Episode Transcript — Learn How to Effectively Scale Your eCommerce Brand w/Chad Rubin of Think Crucial and Skubana
00:01 Announcer: You're listening to The Spend $10K a Day podcast. Brought to you by the performance marketing experts at MuteSix. This is your source for cutting edge insight into the world of online advertising. From the team with more Facebook case studies than any other agency on the planet. Here are your hosts, Steve Weiss and Stewart Anderson.
Steve Weiss: Hey everyone. Welcome back to another great episode of Spend 10K a Day podcast. Today I'm here with two amazing guests, my co-host, Suzanne Margaret Cobo and an awesome guest that we're bringing on the podcast today: Chad Ruben, a long time eCommerce veteran who's been in the trenches of growing eCommerce brands for how long, man? Like nine years, eight years Chad?
Chad Ruben: It's been almost a decade.
SW: Decade worth of eCommerce experience that he's going to share with everyone on how to grow exponentially your eCommerce brand. He runs a company called Think Crucial, which is a vacuum company, and he also runs an ERP solution, a back-end supply chain solution called Skubana.
Chad, thanks for coming on today, man. I'm glad that you escaped the snowstorm in New York and are in safe grounds in Austin. Tell us a little bit about yourself, man; what are you excited about for this year in the wide world of eCommerce?
CR: First, thanks for having me, excited to be here. Austin is beautiful right now while it's snowing in New York. I just had a nice taco. It's about 75 degrees outside, so can't complain. In eCommerce, I'm excited about a ton of things that are happening in eCommerce; eCommerce is roughly about 10% of all retail sales. It's continuing to grow, and with that, there's a lot of areas for disruption still to go direct to consumer and to essentially disrupt traditional incumbents that have multi-generational brands for decades.
SW: Cool, so being that you're the vacuum space, which is a really unique space; how do you compete in a space that there's a lot of brand competitors that have been there for a long time. There's so many vacuums that have been in the space for a while. How do you, from a brand perspective; whether you're running paid ads on search, which are intent-driven search ads; or whether you're running, obviously, any discovery-based Facebook; or even when you were doing Amazon ... how does a brand like yours compete in a very old-school space in the vacuum world?
CR: Sure, I want to clarify, right. We started off as Crucial Vacuum with a Magento site. We then started Think Crucial, which is every home appliance part and accessory that could break in the home, we manufacture. We have over 1000 products across 25 different hurdles. To answer your question specifically around vacuums, how I started was my parents had a vacuum store; they started going out of business; I started helping them sell on the internet. In the old days, we were using Front Page, then we went to Microsoft, or ... Then, we went to Volusion. What I found is that the largest incumbents have massive structural disadvantages in their distribution model. That's really the key. Since they're so large, and since they have so much, I would say, channel conflict that they are indifferent. Indifference to me is a massive advantage in my favor.
SW: Interesting, so when you say indifference, what can you do from a flexibility perspective? Obviously you can move a lot faster than them. This is a really interesting topic because I think, when you look into launching an eCommerce brand, of how you can move quicker than your competitors. Give us a couple examples of how you move quicker and how you had a big advantage or an unfair advantage because of this speed to market when it comes to eCommerce.
CR: Firstly, I'm an anomaly, so we have roughly, on a gross revenue perspective, we did about 12 million last year in the eCommerce world. We have one employee in the United States. The way that that's done is you have a proper system in place. We're not talking about a legacy old-school bulky ERP system. We built software to run and automate our business, which is, of course, I'm the co-founder of Skubana.
Two ways: we first optimize our life; we then find technology that we can use to automate what, it would take human labor, weeks or months to do. Then, we outsource all of our weaknesses to freelancers that can accomplish the job far quicker and better than we can do ourselves. We're fully, remotely distributed. Everything is automated or outsourced, including fulfillment Pick and Pack, and so, we can focus on really building our brand. Again, we have 1000 SKU's. We're probably moving faster than Amazon's private label business, AmazonBasics, right now, when it comes to actually launching new SKU's.
