Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in e-commerce and business. Today’s guest is Susan Bradley. She’s the founder of The Social Sales Girl agency. They teach e-commerce store owners how to get more traffic and more sales. Today’s topic will be transitioning from wholesale to direct-to-consumer or B2C. Some highlights from her entrepreneurship career, she had a brick-and-mortar store chain of six stores that were sold in 2010 and an e-commerce store that was selling seven figures which she sold in 2018 called weesqueak.com.
Before we get started, we have a little shout-out here to Ciara Stockeland from The Boutique Workshop who did introduce us otherwise this podcast episode would not have happened today. Now the sponsorship message; this episode is brought to you by MageMontreal. If a business wants a powerful e-commerce online store that will increase their sales or to move piled up dormant inventory to free up cash reserves, or to automate business processes to gain efficiency and reduce human processing errors, our company MageMontreal can do that. We’ve been helping e-commerce stores for over a decade. Here’s the catch. We’re specialized and only work on the Adobe Magento e-commerce platform, we do everything Magento. If you know someone who needs design, development, maintenance, support for your website, email our team at [email protected] or go to MageMontreal.com.
All right. Susan, thank you for being here today.
Susan: Hi, thanks for having me.
Guillaume: Can you start by telling us a little bit more about your entrepreneurship journey?
Susan: Sure. It’s a long one. I actually started my journey in 1990, when I had a manufacturing facility. We did direct sales way back in the day, kind of like Avon or Tupperware. Eventually, that evolved into brick-and-mortar stores. Then I had a small chain of six stores for many years. I sold that in 1990 and I purchased a little company called Wee Squeak. It was one of the suppliers of my stores. I grew that business. It was primarily a wholesale business but we did have a small online presence. We had a small Neva site if you can imagine. I grew that business for a few years and sold it in 2018. So today I am still an e-commerce store owner, I have a very small e-commerce store. But what we really do at The Social Sales Girls is, we teach e-commerce store owners how to grow a business that has lots of sales, that perhaps it’s location-independent. But most importantly, it pays them well, they get a good paycheck from their business. That’s important.
Guillaume: Okay. So which of your companies did you transition from, from wholesale to direct-to-consumer, DTC?
Susan: From my shoe company, Wee Squeak. When I purchased it, it was primarily a wholesale business. We had more than 600 wholesale accounts across North America. It was based in Texas and we had a warehouse at that time, a 15,000-square-foot warehouse. It was a very traditional wholesale model. Anyone who’s been in the business would know that we have two seasons, we do a lot of markets across the country shows, we take orders a couple of times a year, and we would have showroom reps.
So when I purchased the business that’s where the business was. But what I soon learned after I purchased it, and I kind of knew from my own experience in brick and mortar, is that the landscape was really changing. More and more people were making their purchases online and brick and mortar stores were not able to order as they had ordered in the past. So it was a bit of a struggle. But of course, we had a big overhead attached to our business, we had our warehouse, we had employees, and we shipped multiple containers over from China every year, so we had a huge investment in inventory.
So there came a time, I believe it was 2014 when I realized that our business, I think it was the first time that company sales had been down since it was established in 2005. I realized that I had to make a change or it wasn’t going to be pretty. It was going to get ugly. So in 2014, we started the long journey of trying to figure out how to transition this company into a direct-to-consumer business.
Guillaume: Alright. Well, most of the people I’ve talked to were in that situation of wanting to sell direct or sell retail. Well, they’re very concerned that they will alienate all of their retailers just because they’re the distributors there. They would lose all that kind of market, and maybe then they’ll not make payroll, pay their loan obligation, their inventory obligation, and all that. So how did you proceed with the transition and manage your relationship with your 600 retailers?
