Joseph Hansen joins us on LearningFromOthers.com. He built and sold five businesses in 10 years. We talk about taking a leap of faith to start your own business. And successfully balancing family and work life. Please welcome, Joseph Hansen.
- 00:00:59 – Joseph’s background
- 00:04:25 – Talks about learning curve
- 00:10:35 – Damon’s takeaway
- 00:16:41 – After Flirty Aprons
- 00:19:43 – Damon on working with Joe
- 00:31:40 – Complication on selling on Amazon
- 00:37:10 – Damon’s notes on Amazon
- 00:39:20 – Overlap on SEO
- 00:45:16 – Joseph on Amazon’s success
- 00:53:57 – Joseph on Amazon and Seattle
- 00:58:04 – Learning from mistakes
- 01:04:00 – Closing Remarks
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
Hey listeners, it’s Damon Burton from SEOnational and learningfromothers.com. I’m super excited about today’s guest have Joseph Hansen. I’ve known Joe for about a decade, worked on a lot of projects with them, and it’s been interesting to watch the evolution of his career and the little cookie jars.
He has his hands in. Um, you know, I don’t get too envious about a lot of entrepreneur success, but I do. And the Joseph, so Joseph Hansen. Welcome. Thanks for joining us. Hey, thanks for having me. So we got a lot of stuff as far as, you know, career events and evolutions that we could talk about with you. So, um, why don’t we start at the very beginning and give us background on how you got into entrepreneurship.
Maybe. Why don’t we start off? Where, what was your last job before you, for you gave up working for the man last job. Okay. Well, I was, I was premed in college, right? So. I was planning on going to med school. I graduated, I was actually working as a personal trainer for Gold’s gym. So that was the man Gold’s gym was the man.
And, uh, one of my colleagues gave me a book called the email and I started reading through the emails for those things. Aren’t familiar with the E-Myth it’s not the electronic myth, the entrepreneurial myth. Right. The myth is that most people think that businesses are started by entrepreneurs, but most of them are started by technicians.
Like a doctor starts a medical practice, a shoe repair research, a shoe repair shop, a personal trainer has their own personal training. They start and according to Michael Gerber wrote the book. That is the reason why most small businesses fail. So he kind of takes you through this process of.
Understanding what he called the franchise prototype model, which is like the McDonald’s model, creating a system that allows you to work independently for business. Instead of working inside the business, doing all the little tasks, running around like crazy, like a hamster, trying to do it all, you were actually working on it on the business.
You’re creating the marketing initiatives and other things that propel. You need to grow that reveal you to do more with your business. I remember when I read that book, I realized, well, I I’ve always been here an entrepreneur, and I just didn’t realize it. There were so many times working for so many different people and like summer jobs in college where I would suggest something to a manager and they’d look at me and say, who are you?
And, but they were entrepreneurial minded thoughts that I had had. So I decided to not go to med school. Instead I started a small business with my wife and that business was called 30 aprons. So we, we met together with another couple and we each brought 10 business ideas to that meeting. And I asked them to do that, knowing that we would cross almost all these off, we got to meeting and we’re looking at them.
And some of these ideas are like starting like a, a Jeep park where you’re driving over all these obstacles and doing things. And I’m a dollar signs are adding up in my mind and I’m realizing, come on guys. We don’t have anything prior business experience. We can’t start a $10 million business from the start here.
Like let’s, let’s go through this list. And let’s cross off the ideas that can’t be done really quick and with little capital. And so we did that and we ended up with like four or five and ideas. And one of these ideas was these aprons that our business partners life had made a couple of years earlier.
And my wife, Heather had had a bunch of it as I experienced. So she took those aprons. And contoured the design a little bit to make it flatter a woman’s figure, and then made the waist ties really long and really thick. So you could wrap them around you and tie a bow and then added modern patterns to it.
And all of a sudden, what was kind of this traditional, just utilitarian functional item became a fashion piece. And that’s where our first business came from. Cool. So with Bernie aprons, um, tell us about the learning curve that you had to go through to sourcing materials, uh, for a retail product. Well, I haven’t, it was pretty steep.
We, uh, in the very beginning, we kind of had no idea we were buying fabric. Like Joanne’s. Right, which is really expensive. And then trying to sew some prototypes together. We knew we couldn’t sustain a business off of that model because all the fabrics change so quickly and because the cost is so high and we would be doing that manual labor.
So we talked to a bunch of people around us joining what was called the small business development center locally and got some referrals. And we got some suggestions as well. And then. My wife and Jamie, um, the two female partners did a lot of research, just online, just looking up different fabric suppliers and found two fabrics.
Fliers. Think one was called Michael Moore and than the other one was called Robert Kaufman. Pretty sure. This is like, 11 years ago. So it’s hard to remember, but they found these fabric suppliers that made custom fabrics and they found the type of fabrics that they wanted and ordered a bunch of those.
And then luckily we found a place called authentic concepts, which is like a mile away from our house. That was a cut and sew fab factory, but it was the only cut and sew factory or one of the only few in Utah. That was left. You know, I think a bunch of them had kind of just shut down their business in the early two thousands.
So luckily they were right by us and we took a bunch of fabric over to them and took the patterns over to them. And they were able to start producing. That was kind of the beginning then. And we worked through a sourcing company called box marketing group and they took what we had done instead of us ordering the fabric from these designers, men, having them.
Alright, cutting. So place here locally and produced in the U S we went over to China and they bid out the work with a bunch of different factories and had the action. And we actually designed the fabrics at that point. And so they were own designs instead of purchasing someone else’s designs. And they did all the manufacturing and shipping for us.
And that took our costs down, you know, Jeremy adequately from what it was before, but that was a. Okay. Eight to nine month process to go through all those different phases. Is that, was it so with the first phase of sourcing materials and cuts locally, even though it was more expensive, um, obviously you would do that just for, you know, quick prototyping.
