Amazon to Retail Success: Wholesale Strategies for Marketplace Sellers

[00:00:00]Welcome to episode 466 of the AM PM podcast. This week we're talking about something everybody that's selling on Amazon and online needs to pay attention to, and that's retail. If you're not giving a shot in retail, you should be right now. And maybe you should be doing that before even Tik Tok shop or Walmart or expansion to Europe because it's a huge market in the US.

[00:00:23]And there's people that will help you and guide you and can grease the wheels and even help you with the financing on that side of things. So, my guest today is that's exactly what he does. Does this for some of the top Shark Tank brands, does this for other clients, uh, a lot of different Amazon sellers. It's Doug Harding. Uh, and so I think you're going to get some good insights and uh, and how retail works, what the margins are, what the breakdowns are, what you got to plan for, where you need to be on the type of product, and a whole lot more in this episode. So enjoy this episode with Mr. Doug Harding.

[00:00:55]>> Welcome to the AM podcast. Welcome to the AM podcast where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, plus this is the podcast for money never sleeps working around the clock in the A.M. and PM. Are you ready for today's episode? I said, are you you ready? Ready? Let's do this. Let's do this. Here's your host, Kevin King.

[00:01:23]Kevin King.

[00:01:26][Music] >> Mr. Doug Harding, welcome to the AM podcast. Nice to meet you.

[00:01:35]>> I appreciate you having me. Uh, thank you for having me on. I'm excited.

[00:01:40]>> Now, you do something that a lot of people, I think, you know, it it's interesting. I just had a podcast just recently with with a Chinese-based seller. uh she she helps teach a lot of these Chinese-based sellers that sell like on Amazon and ecom and it's an interesting story uh for those of you listening you should go back and listen to it but how it applies to today is she said look we we Chinese sellers we used to have a problem with language and it was difficult for us to write the marketing and the listings and the stuff on Amazon but now with AI that's not no big deal we're good with the numbers and analyzing all the reports and the data and everything that's that's always been our advantage but we just don't know two things when it comes to the American marketplace and those those two things are are branding. We don't know we're not good at branding. We don't understand the American culture and we don't know how to get into retail stores. We don't know how to actually do the retail side. I started thinking about that and as an Amazon seller from the Amazon world, most of us are always competing against the Chinese and we're competing on price and there's just a race to the bottom with these guys and they have some competitive advantages.

[00:02:46]But one of the advantages it sounds like we have is one is culture. We know the culture, we're here, but is actually retail. And so I think more Amazon and e-commerce sellers should actually be looking at retail. Uh maybe before they should be looking at Tik Tok shop or at Walmart.com or it's at some other expansion because retail is still what eight something like 80% of the sales are still retail. So I just want to get feedback a little bit from you. you're in the retail side of things and you help brands get into retail. What's your take on where retail is at now versus e-commerce?

[00:03:22]>> You know, that good question and and specifically with Amazon, if a brand comes to us and says, "We're on Amazon, we're successful, the margins are working, we're growing and scaling."

[00:03:32]Now, that actually means that you'll be able to bring that success over the retail. few years ago uh when it was a little bit easier on.com you know the margins were a little bit better there wasn't so much expense you would definitely get a higher profit margin you know if you're working on Amazon or any kind of.com business but now with how competitive is how expensive places Amazon and all the other third party fulfillment centers are if you are successful on Amazon you're going to be successful in the stores if you work with the right groups right so it's about placing your product in the right space where Amazon is or it's mass marketing where if you go into retail, you know, you're looking for one or two partners to start with that are going to help you take to the masses. So, just a little bit different. Um, but if you're successful on Amazon, we say come on over and, you know, take a look at retail because that's where the big money is.

[00:04:25]So, so success on Amazon did and back I remember I went to a pet show probably seven years ago in in Vegas with one of my brands that I was selling and every time I would say I was selling on Amazon I would talk to some distributors in the pet space and they were like go away get get you know it's almost like one of those little crosses the devil just showed up in front of my booth get out of here uh we don't deal with any uh online people but I think that and that was because people were doing a lot of price checking and the original reaction in retail and a lot of distributors was like, "No, we're not going to be your showroom. Uh, so someone can go just buy it on Amazon." But that that seems to have changed uh in the last few years.

[00:05:05]Is that is that true?

[00:05:06]>> It has changed. It's actually a litmus test now. Amazon is a uh a big part of um having your brand looked at. You know, when it comes to branding, you never know what's going to hit, right?

[00:05:15]There's when you go back to your original question, you know, the Chinese have problems with, you know, getting into retail. Um, I think that's universal. But branding, branding obviously, you know, some of it takes off, some of it doesn't. Getting into retail is more of a process. And, um, if you're able to position your product the appropriate way, um, you're able to get into retailers. So, it went from Amazon was a cheap um, you know, website that nobody wanted to be on, so the knockoffs. Now, it's a true litmus test.

[00:05:47]It really is. We had a a meeting the other day with Whole Foods. Um what do you think the first place they look at?

[00:05:53]Obviously Amazon because they're a partner. So it has changed, you know, just like the metrics to where if you're successful on Amazon with, you know, their costs and the fees um eating into your margins, just like it happens in retail. If you're successful on Amazon, you're going to be successful in retail if you work with the right partner. But sometimes that also means changing your packaging. So that's a whole another conversation that we can have, too. And Walmart's doing the same. I mean, Walmart used to be Walmart and Walmart.com were like two separate things, but now the Walmart buyers are looking at Walmart.com uh success and deciding, do I want do I want to kick someone off the shelf and put you in or not? Uh which that did not used to be the case.

[00:06:34]>> Yeah, it's a it's a big uh uh we'll say it's a it's a big obstacle to overcome as a retail wholesaler um because the buyer could always kick back. we'll give you a try on online to see if you're successful. And it's so hard. It's it's it's definitely not the best position to be in. But any way that you can get into one of those, you know, Fortune 10 companies, a Walmart, Costco, Target, um just getting one of them the right way, it's it's worth it, right?

[00:07:02]>> So So who's who's considered the the holy grail right now in the US when it comes to like retail? Is it it's Walmart? Um it's Costco? Um it maybe it's Whole Foods. Who would who would Best Buy? Who would Home Depot who would I rattle off like okay here's like the the top 10 or roughly you know like everybody's dream to be in.

[00:07:23]>> Yeah. Yeah. The calls that we get everybody wants to be in Costco and Target, right? So that's always the first two calls that we get at WRD Global. Can you help us get into Costco?

[00:07:32]Can you help us get into Target? And we usually say absolutely. Where are you now? And they say online. So those are the two most coveted places. And when it comes to, you know, the hardware space, obviously you have Lowe's and Home Depot who dominate that space. And then in grocery, everybody wants to be in Whole Foods, Publix, Sprouts, those ones are really big now. And of course, you always have the bigger players, um, Kroger, Albertson. So, those are all big ones, but everything circles back to Costco and Target. I don't think we have a brand that doesn't want to be in both of those places. Um, and I don't think there's probably a brand out there that doesn't want to be in them. Um, as long as the again the metrics make sense, that's what it boils down to.