SW: Wow, that's crazy. I'm just trying to think. You are an anomaly. You do a 12 million revenue, and you have one employee. Obviously, I don't think there's a lot of brands that could aspire to being a 12 million dollar plus brand with one employee. So, if you were to give some tips to eCommerce store owners: How can you become more efficient? How could you cut the cost of your supply chain? How could you leverage freelancers? What tips would you give to a store owner that already has an established store but really wants to figure out how can they become more efficient, if that makes sense?
CR: How can you become more efficient ... I think everyone's asking themselves that, and the first thing before even going into outsources. Most people think of outsourcing are like ... they want to get more stuff done. When I think of outsourcing, I want to get my stuff done first. In order to get my stuff done first, you need to really optimize and think about where you're spending your time. Time is ... you'll never get that back. If I lose a million dollars last year, I can always make a million dollars the following year, but I certainly won't be able to get that time back. I start creating a list, a bucket list and ... I don't want to curse but an F-it list. A bucket list, an F-it list, all the things I like to do, the things I hate to do, the things I want to do ... I start making these lists and finding out where I'm spending my time where I shouldn't be and then figuring out how I can actually have someone out taking that off. Subtraction becomes more important than addition in the onset of actually getting more efficient.
Suzanne M.C.: So, Chad, was outsourcing that element that was able to save your parents back in business? Or what was that element that really turned that around when you went to the internet?
CR: That element was the fact that the internet opened up a massive pool of customers that they were only achieving in a small town of New Jersey. They were just a reseller, so for me, it's all about solving a problem. I was like, "Wait a minute, why do we need to buy a vacuum filter from a genuine brand like, say Dyson or Hoover, and resell it when I can actually go and manufacture that filter myself? Cut out the bloat. Cut out the middleman. Give it a far better experience from shipping: free shipping, free returns, and live chat, and expert advice off of our website?" That was the initial days. Outsourcing really was achieved for me when, about 2013, I was running a warehouse with about 20 or so employees, and I knew that that wasn't my core competency. I didn't go to college to run a warehouse. I just couldn't do it because it was a weakness of mine. I'm not going to lie. It was a weakness, and I found a way to actually outsource that, and we have a third party warehouse that does that for me. Even though it cut into my margins, it opened up time, which allowed me to expand my business faster than being stuck in the weeds of running that business.
SW: Interesting. That's really interesting. Let's go into if you wanted to start a new company. If you're starting a company in 2018 ... obviously, Chad, you have a wealth of experience, but if you're starting a company now and you're a brand new eCommerce brand, what are you focusing on? Not even just from a marketing angle, but what are you focusing on in the back end of your business, of building this amazing supply chain? What's the first thing besides finding the product, gaining the product, trying to gain the product, whatever. What are you focusing on as the core areas that you know that's going to allow you to scale business?
CR: Exactly, I think the biggest mistake that sellers are making that are starting businesses today is not being a systems thinker. It's an afterthought. They don't think about their system. They don't think about the foundation so they can build on that foundation. I think that's a mistake that I made early on was... I was running this warehouse. I was doing everything myself. I didn't have any software or technology, which can really be a competitive advantage to win. I didn't think about that until 2013-2014, and then I found that there was no softwares that we can use to run a business of my size that was about 20 different channels all in one place. And so, I ended up starting Skubana. I think the first piece is to think about the foundational element of your business, making sure you dot all the T's, or no ... dot all the I's and cross the T's, so you can actually have a foundation so you can scale.
SW: You used the word "scale". As a marketer, we come from the two totally opposite areas, and I know you're good at marketing, Chad. You think like a marketer, but you definitely built more systems: relating, building backend platforms to sustain eCommerce brands. Being a marketer, I'm always thinking about scale, scale, scale; and we talk to partners, who reach out to us, who we're working with. We're like, "Well, we've run out of products." And as a marketer, I'm like, "Wow, that's great. We've sold tons of products, and now we've oversold." I guess the big question I have is, how do you overcome that problem, if you're in eCommerce brand? Making sure that you never oversell product and you always keep that customers experience and that journey very sacred. I tell everyone I work with, "Make that customer journey and that customer experience a sacred element of your business. Put that first," and people come back. People really, really appreciate that. If you're advising these early stage businesses from your vantage point, how are you keeping that customer journey sacred?