Um, was it hard to give up that. Expeditiousness is that, is that a word it’s a hard to get and give up that ability to get quick turnaround with prototyping, um, in trade for the convenience of, uh, outsourcing overseas for cheaper materials and products? No, it wasn’t that expeditious, right? It wasn’t that quick to do it here locally.
So it wasn’t that hard to give it up. Um, what was more difficult giving up was the ability to do small amounts. Cause going overseas, you know, we had to order, I’m trying to remember when our first batch and that it was, you know, somewhere around 10,000 units or something like that instead of 500 units.
So that was definitely more difficult. Okay. Um, so, so 40 aprons is your entry into the world of entrepreneurship. Uh, you sold that and made an exit. And then, and then what did you do after that? And what were you able to take away from 48 friends that you could apply to the businesses that, that lied ahead?
Well, for me to be successful 38 prints, it wasn’t just coming up with a good product idea. It was coming up with, it was, it was learning all of the essential. Oh, gradients to having a successful business, which includes all of the marketing kind of know how or 21st century company. And so I had to kind of school myself and learn from experts that were willing to teach me on per click advertising on social media, on SEO, um, on.
Understanding conversion optimization, affiliate, marketing, all of those things. So I could create a comprehensive marketing structure for my business. And we also sold to a lot of boutique stores. We sold the big box stores and eventually cut off that supply. So I learned a lot about retail distribution, but eventually found that it was more profitable and we sold more units, um, allocating all of our inventory to online channels.
Now what I also found in learning a lot about some of these marketing techniques that you really need to build out a comprehensive platform that really shouldn’t do most of it yourself, let the experts do it, but yeah, learn as much as you can so you can understand what they’re doing and why, because I think that that helps you in many ways to explain that a little bit more.
If you, if you learn the fundamentals of SEO, And you can, you can understand better what type of products are going to perform better or how you can structure your site and the content you create and make it more relevant for your site, rather than just relying on your SEO technician to do all of that work for you.
Um, you can also create content campaign on social media. And other various sources like that, that feed into your SEO strategy and develop something that’s more comprehensive. No, that’s what aspect there is the same thing with paper, click advertising, the same thing with affiliate marketing, right? You learn a lot more about this things and get some detailed knowledge.
Then not only can you assist your, your outsource technicians and doing that work a lot better, but you can employ kind of fundamental changes in your product line, maybe in processes of your business. It also helps those things perform a lot better for you as well. I kind of went off on a tangent there for a second.
No, I think that’s a good takeaway. Cause you know, a lot of people will talk about how you kind of let the pros do their work. But I think a unique insight that you offered was that you can, you can take away, um, You know, little tips from what they do and apply it to other aspects of the business. Um, was it hard or did you have any kind of humbling experiences where you kind of had to tell yourself to step aside and let the pros do their work without trying to, you know, you’ve got to keep a pulse on everything, but it, wasn’t hard to not poke your head in too much.
And did that take awhile to get in group with? I don’t think that was hardest for me with affiliate marketing, um, with SEO, as I tried to learn it, I realized, wow, it’s going to take me years to become an expert in it. And by the time I become an expert in what’s relevant today, that’s going to be irrelevant.
So I might as well hire someone that is already up to speed on it, but understand the fundamentals of it. When it came to affiliate marketing at first, from the outsider’s perspective, I thought, man, why would I even hire someone for this? I should be able to do all this myself. Um, but as I got further and further into it, I realized, wow, this.
Industry is relationship based. And so unless you want to be calling, texting, emailing like a hundred or a thousand different affiliate partners every week, and you should have an outsource manager there. And for me, that makes a lot more sense when I was young. Um, so you talked about where you. Went through an evolution where you had a, some degree inventory allocated towards it’s called retail shops.
And then you eventually went all in online. Was there specific moment or event what triggered that or was it just a slow understanding of, you know, there’s more profit over there? Well, that’s a good question. So I think it’s both, I think there was kind of this slow break, even less than profitable experience.
You’re having almost every month. You’re trying to grow our business from startup to become, you know, a decently sized business that can support multiple families and the employees that we had. And we reached a point at which we realized, wow, we have limited financial resources here. And we have a certain level of profitability when it comes to wholesale.
We have a certain level when it comes to our website. And I remember looking at, um, the P and L statements, which from the beginning, we, we kept very good financials of our business, which is helped us understand and analyze our business very well. And I remember looking at kind of these class classified financials, where we had our.
Kiosks that we had involved are selling kind of retail prints. And then we had our website and I was looking at that end of the first year. And I think, you know, for December we had something like 150,000 or 200,000 in revenue from our, our kiosks. And we had about $15,000 in profit. And then looking on our website, we had.
About $25,000 in sales, which is nothing to sneeze at for first year. Never done it before you still had $25,000 in sales in December on our website. Um, and $15,000 in profit. Yeah. So the same bottom line, but you’re selling 10 times as much those regional locations to achieve that. I had known that all along, but just seeing those financials in front of me made me realize.
We have to devote our resources to the website. That doesn’t mean we did all of that right away. We still had to kind of transition that out over time. But within two years we weren’t selling in retail locations anymore. And I imagine the retail is a lot more time intensive too. So you have more profit on the website with the last hands on involvement.
So you can focus on other things, data too. I’m a data driven person. And so I like to be able to employ data and the decisions that I make. And when it comes to retail, you don’t really know what’s affecting or not affecting sales, but when it comes to SEO, PBC, affiliate, marketing, even social media, you can determine what’s actually producing results for your business.
