Many of the multi-channel sellers I talk to are focused on the operations of their business.
They spend most of their time working on the processes that enable their business to run effectively: managing inventory, shipping orders, and handling customer service.
But when I spoke to Kyle Goguen, the founder of natural dog treats company Pawstruck, a different theme kept repeating itself. Kyle understands the importance of efficiency, but his enthusiasm really shines through when the conversation moves to another topic: marketing. I believe it’s Kyle’s enthusiasm for marketing that explains how this young business – less than two years old – has become successful so quickly.
Whether the topic is branding, email marketing, product reviews, social media or even packaging, Kyle has something to say. We also talk about Amazon Lightning Deals: Kyle reveals how his deals performed over Thanksgiving, and gives advice for other sellers on making the most of Lightning Deals.
Andy: When did you first start selling online?
Kyle: I started selling on eBay in around 2006. I was looking to try to get a part-time job to make some extra money. I couldn’t find anything near me in Los Angeles County – it was tough.
Then I saw a posting on Craigslist, for someone looking for help selling on eBay. I assumed it would be a onetime deal, but it turned out to be a guy in my area who was looking for help selling electronics on eBay. He would purchase electronics in bulk from some of the bigger retailers – returns or open boxes that they received back at the retail shops – which they would sell in bulk in big containers.
We would go through all the products, determine their quality, list them on eBay and sell them. I got a percentage of the sales. That was really when I learned how to optimise listings, get products seen, and try to outsell people who were selling similar products.
After 18 months we transitioned to clothing instead because we were frustrated with electronics. Occasionally you’d have a lot of returns and issues with products not working as they should, because you were buying them refunded and used, and the margins weren’t really there. The margins were better in women’s clothing. It was easier to sell, it was simpler and you didn’t have to describe things as in depth as long as you showed the photos.
Then it changed to me buying directly from him for a wholesale price. I would keep whatever profits I made – so it had gone from a commission basis to me just buying the inventory. I did that until I was about 18 or so, and then headed off to college.
I stopped selling on eBay when I started college. I got a job on campus and was busy with school, so I just sold a few things on the side for friends and myself.
With Pawstruck, did you come across the product first then build it into a business, or was it the other way around?
There wasn’t an “aha” moment when it happened. I did an entrepreneurship minor at college, but didn’t complete the course. They were really cool classes though. You get a chance to pretend that you’re going to make this business. There were a lot of people that would go through the process in those classes, and were brainstorming a real project for the class.
Through that process I was wracking my brain trying to think what would be a good industry to be in. I went through some different projects and had different ideas. I actually had a dog that lived with me at school – I’ve always been a dog lover and dog owner. The time coincided with issues around pet products from China, where dogs were dying because treats from China were hurting them. There was a media storm over it, and I had my own dog that I was worried about, and wanted to buy products that wouldn’t make him sick. It just made sense to look into this field.
I did research online, and went to brick-and-mortar shops, and saw that healthy natural products were available but were also very expensive. They weren’t necessarily available online, but were mostly on sale in large pet retailers. From an ecommerce standpoint there were very few people who were doing it. The manufacturers were selling B2B wholesale to these retail shops.
That’s where I saw the opportunity and did a lot of research. I realised that this might be a good niche to get into, and this was something that I was interested and passionate in. I don’t think it’s a necessity that you’re passionate about something for ecommerce, but it definitely doesn’t hurt being interested in it.
My research suggested the pet food industry in a lot of ways follows the human food industry. People are more worried about what they’re eating and what they’re putting in their own bodies. The pet industry is following that same trend. People are more worried about the health effects, where it’s made, and if it’s natural, for dog products as well. I saw a big opportunity there and I’d been thinking about it when I graduated, so I decided to jump in and really try it out.