CR: I can tell you how I figured out that keeping that customer journey sacred. We started a Volusion sight. Then, we started selling on eBay. Then, we started selling on Amazon. In the Amazon marketplace, there's about five million Amazon sellers, and in order to stay healthy on Amazon, you need to comply with Amazon's benchmarks and policies. Amazon's mission is to be the most customer-centric company in the world. If anybody, I think Amazon cares so much about the customer experience that they force marketplace sellers to actually level up to where they're at. That's really how I started thinking and considering customers. We had an issue where we actually oversold on Amazon, a hundred different products. It's a problem, and at that point, think about it. Think about the experience that you're giving to an Amazon customer if you have to go and cancel a hundred different products that someone ordered. Amazon hates that, and so Amazon suspended me for that. That's exactly when I started really building up processes. It hurt. Amazon suspended me. It was 50% of my revenue, and I was like, "Oh my God, what am I going to do?" We appealed it, and we created systems in place to make sure it never happens again. To me, that really comes close and very dear to my heart, where we actually had that same problem, and it certainly is not a good look when you have to cancel on clients or even change the estimated time per delivery because you don't have it in stock.
SW: That's a really good Segway. We run a lot of Facebook ads, and we see that there's crossover attribution between the Facebook ads you're running and sales on Amazon. I think it's a given that people are going to see your Facebook ad and then purchase on another platform. Facebook's a discovery-driven traffic channel; whereas, Amazon, Google are more intent driven. If you're giving advice to eCommerce brands, how do you balance off sales and marketing you do on both Amazon as well as Facebook in your mind? How do you build a strategy from a supply chain perspective that you're making sure that you have product available for both sides, if that makes sense?
CR: I could be wrong, but making sure I understand your question correctly ... Right now, I think it's all about picking the channel you sell on. For me, if I sell home appliance parts and accessories, and let's just say we're having a beer together in New York, and after a beer, we both go our separate ways and we take an Uber. In that Uber ride, I open up Facebook. The last thing that I want to see when I open up Facebook and really zone out of the world is a vacuum filter, a dirty vacuum filter saying, "Hey! Here's a coupon for it." I think that merchants in general and retailers in brands have to really choose their platforms very wisely. Not all platforms are created equally, and for me, Facebook upon vacuum filters may not do well. Maybe coffee filters and having a beautiful coffee filter that solves someone's problem, like we make reusable filters for these third wave coffee brands. So, we manufacture replacements parts to fit them Chemex or the AeroPress, some of these Kalita wave filters. That might be a great market for me to tap into on Facebook, but some other products wouldn't. Segmenting products and then, of course, making sure that not only the top of the funnel, but the bottom of the funnel, is secure as well. That answer your question?
SW: Yeah, it's interesting. You look at it a little bit different than I look at it. If I look at your story, you have over 1000 SKU's. I'm looking into the data. I'm trying to figure out which SKU's are going to be hero products. Which SKU's appeal to the masses? Which SKU's can we run as an ad top of the funnel. We look at ... what is the hero products? How can we build messaging specifically around the hero products to bring people into the funnel? They might not even buy the hero products, but they're going to buy other ancillary products. They might be long-term LTB customers. Getting back to Facebook's discovery platform, I always say, "Really figure out, understand what are your hero products. What products appeal the masses? What products can we build content around that's going to positively disrupt the users on a mobile news feed? How do we execute on that?" I think that that's something that we're always trying to look into and really understand ... is hero products and then creative. Those are the two things that, if I'm looking at one of your sites, I'm like, "What can we do here?"
CR: Right, so what can we ... I'm just curious from your perspective. This is an interview. We are hiring, right? What do you see? What's the criteria that would make something a hero product for me on Facebook? Because I actually haven't been able to figure out the piece to really hack Facebook.