Right? Give us some idea on the timeframe it was from inception to your, to the time you sold 40 aprons. So we started in December of 2007 and we sold February of 2012 pretty quick. Um, before I jumped into, you know, Kyle and I, we have, uh, experience with Joseph way back to the beginning days of to Gator prims.
Um, Kylie, I’ll give you the opportunity if you have any. Um, any questions about, um, evolution of 40 aprons or, uh, you know, anything that stands out with, with our involvement that we could share with the listeners? You know, it’s kind of nice to actually you’re from Joe’s side, because I had to have the opportunity to kind of know everything in the background.
And then you, my question was timeframe and you answered on that one. Um, so now as far as 40, the is concerned, it looks fun, right? To be part of, you know, some of their website developments and, um, giving the initial pudding in with the SEO. And, and I’ll never forget, you know, the day we ranked the pro Amazon for aprons, for women, that was, that was a milestone in my young SEO career right there.
So thanks for letting us be a part of that one. Go.
So you now you’re out of 40 aprons. Um, did you take any downtime after that or did you jump right into the next project? What was it? Well, my business partner went off and got an MBA. Then did some other things. I didn’t take any downtime. I actually continued to run that business for a year and grew it substantially during that year.
But I also started other companies at the same time. So I had another company that I started called centric. And the point of that company was to figure out how well do I know Amazon? Um, up to that point and towards the end of flirty aprons, starting in, I think 2010, but more in 2011, we were selling on Amazon.
We were selling as a third party seller were also selling as a vendor directly to Amazon. So I learned a lot of the. Pitfalls that brands run into selling on Amazon. There’ll be times when Amazon would put in a huge purchase order, great style. That’s not my best seller, but they’re there, you know, they’re ordering 500 units or a thousand units.
This is awesome. And then two weeks later that product would be listed for half of retail price on Amazon and sales on my site. It’s shrink dramatically. And, and so there were events like that taught me a lot about selling on Amazon and the complexity associated with it. So I started centric, um, some partners as well in that and put it together.
We put in an initial investment of $120,000. I wanted to see what we could do. Uh, by the end of the year, by the end. And what we did was we purchased watches and fashion accessories and other and jewelry, and it was branded jewelry. So already had a strong brand, but I wanted to see how far we can turn that and kind of tweaking systems over the year.
By the end of the year, we had about $2 million in sales. Wow. So. That’s not Amazon. And so it took me five years. He gets $2 million in sales or flirty aprons, but within one year utilizing Amazon’s heavy traffic flow and the brand equity of these brands as well, and products we’re able to get to $2 million.
So I sold off my interests to my partners and then started my own marketing at that time. And. And that marketing agency, primarily my goal was okay, I’m going to help you go with Amazon. Now it developed a lot of good systems here and I’m going to help brands understand Amazon. And after a couple of years, I met James Thompson who worked at Amazon for six years.
He was the very first FDA category manager. There became the head of social services and together we started multiple businesses. He became a partner in buy box experts, our marketing agencies, support brands. But we also started the prosper show and the prosper show who came the largest continuing education conference for Amazon sellers this last year.
Great. Yeah, pressors are called story. Um, so we mentioned in the intro that we’ve had the opportunity to work with Joe, um, We, we get the privilege of working the SEL side of a lot of his businesses, including buy box and prosper. So prosper was really cool for me to watch. Um, yeah, the SEO side has a quick gains.
Um, but I think what was more appealing to me to watch was just how quickly the show scaled and here in a moment, I’ll let you elaborate. But, you know, from my perspective, I saw that the first year, uh, Sold out, you know, met, uh, the quantity of seats you wanted to fail. Um, and you, you outgrew the facility and then partnered up and moved it to Vegas.
I mean, all was just when you built the show and outgrew its facility, basically within a year. Um, you know, and then I don’t know how much more you want to go beyond that as far as where he’d taken the show, but, um, so why don’t you kind of speak to, I mean, starting at a conference. To me, it seems like is a pretty different animal than doing consulting or selling online.
So are you able to take any of your experience from your retail online world and apply it to prosper or was it totally different? What made you want to get into this? And what was the biggest learning curve you had to overcome? I suppose your question. So let me take them one at a time. Um, just start off.
I want, I give James kind of most prosper because he’s the one primarily involved in crafting the agenda and running the show. And so is a lot of the genius behind that has done a tremendous job building that I definitely what I utilized most. What I brought to the table was the marketing and eCommerce perspective and ability.
And so. Um, working in tandem with like your organization. We crafted a site that converted well, but, um, also worked to create landing pages and conversion funnels and sequences. Right? So we were giving people lead magnets when we were advertising to them on social media, all of those magnets were. No, the top 10 methods that private label sellers use to market their products or understanding what will get your account suspended on Amazon.
Those are just kind of generic ways of explaining the type of lead magnet, informational resources that had significant value. And when someone would sign up with their email to get that lead magnet, now we have their email and we’d use that to then send additional messaging to them. And the people that tended to sign up for those things were people that tended to want to attend a conference like ours.
Getting our goal was let’s not create another conference that’s advertising because you go to a lot of conferences and there’s usually some sort of hidden agenda there, or sometimes pretty blatantly obvious agenda, which is. The speaker. There’s a couple, usually the conference itself is trying to sell or promote something.
And then the speakers themselves, it’s kind of pay-to-play they get up there, they paid to be on stage. They promote their product all day long. The attendees have to question the speaker, really telling me what is really relevant to my brand or my business, or are they just trying to sell their service?
And so at our conference, it was, there’s no pay to play. Right. We’re going to bring in the people that we feel are qualified experts. They have to disclose the businesses that they own and have interest so that there are no conflicts of interest conflicts. And then we don’t allow it and to Mark it from the stage.