From the get-go I realised I wanted to brand what we were doing. I didn’t want to get into just being just a reseller for multiple reasons. Having gone through that when I was younger, I saw that there were opportunities there. But you’re too reliant on the brands you’re selling. It’s tougher, the margins are slimmer and there’s not a way to separate yourself from the competition besides price. Of course you can make the listing look better, you can provide a little better customer service. But in many ways you’re selling exactly what everyone else is selling and that makes it difficult to set yourself apart.
Did you start with your own web store rather than the marketplaces?
That’s correct. We wanted a brand and I decided early on that we wanted our own website so we could be in control of our customers.
It worries me that tomorrow eBay or Amazon could change their policies and say, “Hey, instead of whatever percentage we’re taking now, we’re going to double or triple it.” We have no control over that. It’s a little bit scary to have a business that is 100% dependent on someone else’s business, in the same way as I was saying that I didn’t want to just be a reseller of other brands.
So by creating our own brand with our own website, I would have control over our customers, when and how I contacted them, what they saw on our website, and how they would see us as a brand. The only way to do that was through our own website.
But early on we also realised, “Why not sell on all these other marketplaces?” eBay and Amazon are great and other marketplaces are terrific, so I wanted to take advantage of all those marketplaces. Some people prefer to buy on eBay, some people prefer to buy on Amazon and another person will prefer to buy on the direct website. We wanted to reach all those customers and take advantage of as many marketplaces as made sense for our brand.
How did you go about marketing your own store at first?
It was a combination of many different things. We utilised PPC. We did a lot of Google AdWords, a lot of Bing, and Google Shopping, which was free in those days. We did a lot of that from the get-go to get our first customers.
We would do our best to capture as many email addresses as possible, whether they were customers or just people viewing our sites, so we could remarket to them at a later point using email marketing. We also did social media, building a community of people around that. We’ve had mixed results in terms of all those platforms.
In the case of social media we’ve had trouble monetising that community. On Instagram, we have over 20,000 followers, but we’re still working on monetising that and converting people who love looking at dog and puppy photos, to people who are actually going to purchase products.
I’m wary of being dependent on someone else again, in terms of social media. We built these social media communities, and were seeing great results. Now Facebook have changed their algorithm, so you put something on Facebook and it only gets seen by a very small percentage of your followers. That’s really too bad for a lot of brands because they’ve built these communities and now they have to either pay for their traffic, or they’ve wasted a lot of time and effort getting their group built up.
It has been a learning process, but right now we’re really focusing on PPC and email marketing. Getting people through the door and then if they’re not purchasing, trying to gather as many email addresses as possible so that we can let them know about our brand and everything else at a later point.
There are definitely still reasons to build your social media followings, but email marketing is something that I personally want to focus on, because in some ways you own that audience. You have those email addresses and for the most part nothing’s going to change, you can continue to advertise to them and let them know about content that you produce or whatever it happens to be. They’re not going anywhere unless they choose not to be a part of it anymore. But at least we control it, so that’s what I’ve been focusing on.
How did you manage selling on the marketplaces as well as your own store?
With Magento there is a plug-in called M2E Pro which automatically pushes listings to eBay and Amazon. We had to try that. Creating all these listings would have been a major hassle!
So we were bringing marketplace orders directly into Magento with M2E Pro, which were then being pushed to Brightpearl. At that point Brightpearl developed multichannel inventory and order management plug-ins. So I switched over to Brightpearl, which has been great. I was able to create all the listings on eBay and Amazon, and all those orders automatically come through Brightpearl as if they’re a normal website order.
I can still filter based on what channel the order came from, but our fulfilment team really doesn’t know the difference. We treat every order exactly the same, with the same packaging and so on. That has really simplified things. We don’t have to check every marketplace separately except for customer service messages and emails. Once it’s set we just let the listings run.
We’re able to focus on other things as opposed to managing many different channels at once. It helps keep our inventory in check too – that’s a big part of it. If you’re worried about inventory, using a system like Brightpearl or M2E Pro is crucial because it syncs your stock across all the channels. So you’re not accidentally selling past what you have on eBay or Amazon or your website, and then having to really disappoint customers. That penalises you on a lot of those platforms if you have to cancel orders.
