Jeremy Weiss: Dr. Jeremy Weiss here, founder of INspiredINsider.com, where I talk with inspirational entrepreneurs and leaders like the founders of P90X, Baby Einstein, Atari, many more, how they overcome big challenges in life and business.
This is part of the Skubana E-Commerce mastery series, where top sellers and experts teach you what really works to boost your E-Commerce business. Skubana is a software platform to manage your entire E-Commerce operation.
Today we have Eytan Wiener. He is co-founder and COO of Quantum Networks, founded with Ari Zoldan and Jonathan Goldman. They grew from 0 to 30 million in sales in just under four years. They sell items such as wireless routers, signals boosters, hard drives and much more. It all started with Eytan and two friends in a cubical.
Eytan, thanks for joining me.
Eytan Wiener: Thank you so much for having me.
Jeremy: Straight from New York.
I have a fun fact that’s really interesting about you, and we’re gonna talk about… You’re really good, and I have a long list about advanced analytics, marketing, what you guys do with text support, partnerships, challenges.
But you started off and you went to dental school.
Eytan: My dad’s a doctor. My uncle is a doctor. Most of my friends are doctors. I was gonna be a doctor, and then I was, like, “Maybe I’ll be a dentist,” which was probably smarter, based on the current healthcare situation.
Eytan: Then I was, like, “Okay.”
And I had pretty good grades. I went to dental school. I did very well on the academic side, but all the laboratory, tedious, nitty gritty millimeter work made me a little…
Eytan: …Cuckoo, yeah. I had a baby on the way and I wasn’t sure what to do. It was a lot of investment.
But I just really wasn’t happy, and I didn’t want to continue that.
Jeremy: Did you end up finishing?
Eytan: It happened to be not the greatest school. I think, if I would have gone somewhere else, they probably would have pushed me through. So it wasn’t the best support system. But I was, like, “You know what? Let me try something else.”
I got into marketing, and then the rest is history. But I do have a science background.
Jeremy: Okay. Yeah. I thought that was really interesting, actually.
So we’ll talk about when that first started in the cubicle. But first, what’s working? What’s a must for sellers to boost sales? You guys drive a lot of sales. What should people start to think about and do that you are doing?
Eytan: It’s funny. I went to a lot of trade shows recently, and the whole thing now is Omnichannel. Omnichannel, Multichannel. So Omnichannel being different platforms, and Multichannel being different marketplaces.
So when you have a site, you have to have a mobile site, and you have to have an iPad friendly site, whether it’s responsive, whether it’s adaptive, or you have a custom site. Most purchases now, or a lot, are made on mobile devices. It’s the hottest thing, the payment side of it, etcetera. So that’s huge. People are starting to use their phones more than their computers, a lot more, to buy stuff.
So streamlining that process, making it efficient and making the checkout efficient is key.
As far as multichannel, the Amazon and the eBays of the world are hard to leave out. So there’s a lot of conflict sometimes. You want to sell on these channels. They violate certain pricing rules, or they control the market, or it’s monopolistic. But there are ways to do it. You have to play with it. It’s usually for the good. You can do a lot of sales. Sometimes it hurts a brand.
But if you do it right, and we’re pretty good at that, and the vendors that we carry, it could increase sales a lot.
So putting the brands that we represent, or manufacturer, on our website, as well as the other channels, and in all of the different formats for different renderings for different devices, is key to really get out there.
You have to be everywhere on the web, so to speak.
Jeremy: So what channel should people be thinking about?
Eytan: Our website was very, very successful at the beginning for different reasons, which I could go into. But then we got into the whole Amazon world, and that really grew our business a lot. The problem with that is, a lot of times you’re not so sure how much money you’re making with all of the fees and associated issues, and you also lose your own brand name and customers.
So you sell cell phones on a website. You have the brand, you have your name, contact the customer and own the customer. On Amazon you can’t really contact the customer, and they take their fees. So you pay acquisition costs for your website as well, but if you have your own brand and your name, you really want that.
When these huge Amazons and eBays take over online, it’s number one and two, and everyone else, it’s very hard to build a website. So what we’ve done is, since we’ve shifted a lot towards the marketplaces, we’re shifting back now to build our own brand and website with certain features, from learning experience, to really make it pop at the cell. Not abandoning the channels, but diversifying, going back to our roots.
Jeremy: Yeah. You realize you own that customer and you can follow up with them, and they recognize you as the brand.
What was working early on? You said the website early on was really big.
