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Pricing Your Products for Growth and Tips for Selling B2B with Dillon Carter - Amazon Seller Tips Part 2
April 4, 2022
Pricing Your Products for Growth and Tips for Selling B2B with Dillon Carter - Amazon Seller Tips Part 2
Things we discussed in this session:

A. Part

B. Part 2

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Transcription in this episode:
[00:00:01] spk_0: welcome to the seller, roundtable e commerce coaching and business strategies with Andy Arnott and Amy Wees. [00:00:10] spk_1: Yeah, there's, there's a handful of things, there's there, you know, I did podcast this morning and I pretty much laid out all the potential options and, and, and it's a lot and we'll cover a view, right? It's not necessarily just choosing your wholesale pricing, You gotta have it, but what's within that? Right? It's not just a price, right? It's not just 50% off of of retail. You need to think through that long term strategy, where do you really want to take this? Do you want to be in Walgreens? Fantastic. That's a different discussion. Uh If you're like, hey, you know, not really, but I do want to be in a ton of independent retailers because that's kind of my brand. Fantastic. That's a different version as well. You're trying to think through what's the volume that you can expect on average, right? Because you might want to have volume based discounts. This is very common when I was a retailer, right? Um 0 to 100 you're paying 10 bucks, 100 1 to 2 50 you're paying 9 50 you need to think through that, right? This is why coming into your wholesale pricing and having enough margin is incredibly important. If you get this too low, you run the risk of a very large regional retailer as an example coming in and saying, hey, we want to buy 1000 units. It's a ton of money, You're super excited, but the price we're willing to pay his ex, well, one, you're a small brand compared to a massive regional retailer. So they have the power in this power dynamic situation. So it's pretty much like either accepted or don't and you don't want to find yourself in a weird position where you go, I could accept it and get the cash flow. But the issue is I'm not gonna make any money and by the way they're probably gonna want net 30, net 60, net 90. So now you got to cover the cash flow within that period of time. That's a problem. Right? So we want to think through like are you really positioned and ready Got for going B two b. So I I tend to recommend like the average benchmark and every industry is different luxury tends to have much higher mark ups and margins, but 40 to 60%. It's very common in B two B um as a margin. So I would say try to be a little bit on the higher end there, either through reducing cogs or getting your your retail price in a in a good good spot there. And obviously that's a lot of strategy there as well. The point here is you want to be able to have a flexible pricing structure. That makes sense for most retailers because you don't want to have a million dollar contract on the line and not be able to take it simply because the pricing doesn't make sense. And I've talked to enough brands that listen, like I talked to one the other day where they had a massive grocery chain come in and negotiate and she's like I'm taking that money like it's overnight, there were 75% of their wholesale B two B orders. I mean that's huge. And like of course they want that terms and you know, special discounted pricing because the volumes that they're gonna pull right, you're talking about going from an average of let's say 250 units B two B wholesale order too A 1000. I mean it doesn't seem like that big of a leap but it can be [00:03:03] spk_2: sometimes containers full of product from your supplier, which is [00:03:09] spk_1: correct. It's [00:03:10] spk_2: huge. You know, my client has a deal with the distributor and in another country and that distributor orders straight from there, they're one of the major distributors for their line of products um in in all of europe. And that distributor just orders straight from their their supplier. [00:03:34] spk_1: Get [00:03:35] spk_2: a check like it's just like stupid money right? So now, you know, they're starting to compare their what they sold on amazon with what they were able to do in wholesale and it's just it's like 80 20 and they're like for all the extra work that amazon is compared to the work that we had to do to get in with this distributor. Like it's a lot of work up front, like you're talking about with your pricing and getting everything ready. But now, once they get that, that pipeline going and they can keep it filled up. It's like a mailbox money. Its stupid, right? Sure? [00:04:10] spk_1: Sure. And a lot of the brands we've talked to, so all the brands, we talked to our direct to consumer, but they also happen to directly sell wholesale to retailers. That's like our sweet spot with the new product we're working on. Um you tend to see a process and systems issue as well, right? So, you know, amazon, you know, direct to consumer, you get that figured out, you're good, wholesale is a little different, right? So we already talked about, you gotta figure out pricing and make a few decisions