So which channels do you sell on, and which is your best one?
We started with eBay because that was the one I knew. I set up a listing template and worked from that to build it out. I had never sold on Amazon but knew that it was a good opportunity, so jumped into that one right after eBay. I learned as much as I possibly could, read through a bunch of forums and different places learning about selling on Amazon, how to optimise listings and so on.
I quickly added the products and tried to build up early on to get some sales, get people reviewing the products, and from there Amazon has really grown. Looking back, eBay is fine and we’ll continue to sell there, but Amazon is really the place we want to focus in terms of a channel outside of our website. There are just so many people shopping on Amazon and so many opportunities there, that it’s tough to ignore it completely. You have to take advantage of what Amazon offers.
But our website is still our biggest channel. In terms of marketplaces, Amazon is definitely much, much bigger than eBay for us. eBay started the biggest because I knew how to use it, and in my mind it’s easier to start with because of the way the listings are set up. You have your own listing, and it’s how you optimise that which determines if people are going to find your products and buy from you. You’re not competing with other sellers on your listing like on Amazon.
On Amazon as a new seller it takes a little while to get some traction, especially if it’s your own brand. Most people on Amazon aren’t buying products that have zero reviews, not to mention that when you first start out, you show up very low in the search results. If it’s a popular niche people aren’t going to see your listing, because it’s going to be covered by all the brands that people have been buying for years and years.
It does take some work to build up your listings on Amazon. But as soon as you do, there are just so many more people buying on Amazon in our industry. It is industry dependent but in terms of pet owners shopping, Amazon is huge.
Have you had any problems selling on Amazon? Do people try to piggyback on your listings for example?
On our website we sell our own brand and some other trusted brands as well. We don’t sell those other brands on eBay or Amazon. On eBay you don’t really have to worry about it as much, because it’s still your own listing, but we still chose not to sell other brands.
On Amazon I really didn’t want to get into the reseller issue that a lot of people have. Selling other brands on Amazon is tough because you’re competing for that Buy Box. All you’re doing is competing on price. We weren’t really in a position to be cutting our margins as slim as other people do. There’s so much competition on Amazon for existing brands. They’re probably losing money on these listings. We wanted to focus on building our own brand on Amazon. And now that we’ve done that, it’s tough for other people to compete with us on our listing.
Nobody can sell our brand because we don’t sell it elsewhere – people aren’t able to piggyback on our listings that are doing well. Even though they show up high in the rankings, we’re the only business who sell them and that protects us. We have had a couple of people trying to copy our listings, and also try to sell on our same listing. It’s been irritating but not too detrimental to our business, because it’s not sustainable for the people who are trying to do it. The biggest problem is from a customer service standpoint.
One example was a lady who contacted us saying, “I ordered a 10 pack and I only received one.” I couldn’t find her order and it took me a while to figure out what happened. Someone was offering our product on Amazon under our own listing, selling it to a customer, and then purchasing our product on eBay and having it shipped direct to that customer. They were trying to be a middleman buying it from eBay and shipping it to an Amazon customer.
So that’s the biggest issue we’ve had. It’s not really sustainable because those people will quickly learn that they’re not making enough money to keep doing it. He was making a dollar or two on each order, and it was a lot of work for him, so luckily he’s stopped doing it. I did contact Amazon, but they’re not really in the game to police listings that way. They don’t really care as long as they’re selling products and their customers are happy. It’s sometimes hard to get Amazon to really act, even though we can tell them that we own this brand and there’s no possible way that this other person is selling it.
I’ve seen a lot of people selling natural dog treats, so how do you differentiate yourselves from your competition? Are reviews important for your products?
Generating reviews is so important to Amazon listings. Social proof in general is huge, especially in the pet industry and with natural products. People want to see what other pet owners are saying about the products, because they care so much about where it’s made, the quality, and so on. We try to get as many product reviews as possible on our website, and also on Amazon. Massview is a good way of getting reviews on Amazon.