Eytan: Yeah. So, early on, as I said, we were guys in a cubicle. Or, I think you mentioned that in the intro.
Eytan: So I got into web marketing. SEO and pay per click with someone who I met, and then my partner Ari was working on the same floor. He has a telecom background, and he also had telecom companies. The most recent was an equipment company where they just started listing refurbished and re-certified products online on eBay, and they build customer base from it, carrier base from it. He had sold those companies, and he wanted to do the next best thing, which was 4G, WiMAX, wireless. So we got into that. We basically made a website where we listed every single 4G, WiMAX or LTE product before it was that prevalent.
Jeremy: Yeah. I think I saw it. It’s, like, going WiMAX.
Eytan: Yeah. We have some blogs and media centers that we still use.
So WiMAX was one technology that’s [inaudible 00:07:01] and clear wired deployed, and then there was LTE, which is what people use now, AT&T and Verizon, as you know. It was in its infancy, so people would call from Africa and third world countries. They would want certain products, and a lot of times it would just be not realistic because of all these different licensing issues, and this and that.
That said, we did close several very large deals. So we have a large network in Panama, in the Virgin Islands, in Africa. So it was good business, but it was a very long sales cycle. Sometimes years. Sometimes [inaudible 00:07:39]
So it didn’t really pay the bills, but it was something.
So we’re, like, “We need to figure out something that’s more consistent,” and that was really when E-Commerce was taking off. So we started to sell stuff, but we didn’t want to sell things that were such commodities, like cell phones.
Jeremy: So you’re competing as everyone else, in other words.
Eytan: Right. We wanted to find a niche product. So something that has a certain price point, a certain margin. A sales assist model where you need to explain to someone what it is, and help them.
So we’re, like, “We’re [inaudible 00:08:15] retail online.”
They lobbed us a couple of questions. Usually it was cellular boosters. People who don’t have cell coverage for their home or office. They don’t even realize, which is part of the product secret, if you tell someone a product exists and they don’t even know about it, and help them so much, it’s a pretty easy sale.
Eytan: Despite the price. So we can charge a premium. We don’t have to compete on price. We help them. We find them the right solution, and instead of them paying thousands of dollars for their cell bill, or they need it for an emergency, now they have a booster or an amplifier for their home.
So, quickly, because of that model and some SEO and strategic online moves, we were selling a lot of this stuff. [inaudible 00:08:57] a lot of these smaller companies. But then we continued to find more of that type of genre product.
We diversified a little more to just regular consumer electronics, but most of the stuff we sell has a little edge to it, or a twist. Usually not something…
Jeremy: It’s a little more niche, or higher end.
Eytan: ..You couldn’t just buy it in a Best Buy or a Target. We sell storage and surveillance, but it’s usually on the higher end side, or the studio side, or something that’s a little different. So there’s pricing the margin, and there’s a program where there’s some kind of value add for us that makes it make sense. We in turn offer the value to the vendor, so we’re not just some other guy online selling their stuff. We’re providing a service. We’re doing installation. We’re remodeling the brand and the challenge strategy.
Jeremy: Yeah. I want to talk about that later on too, about the tech support and how tech support helps drive more sales for you.
But back to… What’s interesting is, talk about what was working with SEO and online. What’s interesting is that people, like you said, don’t even know there’s something out there. So how do you get those customers through the online… Obviously you’re an expert in online marketing, to… Who didn’t know this even existed, to actually coming to your site and getting a product?
Eytan: That’s a good question.
I think people were searching, in this case, [inaudible 00:10:27] which is a good example, because that’s how I honed a lot of the method.
So people didn’t have coverage. So you Google, like, “What do I do? I need coverage in my house.” You can’t build a cell tower in your basement. This was before femtocells and the carriers weren’t really so onboard, because for the carrier to say, “You have bad cell coverage,” is admitting that their coverage isn’t good. So they didn’t really like boosters. They went through a whole FCC process, which is a whole other separate discussion.
But we would post a lot of content about it. So any time… I was just speaking to my customer service team about this. When you get questions from customers, it’s important to document it. It’s important to transcribe it, almost, and put it on Q&As in the blog. So if someone searches, like in your case, you know how to get video podcasts out there, and your blog comes up, it’s very targeted. So Google is getting better at that.
So if someone searches, “How do I get the right cell amplifier for a 4000 square foot warehouse in Atlanta,” and it had that content, it usually comes up for the long tail search.
Eytan: The long tail cumulatively is much shorter than the short tail, if someone is searching cell amplifier. So sometimes people don’t even know it exists. They just say, “I need coverage.”