[00:08:14]>> So, how important is branding? If you're if I'm online, if I'm an Amazon seller right now, and maybe that's one of the reasons the Chinese sellers have trouble is because they're they can't do the proper branding online and their brand name is some a bunch of letters like DK72342 because that's easy to get a trademark on. Uh, how important do the buyers look at do they just care about the sales and we don't we don't care? we're going to repackage this and uh change this up a little bit anyway. Or or do they actually care about the branding and the photos and the A+ and your social media and all that stuff when they're analyzing you?

[00:08:47]>> Yeah, I would I would they definitely care. The second place they're going to go to um the first place they're going to go to is Amazon. Usually the buyers are going to go to Amazon. That's going to be the first litmus test. The next thing is again just as you mentioned, uh what's your social outreach? They're going to check you out on Meta. Um see what you're running on Google. Those are the first three things. And then of course, where are you? So all of those all of those things, you know, paint the big picture from for a buyer. They're going to go back to see where your first review was when you built your Facebook page. They're making decisions that can cost them their positions. And there's so much free data out there, so they're dipping into it. It's Amazon, it's meta, and you obviously want to have advertising on Google. um and have a track record that you're able to show because without track record history, uh you're a risk, you know, just like anything.

[00:09:37]>> Now, there's some people that may be listening to this that don't sell on Amazon. They only sell on Tik Tok shop or they only sell on Walmart. Is that a disadvantage? Do they like to see that you're diversified across marketplaces on online marketplaces or they don't really care?

[00:09:51]>> Uh yeah, they definitely like diversification. Obviously, Tik Tok is new and it's emerging. It's something that the buyers are looking at a lot more recently than Amazon. Amazon's still the lititness test. Um, we don't have a product that's not on Amazon. Um, so I would I would uh warn all the brands that, you know, it's the number one litmus test out there. Whether you're dealing with Costco, Target, Publix, uh, BJ's, Home Depot, those, they want to know about your online presence, you know, your Meta, and they're going to look for your Amazon sales. And it's not just, you know, your sales. you're going to get, you know, they have the rankings, the reviews are important, the all those little metrics that some people say don't matter. Um, they matter when it comes to a buyer because then again, it just it comes back to them taking a risk. Is the product going to move on the shelves?

[00:10:34]And more importantly, is this new brand off of Amazon going to be able to support and, you know, take care of our customers the right way?

[00:10:42]>> Are there certain categories that are just a little bit easier to get into retail distribution? like I don't know, I'm just making supplements are easier than uh say pet products or or something like that or automotive accessories or whatever a little bit more difficult.

[00:10:57]Are there are there a few that are a little bit harder and a few that are a little bit easier? Um you know, you brought up uh maybe in the cosmetics world uh if there's anything that has to do with supplements, cosmetics, uh unfortunately things you put on your face and your body you can get away with very easily. There's very little regulation when it comes to supplements.

[00:11:17]That's one of the hardest things, right?

[00:11:19]Um there's SD, there's all kinds of uh certifications that you need first to get in. We're not just selling coffee.

[00:11:24]Every product has its niche. If you have a patent that has to do with gas, um there's something that you have to, you know, uh there's going to be some oversight there. If you have um a product that has a certain niche that you put in your mouth, um they're going to want to see, you know, case studies.

[00:11:41]Nowadays, sometimes they're, you know, if you change the formulas at all, you have to update uh everything. You know, it's all ca business in reality. But supplements are the hardest thing.

[00:11:52]Putting stuff on your face, that's the easiest. Cosmetics, um, unfortunately, I hate to say, you put poison on your face out there. There's not too many, uh, regulations on getting some of these major retailers. But when it comes to consuming, um, when it comes to, you know, consuming supplements, we have a few brands. Yeah. That's definitely the hardest path, the longest path. Um, uh, you know, cuz without, uh, any data, um, you're not getting in the door and then they have to try it and like it and it has to work. So, a lot of the stuff that you see on the major major retailers, Vitamin Shop, GNC that we work with, there's a lot of due diligence they put behind that.

[00:12:28]Yeah, that's I think that might be a surprise to a lot of online sellers because most of these marketplaces don't have they don't really either they don't have them or they don't really enforce them to a large degree the the reg the the testing and the regulations and stuff that that is required to go into retail.

[00:12:46]>> Yeah, it completely different. Amazon's still the wild west. U but in retail, you know, if we're if again we'll focus on vitamin Shop at Kroger, those are two places we're working deals with right now. Um, there's six months of backend work. You know, there's certain certifications that retailers need. But the good thing about that is if you pass the test, you know how hard it is to get there. You know how hard it is to be replaced, right? So, there's a good and a bad to how long it takes to get there.

[00:13:11]The due diligence if you pass it, getting to a company like Kroger is well worth it.

[00:13:17]>> And I mean, to get on the shelf, you got to take some usually got to take someone else's spot >> too. So, that that's where once you're on the shelf, your work hasn't hasn't stopped.

[00:13:27]Um, right.

[00:13:28]>> That's it. Most people think, "Yeah, you're on the shelf. There's going to be hundreds of people passing by all day.

[00:13:34]Uh, my product's going to move." Now, it's it couldn't be more false. Um, we have a whole implementation team that helps with, you know, our products, especially the new ones getting on the retail shelf. And off the top of my head, if you're not spending 10% of the PO on getting that product pulled off the shelf, um you're not going to be there that long. We've had products launch into companies like Sprouts, Target, pulled immediately. We've had companies that we were able to get into regional uh locations, three to five.

[00:14:06]They put marketing dollars behind it, made sure you had the right placement.

[00:14:10]There's all these little small intricacies, end caps, design. Um, we've taken those companies that actually listened and grew and put money behind their programs to,900 locations from five where people have stepped in and said, "I have flows now. I'm in 2,000 locations." And you don't do anything or put any marketing behind it. You get left behind pretty quick because all the big boys out there, they're marketing every day. They're at eye level. They're at the perfect shelf space. And uh you're not going to win unless you do what the big boys do and that's uh you know put money behind it when you get out the shelves.

[00:14:44]>> I know a lot of times a lot of times they do a test, right? So you go in it's it's rare for Walmart to say, "Hey, put us in 44 we're going to put you in 4,400 stores unless you're a big brand and they you have a track record, but if you're new, they're probably going to test you in a handful uh or something."

[00:15:00]And is one is that that still correct for most of the brands. And the second is when that happens, you know where you're at. And that's that's I've heard people say that, well, if I'm going to be in Tucson in the Walmart uh ex on Main Street in Tucson, I'm going to go target everybody on Facebook that lives around that Walmart with some ads for my product to try to influence them going in pulling the stuff off the shelf just to kind of hopefully juice the numbers a little bit to make it look like my stuff is flying off better than it better than it might not. But what what if without those ads?

[00:15:33]Is that is that a strategy that you see a lot of people use?

[00:15:36]>> That's a it's exact strategy. We and we we just want to keep it going too cuz the the goal is to stay on the shelf, right? Repetitive uses obviously the continuous marketing, the continuous we call there's a push pull program. Our sales team pushes your product out there. When it gets on the shelf, we need a pull program, right? Um it's not mandatory, but uh we highly recommend it. We we uh use our model based off of some other successful ones that we had.

[00:16:02]Uh some people say, "Hey, you have Shark Tank once you get on the shelf.

