared.
I really like that. I really like that. And I will be applying that to our financial statements. I think that’s a good lens to look at things through. So, well very nice. Well, Ken, let’s get the fire round started.
Ken 41:02
Yep. Gary, are you ready for the fire round?
Gary Huang 41:04
Let’s do it. Let’s do it.
Ken 41:06
All right. What is your favorite book?
Gary Huang 41:08
So many. I think one of the first entrepreneur books I read was The E Myth revisited, Michael Gerber. Just getting around that mental block of if I were to teach someone else to do it, I should do it myself. If I never outsourced anything, I wouldn’t be where I am today.
Ken 41:27
Excellent book. What are your hobbies?
Gary Huang 41:29
I like to cook. When I have time I make dinner every night for my family. And lately, I’m starting to garden. It’s a nice activity to destress. And you know, I have some we can get some time away from the screens with my son as well.
Ken 41:46
Yeah, that’s awesome. And you were you were sharing with us before the show that you’re able to grow like most of the year where you live, so.
Gary Huang 41:53
Yeah, we’re super fortunate.
Ken 41:56
Yeah, that’s awesome. What is the one thing that you do not miss about working for the man?
Gary Huang 42:02
Just that morning commute. You know, just squeezing the traffic. I used to live in LA. Yeah, that time just stuck in traffic. I don’t miss that.
Ken 42:15
LA traffic. That’s a good answer.
Gary Huang 42:17
It’s a nightmare.
Ken 42:18
Yeah. All right, last one. What do you think sets apart successful ecommerce entrepreneurs from those who give up, fail or never get started?
Gary Huang 42:28
I think the thing that sets apart successful entrepreneurs is when they face challenges, they find a way to get things done. I feel like there’s always a way to get things done. It’s just up to you to find it. I feel like there’s always like a door, an opportunity. And sometimes, you know, we don’t, if we can’t go through the wall, we go around it. We go over it. We go under it. I mean, I think there’s always a way. And yeah, it’s not easy. It’s not easy. You know, we get frustrated, but we, I think everyone has a gift. You know, everyone has to discover that and be able to apply it to, you know, to help others to build that business. And yeah, that’s I think that’s the number one thing.
Ken 43:14
Excellent answer. David, you want to close out the show?
David 43:17
Yeah, absolutely. Gary, if people want to learn more about the seven figure seller Summit, where can they go?
Gary Huang 43:23
Absolutely. So, you know, everything I shared today was just my personal takeaways. I’m sure you know, Ken and David, if you were to watch the summit, you could take away you know, things that are totally different because everyone’s business, everyone’s personaliry is unique. So I’d love to offer a free pass to everyone to the seven figure seller Summit. We’re launching February 28 through March 4. And I you know, it’s an online event, and it’s a five day event. I highly recommend you guys check it out. And Ken and David, I believe that we have a custom link for you guys as well. So do you want to share that or should I just should I?
David 44:00
We will post a link to that in the show notes.
Gary Huang 44:03
Yes, perfect. So Excellent. Excellent.
David 44:07
Gary, thank you so much for being a guest on the firing the man podcast and looking forward to staying in touch.
Gary Huang 44:13
You’re very welcome. Ken and David. It’s been a pleasure. And good luck to you guys and everyone out there. Have a great 2022 and hopefully to see you guys at the seven figure seller Summit.
David 44:24
All right. Sounds great. Thank you everyone for tuning in to today’s firing the man 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. For that head on over to www.firingtheman.com/library. Lastly, check us out on social media at firing the man, and on YouTube at firing the man for exclusive content. This is David Schomer
Ken 45:04
And Ken Wilson. We’re out
David 45:15
Before you go, fun fact for all you Amazon sellers out there, when you start selling in international marketplaces, all of your reviews come with you. At the beginning of this year Ken and I sat down and talked of ways that we could double our businesses in size and landed on international expansion as our number one initiative this year. We partnered up with Kevin Sanderson from maximizing ecommerce and he has made the process an absolute breeze, walking us step by step through the process. If you want to grow your revenue and reach new customers head on over to www.maximizingecommerce.com/fire and connect with Kevin Sanderson today. Now, back to the show.
Transcribed by https://otter.ai