Or those keywords, like coverage, reception, blah, blah, blah.
Eytan: When it became a little more popular, which it is now, there are these companies I used to sell that are actually in Best Buy by now. I would never think they would be. They were much more niche and specific. Now they are more co-funded by VCs, and they are very out there.
But people search the brand names. People search the solution, and we would come up with different blog spots and videos, and custom landing pages, and ad word campaigns, just to target that base. Then we built a lot of repeat customers from that, which is what you’d say was the value of the website. So whenever they needed a solution, if they were installer, or for a home or for a friend, they would come back, and that’s really how we did that.
We applied the same method to other products and solutions.
Jeremy: Yeah. So you were doing content marketing before it was called content marketing, probably?
Eytan: I mean, that’s what I told everyone when I started. Content is king. At that time people were doing spammy links and all this other stuff that was driving Google, and whenever Google changed their algorithm people would get penalized.
[inaudible 00:12:48] problem. I think nowadays SEO is very hard to do. It’s almost like… What’s the word? I wouldn’t say untrue. It’s almost, like…
Jeremy: Like a myth or something?
Eytan: …Yeah. It used to try to find things to fool us, or [inaudible 00:13:10] robot or Google. But in reality they’re just getting better and better.
Jeremy: The algorithms are getting smarter.
Eytan: Semantics in realizing what’s going on.
Jeremy: No, but I like your method. I mean, your method of basically document all questions, and… Document all questions and write them down, because this is the exact word and verbiage people are using, and then put them in either Q&A or blog posts and answer them, and you become the expert.
Eytan: Yeah. I actually had a friend. He was starting a business where he would record all of the receptionist’s calls and transliterate it into content. So you’d [inaudible 00:13:43]
Not sure what happened to that, but that’s the idea.
Jeremy: That’s smart. Yeah.
Eytan: Yeah. That was one of the ways we started. Again, now it’s much harder. But, by continuing to do content, you can thrive.
So one of the things we’re doing now is video content. So since retail is going away, you want to bring that retail experience to the web.
So we partnered with a company that does a lot of video based marketing. So every product that we have on our new website, there will be a video. But it’s not as though there will be a custom video from the vendor, but the beauty of a lot of the software and the process is that it will pull from existing content.
So if I’m selling, let’s say, a NetGear or switch or router, I don’t have to really do a review on that, because there’s a lot of existing content. So I can pull from YouTube. I’ll pull from iTunes. We can serve up the best video, and aside from the video being on our product page, we’ll also have a dot TV.
So if the site is jeremy.tv, you’ll have all your products, videos. Then people will click there and it will take them to the actual checkout page.
The conversion is almost 60% to 70% higher.
Eytan: You’re getting relevant content, video content of what they want to buy, and explaining it to them. Almost like a customer service person explaining what this is to you.
So with some of this software that we’re building and collaborating with, we’ve seen really great conversions, and it’s a real big value add for the vendors. I think that’s the next level of SEO and the web, where it’s a virtual shopping experience.
Jeremy: So in the [between], Eytan, do you pull in certain things that you know are good, or is it built now to automatically pull in certain videos? I’m just curious if there’s certain content that you look for that you find work better to be on that page.
Eytan: It’s a good question.
So the beauty of the software is that, based on the sales conversions, you can see which video did better. Let’s say you want to buy a TV, and I show you one… We don’t sell TVs, but let’s say you want to buy, I don’t know…
Jeremy: A router.
Eytan: …A router, and you see someone, and then we’re working with a vendor, and they give us video content. We pull some public content from YouTube or Dailymotion, and we pull some content from some guy in his basement doing a review.
Sometimes that will convert better, because it’s a real unbiased…
Jeremy: It’s authentic.
Eytan: …Review, unboxing.
But the beauty of the software is we can tell which is best, because we see what converts and what doesn’t. The real value of that is we can often go back to the vendor and tell them, “Hey, this video converted better than the other one.”
They’re, like, “Thanks for telling me, because I spent five million dollars on video. I had no idea of the ROI, return on investment…”
Eytan: “…Because I have no audience. There’s no rating, like a TV rating. It’s all based on experience.”
It’s a really cool win-win for the vendor and us to promote products in this new age way, and that’s one of the things we’re really working hard on now.
Jeremy: Yeah. What surprised you? What has worked that you have seen with conversions in certain sales videos?
Eytan: The unboxings are good. It allows detailed explanations and descriptions.