[00:16:06]Everybody pulls your product off the shelf because it's got Kevin Olri's face on it." Couldn't be more farther from the truth, right? Um we just like anything, you have to just put dollars behind it. And it just depends on um if you're doing direct target marketing when you get a uh a shootout, they're called shootout trials. We have one at Lowe's coming up for one of our products. Uh really neat at Turbo Trust.

[00:16:28]So we're launching in about 200 stores trial. We're going to do everything you said you're, you know, that he recommended, but our goal is to do that on a scale of 2,00. And it's just about continuously getting the poll. And when you run through the market, you have to have the next innovation. And that's the next step in retail.

[00:16:46]So, walk me through the A lot of people don't understand uh slotting and and positioning on the shelf. And like you said earlier, you know, they this one's u eye level or they're on end cap. Can you explain to the audience that may not be aware of some of this terminology?

[00:17:01]What's an encap? What's what's slotting?

[00:17:03]What's uh some of the little placements that you can do around uh a store that actually usually cost you some some change?

[00:17:10]>> Yeah. Yeah. Uh good question. F first off with the Yeah. verbiage. Uh all the retailers kind of use the same but different words. If slotting, shelf space, end caps, you know, to to reverse engineer that question, the place that you want to be in the store is on an endcap. The end cap is obviously the end of an aisle that's usually attached to some type of display, right? Um that's the number one spot in the store. Uh the second best spot in the stores right now are in the checkout aisles because you're going to get guaranteed traffic um in the checkout aisles where if you're in aisle 17, sometimes people don't walk down aisle 17, but everybody has to check out. And then you know the third space is yeah looking for shelf space just directly in your category whether that's paying some type of slotting fees um giving some kind of discount upfront um paying for premium placement or doing what a lot of great entrepreneurs do. You go after the brand that you're better at and you try to replace them. And if they're at eye level, you take their eye level. Or if you not try to replace them, you offer competition because if it's a brand that's moving in that store and you offer something similar, um odds are um they're going to get more customers.

[00:18:20]They're not going to lose customers to brand A because brand B is there.

[00:18:24]They're going to gain more customers and that's what the retailers look for.

[00:18:28]>> And then you have the ones where the little hanging things they hang off a shelf or something. What?

[00:18:34]>> Yeah.

[00:18:34]>> What are they called?

[00:18:35]>> Yeah, the strip clips. strip clips.

[00:18:37]Yeah, there's like the strip clip.

[00:18:38]There's Yeah, there they'll merchandise in any way anyway they can. The middle of the aisle stuff, you know, you walk through a Walmart and there's just what's they call it? Pallet offloads or something like that or or uh it's like the stuff is still on the pallet.

[00:18:50]>> Yeah. So, really neat. The distributor that we use, it's called US Merchants.

[00:18:55]They're one of the largest in the country. Um they service Costco, Target, BJ's, Walmart, Sam's Club for us. um their CEO um I don't know the details but he created the pallet program um that is at Costco and um they actually started the program with Costco have expanded they have the skirts on it so you're able to save space you're able to get the retail display and the brand on the bottom of the pallet the pallet is full I forget the name of the program but they actually created that and we're lucky enough to just have them as one of our distribution partners and um if you're able to go to a retailer like that. Another secret, right, um is if you go to a retailer like Target and Costco and say, "I'm going to sell all this product and we have this great idea." It's going to go one way or out the other because every entrepreneur has that. But if you come with a pallet uh program, if you come with the actual SKWs on a pallet, send over the diagram, show how many fit on a truck, how many fit on a pallet, all of a sudden the buyer knows you're the real deal. And the pallet program has a lot to do with that. It's really amazing that you brought that up because our our distributor partner, US merchants, they invented that product or I'm sorry, they invented the program and um you know it's used at Costco by some of the biggest brands in America.

[00:20:12]>> Costco's also a different animal does because Costco don't you ship directly?

[00:20:16]So versus like if I'm in Walmart, I'm shipping to Walmart distribution centers and then they're spreading it out on their trucks. But with Costco, you're shipping directly to every single Costco, right? it. Um, yes and no. Yeah.

[00:20:29]So, there's different. They have regional shipments. There's a regional rollouts. Um, yeah. So, they each place is different. Almost every one of the major retailers with 250 or more stores um offer both. Um, they'll either work with a distributor um or they'll have direct store delivery. But a lot of them also, even if they have DSD, they have warehouses that are placed uh, you know, strategically around the country, including Costco.

[00:20:56]Now, you mentioned earlier about the eye. You want to be at eye level trying to displace, but how much control do you really have that over that? Cuz don't the buyers do like planagrams, like these little diagrams, and like they they they match it up and I I've seen guys in the store holding like a laminated sheet of paper and like reorganizing the shelves.

[00:21:12]>> Yeah.

[00:21:12]>> Um what's the science behind that or the the what makes that that hum that work?

[00:21:18]Is that just some buyer random like I'm going to do this or is there real data behind it? Okay, we're putting the slowmoving stuff on the top, the the good stuff in the middle. Um, or what what's the what's the reasoning and science behind those things?

[00:21:30]>> It's changed. Before it was like if you bought them a nice lunch, you would get better placement. You know, 10 10 years ago it was that. Now AI controls so much of the buyer's decision. They still have the decisions, but they're using um, you know, you're able to see almost any website sales now with the right software. um they're most of the decisions are making that are being kind of I would hate to say made for them just based on trends trends that they know that are going to come in and then also you know placements are bought um paid for um I I I forget you know generationally by some of the major brands there I forget that's not the right word. So it there's no real science to it. Um it's just you have to have you know every store will have a different pitch for each brand. It sounds silly, but you could be going after your competitor. You could be going to become a partner, you know, next to your competitor. You could be going into a store with a brand new product that nobody's ever heard of. Um, all of that shelf space algorithm stuff is kind of being AI based now. And uh, you know, if the buyer likes you, you still have a little bit of sway online.

[00:22:38]There there's a couple things that don't matter as much is pack. One of them is packaging. A lot of people don't spend much money on their packaging when they're selling online. It's a brown box or it's an ugly little package. I've always been of the opinion that you should actually do nice packaging online because because people eat with their eyes first and and it can convey uh you know a slightly slight increase in packaging can convey a big increase in justification of price and but a lot of sellers don't understand you basically get your whole listing onto a package.

[00:23:11]Uh so when someone picks it up and turns it around in a store, uh what what is it? And then the second is a lot of these stores, I know like Walmart specifically, they um a lot of times, not all the time, but a lot of times they want the skew to be different. If you're selling a some uh Quest bars and you're selling a a box of six online, they want a box of five in the store uh with a different UPC. So there's no price comparison going back or at least they used to. Uh maybe that's changed now. Uh what what so what happen what do you recommend on packaging and on uh you know configurations? Do they do they need to be different uh than what's online uh or you can just run the same same stuff?

[00:23:51]>> Uh you you can but you'll have a less chance of getting in. You're exactly right. If you have a, you know, consumer products food, uh, a consumer, uh, products good, that's food. We'll say if you're going to be in Publix, Amazon, and Costco, you're probably going to have three different packaging, uh, three different price points, and, you know, three different serving offerings.

[00:24:09]You might have a 16K cup, a 9K cup, and and a 12K cup. And it's because, again, they're trying to eliminate the competition of what they have on the shelf compared to what you could put everywhere else. So most of our brands have three, sometimes four different packages. And it's so important because you think, "Oh, we can just make a bigger box." Um, you can't because in Costco, your stuff's going to be on a uh a pallet where in Publix and Sprouts, you may be on a shelf where if you're at an outdoor, we're going to go to coffee.