On our website we actually give a discount for customers if they leave us a review. It’s around five percent off their next order, so not massive but just a way to incentivize and reward people who leave us reviews. We get a lot of people to do that and it’s been very helpful. Along with social proof, we’ve tried to set ourselves apart with two things: quality and customer service.
The quality of our bully sticks and other dog products I would say is equal, if not superior, to anything that you would find in a store. People are generally very happy when they purchase from us. It’s something that we focus on.
Secondly, it’s customer service. If customers aren’t happy or they have questions, we do whatever it takes to make them happy. That’s one of the biggest things that sets us apart on Amazon and on our website. We have automated emails on our website that go out as soon as you order something – the normal order confirmation and shipping conformation emails, but we’ve really customised those to make them fun and exciting and different.
On Amazon we use Feedback Genius (from SellerLabs) to send automatic emails. I send those directly from myself, giving them my personal phone number and email address, and ask them contact me directly if they have any issues or wouldn’t rate our product five stars on Amazon. I do get some people contact me, and we say, “We’ll take care of that for you, send it back and we’ll find something that works for you or give you a refund if that’s necessary”. We really try to prevent issues and let them know, as soon as they purchase the product, that they can contact us if there are any problems. We send a second email two days after the order arrives at their house, which is more about asking for reviews.
That’s been really effective to help brand ourselves and set ourselves apart, because most Amazon sellers aren’t doing that. People feel really comfortable buying from us because they know that I care, and that I’m there and available if they have any issues. That also drives people to leave reviews because they’re happy with their purchase, and happy with their customer service. They want to buy from us again, even if the products are a little bit more expensive, because they know they’ll receive a level of customer service that they don’t usually get on Amazon.
It’s the same thing with our website – we try to set ourselves apart as showing that we’re dog owners too. We only sell things that we would be comfortable giving to our dogs. You can not only call us or email us with questions about the products, we can give you advice, we can help you out and you can trust what we sell.
It’s a big thing that we try to do because in many ways we’re competing with Amazon. That’s how we try to set our website apart – you could go on Amazon and you could buy something cheaper than on our website but you’re not getting the full service experience. You don’t get any one-on-one help if you need it. You don’t get any of the fun branding with our shipping confirmation emails, order confirmation emails, or cute dog photos and videos and so on.
On Amazon it’s just a bare-bones experience. If you’re just looking for the lowest price, go shop on Amazon. But if you really care about your dog, you’ll probably shop from us because it’s the whole experience. That’s how we try to set ourselves apart from big retailers like Amazon, and even some of the other pet ecommerce companies that sell thousands and thousands of SKUs. They can’t possibly know all their products as well as we know ours.
I’ve seen that you take part in Amazon’s Lightning Deals. Why do you do that and how have they worked out for you?
This is the first year we’ve done Lightning Deals. We’ve done four SKUs each with four separate Lightning Deals, so that’s 16 deals in total between early November and mid-December.
I did it simply to test it out. I also read on eCommerceFuel about some other sellers who had great success with Lightning Deals, which helped inspire me. Because we own our listings and it’s our own brand, we have a little bit more play in our margins. Some sellers out there are losing money on Lightning Deals, but we’re able to make money on it and also sell a ton of product, which is going to help in the long run in terms of rankings on Amazon. Their algorithm takes a lot of things into account, and one of them is how much you’re selling. The more something sells, the higher it’s going to show in the rankings.
Besides selling a sell lot of inventory during the Lightning Deal, even after the deal there’s a kind of a “halo effect”, because your overall rankings improve quite a bit. So you see increased sales even after the deal ends – at full price – because your rankings are better and people are finding you more often.
We had some deals running at the beginning of November which were a success. We sold way more than we normally sell on a daily basis, but not all the inventory that we had allocated, which I was hoping to do. But it was at the beginning of November, on a Tuesday morning from 5:00am to 9:00am – so a very random day and time slot, but it still did OK.