Susan: Well, sadly I have to say you’re exactly right. That is always the big problem when you are a manufacturer and you have a direct-to-consumer that you’re trying to grow and wholesale accounts. There are a lot of conflicts not only with your stores but also with your sales reps. So we were in a position where we just had to make a hard decision. I talk about this often and I’ve always shared this story. I was sitting in my house, near Christmas, I think it was 2014. My mother came in, she was in her 70s at that time, she told me that she had completed all her Christmas shopping online. I can remember that was like a big lightbulb moment for me, if my mom who was probably 76 at the time had figured out how to order all her Christmas gifts online, that’s why I was having a sales problem. That’s why my retailers were struggling because she decided even though you know her whole life she’d been buying in stores, she decided it was time for her to shop online and she saw the benefits of doing that.
So I’ve made the decision. So at the time when we decided to do this, we actually closed our warehouse and we moved everything to 3PL, third-party logistics. We had a shoe company, Wee Squeak is a children’s shoe company. It was a struggle, this bit of transition. We went to our retailers, we sold to several Mangers, we sold to Target, and one more, we have a US presence, of course. Then we went to our retailers and said we’re changing how we do business. Thank you for your support for all these years, but unless you’re able to log into our wholesale portal and place your order online, we’re not going to be able to service you. So we let go of our showroom reps. I still remember the last trade show that I attended in September 2014.
Then we just went ahead and said, how do I reduce our overhead? How do we systemize our business? How do we make it scalable? How do we reduce our commitment to inventory? And how do we put all our effort into scaling this direct-to-consumer business? And if we can keep some wholesale business, we will, but we can’t be serving two masters and have all that conflict all the time. We have to make a decision and go full force on direct-to-consumer, and that’s what we did. So we basically passed history by a million dollars worth of sales.
Guillaume: Wow! But then you can say that that million was not necessarily that profitable on the margin. You’re also saying this is not scalable because I mean so much overhead and the profits were not. Then you say, it’s hard decisions and letting a million go too, but then you say, this is what’s holding you back. You are betting that you’ll get not only a million but more and more scalability by going the other way, direct-to-consumer?
Susan: Yeah. And there were a few hard lessons to learn along the way but I was pretty much convinced that there was more profitability too for us. So when I think about the lessons, I don’t know whether the people who are listening might be interested but anyone who understands this business model will understand what the challenges were. So the first challenge was inventory. When you are a wholesale business or a brick and mortar retailer when people come into your store, they need to see a wide variety of products. Like they need to open the door and kind of go wow, look at all this selection I have!
So in my very first year when I focused on direct-to-consumer, I can remember the orders that I placed for the styles that we were going to run. I had one style and I might have it in five different colors and all sizes. My inventory selection, I organized it in a way that I would have done for a trade show or a showroom. What I quickly learned is, that’s not how e-commerce works. If you sell brown shoes and black shoes mostly but you need pink shoes and red shoes and blue shoes to make that brick-and-mortar customer think that there’s a good selection, you don’t have to do that online. You just have to have a lot of brown shoes and black shoes and your sales are going to grow because you have exactly what people want.
When we think about how people shop in a store, they usually go around the store and then come back to the things that interest them. But in e-commerce, at least the people that we work with and my experience with my sites is that the average is maybe four to five pages that they look at, they stay for four or five minutes. It’s really different from a physical store experience. That was the first mistake I made when I did this. I went broad and shallow and what I needed to do is go narrow and deep. So if anyone’s thinking about that, that’s a big thing. The second mistake I made is not understanding how much traffic you need to get sales, like really how conversion rate works in e-commerce.
So when you have brick and mortar stores which I had had for many years, what happens is when people come to you, particularly if you’re not in a mall you’re a destination, your chances of getting a sale are pretty high. But of course, we all know in e-commerce, it’s a total numbers game. Once you have proof of concept, you really just have to scale those numbers. So that’s the other pitfall for manufacturers who are wanting to go direct-to-consumer, they need to understand how conversion works and realize that their one job is to wake up every morning, find their customers, give them the right message, and grow the traffic to their site. I didn’t know that but I learned quickly.
Guillaume: Which of those tactics did you put in place at first after you got your million-dollar and you needed to grow internet traffic, what did you do?