[00:24:40]We have a lot of coffee. Um, if you're in an outdoor space, you may be in the checkout aisle. So, um, your placement is going to be different at each of those, uh, you know, each of the locations. And um you know it just kind of just depends on the retailer and the brand.

[00:24:54]>> And what about on the packaging side of things? How what do you guys have to do to help these online people migrate to retail when it comes to packaging? What what do you have to like hit them over the head with? And like come on guys, you you got to wake up here.

[00:25:06]>> Yeah. Well, luckily we have a really good partner that has a lot of you know Fortune50 brands. So, we like to bring them out and uh take them out for a tour and and show them the difference between packaging in a pallet and the packaging on a bag because every entrepreneur has the best package, the best design. You know, we all have the best product, the best everything. Um, but the best thing to do is give it to someone who specializes in pallet packaging. And we help with that by, you know, sending you to the right distributor who obviously we're partners with, but they're going to make the packaging different already.

[00:25:39]as soon as we bring a skew in, we're ready for clubs, we're ready for retail, and we're ready for Amazon and.com business. It's kind of something we do from the gate because we know where we're going. Um, but most brands, if you want to be in retail and and online, you're going to run with three different packages and just take advice from people who've done it before, right?

[00:25:57]It's not my field, but we have a bunch of smart people and a bunch of companies we could send to that just this is what they do. And it's just best to take their advice, take your brand and your idea and let the professionals just run with it because there's a whole science behind that, too. Now, I know there some people have been a little gunshy to go to retail because they're like, "Well, I don't have any control. you know the on Amazon I know if I ship in a thousand units I can sit there and see and track it and I can see that okay it's got checked in or this truck loads got checked in and I know it's available basically to the whole world if I ship in a th000 units to uh to Walmart's distribution center I don't know if that stuff is sitting sitting behind the shelves or sitting in the warehouse or when it gets to the Walmart local Walmart store it just sits in the back for for a while uh and just you know expires out and then I get big returns.

[00:26:50]They're always worried about those type of things. And I know I used to have a buddy uh that worked for like the Mar it was a private company, but they they handled like M&M's and Mars related stuff. and he would go in, he had 240 retail stores, and his job was to go into everything from convenience stores to Walmart and check the the gum and check the M&M's to make sure the Reese's pieces weren't taking up the M&M space and like rearrange the shelf and make sure there wasn't some guy sitting, you know, couple boxes sitting in the back and bringing them out. Uh, especially if it was around a holiday like Easter or Valentine's or something like that. So, what do you what can you tell me a little bit about that side of the business uh of uh where I know like Mr. Beast just recently he he launched and he says he likes every time he's in LA or somewhere traveling he likes to stop at as many Walmarts as he can to go in there and just see uh how his beastables are on the shelf and sometimes he'll sit there and rearrange them on the on the shelf cuz they're they're a mess or whatever uh for for uh from on on from the marketing side of things. Um, so what what's talk to me a little bit about that aspect of the business.

[00:28:00]>> So let's see. Um, Up Cup Coffee is one of our brands, the mushroom coffee and a K Cup. I walked into one of our stores two weeks ago. It was a disaster. Um, I ended up texting everyone on our team, you need to go to Sprouts and check the displays at all the the stores. And honestly, half of them were really just in shambles. They weren't um in the right place. Um, so the control on that, it's different per store. We uh we don't have to uh you know do that for all of them, but most of your places like Costco, Target, um e even Sprouts, um we're there or our trucks are delivering there every day or some of these brands have their own merchandisers just like you mentioned that go there. Um difference between now and 5, 10, 15 years ago, losing track of your inventory. Now it's just it's a lot crisp and it's a lot cleaner now. And we actually run that when we run into a Costco or Target, all these stores that I keep mentioning in um we take care of the inventory when it leaves the dock.

[00:29:00]Um it's our responsibility. So if it ends up in the back room, it's our responsibility. And but we have EDI um connections to all these places that make it easier. Things still get lost.

[00:29:11]You know, people still take snacks home.

[00:29:13]We just shipped out 3,000 ovens and uh you know, 5% of them are damaged, you know, after they left. So, you have to deal with all those things that happen.

[00:29:22]But nowadays with, you know, all the electronic, the back end, it's it's a lot. It's a it's it's as crisp as it is online. And I would say it's better because when you move a,000 units this way, it's on a truck. When you move a,000 units online, it's a thousand different, you know, or 500 different uh addresses. So, this is actually a little bit cleaner, easier, and, you know, softer on the uh brand's pocketbook when it comes to administrative duties. But the but the brands also get charged a lot of I call them BS fees cuz I sell calendars into a calendar club which is they have all the kiosk and stuff in the malls every year and I have a co-op fee a 3% advertising co-op fee I got to pay them. have a if I put the label 1 millimeter uh in the wrong spot from the right corner there's another fee if I what there all kind if I'm late by day there there's another fee if I don't enter the tracking number from the trucking line there's another fee if I don't make an appointment at the right time there's another fee they nickel and dime you get together on fees to get to death on fees and then then on the they when the calendars are in the stores up until Christmas I'm getting my normal uh my normal wholesale price and then after Christmas when they mark them down to 50% off they only pay me 50 it's a shared markdown I only get 50% of my wholesale price and then when they go to 75% I only get 75% and then at the end of the year when they're done or they close up the kiosk whatever's left over they don't send them back to me in the old days they would do ter cover tears and stuff and send you back the covers but now they just say hey we didn't sell uh 217 of them we're not paying you for them and they keep them and what they end up doing is they still sell them.

[00:31:04]Um, and but they they just put them in a bargain bin and they sell them and they don't pay you for them. Uh, and this is true. This is not something like this is the way it works. Um, so what what are some of those things that people need to be aware of in in that regard if they're going to go into retail?

[00:31:20]>> It's it it's crazy that what you're saying is true and it is true. Um, you know, we're entering our 13th year doing this. The first five years I I have no idea what I was doing. Let's just put it that way. And you do you just give the stuff away because you think that's protocol, right? Um the way to protect that is just kind of having the knowledge, right? Knowledge knowing how the system works. Um I don't think in the past six, seven years, we've never donated um any um uh product that was left. But it's all about, you know, uh from the initial PO to the invoice, everything that happens in between is tracked. It's it's taken care of by either our company or one of our distribution partners. And when you partner with us as a brand, you get to actually pass that liability off to us that if you have as an individual brand, number one, it's just there's so many things that can go wrong from, as you said, if the bill of lighting is upside down, if it's on the right side instead of left, if the boxes are stacked incorrectly, you get fined and chipped away. It's kind of like the medical field, right? They don't pay. they don't pay and then the brand dies or the big conglomerate comes in and buys the brand and then what happens is they have control and we're lucky enough to have the partners to have control on that end. Yeah, logistically it's a nightmare because they do technically nickel and dime you. The things you can do with protract yourself is you go with you know somebody that is a large well-known distributor um and not do it yourself um because nobody knows how to do every single part of that logistics game. Um, but with us signing up with WRD Global, if if there's something wrong with Target, um, it's going to fall back on us. Obviously, if fines happen, um, they still do fall back on the brand, but, uh, we take a lot for the team. You know, we have long-term relationships.