Then we had another deal early in the week of Thanksgiving, and three running on Thanksgiving Day. Those did much better because people are ramping up for Black Friday and ready to shop.
On Thanksgiving Day, revenue was 25 times the average daily revenue, and the number of orders was 38 times the average. For each of the 3 deals we had on the day, we sold 99%, 96%, and 69% of the inventory allocated. It was a great improvement over the Lightning Deals earlier in the month which had sold 19%, 38%, and 18% of the inventory respectively.
Our category rankings improved as well. Two of our products jumped to number one in their specific subcategories, and we saw a big bump in sales after the deal ended. I expect our average sales to continue to be higher than our old averages. I will also be tracking how many people from the Lightning Deals return as repeat customers over the next few months. We have four more in December and we’re excited to see how those go.
These are opportunities that Amazon offers that eBay at this point just doesn’t have. They may have something similar but just not the same scale at all.
So how do you get to take part in the Lightning Deals, and do you have any other advice about them for other sellers?
Amazon reached out to us directly. That’s the only way to do it unfortunately. I’ve heard of a couple of people trying to reach out to Amazon, but I really don’t know if that will be successful. So they reached out to us and gave us a list of SKUs that they thought would be a good fit for the Lightning Deals. Then we had to put in the discount we would offer. They require around 20% off at a minimum. It has to be the cheapest price you’ve offered the entire year, or along those lines, and you have to meet all the requirements.
Then you send them exactly which products you’re willing to sell and the quantities you want to sell them at. They either approve or disapprove them, then send a confirmation saying exactly when your deals are going to run. You don’t get to pick the days and times – they figure that out. When they sent me all their suggested products for the Lightning Deals, I sent most of those back and also added a few other SKUs they didn’t ask for. Two of the SKUs I added got approved.
If you get approached by Amazon, think about adding SKUs that you want to put on there and not necessarily just the ones Amazon sends you. The biggest thing is making sure you have enough inventory, because you have to have the stock ready to go in advance of the deals. We had some headaches getting enough inventory in there.
The day and time of your deals is extremely important. Deals on big shopping days are much more successful than deals on other days when customers are not ready to buy. Unfortunately, Amazon doesn’t let you choose your sale dates.
The overall discount percentage really affects click-through and conversion rates of deals. Based on their margins, retailers should try and discount as much as they can afford. The higher the discount percentage, the greater the sales. If you sell consumable products where you are looking for repeat business, discount even further.
The category and type of product also makes a big difference as to how successful the deals will be. Pawstruck products are both impulse buys and consumables. High priced items or those that aren’t given as gifts might be difficult to push through Lightning Deals.
Do you do your own order fulfilment alongside Amazon FBA? Have you considered outsourcing fulfilment?
Yes we use both. For our website, for eBay and some of Amazon we fulfil orders ourselves from our facility. A limited number of the products are on Amazon FBA, because it really helps in terms of sales. If you haven’t done FBA and are selling on Amazon you should do it because it will, in almost every scenario, help your sales and make sense for your business, even though it’s a larger cut financially.
In an ideal world I would have everything on Amazon FBA for our Amazon sales. The problem is that we have different pack sizes for everything. If you’re going to buy a dog treat, we have a 10 pack, then 25, 50, 100, and 250 packs because people like buying in bulk. It’s really difficult for us to send all of that into Amazon FBA, because every single one of our SKUs would have six different pack sizes taking up inventory. So we usually only use FBA for the smaller sizes or the ones that people are going to buy more frequently. The ones that are more in bulk we ship from our warehouse. So if someone buys 150 of a dog treat, that will come from our warehouse. If they’re only going to buy 10 it generally will come from Amazon FBA.
I think we’ll keep most of our fulfilment in-house unless something really blows me away or there’s a reason to switch it. It makes sense for us because our products are a little bit complicated – they’re all different sizes and shapes and weights. So for example we have really small dog treats that are easy to ship. We also have big bones, like bit meaty knuckle bones that are very inefficient to ship and hard to package. We allow our customers to buy as many or as little as they want, and as many different products as they want. So they can buy three of this, four of that, seven of this.