there. But the process for a retailer to pay you money oftentimes gets overlooked. There's so much friction. Right? Listen, I've been a retailer, a small online retailer, um, buying directly from brands. Every brand was different and that's a problem because I would forget to be honest, like, I don't even know if, like, my pricing is up to date that this is an issue. And so some, I'm like, oh, that's right, I have to call you and give you my credit card number to place an order. This other one. I have to be fact, then this other one, there's a web portal. And so it becomes a problem. Right? The simple fact is you are in competition with other brands that that retailer could carry. So which one do they prefer, assuming profits and all that stuff is is equal. They prefer the one that has great communication that has a very clear process and structure in place for placing orders to where there is no guessing there is no, I know your price sheet says 20 bucks, but we negotiated an extra 10% off. Where do I see that? So we're just gonna remember, Okay, I hope you're you don't miss a day and then your team member doesn't apply that for me. Now, we got to go back and forth and now we're risking potentially the relationship itself, there's a whole lot here, right? Like you can you can see, I mean, do you want to accept net terms, can you afford to, is it net 30 net 60 net 90. What makes sense here? Right. When do you win? Don't you, are you going to run credit checks? Great. How are you going to do that? Right. How are you invoicing? Because you're not just getting an order, you're getting a purchase order, you gotta convert that over to an invoice and that's gonna come back and get paid, but it's a lot. And so what we're trying to work on with the new product is streamlining that process. So it is standard and it's just way easier. I mean, listen, placing a B two B order should be just as simple as placing a direct to consumer order. If I'm on Shopify, it should feel the exact same as if I'm on vin dr placing an order and that's kind of what we're looking at here, right? We're trying to say, listen, if you already have, you know, the relationships and wholesale in place, that's fantastic. Come on board will streamline things for you, but if you're brand new, we have a little bit of opinions built in so that it is much more clear cut and you don't have to worry about it as much because there is a lot to manage [00:06:36] spk_2: making it. Yeah, definitely. I mean what we do when we get wholesale orders, we just manually invoice in quickbooks [00:06:47] spk_1: and like you [00:06:47] spk_2: said, it's going to be getting those repeat orders and remembering to follow up and all of that is um it isn't easy, you know, it's a no. So yeah, I think making it easier is good. There are I know you guys are working on a product where you're building a wholesale side of Shopify so that people can basically take B2B wholesale orders on their Shopify, which is really, really powerful, so not [00:07:18] spk_1: necessarily um sorry to cut you off, not necessarily on Shopify. So basically, you know, we're Shopify is just an assumed thing for direct to consumer, right? If you're gonna go build your e commerce site, you're using Shopify, we want to build the B two B version of that. So it's its own application, it's its own whole thing and so there's it's a platform really and so there's two hemispheres. One hemisphere is the platform where you're able to manage your current relationships. Your retailers are able to see pricing specific to them if there is volume discounts, if you've pre negotiated anything, they can see inventory levels in real time if you have that connected as well. Right? So that side we're trying to reduce the friction of them placing a wholesale order while also reducing the friction for you to process it. Right? So we'll integrate with Quickbooks as an example. So you know, workflow here would be you would receive a wholesale order, you would review and say this all looks good to me, approve it, create the invoice and then that could be automatically sent over and and handled in quickbooks if you wanted. We're actually doing payment processing on platform. The second part there is how do you find retailers? Listen, this is a major major [00:08:26] spk_2: hurdle. So what I do right now is um I have a wholesale um section of my website and you can create an account all of that. But most retailers that I work with don't use that like they prefer to not have an account somewhere that they have to manage, right? They prefer to just invoice, you follow up with me. It's all good. Right. So what we've actually found um to work really, really well, but there's there's a there's a kind of either use a platform like Fair, where, where there's a lot of retailers that are already looking for you and they can, they can place an order right on platform and they can find you and place an order right on the platform. But a lot of retailers are not unfair. So then that's when that outreach comes in and you have to like find those things. So we use a system where we search, we scrape different platforms, right? We look at like yell for local businesses, that kind of thing. And then we have this database