[00:33:07]Um, most of the mistakes are ours anyways or our distribution partners because they still happen. But, um, compared to doing it individually, it's it's almost impossible to make a profit on your first run. So just signing up with a distributor, making sure that you put a professional in the way. It's kind of like doing your taxes, too. You got to they watch, so you got to watch back.

[00:33:28]>> So on in your case, you said you guys handle all this. Do you have a big warehouse there in Tucson or do you have them uh partnerships or warehouses all over the country and then and then your all your brands are shipping in there and then y'all are basically distributing them back out or how's how's that process work?

[00:33:44]>> Exactly like that. So, we have a partnership um here with a local company in in Tucson. Um they're actually a local nonprofit. Uh it's called Beacon Group. They do some of our direct to consumer business. Um then we have our big partnership with US Merchants who has 36 facilities all over the country.

[00:34:02]They're also in Canada. Um they do most of our distribution. Then we have a couple of their small distributors around the country. So, we handle it all, you know, from a logistics standpoint. to which distributors you're going to use because some distributors you know you can't get into certain retailers with some just have contracts with um you know specific ones and that's kind of where most of it's going every place is being owned by the 5 10 15 conglomerates same thing in distribution same people that are getting the stuff to the store nowadays are owning them like Amazon and Whole Foods and there you're going to see a lot of that like Walmart and Walmart target and target.com you knows um Ulta Ulta's changing their mouth throwing putting themselves inside of Target and still having their own individual model. There's all these different models, but in the end, they're kind of owned by the same 10 15 groups. Um, if you take a if you take a look at it. So, it's uh it's pretty interesting. Pretty interesting.

[00:34:54]>> Do you do cold storage, too, or or No, >> we do. We do cold. We do food. Um, >> dangerous goods.

[00:35:01]>> Yes, we do. Yep. Yep. We do. We do. Um, yeah, we actually dangerous good is just another actually. You know, the different uh we have guns. We have gun safes.

[00:35:10]Um we work with >> like sanitizers or pesticides or stuff like that that are flammable.

[00:35:16]>> All kinds of cleaning. Yes. Yeah. All kinds of cleaning fluids. Yeah. All Yep.

[00:35:20]Yeah. That's the angle. It's a whole different angle in our household supplies. So yeah, all kinds of hazardous shipping. Um all that stuff is taken care of by you know our major distributors and we made the mistakes early and felt the right partners.

[00:35:34]>> Now you mentioned earlier EDI. Can you I think that might have glossed over some people that are listening like they're like EDI what's that. Um can you can you explain what EDI is and u the process of getting set up for that and stuff uh and why it's it's important.

[00:35:48]>> Yeah. Yeah. Um well most most of the places are not done on paper anymore but you get an account you know like Publix you know your invoicing your logistics plan the planagram from your meeting right on down to the deductions. Um everything is done electronically. So, if you have a small brand, you're going to have to be set up with, you know, several softwares, uh, several different softwares because each of the companies use different ones. So, if you're not set up with the software, um, number one, it's not easy to do. Um, if you don't know how to work with it, like softwares at ACE, um, it's it's almost impossible. There's, you know, decades of, I think, learning that goes into some of these softwares. But with us, just cuz we have the relationships with the uh the distributors and the retailers, they take care of all the billing when you when you sign up with us and you're able to get in. Um we've taken care of everything already, including being able to set it up to where direct deposits go directly to your bank and you're paid most of the time on time. You know, they still, you know, they still pay late, but um they're a little more friendly to companies that do bigger business. And uh um so EDI, all electronic payments, that's the big thing. If you don't have EDI, um it's going to be really tough to get into any major retailer. And you're going to usually have like three or four different softwares. I I'll share some names of ones that you can use on your uh uh you use and tell your audience some of the most famous one or some of the most common use.

[00:37:14]>> Um that'd be great. Are there fees to use the EI or is it uh is it is it like a monthly subscription I got to subscribe to or it's just a software that I just buy one time or does every single uh retailer have their own system I got to log in tie into?

[00:37:30]>> Um there's there's a few that dominate.

[00:37:32]You know SPS Commerce is just that's one of them. Um you know they have five or six major retailers that we work with.

[00:37:40]Um, we have actually f we have five different softwares um that you know Costco, Target, Public Sprouts, I'm reading them right now. Um, some of them I think all of them are used by at least two or three. So, there's some dominant ones. Um, and as far as the subscription and the payments on things like that, um, they're pretty nominal. Uh, you know, not going to break the bank, couple bucks a month.

[00:38:04]Um, there's no fee. It's not like paying a credit card. It's just, you know, they're all set up. everything goes through one backend system whether it's payments, logistics, deductions or you know stuff that uh we'll say gets left as samples, right?

[00:38:18]>> So let's let's talk about the money side of things. Uh like you just said most of them pay on time uh especially if you're a big boy.

[00:38:27]>> I I've I sometimes get paid on time on some of some of mine. Sometimes it's like they pay you whenever the goddamn well pleased wherever they please. And some I got one right now um that's a month and a half late. Um and they just sent me yesterday said, "Hey, the check was cut." And you know um they're actually sending a physical check through the mail. I'm like, "Come on, guys. This is ridiculous." Um the contract clearly says this. And I have no recourse other than to sit and wait.

[00:38:54]So, but but a lot of people, I think they're afraid when they get into retail. They're like, "How am I going to finance this?"

[00:38:59]>> You know, if I go in, okay, I can finance a test. I'm good for that. But if I do a 200 store test with Walmart and they come back and say, "We're going to do a national roll out to all 4,400 or whatever the number is they have now." I'm like, "Holy cow, that's I don't have two $1.2 million just in the bank to service a $4 million PO." Um, what what do I do? Do I go call my rich uncle? uh do I uh I know there's companies like factoring companies and stuff that'll that will take take that on and basically finance it for you for a 3 to 7% fee usually, but what are some of the options? Uh and and maybe explain what factoring companies are too or what when you get into this if you don't have the cash flow up front, you're you're new, how how do you how do you handle this?

[00:39:44]>> Um >> and then and wait forever to get paid uh and they might place another order in between. and you got to pay your factory um you know deposit or something. Uh while this current stuff's on the shelf selling like hot cakes, but that doesn't matter if they sell it on a week. They ain't paying you for 60 to 90 days unless you have some sort of like 210 net 30 or something that motivates them and they decide to do it.

[00:40:07]>> Yep. And they want to order more coffee while they're behind on payments. You can't pay the roster because they won't pay but they want more. Right.

[00:40:14]>> Yeah. How how do you how how do we how does a seller navigate that or what's it's >> what do you do?

[00:40:19]>> It's a nightmare to it's a nightmare and it happens with successful products. So that's the worst part because you're running out of inventory, right? And you know we have a ton of options. Usually when it hits though it it hits fast and you always have 60 90 120day lag where you're just like we just went 600 stores to 6,000 and and you just have to go. You could obviously get, you know, short-term loans, right? um which we recommend against because we want brand owners to keep their their 100% of their brand if possible. um just getting an investor.

[00:40:51]Um we obviously have access to investors just regular just basic private equity capital investors but most people use factoring like you said 3 to 7% um it's about 3 to five with us most of them are just depending on the the dollar amounts and the intricacies. We pay 3 to 5% of the PO um uh to the place that factor.