I see it being a nightmare from a third-party logistics standpoint, because there’s no universal shipping weight, no universal box, no universal order size or quantity – it’s all different. We prefer to do it correctly ourselves and make sure it looks really nice. It just makes sense for us that way. Then we can handle getting the inventory in stock too from where we manufacture it. We’ve set up our fulfilment centre close to our manufacturing facility, so the lead time in terms of getting product into our fulfilment centre is very quick.
Wow, so you manufacture your own products. What’s involved in that?
We manufacture all of our own-brand products ourselves. We have a facility and we do things in-house. There are other brands which we source elsewhere and bring in, but for our own brand we do manufacture it.
Almost all the products are completely natural. They are cut off, cleaned and cut to the right length or whatever is needed for the product. Then they’re usually just baked to take away the moisture and preserve them, and make them ready to be a good long-lasting dog treat or chew.
Our products are very affordable for the quality. They’re not necessarily the cheapest you would find online, but for the quality they’re very affordable. If you were to find a similar one in a store, it’s going to be substantially more expensive because we do our own manufacturing and cut out all of the overhead that’s involved. So we have limited marketing, the packaging is pretty simple and we’re cutting out that middle man. That’s how we’re able to keep our prices relatively low in comparison.
What are your ideas and plans going forward with your business?
One thing we’ll be focusing on in 2016 is packaging. In the past we went with what was easy, because it’s difficult to package all the orders with different sizes and weights. But we’re really going to try to be more consistent, and have things look a little more professional and branded and fun.
We don’t take ourselves all that seriously. We try to take a fun stance on things. In 2016 we’re going to get custom boxes made and we’re throwing around different ideas, one of which, for example, would be having a silhouette of all the different dog breeds out there covering the entire box. So it would be a crazy-looking box where customers can find their dog breed on there so it’s something fun when it arrives at your doorstep – it becomes an experience and really stands out.
We’re taking inspiration from those subscription boxes, how they make it a fun experience, and we want to do the same. We want to make it something that the owner and the dog will look forward to every month or two, or whenever they’re purchasing. So we’re really looking to brand the packaging, number one.
We’re also looking to focus on our auto-delivery programme which we launched last month but have yet to market substantially. We offer auto-delivery on all the products we manufacture, where you can sign up and say, “I want this dog treat, I want this quantity, and I want it once every month”. It’ll arrive at your doorstep every month, and your credit card will automatically be charged.
Because our product is consumable, a lot of our customers do know when their dog needs it. If they give their dog one treat every night and they have 30 of them at a time, they’ll know they need a new order every month, for example. That’s the simplest scenario. It’s just a convenience thing for them. From a business standpoint, it’s awesome in terms of lifetime value of a customer. That’s also something we want to focus on in 2016.
Then we’re going to make some big changes to our blog and content strategy in 2016. It’s going to be a lot more consistent, and it’s going to be really unique. We have some really cool ideas of how we’re going to change the way our content is written. I don’t want to spoil the surprise because it’s not 100% set in stone. We will be giving advice to dogs’ owners, but because there are so many websites out there that have content about dogs, we’re trying to figure out a way to set ourselves apart. It would be high quality content, but written in a fun and different way.
We will be keeping an eye on other sales channels too. Jet is one that we’re watching. Right now it seems pretty difficult to get products listed. They have an API but I don’t really want to invest a lot of time and money until it proves itself. I could see it working for our product. But for now we’re going to wait until it becomes easier and we can look at more data and see other peoples’ experiences.
But the big one is going to be international Amazon. Even though it’s the same channel we’re already using, it’s something we’re looking into. Canada and then potentially the UK would be the first two we’d look at.
Kyle, it’s been a pleasure talking with you. Thank you for sharing so much and I wish you and Pawstruck the best of luck for the future!