called any biz that has over 15 million businesses in it and we can search for various types of retailers around the world. And then it actually sends email campaigns out, but still you still have to follow up. You still have to do that. So, I would love to hear how you guys are finding the buyers. [00:09:58] spk_1: Sure. So this is interesting, This is hemisphere too. So, this is a marketplace you mentioned Fair. Fair is going to be one of our competitors. So Fair is very similar to amazon. Uh, the, the customers, the retailers are unfair affairs, customers, not your customers. Hence why they charge commission. Right? That commission eats into your margins, right? We already talked about margins already being slightly tight. We're not taking that approach here. So we're fundamentally against Commission were saying, hey, that's not the case here. What we are instead doing is a like a slack model if you will. Right? So it's based on active retailers. And so we were, you know, like Shopify, you don't say, hey, go to my Shopify site and buy my things talking to end consumer. You say go to my site. We want then drive to be that as well. We want you to say buy directly from me. So a lot of the brain's, we've talked about will say you can buy directly from me or you can buy unfair. What we want to say is you can, you know, when you say buy directly from me, you're actually talking about the van driver platform. Right? So there's some white labeling going on, [00:10:58] spk_2: correct. Exactly correct. [00:11:02] spk_1: We're the platform exactly. Now. We do have a marketplace. I think this is important. A lot of the brands we talked to when we asked them, how do they go about finding retailers? They're like, I kind of google and like, you know, but here's the thing, a lot of retailers don't have websites, massive ones do, but that's, you know, you're not going to just go to Walgreens dot com and be like, hey, I'd like to talk to you guys and they have a completely different process. Right? So You have good inbound on sites like fair because retailers are trying to find you, what when we looked at the data after talking with like 300 brands is you have a lot of first orders. But hardly any recurring. 2nd, 3rd, 4th, 5th orders and the order volumes [00:11:41] spk_2: as well. [00:11:42] spk_1: And here's, here's the interesting bit I would ask you. Okay, so how much is your average cart total if you will for direct versus fair dramatically different? We're talking like 1500 bucks. 150 bucks. Okay, that's not a that's not a wholesale order. 100 50 bucks is not a wholesale order. That's just a very large bulk in retail discounted order. Right? So we don't have that incentive because we don't make money based on commission. We don't need you to lower to increase sales, don't need it to, I don't really care. So what we're saying is we charge based on active retailers. So if you work with 300 retailers, retailers in a year, but only 20 of them tend to place an order every single month. We only charge you for the 20. So now we're incentivized to say, hey, you tend to place an order every month, but it's been three months. Maybe you should place a restock order here. Right? So you mentioned retailers don't want to have an account. Let me explain that because I've been there. They don't want to have 1500 accounts. This is the problem because you're like, what was that long again? Oh my gosh, was it this way we are structuring then drive so that a retailer has a retailer account, there's a retailer side and a supplier side or a brand. A retailer can have connections. Just like a supplier can. [00:12:59] spk_2: So it's kind of like fair where they have that account and they're able to then search and they're able to pay right there and they don't have to correct it. And [00:13:08] spk_1: but we have connections. But here's the interesting bit, Fair says you're taking the order Right? Unless you can, unless you're going to cancel it. Like you don't, you don't, there's no relationship. It's purely transactional. But you know, as well as I do, B2B is relationship based. It's not transactional based. So for us, we said, Okay, there needs to be a layer where you both opt in just because somebody's willing to give you money doesn't necessarily mean it's good. This is a lot of what we heard with with the fair people we talked with where they're like, I'm getting orders, but it's like going to a farm, I sell things that are not farm related, just buying it in bulk, right? It's not whole. So I'm not really helping my brand. So for us we say, okay, a retailer can find a brand but a retailer, I'm sorry, a brand can also find a retailer. So it's very difficult for a brand to proactively go find new retailers to have conversations with and start sort of relationship with, it's easier for a retailer to find brands all day long. Right? I can just go on amazon and find brands but do the inverse. Hence why you have to scrape so much [00:14:12] spk_2: data like reach out on linkedin. We do different things. You know, you make phone calls, but you have to find out like a person who is going to be interested, you know, so it's, it is very difficult. [00:14:25] spk_1: But what if on the platform you go and you find a retailer