[00:41:11]So if we get a PO from Sprouts for a million bucks you need $500,000 we cover it. We charge you five points. We take it out when Sprouse cuts you the check.

[00:41:22]And that's really just >> that's basically a 20% annualized interest rate or more.

[00:41:27]>> Yeah.

[00:41:28]>> Um so if if I got a credit card with a if I had good credit and I'm a small guy just getting going and I got good credit, I might want to get one of those 0% interest credit cards for 18 months that has a 50 or 100,000, you know, one of these MXes that has a huge balance, uh a huge available balance and leverage a bunch of those together. Uh, so you got to get basically you got to get creative. Uh, is it what you're saying?

[00:41:49]>> You got to get creative. That's another part, you know, if you're in there for two years, SBA loans, you know, negotiating terms on where you're getting your products from, right? I mean, that's the goal. Your goal is to pay people on net 90, collect net 60, but usually it happens the other way around. And, uh, so you just run into a jam. The best thing is, you know, factoring. If you're working with us, we're going to get get ahead of it. The third way to stop that is just planning, not going for the bait job. We're rolling out ACE. We're rolling out 8 12 32 4. We're going to get to 5,000. But it's a healthy roll out. It's an expensive product. It cost a you know uh the brand owner, you know, it's a $500 you know retail oven. Um so rolling out sometimes uh you know just responsibly just keeps the brands healthy. Making sure you have a little bit of money coming from online just planning planning but uh you know plans don't always work. Uh, we have the resources, you know, with WRD Global to just get, you know, if you get a $10 million PO and it's for one of the major retailers, we can get you the money.

[00:42:49]>> That's that's cool. That's that's that's really good to know.

[00:42:52]>> Yeah.

[00:42:52]>> So, so this is this oven that's going out. Uh, are you allowed to talk about this? This is a Shark Tank one, right?

[00:42:58]Um, are you Yeah. So, what So, walk me through this this product lifestyle. So, some guys invented this this oven and went on Shark Tank. Kevin Olirri invested and then they sold at DTOC for a while and then what happened or well walk me through the whole process.

[00:43:14]>> Yeah, exactly what you said. They went on Shark Tank 2018. They won uh Shark Tank Oir one of the investors. Um they ended up coming to uh coming as a lead from one of my Amazon partners who sends us leads that want to uh get people into retail. Sent uh Burella over as a lead.

[00:43:32]They were looking for someone just focused on retail. Um, you know, Shark Tank team has a lot of value. Um, but, uh, they just needed someone that could, you know, focus on big box hardware.

[00:43:43]They ended up referring them over to me.

[00:43:46]Um, we have ended up able to help them and we're launching into, as I said, you know, Ace. We have some other big ones that are moving. It's a rotating pizza oven. It's a patented product. We actually developed it from its original 12in platform to a 16-in dual fuel rotating pizza oven that's going to pretty much push everybody out of the way. And uh we made that product successful and and Mr. Olirri and their team has you know continue to send us a few other products. So um a lot of them um are Ace Home Depot, Lowe's um True Value I think there's something that just happened with them. a lot of products in the outdoor space um that you know we get sent over. But yeah, the Patello pizza oven. We'll be cooking we're cooking lunch for the east staff in a few hours here.

[00:44:34]>> I think I actually have one of those ovens sitting on my uh in my garage. I I moved I bought one several years ago and then right around that time I moved and I think it's still sitting in a box in my in my garage here that I I just now remembered. Uh when you said the name I was like, you know what? I think that's what's sitting behind those things still in the box. I need to pull that thing out and and actually use it. It's probably an older version. Doesn't have the dual ovens or whatever you just said. Um but yeah, I need to pull that thing out and actually use it.

[00:45:04]>> We're going to send like a little brick oven miniature brick oven pizza kind of thing, right?

[00:45:09]>> Yeah, we'll we'll send you a new one. Uh I'll send you a brand new one. Like I said, it's rotating. You cook with wood and gas at the same time. You could use batteries. You plug it in. Uh it's a it's a great and we took part in it over the past year as we sold the one that you have on your shelf now.

[00:45:27]>> Um we've sold about 150,000 of those uh over the past uh three years and we have some like amazing pre-orders. Ace is one of them, but um there's a couple other big box clubs that we're going to be launching into uh as well. But yeah, Bello pizza oven. It's that's my favorite product right now because we use it. I like pizza, you know. It's it's it's got a high dollar amount. So, it pays good commissions. So, when you when you're a sales rep, you know, you're thinking of that. So, but it's a great product. It's a patent. Something that that's another thing we look if you have a product that has a patent or proprietary, those are the things that, you know, retailers are looking for.

[00:46:07]It's so hard to be the next coffee. It's so hard to be the next cell phone case, the next hack, the next brand, the next design if you, you know, it's, you don't want to be the next co mushroom coffee.

[00:46:19]You want to be the next coffee that actually has mushrooms uh ground in with it and put in K cups because nobody else does, right? So, >> kind of just a sidebar when you have patents, a lot of reasons why it's a favorite product. Um but you know being a patented product um that offers just other you know functionalities that the products don't have on the on the shelf getting that patent is super super super important if you if you have that chance and that's what we're usually looking for patent proprietary products but patents first and that's why so speaking of commissions do how do you guys work if I'm an Amazon seller and I've got a I got my patent I got my uh proof of uh good sales on Amazon I'm like I want to I want to try this retail thing. I give you a call up uh and I say, "Let's go forward. Let's do this." Um what am I looking at as in terms of fees from like from your side, not from the retailer side, but from your from your side?

[00:47:15]>> Yeah. So, we we kind of come on as uh we say you hire us for minimum wage. We cost $40,000 for the year and we charge 5% commissions of all of our gross sales to the wholesalers and retailers. Just the business that we actually touch. 5% on the PO value.

[00:47:34]>> 5% on the PO value. Yep. 5% on the PO value. And >> yeah, what if it doesn't sell? Are you are you taking 5% off on returns and uh and clawback drawbacks or are or is it just 5% no matter what?

[00:47:47]>> Oh, I hope you don't jinx me here. So, we have not had a I I can't remember doing a clawback or drawback or buyback in about four years. Um but if that happens, we figure something out. I've actually had like two or three way earlier. Uh we're getting ahead of it, but what what happens? Yeah, we we obviously don't take commissions on it and we're usually helping manage their dot business. Um we have liquidators who will pick up directly from the store and liquidate for us if we have so many different options, but I haven't used them in a while. I have not used them in a while. Um and I plan I don't plan to, but yeah, we only get paid for what you get paid for. It's not >> 40,000 per year ongoing and then and 5% ongoing or 40,000 one time >> throughout the year. It ends up it's 3500 a month. It ends up being 42,000 exactly. Um and that's 3500 for the first year and 5% and then after the first year it's just 5%.

[00:48:46]>> Okay.

[00:48:46]>> Yeah.

[00:48:47]>> And that that doesn't matter how many products I have.

[00:48:49]>> Oh, that's only one. Yeah. No, that's only one big question, you know.