Yeah. They can give their background. That’s okay. You want them to give their background? Because we want them to have credibility when we speak in front of the audience, but the point is education education first, right? Bringing in the relevant. Topics and speakers as well. And I think that led to most of the success of prosper show.
Cause when you had a lot of people come initially, and a lot of that initial success was, was partnering with the right types of sponsors that could get the word out. And then also delivering substantial information that gave people real value, where they knew the conference then would probably give value.
But then after that first conference, the feedback where. Best Amazon conference ever been to. Right. It gave me the most information, which gives me real value to actually propel my business, moving forward. And for there that just steamrolled and word of mouth and marketing became a lot easier after we achieved that type of feedback.
So prosper seemed to go from, from the public side, it seemed like a scaling. It went pretty seamlessly, but I’m sure with any project a behind the scenes, there was a lot of headaches. Um, what was one of the biggest learning curves, um, or things you had to overcome or, you know, failures or anything you wanna speak to you in that respect?
Well, a lot of people don’t know that amongst Amazon sellers, huge Orthodox Jewish continuum, that makes up some of the top sellers. And so in order for us to be able to cater to those people, to that culture we have to, or religion, we have to actually provide kosher catering. Yeah. And then a place like salt Lake city, where there’s, I think only one rabbi who can write it has the prepare kosher food that was really difficult.
Um, and so choosing a location that has substantial ability to provide kosher teetering actually was a big requirement and narrows down the selection of cities. You can all the competency, things like that. There’s multiple things like that. You just never think of until you actually run a conference and then you understand what your attending demographic looks like, and that really changes things for you.
As you start to try to run it operationally. How long did you have before you actually took the first step to building out prosper? How long have you, had you been brainstorming on it?
Jay James and I attended another conference. I won’t say what it is, but it’s another Amazon conference and we went to it and we were disappointed. You felt like there was a lot of glitter kind of glamour, but very little substance that provides real value to brands or sellers. And so at that conference, he and I started saying, you know what, we should just do a conference ourselves.
And we got into the initial work of it. And we’re like, why should we care? Uh, cause one of the things you find with conferences, like, like 90% of your ticket sales typically come in, like the 90 days before the conference. And so you’re sitting there like, Oh crap. And I’m going to have like 10 people come to this conference, but then if you’ve done everything correctly, they really do start to steam roll in and compound.
Um, but yeah, it’s each year it’s still it’s as nerve wracking as the last year, even though. There’s progress made and you see more tickets come in earlier. It’s still like, well, we’re wanting to hit a lot more people this year. And, but magically, they kind of do come in and then I think that’s, it makes sense.
A lot of people don’t pay for conferences a year out. I don’t. Yeah. Yeah, it’s interesting because from analytic side, you could see, you know, from us, from the SEO position, the rankings increasing and, you know, prosper was a home run. There is a monopoly on a lot of keywords pretty quickly, but yeah, you don’t see the conversions coming through yet until those that last month or two, and then it just kind of plugged in.
So it was interesting. Um, so, so, um, what’s the goal with prosper now? Um, where’s it going? What’s your role in it? Sure. So the prosper was actually sold to Emerald expositions in December. I was last year, um, a Oh, and a bunch of retail shows dozens and dozens of sorry, trade shows like they own a IRC internet retailer in Chicago.
Um, they own the ASD show. They a bunch of other shows. And so it’s kind of a perfect fit for them. Now James continues to do the agenda for them. I have some involvement kind of moving forward just to make sure that things transitioned smoothly, but they’re doing an excellent job propelling that business within forward.
And we look forward to continuing, continuing to craft the agenda to make sure it stays relevant and true to the principles that we established the business on. So Joe, with flirty and then now a prosper. Was it always in the back of your mind that you’d be okay to sell that you have an end goal of either the company?
I think. And there’s a couple other companies I didn’t really mentioned in there cause they were smaller. One was called cool wall art. No one was called Lola did. So I sold those off to, um, I’ve always thought businesses are a means to an end. I know a lot of people kind of view their business with their baby.
Not me. Um, I want to learn from a business. I want to grow. And then there’s usually a very good time to sell. You’ve done it. Right. And, and I think it’s, it’s good to sell. I don’t think you should hold onto a business forever. I think you can grow in subsequent businesses in ways that you couldn’t in know current business.
At least for me, maybe that’s just because I have a little bit of EDD. I get bored pretty quickly. But I think there’s a lot of opportunity in moving on to new ventures and some of what propels me call it a source of my ambition is that people have told me before, when I expressed ideas about starting a software company or doing some other things, I’ve had people tell me, just stick to what you’re doing.
Almost everyone fails when they try to move on to a new industry. That kind of upset me, gave me a little bit of fuel, right. You know, to the fire, move into the different types of businesses that want to start in Egypt. He had someone tell me that I couldn’t, um, to want to do a trade show and, and they turned out very well.
What’d you do? Sure. Definitely. Well, obviously I can’t do one that, yeah. Um, but yeah, definitely. Yeah. Okay. So, you know, we’ve talked about a handful of businesses, as you said, there’s a few in between, um, you know, what is their favorite type of business that you have so far or, and, or is there, um, you know, something that’s really appealing, that’s coming up that you want to jump into?
It’s to be determined. That’s a, that’s like top secret.
So back to selling on Amazon, you know, that kind of seems to be your, your, your niche, we’ll say right now. Um, so everyone that isn’t already in the world of Amazon kind of. When they talk when they hear about the opportunities of Amazon, obviously it sounds amazing. And it is, there’s a lot of benefits to jumping on Amazon.
Uh, so I think we can kind of skip the advantages of selling on Amazon, uh, and maybe speak to listeners about the complications of Amazon, you know, from a high level, we don’t have to get too detailed, but things that, that new Amazon entrepreneurs probably haven’t even talked about. Okay, well, there’s.