and you know, the types of retailers that your brand and products do very well with, it could be a certain category, a certain size, certain geographical location. And you can go in search and find as many of those as you can that are on the platform and you reach out to the person who is in charge of that. It's no longer about trying to use hunter dot io to find the right email address and, and, and you know, hacking linkedin to figure out who's in charge here, The person who's running wholesale is running that account. And so what's great is you get to reach out and say, hey, I'd like to request to connect a connection. Once you both agree, it means you have a relationship now and they can be severed at any point, right? So if things go wrong and be like, hey, like this is not good. You can no longer buy from me, but you get to reach out. And so there's this interesting problem where when you're getting started, especially as a smaller brand and you're wanting to get one to go B two B wholesale, you don't have enough brand recognition yet to have retailers search for you. They might be looking for products like yours, but we want them to look for your brand, your products that's different. But how do you get there? It's a lot of outbound to be honest. It's a lot of sales when I talk to brands, they're like, I hit up the trade shows, I do sales, I hired a sales person to do it right. But what if you could just sit down and have a straightforward process where you can say, I know what does well what kind of retailers we work with that, that has super high throughput all that stuff and just go find more and start having great conversations and eventually over time they start to find you as well because you've built up that brand recognition, here's what's interesting as a second order effect. You do that enough with the small the medium retailers, large box retailers start to take notice. Yeah, because [00:16:04] spk_2: you're getting traffic in the store that they're not getting because they have interesting products. That's the reason that they all hate amazon because there's so many cool products and that are not available in their stores and the brands that are on amazon are not big enough to sell in their stores and are not set up to sell in their stores. So that's it's really interesting. So you're still in beta, we can, I love your passion about this platform and a lot of our listeners are going to be excited about checking it out when it comes, but what is your advice for, you know, we're, we're almost at our our today, What's your advice for folks right now, where they're at um about getting, getting started in that B2B relationship, like, what do they need to do? So when your platform is up and operational and great, what do they need to do? What are some D I Y methods for getting started and getting moving in, selling your products, BTB? [00:17:14] spk_1: Yeah, there's three major pillars in my mind that that really will set you up for success and that don't need to be perfect, but need to be at least somewhat thought of one is your pricing strategy, right? This, this is like fundamental, if you get this wrong, a lot of second order things start to go wrong as well, right? You don't, you don't want to find yourself saying, oh, this is an incredible opportunity, I want to go that route, it sounds fantastic and then realize you just don't have the margin for it, it's not going to work, right? So if you're, if you have a current product line and you want to make wholesale work, they're great start there and see if you can make it work. If not, unfortunately, you might neither need to raise your price. Which you might have needed to do for a while anyways lower your cogs, Maybe you are paying too much. It's always a good conversation to have and to think through um or launching new products that are a little bit more tailored to be able to go. So here's a second, you know, kind of strategy here is you have wholesale items that are really meant for branding to get people to like your brand to then search your other things and then by your other things directly to you. As in consumer. Right? So you have a lot of opportunity here, but I think you need to get it right, you need to think it through, right? And it's not just the price, it's recommended M. S. R. P. Do you want to have something like a map if you're you know um at well anywhere really map is applicable, but you know that makes sense if you want to have volume based discounts because you anticipate being unable to sell 1000 units a month to a retailer. Great. Think that through, you don't have to get it perfect, but think it through and there's a lot of different methods here, but there's no need to make it super complex, You know, dual pricing is very simple, right? This is why we charge for retail across the board, whether you're buying it for me or one of my retailers and this is what I charge for wholesale and it all makes sense where, you know, everybody's getting enough margin. # two is really the systems you need to think through, how are you going to receive the order? What you don't want to have happen is a retailer get excited that you, you sourced yourself and say, great, how do I, how do I submit in order