[00:48:55]Good question. No. Um, if we we like to take on one product, one brand at a time. Obviously, you're going to have two, three packages of coffee. There's a couple ovens. Uh, we have a turbo trusser. It's a really cool uh Thanksgiving item. It it replaces the twine that you put around your turkey, but um it's it also could be used for chicken. Um we have uh yeah, there's there's different strategies with uh with all three of those brands or all three of those products.

[00:49:23]>> All right. So there's additional cost or additional things. All right, that makes sense because you had extra work on that. You talked about liquidation where you have someone that go I see on your website I I saw that you had a liquidation services. Is that just go pick up the stuff in the stores and and and clear it out or if I'm an Amazon seller listening to this and I've got man I'm sitting on a bunch of crap that I just can't move cuz some Chinese guys came in and just undercutting me.

[00:49:47]>> Can I call you up to liquidate that as well or is it you just doing the retail side liquidations? We, you know, we are just focused. We used to do uh all liquidation, but right now we're so entrenched in all the retail sales. All of our liquidation that we used to get would come through the retailers. Um right now, we probably could help somebody out on that, but it's really not our space anymore. Our liquidation is Yeah. bringing stuff off the shelf, making sure that we're replacing it.

[00:50:12]There's times where we've changed packages and we wanted to pull some things off the shelf, right, and liquidate the old things. So, we're able to do those things, but uh really not into that. we're more into just a long-term business. If you have an Amazon product that you're trying to liquidate um here, you know, um through any type of distributor or third party, my best piece of advice is sell it online. You're going to get 5 to10 cents a dollar maybe. And that's before shipping and um you know, that's it. We get calls all the time. Do you have you know close to expiration dates all the you just don't want to fall into that trap. it's just better to put it online and at least be able to brand also not making money or if you sell it to, you know, some of these DS some of these liquidators um they can end up anywhere.

[00:50:55]They could their family dollar they end up with the prison system, they free school lunches, um there's really no marketing. There's really no uh you know value that's behind it. You're really just losing. So if you're want to liquidate from Amazon, use it to build your site. Use it to build the dot presence. Uh that would be my advice.

[00:51:13]get more money. You get more money.

[00:51:15]Yeah.

[00:51:16]>> Yeah.

[00:51:16]>> Yeah.

[00:51:17]>> Walk me through the uh the the p the uh the cost structure on wholesale. So, just so everybody understands what they're looking at. So, if I I've got an item right now, I'm just make up. So, it's $29.95 uh on uh on Amazon right now. And my landing cost on this thing is let's say eight bucks uh just for argument sake.

[00:51:38]So, I've got my Amazon fees and my my advertising and all my stuff taking a chunk of that out. What am I looking at when I go to a retailer and I say, "Here's my $29.95 item. Let's say Dick Sporting Goods or something." And I say, "Okay, am I is it still keying for most stores or like in the case of my counters, they want 70% off uh SRP uh and then some additional fees? Can you walk me through the backwards through like what I should expect? Okay, $29.95, you're going to sell that for whatever 70% off. That's um or 50 if it's 50% off to make the numbers easier. You're going to sell that for $14.97 and then they're going to take a 3% advertising fee and 2% co-op fee and 1% fee and another fee to do this and then you got your factoring fee or whatever. Can you walk me backwards so I can see just paint a picture of a possible am I making a dollar a unit uh and I'm just this is all money's made on at scale or walk me through that.

[00:52:35]>> Yeah. Yeah. So, uh, first part of the question, yeah, there's all those fees, right? It's crazy. Like half of our job, I'm telling you, half of our job is we save 10 people 10 10% because of the fees. Um, the first rule when bringing out a brand, okay, that I look for that's going to be successful, obviously, we have Amazon, but we look for 5x uh markup from our cost of goods to our MSRP. So if you have a $8 product um that that the landed cost is eight bucks, we >> $29.95 is too small to to do.

[00:53:08]>> Yeah, it would be it's it's it's a tough, right? You know, we'd like to be over four over 4x was our as our as our now we're looking to five.

[00:53:16]>> Now the other thing to factor into that is when you work with a company like ours and you're going to scale and your cost of goods is going to go down.

[00:53:23]>> So we look at a 5x um and that so that's the first rule. or do we have >> basically my 29.95 I need to figure out can I get this to six um by scaling and maybe my first order is at eight because that's it's a smaller order but I know okay I'm going to take a hit on this first order maybe break even or even lose a little money but just get my foot in the door and then I know I can at scale I can get this to six something like that could work >> that's you're 100% 100% right and we're not going to do a deal unless the brand another rule is unless the brand wants us to do this if you are not going to have a 25% % margin after all the bells and whistles, feels paying us, paying the distributor, shipping everything, we're not going to even present the deal to you. So, we're going to make sure now some of our brands make way more than 25% margin. Um, and we have one brand that actually they're just building their brand and they're okay with not making that margin and being in a lot of stores right now and they have a different story. Um, but 5x COGS the MSRP, right? That's, you know, the biggest, you know, biggest rule. We're gonna do a deal that you're going to have a 25% margin on, right? At the bare minimum, we're going to try to get you the most, right? And uh, you know, the third thing is, you know, just making sure that we get ahead of all of the discounts and promotions and the dollar amounts that we have to factor in to make sure that you have a, you know, net profit. If you're looking at a 5x just going six to 30, um you're looking at about $9 would be a good takehome on that six bucks, $850 to n bucks. And that and that's what you're looking at.

[00:54:56]Most of our brands fall between 30 and 45% net margin.

[00:55:02]And the retailers, depending on them, they're between 30 and 60% net margin. Just depending on the category, the space, if it's outdoor, food, if it's club, everybody's different. There's different algorithms, but from a brand perspective, you can do whatever you want, but we want you to make, you know, 25 to as much as possible. And the retailers, they're going to want 30 to 70 just depending on the the uh product itself.

[00:55:29]And then what fact, what number do I need to put in? You said earlier, I think you should be spending 10%. Was that of your gross or of your if I'm netting, if I got $9 margin, I'm netting 15 bucks, I think, is what you just said. on a $30 item.

[00:55:47]Am I paying It's 10%. It's a $150 a unit I need to assign to advertising or $3 a unit.

[00:55:53]>> Um, it would be on your wholesale price.

[00:55:55]Yeah, it'd be on the wholesale price.

[00:55:56]Yeah. So, >> I need that. That's going to come out my 25% or the 25%'s already margin that you're shooting for is already got that baked in.

[00:56:04]>> The 25%'s already caked in. So, six bucks is a really good uh, you know, it's a really good number like with coffee, right? So if we have a $6 or $7 cost on coffee, they're going to take home 1011 bucks after it's all said and done. That's after the 10% on marketing.

[00:56:20]So what you want to factor in is you we have our 5%. You want to put 10% into, you know, a pull program and then it's going to cost you 10 to 15% on distribution depending on how many products, truckload, pallet, weight, you know, distance. So, um, again, we're going to always go back to the same metric. We're going to make sure you don't make you make at least 25% margin or not do it. Um, unless you tell us otherwise, unless you want to get in the store and and at the beginning, you might only make a 5 to 10% margin. Um, just as you said, just to get your foot in the door.

[00:56:54]>> So, in that example, I'm just doing the math in my head. Correct me if I'm wrong here, making sure I understand. I just want to paint the clear picture. Yep.

[00:57:00]Uh, so if I if my co landed cost is $6, I'm going to sell it for $29.95.