Susan: Back then, you know, that was several years ago in 2014, social media was certainly a lot more free reach and free traffic from social media than you do now. But honestly, there were two things that I focused on when we did that. We were a very small team, we had our 3PL, I had a social media person and I had a tech person, we were on Shopify. That was our team, basically, we didn’t have a lot of people. What I realized quickly was that I needed to learn how to get paid traffic to supplement the free traffic that I was getting from social media, we worked hard on that. We learned how to run ads on Facebook and later Instagram, and did very well with that.
The other thing that I had known from my years as a brick-and-mortar retailer is that if I could get people on a mailing list or physical mailing list I could control my traffic and my sales. By doing that I can get them to come into the store with an offer, and give them a reason to come into the store. So that very first year, I decided I was going to learn and it was very hard, I still remember naming an ad Please work I’m so frustrated. I learned how to get traffic so I could control my own traffic. The other thing I did is I basically woke up every morning trying to figure out how I would grow my email list, that really paid off. In the first year, I think we grew our list to 18,000 people and we were on our way.
Guillaume: Wow! That’s a very nice growth in one year. Yeah. How did you grow that mailing list?
Susan: Well, let’s say it was easier back then. We’ll say that it was easier to get people to give away their email lists. But even still in 2022, with our members and even with my own business, my one thing is owning my list, whether it’s SMS or email, or both, you really need to own those lists. So a lot of the things that we would do, launch activities like product launches, or maybe a collaboration or even just what we call the perfect giveaway. We would do a lot of activities. The win success for those activities is to grow your email list. Because even though email is not free, it’s so affordable and it’s something that you can control. One of the things that I think that e-commerce store owners have is independence for sure, they don’t understand really how much control they have over their sales. Once they have proof of concept it’s really yours to win or lose.
Guillaume: By using your list and then having either collaboration with other companies where you have a joint offer or you have a perfect giveaway or discounted offer.
Susan: Or you just control your traffic. Don’t sit there wallowing in self-pity if you’re only getting 2000 web visitors a month. If you have good conversion rates at 2000 web visitors a month you just need to drive more traffic and warm those people up. People don’t often buy on the first visit. Anyone who uses Google Analytics can see very quickly that if you look at first-time visitors and the time that they spend on your site and the number of pages they look at, and the conversion rate of that cohort, and then you compare that to multiple session visitors, it’s like night and day. I almost never see a Google Analytics account for one of our stores that would have a first-time visitor conversion rate that is higher than returning visitors. What I see traditionally is that returning visitors and multisession visitors convert at two to three times the rate.
So if a first-time visitor cohort converts at half a percent, it’s not unusual for returning visitors to convert at two to two and a half percent. So when you’re sitting there wondering why you don’t have the sales, there are really simple steps you can take that might take some time for you to have success. But truly, it’s a numbers game. There are things that you can do to increase your sales that won’t cost you a fortune, that you can control and you can build this business that isn’t so dependent on what’s happening at Google today, or what’s happening on Facebook today.
Guillaume: Yeah, because you can lose ranking and your search engine optimization, and then you’ll have an issue with stock. So let’s get into the weeds but let’s get tactical. So you’re saying building the list is the most important thing, you can have product launch collaborations and perfect giveaways, but those are just excuses or marketing reasons as to why people should be interested in your message. How do you go about building that list, let’s say somebody is starting from scratch? Like 100% on their list is friends and family, mostly two, three, or five maybe, and they really need to build the whole thing. How do you go about that?
Susan: The first thing you need to do for sure is set up a popup on your site. Even though we don’t like popups, we need to have a popup on our site. The reason that’s so important is that it’s very much aligned with all the other things we’re doing. We already know we need traffic. I always tell our members that they need at least 3000 web visitors a month to even get a sale a day. That is just the starting point. We know we need traffic so we’re spending time and money getting traffic to our site, whether we’re getting 3000 visitors or 50,000 visitors we know that that takes some effort to make that happen. So if we get them right there when they’re most interested on our site with a popup some sort of offer, whether it’s a free download, or it’s a discount, or it’s a virtual gift card, whatever it is, a percentage of those people are going to get on your list just by driving traffic as long as you have a popup.