SW: Hero product is, number one, a product that fits a lot of different audiences: wide audience targeting. This product could be just as usable to someone in central Texas as it is to someone in Boston. It could be used by both men and women. And also, on your website, it's one of the most popular products. It's got the best reviews, et cetera, et cetera. That's what we think of as a hero product. Number two, obviously, we're looking at creative. What kind of creative can we leverage that's going to get shares, comments, likes; that's going to get social proof on the newsfeed? Can we take this product and feature it in a specific type of video, maybe a gif, maybe a cinema graph, maybe a 30 second short, maybe a viral video? There's so many different video types, or maybe we're getting some press on this hero product. If we do get press on this product, how can we feature that press? Do we run that press with mobile collection ads running underneath the press? It all goes back to hero product plus creative, and I think you have a finite amount of time; you have a finite amount of money. So, if I'm looking at your specific business, Chad, I'm going to say, "What can we do to figure out creative and which hero product we want to focus on time on?" You could even look on the margin side. That's the third area. We have hero product. We have a creative concept. How much margin do I have on this product, and how much inventory do I have? You automatically assume that people are going to come to the website to buy your hero product; when in reality, they might not. They might buy other products, but the goal of Facebook is not discovery product focus. I always say Facebook's a discovery brand focus. They'll click on your product, but they'll discover your brand and buy other products from your brand. It's all about, it's a brand, brand, brand. Our Facebook team likes to describe it as brand response, and that's how I'm tackling and building a solution to doing direct response ads for a business like yours. It has a lot of SKU's. It might not have the most "sexiest products": coffee filters and vacuum filters.
CR: Right, it's not like Allbirds shoes.
SW: That's fine. There's a market for Allbirds shoes, and there's a market for vacuum filters. I think that, when people go to a website, they're going to come in for a reason, just like a store. How retail used to work, they might come into Walmart to pick up soap and milk, but they're going to buy shirts. They're going to buy other stuff while they're there. I like to refer to it as arbitraging intent, where you're arbitraging intent for one product, you get them to buy other products on your website.
SMC: When you're in your Uber car, and you're on Facebook, then you see at the top-of-funnel this video creative. When people go on Facebook, they want to be entertained, and so, if you can capture at the top-of-funnel with video, entertaining them, then you can further push the sale down the funnel from people who have viewed that video or clicked on the website from that video, even thought they didn't buy at the top of the funnel.
CR: Yeah, it's a good idea.
SW: That's what I'm testing. If I'm in your shoes ... I get you don't have a ton of resources. You don't have, from a creative perspective, from a video production perspective, even a campaign team. I'm looking for wins. I'm looking to figure out from a ROAS perspective what hero products can I use to generate wins from a return on ad spend perspective on the platform. Because if you could spend $500 to $1000 a day at great profitability, that's a giant win, am I right, Chad?
CR: For sure, yeah!
SW: That's massive, and I'm not looking for home runs. I don't need to be like Allbirds and build a very social brand, but I look at you, and I say, "Hey, we can generate intent on Facebook. We can bring cool products that people can discover. We can hand choose them and curate then for specific people's feeds, and then we can literally build a funnel on the backend to really engage them and turn them into buyers." Maybe your angle is that you're bringing people in with your hero products, and then maybe you're marketing the brand more or less down funnel. You're saying, "Hey, get a specific discount code for the next 48 hours." And you have a stream of mobile collection ads running underneath the video of the discount code. There's so many different ways to turn that intent into a buyer.
CR: David and I could talk about it offline, for sure, I'm interested.
SW: When you think of a multi-SKU eCommerce brand or product, I think that's the key to really understanding direct response is to understand that you're going to have products that are popular. You're going to have products that fit multiple needs, and you're going to have your best products that fit multiple solutions. Really, be thoughtful about leading with your hero products, and figure out which of those hero products are. Then, have variables based around what a hero product is. Obviously, margin, supply, creative: that's all stuff that I'm looking at when I'm selecting hero products to run top-of-funnel.
CR: Got it. Cool.
SW: I think, from there ...