We’ll start off with this. Amazon is the place where all of your distributions and sins come to fruition. So if you’ve ever liquidated product, or if you’re selling to any distributors where you don’t have ironclad agreements, you’re going to see a lot of that product low back to Amazon that’s because Amazon wants an open marketplace.
They have what they call kind of a fly wheel. And their flywheel mean their primary level levers that drive business on the channel for them. Right. And a lot of that has to do with having a substantial offering of products, lots of different products listed on the marketplaces. It’s somewhere from 400 to 500 million listings right now on Amazon of different products.
Um, so having more products on the channel creates greater value for customers. Having a lower price on those products on the channel creates greater value for Amazon’s customers and having more people sell those products. So not just having a bunch of products listed, but having 10 people selling kind of the same products where they’re at, they all are competing on price and competing on getting high customer service.
Really good fulfillment to those customers that delivers value. And then last of all, Amazon’s fulfillment network, FBA right. Delivers value. So all of those things go together to create really good value for Amazon’s customer, but Amazon’s customer is not suppliers. Amazon’s customer is you. It’s all the people signed up for prime.
It’s all the people purchasing product on the channel. And so Amazon does not view any of that supplier relationships really as its customer really could care less. Not even suppliers because there’s so many of them, millions of them, and there’s one ready to step in right after the next one. If they choose to stop doing business with Amazon.
And because of that, yeah, there anyone and everyone is finding product and your product will find its way onto Amazon. So the question that really behooves brands, resellers, private labelers is. How do you manage your Amazon business rather than would I sell a product on Amazon? Because your product is going to be on Amazon one way or another, whether you want it to or not.
And so what James and I had come up with is what we call the Amazon stool. There’s three really important key elements for selling on Amazon. The first one of those is what we call brand governance. And that means. Ensuring that you’re the one that’s owning the buy box on Amazon and that you have the right types of distribution and pricing policies and intellectual property rights that give you control over your brand and its distribution, because unless you’re the one actually selling the product to customers on Amazon and you can’t control the content of your product, you can’t control the price of it.
And you can’t control advertising next to. Legs of that stool is catalog optimization, right. And catalog optimization, not just kind of the SEO aspect of it, which is also really important, getting the right keywords and right terminology in there to rank well on Amazon’s own search engine, but it’s also optimizing your catalog so that your product listing to actually convert giving the right information, the right images, product video.
And, and mobile level level optimization on your product listings. What does that mean? Well, we have about 55% of search on Amazon coming from mobile devices. And most people scroll through images when they search. So putting a lot of that image, a lot of your product content into images, having call out features and turning them into infographics rather than just plain images.
Um, So having it, mobile optimized, having it optimized for SEO, and then also having it optimized for conversion sake so that people read the type of information they need to get when it’s on there. Okay. Part of conversion optimization is also making sure that you get really good reviews for your products as well, so that people can read through those reviews and that they can get information from other customers because that gives it real products.
Credibility. And then last in the sequence of the legs, stools legs is advertising. You need to have really good advertising built out and granular advertising. So you have proper attribution. Advertising is key to building your actual organic presence on Amazon, where you advertise really well. We see people are rewarded organically on the channel as well.
And it propels you above your competition in many instances, but you can’t advertise well, unless your product listings convert. Otherwise you’re just sending traffic to product listings that don’t convert and your product listings. It won’t matter if you’re sending traffic to them or it doesn’t matter if they convert you don’t own the buy box.
And that comes from brand government brand governance. All three of those are really critical elements to have a successful Amazon business. What I find interesting is that it’s amazing that Amazon can sell PPC space on their own site. That’ll link out externally to other sites and they still increase their selves.
So that, so they’re like having their cake and eating it too, because they get the sells on amazon.com and they get paid from sellers. Um, so linked to, uh, you know, external sites and then people will see Amazon is more competitive on pricing and come back anyway and buy it. Did I illustrate that correctly?
Yeah, but I mean, they’ve gotten rid of a lot of that. They used to have, um, sponsored ads that would actually link off Amazon, like, like the image of a product, kind of like a product listing. They got rid of those a couple of years ago, then they used to have, um, Uh, text ads as well, going off of Amazon that anyone could do.
And those they got rid of as well. Now they do have some ads on Amazon, but it’s not actually purchased through like seller central or vendor central. So it’s not easily done. It’s just ad space. That’s sold on the site through their, through their Amazon advertising platform. It’s kind of like display advertising.
But yeah, they do sell it. People do go off Amazon and then they come back to the platform and buy products. That’s crazy. Um, so you talking about how that’s evolved and ads have come and gone, kind of speaks to my next question about algorithms. So in my C doing search engine optimization, they get a lot of people that will say, Hey, I wanna, I wanna optimize.
My Amazon channel. I want to optimize there or not optimize that C or whatever. Um, and what a lot of people don’t realize is that, uh, they’re all totally different animals. You know, there is some overlap, like you had mentioned, there’s an opportunity to optimize your keywords and optimize your descriptions and images.
But, um, do you agree that there is some overlap from. Search engine based SEO to Amazon based SEL, but for the most part, they’re just completely different animals. Yeah, absolutely. I think Eric Schmidt right said that Amazon, this was in 2012, right. So years ago he said Amazon is our biggest search competitor.
Um, and that was, that was kind of prophetic because I think at that time, Google had about 35% of product related search was starting on Google. I mean, 9% on Amazon. And today you find. Yeah, somewhere around 50 to 60% of product related search starts on Amazon and like less than 10% starts on Google that’s product related search.
Right. So that’s, someone’s searching specifically, like for the Adidas, whatever type shoe sign or something, or, um, but it’s still. Incredibly important to realize is that as product related searches are strained on Amazon and there were some other stats I think real recently released by Amazon that said when someone starts a search on Amazon 92% of the time they purchase the product on Amazon.