It kind of depends. I mean, it depends on the sector. So I’m more into electronics type stuff. If it’s apparel or clothing, and you’re–
Jeremy: No, yeah. The disclaimer is, this is your expertise.
Eytan: I know. I’m saying, if it’s apparel and clothing… I mean, I know in other E-Commerce sectors a lot of it is about image and brand, or if it’s luxury, sometimes a video with someone on a first class flight holding it is appealing to the person, but if it’s a router sometimes it has to be a very detailed explanation, or to show someone, hey, this is really not so hard to use.
So it really depends on the product. Some of the products we sell are gadgety Kickstarter up and coming companies, where you want to sell the idea and the image, and some are just straight up hardware. We want to say what it does and how, and what.
So it really depends.
Jeremy: What’s one that surprised you?
Eytan: That being said, there’s metrics.
What surprised me as far as conversion?
Jeremy: Yeah. Like, why did this even convert? Maybe an unboxing.
Eytan: Yeah. The problem on the web nowadays is that the data is very fragmented, so when you get content from a product, whether you get it from a manufacturer or you write your own content, or get it from an aggregator, or a distributor of the product, everyone seems to have the same content on their website, which is also not so good for search. It’s just the reality.
So what happens is, it gets very…
Eytan: …Fragmented and often incorrect. So you have listings on Amazon or on websites that don’t even have the right content.
So by doing videos and showing exactly what’s included in the box, and exactly what’s in there, these unboxing videos convert very well.
Especially if you will post an unbiased review, I mean, sometimes the guy will say, “Hey, this is a great product, but the battery life is not good.”
So you don’t want to be shy about that. I mean, the Amazon review. If there’s a bad review, there’s a bad review. If there’s a good review, that’s okay too. So it’s not biased in any way. People appreciate that.
The vendor videos with all of the fancy graphics and stuff, that’s good for a sales drive, or a call to action. But the true, honest reviews seem to do very well.
Jeremy: Yeah. So someone in their basement just unboxing it and explaining it, and telling you what they liked and didn’t like?
Eytan: The reality is, people search YouTube a second after Google. YouTube is the biggest search engine. [inaudible 00:19:42] YouTUbe into a product video generator, research, that’s where people are going anyways. So why not just put that on your website?
It’s easier said than done. The way we’re doing it with these advanced algorithms and testing, and cross selling items and different videos per channel, per category, is quite advanced, and it’s almost mixing a retail experience on the internet.
Jeremy: Right, right. So now that you’re going back to your roots, Eytan, what else is working for the website for sales and conversion?
Eytan: Good question.
So, what else is working? The video conversion helps. I mean, I started the E-Commerce thing. Magento was a new thing then. Like, people with their own site.
We kind of do a lot of that in house now. I don’t like when I outsource things. I mean, I like to outsource things if I can, but a lot of what we do is very…
Eytan: …Home brewed. Custom.
It has to be scalable skill, but [inaudible 00:20:46] little tricks and things like that.
So one of the things we mentioned is the video that we’re doing. Even the design of the site and appealing to a certain crowd, or a certain demographic, versus just being open ended… One of the difficulties is that we sell a lot of different products. Some are tech based, but some are just gadgets, or cool.
So how do you present it on one website, and not [inaudible 00:21:14]
Jeremy: It’s a different audience, you’re saying.
Eytan: What are you about? What is the website about? Are we tech sellers? Are we gadget sellers? Are we experts in this or that?
So it’s hard to have one website create the messages. So a lot of these technologies that [inaudible 00:21:30], like responsive pages to the consumer, seem to win. So Amazon will tell you, “Oh, if you like this, you’re gonna like that. You’re in this zip code, you’re gonna want this deal. You recently viewed this, that.”
Those kind of automated, algorithmic things seem to be much, much more efficient in converting than just AB testing and manual types of things that were more prevalent when I started. Now there’s technologies that know everything about the user when they log on your page. They track all these different things that most people don’t even realize. A little spooky.
I’m not saying I’d do anything in the wrong way, but there’s so much data you can get about a person when they sign up with Google or Facebook, and this and that, and cater to them, that it’s almost an easier sell than when they are in the store.
Jeremy: You know more about that.
Eytan: Yeah. Personalized experience.
Jeremy: So how do you do that? When someone hits your page, it’s quantum-wireless.com.
Eytan: That’s our current event. We’re gonna launch our new domain, hopefully, in the next three to four weeks. We could do maybe an update to the video.
Jeremy: What is it gonna be?
Eytan: We haven’t announced it yet.