CR: What do you think about, in terms of landing page, when you click on that ad for the bottom of the funnel? I'm seeing people that are driving to a specific landing page. There's some people that are using click funnels. It's less of the brands that I'm seeing that are using that, but there are people that are using that. Do you have any suggestions there?
SW: I would say if you have multi-SKU eCommerce, I'm trying to get them to make a purchase in the store. If you're under 10 products, I would definitely use a click funnel or an unbalance. It really depends on how many products. Remember, the more stuff you put them through, the less focused they're going to be. If you have a long sale cycle on expensive products, say, this magical vacuum that could also walk the dog. You have this magical vacuum, and you have a whole sale cycle for this. It's a $5,000 vacuum. That's what's going to need a landing page because you're going to have to really build social proof for that one specif product, but the reality is that you want to give people freedom of ability to go surf and play around with different products in your cart. You could use DPA ads. Obviously, if you're bringing people in through discovery with your hero product, then you're marketing to down-funnel DPA. You could do a whole bunch of cool stuff with DPA. Obviously, regular DPA and Facebook used to require a product feed. Now, if it updates to the pixel, now you don't even need a product feed. You could even do video DPA. There's so many different options with your product feed. I think that's the where the evolution is on Facebook is product feed, product feed, product feed. You can do DPA Instagram, DPA Facebook; you can do newly generated content in your product feed. There's so much cool abilities that you could really start playing around with.
CR: Great. I'm looking forward to hearing more. You got me really interested.
SW: Yeah, man, there's the wide world of Facebook. I think the beautiful part is, when you're an Amazon seller, is that Facebook will feed your Amazon store. There's so many people that really just want to purchase on Amazon. It's convenient. They have Amazon Prime. Even if you can just break even on Facebook, you're going to see a massive positive growth in your Amazon store, and I think a lot of brands are really starting to figure out how to intertwine both their Facebook spending, their acquisition strategy on Facebook with their Amazon store strategy. It's coming, I think. It's what I'm really excited about for 2018 is really building up longer term multi-channel strategies. I think, as a team, as a marketing agency, we're really thinking about multi-channel and omni-channel a lot more now because we know that Facebook is one massive piece of the puzzle.
SMC: Chad, I have a question for you with eCommerce. You had this vacuum business, where you're working with eCommerce. How did Skubana come to fruition from that? Was there a problem in that process of bringing your parent's business online that brought Skubana to life?
CR: Yeah, we were using all these desperate solutions, and they wouldn't talk to each other. If you have somebody who's shipping software; you have someone using inventory software; you have someone using analytic software, you've got a serious problem. If you're going to build a true system where everyone has a common language that they work with, you want everyone on the same page, and you want to get as granular as ... When you print a shipping label, that printing label's a part of your profit on that SKU. You have this intelligence, now, that you can work with. We didn't have that, so really, we were eating out own dog food that we created. The problem was, "How do I find a software to run and automate my business? Why does it have to be this way?" With any product that anyone's solving, whether it's a software product or it's actually a physical product, let's solve a problem where other people have these "oh crap" moments. Why does it have to be this way? And let's see how we can actually make it better.
SMC: Cool. I know most of the clients we, they work off of Shopify, so how does that fit into Shopify, and how does that differ?
CR: Shopify is a shopping cart, but you still need to be able to forecast demand plan. Sure, maybe it's easy if you have one platform, even though Shopify doesn't have purchase order; Shopify doesn't fore-test. We have a lot of the larger Shopify plus merchants using our software. What happens is that once your business starts to get larger and you start to really scale, then complexities start to arise. "Wait a minute. Now, I'm selling on Amazon, and I'm selling on Shopify. I have velocity coming in from both channels. How do I run my business?" In Skubana, for example, we pull in your velocities from all those channels, and we will actually create you a purchase order awaiting approval based on your velocity, based on your lead time, based on your minimums. We become the backbone of your business.
SMC: My guess is this Skubana probably integrates with all these different channels.