Yeah. Yeah. Crucial to know that. Also crucial to understand, uh, and, and really know your point, Damon, that they’re different beasts. Um, The Amazon algorithm is built around. Yeah. Purchase volume and conversion rate. It’s two metrics, right? Mostly there’s a bunch of other things in there, but those are the two big ones, right.
Purchase volume and conversion rate. Google is really built around relevancy. Right? And then a lot of this comes from it’s simply understanding the companies. If you understand the company’s motivations from the beginning, you can kind of predict what their algorithm is going to be. What does Google want to do?
Google wants people to continue to use their search engine, to find information. So you need to have something that’s really relevant to what someone searches, the more relevant you are to that search. More likely you’re going to be ranked. This is from a very broad perspective, but that’s how it works.
Amazon wants people to purchase products and to keep coming back to purchase product from their site. So it doesn’t matter if someone’s someone spends 10 minutes on the listing and whether they keep coming back to the listing, what matters is whether they actually convert from the listing and how many people convert from the listing.
But I think you, you understand what the company really wants to build their user base around and you can predict what their algorithm is going to be. Yeah, I was laughing when you talked about the Adidas search, because I that’s, I did that two days ago. I went and searched Reiki. They’re size 11.
Um, have you dabbled in, uh, any other, um, actually before, before I ask the next question, um, you know what I find interesting. You talked about prime membership and, uh, maybe you can speak in a moment about how. The quantity of people in the U S to have prime membership. And to me, I’m totally convenience play.
You know, we didn’t have the right, and that’s what got me in there years ago. But a lot of times they don’t have the cheapest price. And sometimes when it’s, you know, more than a hundred bucks and they actually care about that five to $10 different similar they’ll shop around anything less than like 20 or 30 bucks.
I don’t even care if I’m spending $5 more than I could go to Walmart because. I don’t want to get in my car. I don’t want to drive. I don’t want to stand in lines. Um, so Amazon they’ll have me forever, just so I don’t have to leave the house. I made that same decision yesterday. Oh, that’s all you can go. I was just think they packaged other things into it right now, your prime video.
Um, and so that just adds that additional layer of stickiness there. But yeah, Amazon said that they have a hundred over a hundred million prime customers, but they didn’t specify whether that was in the U S or worldwide and assume that’s worldwide. Um, and you’re probably looking at somewhere from 60 to 70 million in the U S.
That’s huge though. And almost all of that is built around convenience too. Most amazing thing that Jeff Bezos has done is that he has, he has made what would it be? Sexiest business proposition, the sexiest business proposition, which is logistics. Everyone’s into logistics now. But for the longest time, no one cared about logistics.
Now, every business owner is talking about logistics. And then he also got investors to buy into the vision of his company and that they were, is all about growth, growth, growth, growth, growth, growth, growth, growth, and profitability. He hadn’t have done that then. Yeah. His capital to finance his business would have been a whole lot more expensive, but because he was able to get them to buy into that vision and did his like.
That is Jedi mind trick of sorts on them, that he was able to finance his business. It’s almost the cheapest capital that the world has ever known in the modern world. And so Amazon uses ever increasing stock price to buy other companies, uh, finance price discounts on products. So it can drive other companies down in valuation and then acquire them and use it to bring on.
Employees because was employees very high value employees, which they can’t afford, except that they are part of their stock plan as part of their compensation, which gives them a much more competitive workforce. That financing has been a incredible, a portion of their ability to succeed over the last decade.
Yeah. What is interesting to me that a lot of us probably aren’t aware about is the, you know, Amazon obviously does a ton of revenue, but most of their profit comes from their cloud based services. Um, and not their online sales. Is that true? That’s yeah, that’s correct. I mean, the other thing I’d throw in there, I said those two things were the most amazing things you’ve done.
The third thing is that you’ve actually created two different businesses and both are incredibly successful. I think Warren buffet said he’s never seen someone do it before at his level. Right? Create billion dollar businesses. Multiple same time in his cloud business. AWS has really a separate business and it’s the biggest cloud cloud business in the world.
And I think Netflix either was, are still using it. You have a lot of the companies still using it and it’s continuing to grow. Yeah. So a lot of the cloud based services that you use, like you said, Netflix, and I think Dropbox has since built out their own network, but at some point you can drop boxes on it, but all these huge companies that, that deliver or are based on data, uh, are, or we’re providing that data on the backbone of Amazon’s cloud based services.
And so I think, you know, don’t quote me on it, but you know, out of all the revenue, uh, You know, Amazon, it was something like, you know, only, um, you know, 90% of the gross sales volume came from, you know, the store aspect. But, you know, 90% of the profit came from, from the cloud based services. It was sent in one of the 80 20 rules of kind of, kind of thing.
That was interesting to speak to, to emphasize how much profit comes from the cloud based services, not the retail front. Yeah. I don’t know the exact figures, but it’s probably something like that. I mean, the other thing to consider though, is that there’s incredible infrastructure costs at building out.
Yeah. Or their portion of their business, not the cloud business. There is some of that, but much more on the actual fulfillment side of things. They have hundreds of fulfillment centers, right. And that is costing billions and billions of dollars to build that out. And because of that, there is no one. I can compete them.
Walmart has the longest runway to compete with them. They’re not even close to being ready to compete with them on that type of that type of level. And eventually I think you will see same day fulfillment and everything metropolitan area in the U S um, and perhaps in almost every state, certain States may not never get it like Wyoming, but almost every the state will have same day fulfillment.
And when that really comes down to it, Are you going to go to the store to purchase something? Or are you going to purchase it on Amazon to have it delivered to your home within two hours? For three? Yeah. And people outside of the greater Metro areas. I think like Seattle and New York, um, some places in California, they are have same day delivery.