Where we start is saying, Hey, guys, like you need to make sure that your popup converts. I like people’s popup to convert at 5 to 9%, at least. So if you get 100 people to your site you want five people on that list every day. If you don’t get that you need to keep adjusting either the quality of your traffic or your offer until you do get that. That’s the number one low-hanging fruit, it’ll give you the best ROI and anything you do to really grow your list. But there are so many other things you can do. Some of our members would gate a sale collection which is super smart. So when people go to see your sale collection you get a full-page takeover that says, Hey, this is only for people who are VIPs on our list, join the list and you’ll get access to the sale collection. That’s another way to grab email addresses from web visitors and put them in automations.
There are so many other things you can do. You can do a quiz. You can segment people and put them in specific automations. We have several members who have great quizzes that maybe get leads for 30 or 40 cents and they put them in cohorts and then they can market specifically to those cohorts of people, you know, whatever they said they’re interested in and that’s how I’m going to market to them. So quizzes are a good one. Even though you don’t get as many high-quality leads from a giveaway, you get a lot of leads, they’re inexpensive. It’s pretty easy to segment out the ones that aren’t good and over time even though those lists convert at about 4%, which for most stores is a higher conversion rate than they get from all the other agents.
Guillaume: From web traffic where if you get even 2% is great, even 1% is great.
Susan: Yes. 1 to 2% is average. So if your conversion rate is 1%, you can stop feeling like a loser. Because you’re average.
Guillaume: I’ve seen lots of people starting online having a serious struggle just getting to 1%. They can even get a lot of traffic but then is it relevant quality traffic? So even 1% is nothing to sneeze at because there are some stories we here like those insane legendary conversion rates where they give you percentages like 5, 6, 7, and stuff like that. Then you have either an unbelievable offer, but then it needs to matter for the people that you send. So most likely all that they have is an amazing product-market fit or an amazing offer, but they have a lot of investment in exactly the right funnel. And that is for as long as it will keep working because everything changes. So keep learning that while there’s something in mind but it will typically eventually change online.
Susan: You’re not getting the whole story there. It’s probably a segment of the list.
Susan: A retargeting effort or something.
Guillaume: It’s not legit, lets call it that.
Susan: Here’s what I know. I know that generally what I see is that traffic from email is the highest converting source of traffic I’ve ever seen, and it’s not unusual for it to be around 6 or 7%. What I know is that good traffic from social media doesn’t convert, so it’s good to get people there for the first visit but your number one job is to get them there for the second visit. The easiest way to get them there for the second visit is to get them on your email list and do some broad general retargeting, maybe even show them exactly what they saw the first time so they have some recall. But if anyone’s getting 3 or 4% conversion, there’s something else, not just that they’re doing some Google ads and things are going great.
Guillaume: For sure because when you pay for the ads and advertisements for your site, if they leave your site you can have retargeting for like 90 days. Then we’ll see how that gets impacted with all the new cookie stuff happening now. There’s that going on. One way of retargeting ads is typically what works best for conversion of paid traffic, but you want to have a way to capture those contacts, text messages, or email because otherwise, you’re just paying and paying and you’re never going to be able to keep a little bit of equity in the flow of traffic that you’re paying to apply. So that’s been the game forever and that has not changed, it’s universal. To build a list is pretty great. You said something important about your cold traffic from social media did not convert, do you feel that’s a general statement or do you warm it up to have repeat traffic? Or what do you do with social media?
Susan: I think social media is still the very best place to find your people, identify your people, and get some awareness. I would have said before to get them to your site as well. But one of the things and this might be a little too technical, maybe not, what I will share with you is that when iOS 14 happened last year what we saw is that many of our clients who had had great success with conversion ads on Facebook, by August there were some sad people. That was really gone, that three or four or 10, or iOS was not there and so they weren’t getting the conversions off of those Facebook ads or Instagram ads like they were. But what we have learned and what we have been so successful with, I’ve been successful in our product businesses and our members have been successful too. But for me when I’m advertising The Social Sales Girls, we just have to think about how we build this big warm pool of people that we can retarget.