CR: Yeah, I'm on 20 different channels right now: Amazon, Ebay, SEARS, Rakuten, Newegg, Walmart, Jet, Groupon, Wayfair, Overstock, Shopify, Magento ... We're on all these channels, and we get to manage it with a platform. Now, a lot of these direct consumer, what we call digitally native brands, are now starting to sell to brick and mortar stores. We support Shopify Point of Sale. You can ship out of your Shopify retail location, using Skubana as well. You can manage that inventory. You can replenish it from your 3PL to Shopify. We overcome a lot of these obstacles for these large D to C brands to help them run more effectively and more efficiently.
SMC: This web of channels meets at Skubana.
CR: Yeah, think of us like the central nervous system. We become the operating system of your entire business that becomes the master that actually controls all the different moving parts. We do shipping any way you fulfill, including the 3PL. We do inventory management, juggling across all your different warehouses, including Amazon's warehouses. We have all the automation for purchasing, and the result of that, the "Why," the Simon Sinek, "why we exist" is our analytics. We put everything together in one place, so you can run and see every single metric in your business in one platform. You can actually make decisions about your business within seconds versus having employees pull together VLOOKUPS and patching together all these different spreadsheets.
SMC: You can see, "Okay, I'm getting more sales from Facebook. I'm getting more sales from Amazon." You can compare all the different channels.
And then you can see, is Facebook more profitable for you, or is Amazon? Which SKU is contributing to that profitability on Facebook or on Amazon? You can see every single fee that's part of that, including your first-in-first-out cost of goods sold.
SMC: That's great. I think that's absolutely needed.
SW: Interesting. Sorry about that. I think that's all the time we have right now, but we really appreciate, Chad, you coming on and sharing some of your thoughts of the supply chain. We both shared a little bit of treasure trove about how to formulate an eCommerce plan for omni-channel. Is there any parting thoughts you'd like to add or any follow-up thoughts that you'd like to add before we wrap things up?
CR: I think, if we're talking about sellers that are just starting, it comes to solving a problem. If you're a more advanced seller, it comes to having a system, and I think that really separates a lot of the "haves" and "have-nots" in the internet retail space right now, is having a system that they can automate to scale very, very quickly.
SW: Yeah, I couldn't agree more. I think, from a marketing perspective, having a specific solution that you're bringing to the market will make your life a lot easier when you're trying to sell a product. I would even go deep into your competitors. I would try and figure out the problem that you want to solve, then really focus on your business. I look at a lot of companies that really are focused on their competitors, and I don't think that's very healthy when you're super-focused on other people outside of what you could do. I always give people the advice that ... Focus on making your offering and making your user experience and making your customer journey the best. You'll start seeing the results. I think that's how I've always run my agency, just being able to focus on us. There's a lot of other great agencies who do amazing work, but you can only focus on what you can control.
CR: To piggyback on that, a lot of learning for me happens outside of industry. Instead of looking at my competitors, I look at other people that are actually doing a good job outside. If I'm in the vacuum or air-purifier or the appliance parts space, I might look at what Bonobos is doing or what ModCloth is doing or what other companies who have much larger budgets are doing in different space. I'm not trying to recreate the wheel, I'm just learning from them and seeing. I buy from them. I test purchase. Even I buy just to shop for fun, for personal use. I looked at where they're shipping, how they're shipping; what is the collateral that they put inside the box. What does their retention marketing look like? All those things are super helpful to me and help me develop my brand even further.
SW: Totally. That's another conversation of really doing brand and customer research as well as product research. That's all the time we have today. I really appreciate you jumping on the podcast, and let's be in touch. Coming up soon, we have some amazing podcasts next week. Next week, we're digging more into the future of DPA ads on Facebook, so it should be an interesting talk. Thanks for everyone listening today, and we'll be in touch soon.
SMC: If you want to learn more about Skubana, Chad, where can they go to check that out?
CR: They can go to skubana.com. They can find me @Chad at skubana.com. I'm certainly not hard to reach.
SMC: Awesome, great, if you're listening to this podcast and you really like it, let us know what you think. Leave us a review on iTunes. We'd love to hear from you.