[00:57:06]Out of that $6, 10% of it I need to assign to uh some sort of advertising or support or social media or whatever uh promotional support. Uh 5% is going to go to you. So 30 uh 30 cents is going to go to you on every every single unit. 60 cents is going to go to advertising.

[00:57:23]>> 15 to 20% is going to go to distributor.

[00:57:25]So they're going to take a buck and a a buck and a half roughly of that. So, now I'm at what am I at $2.40 or so roughly.

[00:57:33]Uh, and then I've got some other other costs, maybe some insurance, some other uh stuff in there. So, I'm at $3 add-on.

[00:57:42]So, now I'm my $6 item is now $9 uh cost really to me. Uh, and then maybe a little bit for returns, a little return allowance on my on my number. So, let's call it I'm in 950.

[00:57:55]>> Yep. Um uh then the depending on the store, they're going to buy that between 30 and 70% off. So they're going to buy that um at 29.95 coffee. 70% 70% off of that would be they're buying it well 70% off I can't do because they're buying it before below my cost cuz 70% would be $8 $9 um would be my so I'm making no money. Yeah.

[00:58:20]>> So, if they're at a Keystone at 50%. I'm making then five $6 a unit. Um, so that's better than a 25% margin. Y >> um on my Okay. So, is that that the general M I know I'm probably leaving something out. We're just doing generality, but that's the general math that someone should kind of come come into it from.

[00:58:42]>> Yeah. Yeah. And when it comes to 25% margins um for for the uh for the brand owner, usually we see those at, you know, the large distri or the large wholesalers like Costco, Target, you know, place Public Sprouts where we're going to get a lot higher. We're going to be at 60 points, sometimes a lot higher just depending on the product.

[00:59:01]Coffee is a really tough one. You know, those bags of coffee out there, those 11 12 oz bags, they're making about a buck buck 50. Um you know, all of those brands besides the large ones ending at scale. But um just you know 5x from your COGS to your MSRP we're going to we're going to be able to get you to a margin of 25% and above um you know based on your cost of goods and if not you just don't do the deal right you don't do the deal we know all that within the first few conversations um just like the buyers a lot of the decisions are made on AI what's the first thing we do when we get a brand that comes to us with the patent that nobody else has we run it through the you know the machine so there's just you know a lot of different variables on, you know, when you're building that price. But always go back to if we can't get you to 25% margin, at least at the clubs, then we're just not going to bring you on. And if we do bring you on and that somebody beats us down to a price point that doesn't make sense, there's a lot of retailers out there. It just takes one. It just takes one to get to a place that uh it'll change your life. People are doing five $6 million a year online. Um and um that takes, you know, a small chain of regional stores to get there. and you know they double their business and if you're giving 25% on that 5 million you'll be doing okay.

[01:00:16]>> So basically the gist of this whole conversation that I get from this is that all those people on the interwebs are correct that retail is dead that online is just crushing retail and retail is dead and don't waste your time. That that's just that's the gist I get from this conversation. Did I get that right? Did I get that right, Doug?

[01:00:33]>> Write down the pipe. I'm telling you just every word specifically down.

[01:00:40]Yeah, that's we're just the opposite, right? It is Friday the 13th, so >> that's true.

[01:00:46]>> Oh, yeah. We're taking over 87%. We have 87%. You know that 87% of the buyers um are still >> that include that includes gas and some other stuff. You got to back the gas and the other stuff out of that retail stuff, but it's still it's still very very high. It's still in the like 80% or whatever the 75 80%.

[01:01:05]>> Yep. Yeah. It's a different world. Yeah.

[01:01:08]different world now as you know anybody almost anybody can launch go online have AI run it it's so hard with your ads now like there's so much more competition there's so many more brands it's so easy to start a website it's so easy to launch a brand dump 100k in and make nothing but people do that all the time kids are taking their money they're throwing it on the website I look as.com you're going to hate this Amazon it's the cryptocurrency you don't know what's going to happen when you come and invest into retail long term you work with are companies. We're working with distributors that all been around for 50 plus years. We're Birkshire Hathaway.

[01:01:42]We're going to be a lot slower, but we're going to give a really big long-term return if we're able to crack you into one or two retailers. And you're going to have a fixed cost.

[01:01:50]You're spending 40 grand, 5%, and you don't have to worry about the variables. Are you going to Tik Tok? Are you going to Amazon? Are you increasing here? There's political ads over here, so we have to do that. Here, you just have to focus on what you're good at.

[01:02:05]Get into the retailers. get into one retailer and it usually uh defeats your your year your your annual sales if you do it the right way.

[01:02:13]>> And then most importantly, grandma is really proud of you cuz she can go down the street into her local Walmart in a little small town and pick something off the shelf and say, "This is my little Douggee product, baby."

[01:02:25]Oh yeah. My mom and dad. Oh yeah. I send them all the biggest promoters still.

[01:02:32]I think they got a lot of free samples.

[01:02:33]They got they got a pretty nice uh >> pretty nice set of stuff. We got some really cool products.

[01:02:39]>> Awesome. Well, Doug, if people want to reach out to you or actually or work with you or find out more about this, what's the best way for them to do that?

[01:02:46]>> Yeah, you know, wholesale retaildistribution.com.

[01:02:50]So, that's our website. You can reach out to there through that uh through the link there. Um you'll get set up with a call directly with me. We only have uh 15 brands we're working with right now and uh we're really focused on uh bringing in new patented proprietary brands, something else we could take to the next level. So, wholesale retaildistribution.com, I have no idea how that was opened a few years ago, but that's what we do. You go check it out. Um we might have to update the site a little bit. We've been so busy selling retailers, I haven't updated the site, so maybe we'll have one of your contacts do it for us.

[01:03:24]>> Well, I'm sure someone could help. Yes.

[01:03:26]This has been this has been great, Doug.

[01:03:28]I really appreciate you coming on and sharing. This has been good.

[01:03:30]>> I appreciate it. Now, thank you so much, Kevin. I look forward to it. I'm going to get you an oven.

[01:03:35]>> All right. I I can't wait. I'm ready to make I'm make some pizza.

[01:03:38]>> Okay. Well, I'll get it. I'll I'll I'll get our to order for you right now.

[01:03:43]>> All right. Cool. Appreciate it.

[01:03:46]>> Like we talked about, retail is not dead. It's still 4x or more what online sales are. If you can get on the shelves, it's you don't have the same problems that you have on on selling online and you can move some serious numbers. I know some people that are doing, you know, a h 100,000 $150,000 a month on Amazon and they're doing a million a month in retail. And so there's massive opportunities there that it is a different game. A few different things that you got to learn, but as you can see with the talk with Doug, it's definitely doable for a lot of you. So, I would reach out to Doug or or explore uh put that on your road map to explore getting into retail. Plus, like I said, and this is straight from the horse's mouth from someone that teaches Chinese sellers. It's a great moat right now against uh what's happening with uh the price wars and the and even the tariffs and everything that's going on with competing directly against factories and stuff that's happening online. So, check out the retail options for your business. We'll be back again next Thursday with another edition of the AMM podcast. Make sure you subscribe to my newsletter, Billiondoll Sellers, billiondollarellers.com.

[01:04:57]It comes out every Monday and Thursday with lots of actionable tactical advice.

[01:05:02]Until then, have a great week and we'll see you again soon.

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