One of the beautiful things that are available to us on Facebook and Instagram is in video view audiences. If we put a video on Facebook or on Instagram, video is super powerful, it has to be captioned and it has to be short for the most part. But if we put a video on Facebook or Instagram and we create audiences of people who have watched that video, even if it’s just a through play of 15 seconds or 25% of the video on Facebook and Instagram and still build a high-quality audience of those people because there’s no cookie. All that activity takes place on their platform. So we’ve switched and our entire focus now is to build these whopping audiences. It’s not expensive, it takes some time but you can build these audiences relatively quickly of people who’ve watched your video. Then that’s who we retarget asking for a lead or a web visit, or an add-to-cart, maybe. But those people click your link at a much higher rate and, of course, they are much more likely to sign up on your popup or spend some time on your site. That’s been a game changer for us.
Guillaume: Yeah. That’s a very good tactic when listening, a captioned short video that works everywhere on LinkedIn, etc, and we see that for ourselves.
Susan: I have never used LinkedIn.
Guillaume: Well, for B2B sales it’s different.
Susan: Yeah, it’s really an interesting platform. I’ll have to look for it one day.
Guillaume: Yeah. Because you have an e-commerce store, B2C, so it’s normal when you’re looking more at Facebook, Instagram, and the shop platforms. When you’re on B2B Facebook could work too but it’s case by case depending on the market. LinkedIn is sort of the default first thing to look at for the B2B stuff. So we went down in the weeds on how to build your list and transition because of course the e-commerce aspect is huge, especially when you’re doing that position of selling direct because now you need an efficient and cost-effective way to reach a lot of people and in your case, to replace at least a million bucks and add more to grow that thing. So it’s worth losing that million in the first place than betting to lose that.
Let’s circle back to it a little bit. When you did your transition you said you forced people to use your online portals. Like, now you’re going to use my system, you log in and use it otherwise I cannot do business with you. You’re super strict with enforcing your process and your way of working. We don’t have a secretary or sales reps that you can just call and keep doing things the old way. Things have changed, it’s just a new regime basically.
Susan: We can’t call you five times for your credit card anymore.
Guillaume: No, that’s it. You’ve put it online it’s either you accept that or we don’t work together basically. I can agree with this general way of working for sure. What else happened there? Did you completely close? You said you were open to keeping some of the wholesale, did you keep some of the wholesale or you totally ditched it?
Susan: The first year or two I felt quite attached to doing my very best to keep what I could for sure. I think it was just an emotional thing more than anything. It was, oh, what will happen if I lose that? That maybe $100,000 worth of revenue which is better than zero revenue. But in all honesty I don’t think it was particularly successful over the long term. Well, I don’t even have to guess I know that by the time I sold the company in 2018, I had no wholesale orders. Totally done. And I had at some point just decided it was too hard to manage the inventory. It was a platform like Shopify, I think Magento is very different, but a platform like Shopify was really not set up to handle both kinds of transactions as far as differentiating between shipping and managing inventory and all those things, it was difficult. So we let it go.
But what I know is that the buyer of Wee Squeak has gone on to have a big presence, I think it’s only fair. You know, there are several of those wholesale marketplaces that actually do really well with both direct-to-consumer and wholesale. I think the mentality has shifted for a lot of retailers that that’s a battle that they can’t win with most manufacturers. But the trade-off for them is that they can log into a portal that gives them terms and they can order what they want, they have small MOQs, they don’t have to fly to Atlanta and drive around the mart to find new things. They also have like, I don’t know how fair it is but they have guaranteed sales. If you don’t sell it you can send it back. let’s become crazy easy to keep feeding your inventory as a brick-and-mortar store with great new products into things that you wouldn’t find in Mangers and if you are relatively confident that it’s going to be a good transaction and if it’s not, you’re going to be able to get credit to buy something else.