to go? Um, send me an email, right? It's like it, you know, it can work. But listen, you're stepping into a different world now, this is not just amazon, this is, you're talking to professionals now, you, right? So like every interaction is a reflection of you and your brand that you're building and you gotta think through that, right? Because if that retailers like, it wasn't really that good of an experience, it seems kind of risky. Well maybe they're not going to come back and that becomes a massive blow 12, You know what you've been working on, but to the business itself. So you want to think through, how do I make this easy as possible? Enroll player? Right? Set up a simple process to be like, okay, that was a retailer, I go to pay me money or, you know, submit a P. O what does that look like for me? How many steps am I having to do and let's work to reduce that. And obviously you're gonna do a basic beta, if you will, and you're gonna launch that and you're gonna say, okay retailers that I've found, you can submit orders and then you have feedback with them. Hey, what did you like about the process? What did you hate? What was too time consuming? Right? You got to think through all these things. And then the third one is really thinking through how you're finding retailers, right? You gotta go get them. You know, it's sales 101, it's not the sexiest thing. But if you want to jump start that, you're gonna have to put in a lot of time and a lot of effort to find retailers, it does take time and it's not just get a retailer, you're trying to find the right types of retailers, right? You don't want hundreds of retailers that place one order and then never come back. That's not how you build a sustainable business. And that's what we're seeing a lot on with the brands that we talked about with, some of these marketplaces, like I get a ton of orders. But if I look at the 2nd and 3rd, they don't exist. I'm like, great, that's not a relationship, right? Because now you're constantly have to find new retailers instead. It's kind of like a portfolio, right? You really want to build a nice relationship with a handful of retailers that are consistent [00:21:05] spk_2: And that's the Amazon because sales are consistent. So if we want to have the consistency off of Amazon, we have to work towards that. And I love that 1,000%, I think all the way through the process, okay, someone wants to make a wholesale order for me today. What the heck do I do? Right, inventory located, How do I even invoice for that? How do I collect a credit card payments? [00:21:29] spk_1: What if they ask you for 30? [00:21:31] spk_2: Right? [00:21:31] spk_1: What if they ask you for net 30? Are you gonna be like, oh let me figure that out or hey actually we don't do that right? You got to think these things through. Um you know, I was talking to that, that retailer or the brain, I was talking about earlier where they had a massive regional brand or retailer come through place a huge order and they want net 60 and she's like one cash flow is going to be tough to inventory. That's dramatically more than like they doubled basically the volume she moves and she's like, I don't even have that right now and it's like in covid, right? So like logistics supply chain issues exist and she's like, but this is my only shot at making this relationship work, right? So if you can foresee some of those pitfalls, you can put things in line like that, you know, having a cash flow buffer, you know, slowly starting to increase your inventory [00:22:18] spk_2: levels. Exactly, exactly think through what if I got in order to actually we got an order from wal mart on the shelf and we couldn't we could not fulfill it because it was too much for our logistics team. We were not set up to keep this shelf stocked. So that was the thing is they really wanted us to like stay in and keep visiting and keep the shelves stocked and I was like huge opportunity but we're not ready for that, right? We would have to change a lot of our supply chain would have to change the way we handle logistics. And so you know for us the smaller retailers are better because we can we can fulfill small bulk orders, right? Um but then that allowed us the opportunity to really think through okay, when we grow to this level, what does that even look like? You know and how what would we need to change in order to fulfill a container load. Especially one of our products that's partially made in the usa partially made in china are packaging comes from somewhere else, it's like yeah, you know [00:23:33] spk_1: a [00:23:34] spk_2: lot, we have to change all of our operations, move everything over to our factory in in Dallas texas and get all that going right? So I love what you're the example you gave of think all the way through it. Run a beta, get it going, start small, get moving, think about your pricing strategy first, what do your quotes look like all of that? Okay and then start making your first sales right, pretty much start reaching out, but you sometimes only get one chance to make that first impression. So you want to think all the way through this before you go ahead and start Dylan, it's been so great having you on today. I'm so stoked about what you guys are working