Jeremy: Oh, you haven’t? Okay.
Eytan: Maybe we could do a follow-up announcement. Yeah.
I mean, we’re beta testing.
Jeremy: Yeah. When will it come out? I wont’ hold you to it.
Eytan: I would say in three or four weeks.
Jeremy: Okay. Yeah. I just wanted to know, because I’ll put it on the actual lower third for you and have the correct one. So maybe we won’t release it until four weeks after you release it.
But, yeah. So how do you..? I guess you’re releasing the new site. So talk about the checkout. Early on you mentioned the checkout process. What do you do to optimize the checkout process?
Eytan: It has to be very easy. It could become a little crowded as well. So if you go to a popular site, I mean, Amazon is the king of it. But if you go to a NewEgg, for example, it would give you 40 options, which is good ad [inaudible 00:23:45]
So it used to just be, like, you could check out with a credit card, you could pay with PayPal, and then there’s Google Checkout.
Now there’s Visa pay, Amex pay, Discover pay and Chase and MasterCard pay, where they actually verify, which is good for protection, and that’s a whole other discussion.
But the key to checkout is guaranteeing someone that they are safe, that this is a real site, that we’re gonna deliver…
Eytan: …You have the return policy there, you have all of your trust symbols. You try to do the appropriate up-sells or cross sells in the card, and leave no questions unanswered so they don’t have to browse out of it. You really want someone to buy. Most people abandon the cart 97%.
Eytan: So there’s following up with the people who abandoned via email. There’s optimizing the checkout page where there’s very little data entry, whether you use your Facebook profile or your Google, or your PayPal, and just buy it. Obviously, if you want to make a profile and sign up, that’s great.
But people don’t like doing that. So always offer guest checkout. I don’t like when people don’t do that, because it’s kind of annoying and people avoid it.
Jeremy: Make it easier. Don’t put up another barrier for someone.
Eytan: Right. Make it easy. I mean, you still want the customer. You want them to sign up for the newsletter and constantly be able to reach out to them in an ethical way, via [inaudible 00:24:58] marketing and sending them new deals. “Hey, you bought this. Maybe you’d like that.”
But the checkout has to be very, very simple. Now that things are mobile, it’s more difficult.
The screens are smaller. It’s a little more clumsy. People are a little more worried about the security.
I was at a mobile summit. It was a research summit / trade show in California.
Jeremy: You were speaking at ThinkGlobal too, right? You spoke at ThinkGlobal?
Eytan: Yeah. That’s something else. That’s international commerce.
Eytan: I didn’t speak at this other event. It was just a mobile commerce thing, so it was like 70 delegates. I was one of them. Like, internet retailer 500 or Fortune 500 retailers, and the whole thing was mobile. Like StubHub and PayPal, and Adidas. Very big companies. All companies that [inaudible 00:25:59] were not as large. I was honored to be there. I had interesting, I guess, insight on my own right.
But that’s what these companies are struggling with, keeping the mobile customer, tracking them across devices, which is what I spoke about before. So how do you get them to check out on a mobile device?
Jeremy: So what did people say?
Eytan: It’s all very new, and it’s very exciting. But things like Apple pay, where, if it’s integrated into your mobile app, you can just press your button. You can just swipe your finger, [inaudible 00:36:31] pay or Samsung pay, or Google Checkout. Those are the ways that should convert the best, although it doesn’t always, and there’s a lot of different integrations.
Apple pay works with this vendor on this site, in this browser. It’s not so straightforward, because you have the app, and someone doesn’t want to download the app.
But being able to login to your profile with your saved information on a popular site that you trust, and just checkout. There was even a company there that was advertising, where you just enter your email and they ship your order.
Then, later on, they send you an invoice.
You pay. If you don’t, they charge you interest. They make more money on interest. Like, a pay me later thing.
But the point is…
Eytan: …The reason why they are able to do that is because they are almost the bank in themselves, and they have the tools.
Jeremy: They could finance it.
Eytan: They could finance it and they could prevent fraud. So they can, in a millisecond, calculate the chances that this fraud or not based on your IP and your email address.
Eytan: With this data they have.
It’s usually not forward, and even if it is…
Jeremy: That’s really interesting.
Eytan: …The fees are hedged by all the profit they make from, let’s say, the interest. If you want to take a loan on it, you can.
But the reason is, a lot of times you’ll do research on your phone. I do this sometimes. Like, on the bus I want to buy a wallet, or example. I needed a new wallet. So I was looking on my phone this morning, or wallet on Amazon and on some sites, or Nordstrom, or whatever.