Guillaume: Yeah, it’s consolidated too. You are saying that retailers are basically accepting that some of the people will be selling it, and if it’s not the manufacturers themselves or distributors themselves. Anyway, probably a few people will get the rights to sell it on Amazon and other marketplaces, which anyway will waive the competition. Did you try to enforce any kind of minimum advertising policy in that policy?
Susan: No. We had some sales on Amazon for sure. But quite frankly, it wasn’t in my wheelhouse to learn that platform. Even though we don’t want to do all these things ourselves to me if something is going to be an important part of your overall business model, you need to at least understand it. You need to at least understand what’s important, how it works, and what are the things you can control in that platform. The reason you need to do that is if you just go run and hire some expert, you can kiss your money goodbye. They can tell you anything and you just sit there nodding your head and smiling because you don’t know. So I never invested the time and money into Amazon, so I was not very successful on Amazon. But again, the buyer of Wee Squeak did take the time to understand Amazon and learn it and they do really well on Amazon. Which just goes back to say, there’s a lot of ways to win the race and we as e-commerce store owners have way more control over our outcomes than maybe that little voice in our head tells us we do.
Guillaume: Well, Wee Squeak is in a good position because as a manufacturer you’re also the brand owner in the sense that it’s your own product creation, your own shoes, your own design, and so on. So you’re unique on Amazon, nobody else has that specific design of a penguin with a smiley or something here. So that is definitely a competitive advantage. Let’s say you’re selling the wall drills and everybody’s selling the same drill for the same price, then the question is how much free giveaway are you willing to give to acquire a customer? Because there’s a minimum advertising price. Unless you’re going to violate that then the wall drill kicks you out as a retailer.
Susan: Yeah. Why would you do that? I think those of us that are self-employed work hard and even if we’re not at work often our mind is in the game, and it’s the same effort.
Guillaume: Day and night, right?
Susan: It’s the same effort to do something that does have a differentiator, is more in your control, is a little bit unique. Like, it’s the same effort as it is to try and figure out how to fit a square peg in a round hole. So my advice to people is, there’s pretty much a market for anything and there are a lot of ways to get proof of concept. And when people say the riches are in the niches, I see proof of it.
Guillaume: That is true. Are you saying, if I understood you correctly, basically, to own the brand, to build your own design and so on is way better because you want to be different, and you want to have a differentiating factor than let’s say being a retailer and just reselling other people’s stuff?
Susan: Yeah, and control. I mean, the thing that did happen to me and I’m sure it’s still happening is people would knock me off, like, knock off my designs.
Guillaume: You just keep getting new designs out, so it just needs a machine spinning them out.
Susan: Yeah. I always try and protect my mental health. I try and focus on things. And I would give that advice to anyone who is like us who runs a business, focus on what you can control, and don’t let yourself go there. If you can’t control it, that’s it. You’re just wasting time, and what is your time worth per hour?
Guillaume: Yeah, exactly. Most products will get copied anywhere from six to nine months, sometimes 12 to 18 months max unless it is a more complicated product. So if you’re having success expect somebody to copy it and if nobody’s copying it know that is not successful. So they will try to find a way around patents, around anything and they’ll have a slight variation. So in product business you need to always be making the next product that is different.
There are some other challenges such as cash flow stuck inventory in transit then you’ll say, I’m about to run out of inventory and the sales are really coming in, I need to reorder. But then there is also a production time depending on if the production is overseas or locally. If it’s produced overseas then how many weeks are needed for manufacturing? How many weeks are needed for shipping? Then you will say, will I actually run out of products within 12 weeks or eight weeks? If yes, then I need to reorder now. Find like 100K for an overseas order and so on. So that’s a very different game.