Um, does the prime members outside of the U S they’ll get two day delivery in some locations? Europe. I’m not sure if it’s today. Every placement in many places. Yeah. Yeah. You mentioned Walmart. Um, what I think is interesting is the Amazon has almost become such a large business, so they’re almost too broad to be categorized into one business to where.
Where they could be broken up in an antitrust lawsuit. Um, it it’s almost like Google and maybe that’s why Google reorganized under the alphabet brand name. Um, so then now alphabet has several companies and civic duty, um, kinda like the same thing though. Um, D. Does anybody have a shot of going at Amazon and saying, and these guys are just too big.
We need to break them up. Or they just too generalized for anybody to do that at that. Right. And Scott Galloway from L to Mayton has made some very convincing arguments about that and that a lot in the press, he did that in his book before. Um, the problem is that. President Trump took a very emotional view on Amazon and I think destroyed any legitimate chance of doing that.
He had, I mean, he was aiming correctly. He just did not use the right argument for them. And I think he’s actually solidified legitimacy from their view. By taking an emotional, tight, tight against them, rather than letting a bunch of kind of attorney generals go after them. Instead. Now people think it’s a personal vendetta of Trump against Amazon rather than, or Jeff Bezos rather than.
The government is looking into, is there some antitrust issues here? And I think the big, one of the big differences to consider about Amazon versus a lot of these other companies is that Amazon is vertically integrated in many of their markets. And that is one of the reasons that you could make a strong case.
For antitrust issues is that vertical integration, right? So they own the distribution of that product customers. They own the actual marketplace, right? Showing that product and an advertising for customer where’s the purchase that they, they earned a supply chain. We’re just seeing a lot of these products.
We had insight into all that customer data and they leverage that insight today, galloping their own products, which compete with other people listing on their marketplace. And so that essential and teachers this year, that’s a good point. Um, so, so where we’re all located out of Utah and Utah is such a tech hub and, and you know, every other day, there’s a new study about how Utah is the best state for entrepreneurs and the best state for opportunities and the best, this and that.
Um, do you think there’s, uh, Uh, so I was, I was talking on LinkedIn in a thread about this, how Amazon didn’t really consider Utah, but despite all those advantages that everybody didn’t consider you Topher, um, a second headquarter, and one comment that stood out from the gentlemen was that, well, maybe too much entrepreneurship is a bad thing.
When you need flavors. Um, do you think that’s why, you know, why do you think you’d have to consider entrepreneurship? So Amazon’s creating a second headquarters because they need, they need to staff thousands and thousands of it jobs. And so that, that location needs to be centered in an area. That you have very good international and domestic flights, so that area, but it also needs to be a hub of bringing in qualified work.
And we’re talking about tens of thousands of jobs, right. Of people that are skilled computer programmers and engineers, and you talk to us and have that they, they have two universities that are close by three, a couple of, you know, if you’d you Utah state, uh, okay, sorry. You have three universities. Most of I forgot about.
Yeah, UVU. Um, but, but if you’re, if you’re looking at the actual class sizes being produced, like computer science from all those universities combined, even if you go to Utah state, right. And you include Weaver and say, okay, let’s say five universities here, maybe a thousand or maybe 1500 or 2000 people.
No, they’re looking for an area that has. No, a dozen universities close by including trade schools and other things like that. And then it has low cost economically typically, and has the infrastructure in place to where they can hire hours to bring in. And then also I already have a workforce. Um, so you talked, just doesn’t have that.
And there, and there are only a few places that really do have that in the U S. Now, I don’t think it’s a bad thing that a Passover you saw hanging. It’s probably a pretty good thing. You look at what’s happened in Seattle Darren’s air infrastructure, just still can’t support. What’s happened with the growth with Amazon and property values, unless you already owned it.
It’s unaffordable to live there unless you work for Amazon. Um, I mean, property values are three, four times higher than what they were before and you would see the same thing happen here. That was going to be my next question is just yesterday. I think Seattle passed that head tax, um, or, or at least to took the next step towards passing.
Um, so what Seattle is going to do is, is acts businesses a certain way, which would largely impact a bigger businesses like Amazon and use that to farm homeless initiatives. Um, do you think that’s going to have a pretty big impact on. Amazon caring for Seattle as their, as their, their home arena. No, I, well, well, I think they’ll stay there.
I think they’ll stay there. They were never going to choose Seattle HQ to, to begin with. Um, so I don’t think it really influences too much. I think they’ll be just fine. Like 5,000 open, open positions at their first headquarters right now that are not filled 5,000. Wow. The big, um, alright. Let’s uh, let’s start wrapping up.
We’ve got a couple of closing questions. Um, you don’t need to speak too much to the next question, but just how to be on my own curiosity. Have you dabbled in other channels? Are you going to have you done it and didn’t care for other channels? Um, you know, what makes you stick with them? Definitely dabbled in other channels, um, was in EFA pretty heavy for awhile.
And what I’ve found is that Amazon is going to be the one that’s going to continue to grow the fundamentals that they put in place early on and just wildly successful for them. And if you were to devote well, let’s see your, your brand X, Y, Z. If you have 20% additional resources to devote to channel versus earning that to Amazon, I would just devote more of that to Amazon because that’s where you’re going to see most of the growth.
If all those channels grow 20% or the 20% that Amazon grows is going to be substantially more, then the you’re going to see on Walmart or any other channels. I actually had someone ask me. A similar question to that. They asked me which channel people should be going on other than Amazon. And my answer was go to Amazon, but also develop off Amazon capabilities.