on in this unique um, market opportunity. And I love that you thought all the way through this and you've really thought, what is going to make you different from the fairs of the world, you know, and those types of things and I think that you've nailed it. Um, and I'm excited to see where it goes. Um, so tell everybody, how can they find you, how can they check, follow this opportunity to drive this building? Um, tell everybody how they do that. [00:24:54] spk_1: Yeah. So if you're, if you are a reseller by happenstance, come check us out at dot or dot com, that's G O A U R A dot com um, for, for the wholesale side, it's just been dr E N D R I V E dot com. Um, News site is launched, you can't join quite yet. Um, basically what we're doing is we're in a closed beta with a handful of brands that we've been having beta test as we've been building out prototypes. Um, but we have a public launch date for 2 to 22. So in february early, february will be going live, where any brand, any retailer is able to jump in And that's when we'll really start pushing for attraction. So yeah, you know, just keep keep an eye out. We don't have a form for you to sign right now, but keep an eye out on been, we'll do a big push of course, um on 2-22. [00:25:40] spk_2: Amazing. And we'll have to have you back on the show, you get that going. But your advice today has been incredible for brands. I think that all of us, you know, we want to make more sales, especially where a lot of us are trying to get all of our eggs out of the amazon basket. I love that um that you're offering this opportunity and that you've given us a lot of great advice and some things to think about so that we can be more ready to do that. Um awesome. Well, anything else, any other piece I love to ask what is your your we always ask at the at the end of our shows what is keeping you motivated right now. So, are you listening to any podcasts? Did you read a book recently that was just like ah ha moments. [00:26:31] spk_1: Yeah, interesting. I really like it's going out of style. It it's actually a spending problem because it's like just books arriving, you know, the biggest thing that's been helpful for me is is building the right routine. So I'm going through a flow of course right now. So, steven Kotler talks a lot about flow. Um I I was was a researcher and then discovered the flow inflow and just being like in the zone. So he has this incredible course and a lot of it's related to flow, but a lot of it also covers like productivity and good habits. And so one of the things that they talk about is the, the motivation stack and so basically what you're doing, if you're taking your MTP, which is a massively transformative purpose, this is like if I can do this in my lifetime, holy crap, life is amazing, massive. Then you break that down into a high, hard goal, which is like within the next 5 to 10 years, right? So you're reverse engineering from a very high level and so my process there is each week um each month, each year I set another layer here and then I'm trying to make sure that my weekly goals basically link all the way up. So I know that I'm on the right path, even when it's tough. You know, listen, we're all in business. It's tough at times, but it's nice to know that I'm not just working for today. I'm working towards this incredibly massively transformative purpose. Um that gets me super fired up. [00:27:55] spk_2: Yeah. Which research has shown if your goals aren't big enough, you're just going to procrastinate. So I love what I do is that um is the best year ever exercise every year. Every year. I look at Ok, what would make this the best year ever? Really think through that on a personal and business and and you know, growth level and then I work backwards from that and I set up my goals and then I do my quarterly planning, monthly planning, weekly planning and even chilly planning to get things moving. So I love that, I'm going to definitely look that up. What was that called? The program that you're going [00:28:34] spk_1: Through? It's called 00. Too dangerous. [00:28:38] spk_2: Zero to dangerous. [00:28:40] spk_1: It's pretty, it's like eight weeks so it's like very intense but it's great. It's been insane actually. Yeah, it's really cool. Like it goes super in depth on a lot of things like burnout um proofing. Um you know, it goes a lot over, you know, positive psychology basics like it covers it quite a bit. So it's pretty cool. [00:28:59] spk_2: I love it. Anything that challenges your thought process and your goals I think is a really positive, awesome thing. Alright everyone. Thank you Dylan for being here. Thank you all for being here on the show and thanks for listening. Thanks for rating, reviewing, subscribing to the podcast and we will see you guys next time on the seller roundtable. Bye. [00:29:26] spk_1: Thanks for tuning in, join us every Tuesday at one PM pacific standard time for live Q. And A. And bonus content [00:29:33] spk_0: after the recording [00:29:34] spk_1: at cellar roundtable dot com, sponsored by the [00:29:37] spk_0: ultimate software tool for amazon sales [00:29:40] spk_1: and growth seller s [00:29:41] spk_0: c o dot com [00:29:42] spk_1: and Amazing [00:29:43] spk_0: at home dot com.