Susan: It is. I have to share something with you that I think would be helpful to anyone who’s in that position. After I kind of figured out what I was doing when I started to grow the direct-to-consumer inventory and sales at Wee Squeak what I realized was, I don’t need as much inventory as I think I do. And I would do better if I never ran out of the top sellers, the things that are really hot. I can remember downloading all sorts of CSVs from my reports and deciding that I was going to find my top 20 products and I was going to commit to never running out of those. Which meant that I had to overbuy, and that the products below that if I ran out of them the world wasn’t going to end. The year I did that my sales went through the roof.
I think it was just plain and simple making sure that what most people wanted was always there. It meant that I actually didn’t have as much inventory and I had to fly to my warehouse, I could even just drive down the street. So I would go down there and look at the stuff that had a lot of dust on it and be like, okay, we have to do something with this.
Guillaume: Yeah, discount that one out.
Susan: Right. But what happened was there was just less of that stuff. So your inventory will turn way more often. I often think four inventory turns in bricks and mortar is a myth. I don’t think that’s true. Someone will think I’m wrong, and maybe I’m wrong. But in e-commerce you can turn your inventory a lot more often and you can choose a few signature products and scale those things like nobody’s business. I think that that’s very different to bricks and mortar.
Guillaume: How many turnovers per year do you think is realistic both for brick and mortar and for e-commerce in the kind of store that you have, which is selling shoes?
Susan: Yeah, so I would say probably in my, and I’m making it up now because it’s since 2018, but I would say probably, I’m thinking about it doing the math here, I’m going to say five to six turns five to six or seven turns for my e-commerce store. When I think back to my brick-and-mortar days I think it would be amazing to get two to three turns really. I don’t know how people got it.
Guillaume: Which is reasonable too depending on what you’re selling. This doesn’t mean anything if you’re in a different country, a different market and you’re selling I don’t know, high-end renovation gear or builders gear will be completely different to the normal kind of fashion stuff here for kids.
Susan: The other thing that’s super important to remember is that you can pull out a few products in e-commerce or even products that aren’t made yet. One of the things that was incredibly successful for me was to show the process of a shoe getting designed and build a waitlist for that shoe. So you can launch that product knowing that you already have a buyer sitting there ready for it. Of course, that turns your inventory a lot more quickly. We also have a lot of members that have a ton of success with subscriptions and that’s when you’re creating products that are already sold. So there’s so much more you can do to turn your inventory and pile up profit and keep your inventory and investment down in e-commerce. It’s really just a beautiful business I’ve gotta say.
Guillaume: I agree with you, it’s a beautiful business. When you say subscriptions do you mean recurring subscriptions or just reorders?
Susan: There are two different things in my mind. Pre-orders are just pre-orders, but with recurring subscriptions you can have a monthly subscription which is either just a consumable product, we can have a client who makes nail polish and has a mystery nail polish of the month which is very inexpensive but allows her to use whatever she has got. She has that recurring revenue every month. So you can set up subscription boxes like that out of interest. We have someone who does a subscription box that is all about fairies and nature which has three or 400 subscribers at $40 a month, and it’s this box of products that she puts together. I mean, I’m not very woo-woo but she does super well on that. And you know that kind of income is wildly profitable, it covers your overhead and more.
But I also have a client who does really well collaborating with designers. She’s a Riven manufacturer and she would have short-term subscriptions. So she might have a subscription that is 50 or $60 a month but she gets people to commit for three or four months.
Guillaume: Yeah. Short-term recurring subscriptions.
Susan: Yeah. So you don’t have to worry about attrition as much, it’s a commitment. But you have just nailed down some really solid revenue for a quarter a day and it’s wildly profitable because you don’t have to guess whether it’s sold or not. It’s sold. So you manufacture to what you’ve sold.
Guillaume: Yeah. A very good advice there. I like that stuff Susan. Just a little comment before something you said, of course, it’s way better to have your own brand when you can and to have original design. The reason some people will go for, let’s say, the retail model, of course, there are many reasons, it’s a different business. But first of all the reselling margin tends to be lower and it also takes less cash to get in. So you can easily just buy a little bit of something and get approved as a reseller and start. So if somebody is starting with less cash, maybe you’re just employed in an average job and you want to transition to e-commerce, starting as a retailer is a perfectly fair way to start. You might want to transition later to owning your own brand and design.