And so what I mean by that is don’t focus on Walmart. Don’t focus on eBay, don’t focus on new age or jet instead, focus on building out SEO, PPC, affiliate, marketing, social page, social, um, do all of those things for your own website. And focus on Amazon. Those to me are the two places where you really shouldn’t have most of your concentrated effort.
So this is, this is one of those dumb questions that you’re going to hae. Um, but you know, it’s, it’s a common one for a reason. People are interested in what’s the easiest way into Amazon to, to just start, uh, even at a small scale.
I don’t know if there is a way, um, Amazon makes you think it’s easy, um, and easy to start selling. It’s difficult to build a sustainable profitable business on Amazon. Um, the easiest way to get started today is to sign up for your seller central account to go through the process of getting that account created.
To watch some of the videos in seller central, they have this thing called selling university and learn a little bit from it and to find some products that you can sell them the general. But if you really want to be as sophisticated seller, and since I don’t know any anymore, I don’t have financial connection to it.
I can say, I think she’d go to prosper because at prosper you will learn exactly how complex the channel is and all the different things you need to do really be savvy. And this is the Keenan business owner. So you can see on the show. So looking at your whole career, are there mistakes that others can learn from?
Um, you know, the, what we do you think you you’ve diluted yourself too thin at any point? Um, you know, you had prior to our call, you had mentioned sequencing fallacy. Um, you know, going into business with partners who, uh, you know, maybe you felt like you were carrying more weight, um, what are some things that people can work sort of failures or mistakes or learning lessons that you can speak to that others can learn from?
Partners is hard. I mean, I, I, I have paid her with McGee. It was my current partner because he’s incredibly devoted. He had very similar value system as mine. We’re very ethical, but we’re also very ambitious and driven. Um, and we’re, we’re kind of equally yoked, meaning you will have little kids, we will financially stable.
I think partnerships work the best. They both contribute a lot. You both have a similar work ethic. You will have similar values and you’re at a similar stage of your life. You’re not in a similar stage in your life. You’re going to see tough decisions come to call you kind of go different ways, even if you have a similar value system.
Um, so that really helps. It’s also a little bit of a toss up because people. Can present great faces on themselves. Just like a guy can act, really suit around a girl, maybe for like a year until he marries her. And then he becomes a real jerk. Um, people can do the same thing in business and can present themselves really well.
And then even a year in the business, you think you’re doing great. And then things suddenly turn difference. Um, no, I don’t think you really find out who someone is until you’re about a year into business with them. And then you start to see what they really needed. Um, so that’s what I’ll leave partnerships, not for now, as far as sequencing goes, I’m glad you brought that one up because I think that has been my biggest shortcoming as an entrepreneur or I I’m a victim of what’s called ms.
Sequencing fallacy. And that comes from this book called just enough to Harvard business review authors participant together. And they were looking at people that were successful in life. They wanted to figure out why these people were successful. And we’re not just talking about money here. The people that actually felt true satisfaction in multiple areas, right?
Cheating, like how well you’re doing against other people, um, your career and money and other things like that. But then also your significance, how well your relationships are going with your family with friends. Your happiness levels, how are you enjoying life? Um, and then your legacy, the things you’re doing that actually will extend beyond your life or beyond your personal sphere.
I remember reading that book and starting to read through these different areas and they talk about what’s called the sequency of fallacy, and that is that people often assume fall into the trap that they can, they can put off trying to, um, Create satisfaction. And a lot of these areas thinking that they’ll be able to do it after such and such time.
Well, it’s like once I sell my business, then I’ll be happy, right. Or once I sell my business, then I’ll be able to spend more time my family or I sell my business. Ben I’ll be successful. I can hear myself as successful or once I land this client or mrs. So many different things that you can attribute it to.
But the sequence fallacy is that you attributed to something you say, once something happens, then I’ll be able to feel happy or do more of something. And all the studies have shown that that’s a false premise, even though a lot of people subscribed to it, it doesn’t happen. And that’s when I realized that, that way after reading that, that I needed to give myself time.
Things that I enjoy doing. And that, even though I was a good dad and stent lots of time with my kids, I needed to actually spend beat, really be there and not be thinking about work. When I was with them. I had told myself, well, I’ll be able to spend more time with them and I’ll be able to have more focus with them after I sell all my businesses.
And I retire, retire, really young, very successful. But what I found is that. That really isn’t the case and that it is possible to work really, really hard. And to be able to shift gears really quick and still give your family concentrated time emotion, and to be able to do things that really give you enjoyment and to connect with others, even though it may not be a lot of time, you can still shift that focus really quickly.
Now a lot of that comes from finding energy. Zapped at the end of the day, then you’re not going to be able to shift gears quickly and do it well. And so for me, I have to get enough sleep each night. I don’t get enough sleep each night, then I’m not going to the energy at the end of the day or during the day, just shift gears when I need to.
I also need to exercise when I go and exercise, I feel pretty lousy. Um, it doesn’t happen right away. So it’s kind of just creeps up on you and then I also need to eat well as well. Those are big things. And then the fourth thing for me is also, um, maintain spiritual, well, staying devoted to my religion, reading my scriptures, connecting with God each day.
Say that those four things are fundamental to me having the energy that I need to shift gears and keep that type of balance. Yeah, I think that’s a common topic we’ve had with others lately about, um, you know, managing, balancing your energy and not your time. It makes a big difference on your, on your productivity as we close out.
Why don’t you go ahead and plug yourself, uh, give us any sort of humble brag you want, uh, share a website, phone number, social media, whatever you want to throw out there. Sure. Well, you can go to buy boxexperts.com. If you want to take a look at our Amazon marketing services business, you can click on the contact us page and can get in touch with me there.
Well, Joseph Hansen. I appreciate you joining us today. Um, and I’m sure we’ll be talking to you soon on the next project. Thanks Kyle.