Susan: After you’ve built your audience.
Guillaume: Yeah, exactly. You build your audience and you can keep selling the retail stuff and at the same time create your own brand and start selling both, which is the classic path. Furthermore, when you’re building your own brand it’s all on you to build the awareness and do the marketing and all that, which is heavy and that is why you should have revenue first by doing some retail. Anyway, for some of the retail, if you can nail some amazing brand to distribute, some of those blast hundreds of millions of dollars a year in marketing. So if you can nail one of those accounts to sell it can be a million-dollar retail line for just one brand in some businesses. So you can really kickstart your business from there and then you create your own brand with higher profit margins because you have operational cash to do it.
Susan: Interesting, good point. I haven’t had a lot of experience with that part of the industry. But I’m sure you see that all the time.
Guillaume: Yeah, it’s a different business model. I mean, for successful retail it’s true there’s different models and different things, but you can see a lot of them, especially like, I don’t know about other places, but might be the same like in Canada where you can see pharmacies becoming more and more like super small super stores in a way with restrictive rules. But then they create their own generic brand just like a Costco brand that you copy a successful product. Amazon is always doing the same online, if you have a very successful product they’ll copy it and offer you a cheap knockoff, and it becomes the Amazon brand. So you see a lot of that going on. You can sort of do the same. Get started by selling retail and eventually, you create your own, ideally, not a cheap knockoff, create something of a better value, that will almost make you get rid of the retail.
Susan: Or a complementary product. I think that the thing that we all need to remember in e-commerce and it is the hardest part but the most important part is the audience, which is that pool of people that would be interested in your product. So you can make a complementary product for that person and really focus not so much on what you want to make, but what that person would buy. Sometimes we forget that. I would see a lot of people in my universe that have a passion for something and their business starts out as a hobby or a passion like a lot of jewelry makers or artists, I would work with a lot of those people. And what they have to remember is that they have to have an audience of people before they decide all the things they’re going to sell.
Guillaume: Yeah, because then who will be interested unless you already have an audience and what else interests these. There are many ways to go. So we’re coming on top of the hour here, Susan, is there anything else you’d like to add here for the transition from wholesale to direct-to-consumer or about the e-commerce and building up traffic?
Susan: I don’t think there’s anything wildly important. I think that the benefit outweighs the pain. It’s going to be a little painful when you’re transitioning from wholesale to direct-to-consumer, but the long-term benefit when I think about the changes for me just as a person, of course, it was more profitable and I felt like I was more in control when I got there. The other thing that happened for me was I was location-independent. Our team went all remote, I wasn’t paying people when they weren’t doing any work. For me it allowed me to work from more than one location, I didn’t have to be tied to an office and that’s a huge benefit. I have seen that happen for so many people and it’s sometimes, particularly, with the types of clients I work with, that’s more important to them than they income they make.
Guillaume: That’s the lifestyle businesses of those business owners.
Susan: Yeah. You’ll still work hard but you know, maybe you could do it from the beach.
Guillaume: As long as you’re efficient. Sometimes that’s a bit of a myth and a postcard thing or a bad book cover telling you it takes no efforts and you can have a few hours of work per week or a day or something per week, but actually, it takes an enormous amount of work to get there. If you’re that driven to have that success most likely you don’t want to work four hours a week anyway because you have so much more that you want to do in your life, not to blast that book too much by the four hour work-week per day.
Susan: Yes, but I think you are right. Exactly.
Guillaume: There was a lot of good in it. But there was also a misconception that can send people the wrong way. But there was a lot of value out of that. So anyway, Susan, if somebody wants to get in touch with you, what’s the best way?
Susan: They should just come over to thesocialsalesgirls.com. They have lots of free training that they can take advantage of if they’d like. There’s a part of our website that is just for free resources, so they can absolutely do that. And they can always just send us a message, [email protected].
Guillaume: All right. Thank you for being here today, Susan.
Susan: Thank you for having me.