But to actually go buy it on my phone, it seems like my wife likes to do that. I don’t really like to do that so much.
Then I’ll go to the computer and really buy it. So that’s the idea. Finding it on the phone, edit the cart and then go into your online profile there and have it be in your cart.
So this company is, like, “No, don’t even do that. Just send it to your email and complete the transaction.
Jeremy: Really interesting.
Eytan: So it triggers you.
That, I think on the mobile level, we’re getting a little deep here. That’s the right way to… Even less, less friction than a computer. There’s very little real estate. People are all over their phone getting texts and this, and WhatsApp. If you really want to sell them, it has to be as simple as possible, and we’re working on that as well on our new rollout.
Jeremy: Yeah. No, thanks for sharing that.
You said you had some unique insights at that conference. What were your insights?
Eytan: As far as..?
Jeremy: The mobile.
Eytan: As far as what I learned?
Jeremy: No. I don’t know. You said you brought some unique, or maybe you gained, some unique insights from..?
Eytan: No, just how big mobile is. Numbers. I mean, eBay as a company is not doing as great as they were. But 63%, I think, of their seals are mobile.
Eytan: Some of the companies displaying, they were showing how big mobile is, yet how undeveloped it is. The top 20 or 30 internet retailers, only within the last year or two, developed mobile friendly responsive sites. You just have these clumsy sites where you would have to zoom in and buy it. It was almost impossible. Now it’s dominating and it’s quick, and it’s impulsive. It’s great.
The great is, it’s very fragmented, like all these new technologies.
Who will win the war of mobile payments, blah, blah, blah, and how does that effect your conversion?
I was very intrigued, I guess, with [inaudible 00:29:53] about how important that is.
Now, you have to have built up a site and a base and have a good product to sell to even play in the mobile space, but once you do have that, how do you capitalize on those customers?
Jeremy: Yeah. So what do you go home and do with the business after hearing all that?
Eytan: That’s a good question. So it’s actually a good time for me. Since we’re redoing our site, I have the luxury of building in that as well. So let’s say my Magento developer would build the responsive design as well. Instead of doing it twice, a lot of times people build the site [inaudible 00:30:31] the mobile version of the site, or they host the mobile version, or they send the traffic to a server, which does the checkout.
There’s really 15 different ways, they were saying, and some ways are clearly not the way to do it. But it’s a question [inaudible 00:30:43] the top four or five, what to do it… So we have a responsive site, and we will have a mobile app. But you don’t also want to cannibalize yourself. Sometimes you have a mobile app and a site, and you can’t always know what’s going on.
Eytan: One of the interesting topics was, how do you track a user across platforms? These big companies like StubHub want to know every user. So let’s say you go onto StubHub, right, to buy Clubs tickets on your computer, but you don’t check out. Then you go onto your iPad, or whatever, how do they know you’re the same user?
So obviously, if you login, they could track you and give you suggestions. But if you don’t login and everyone is using six devices a day, and your wife and kid, they have no idea who you are. So there’s a lot of technology now with beacons and location and IP matching to say, “Hey, this is the same user based on these actions.”
If you can master that, which is quite mathematical, you can really convert a lot better. It’s almost a little scary, that whole Facebook obsession of, how much data do these retailers and these cookies and these retailers have about you?
Jeremy: Yeah. So were there some leading companies that do that, that cross platform tracking?
Eytan: Actually, the gentleman from StubHub was talking about that. He was saying, like, “We track all of our users if they login. But if they don’t login, how do I know that this is this same person? Even if it’s the same IP address, it could be someone on the same router.”
So there are ways… [inaudible 00:32:13] one company at a different show, at [inaudible 00:32:17], they use some kind of advanced algorithms to track behavior and track location. I forgot the name of the company, but that’s the next…
Jeremy: Yeah. I feel like I talked to someone, who, that’s exactly what their company does. Now I can’t remember what the company is called.
Eytan: …Yeah. It’s quite obscure, but there’s ways to do it. It’s definitely not a perfect science.
But a couple ways… I spoke to the gentleman about it, and they are working on it.
But there’s so many different platforms and devices that, like, as you said, how do you convert? But how do you know where the person is coming from? There’s so many sources. It becomes an enormous task.
You could have been looking at your… For the wallet on your mobile, but then you go to your desktop, and they don’t know it’s the same person.
Eytan: Yeah. I think his example was, you go on your mobile in the morning, you’re checking out work on your desktop, and then you go home while you’re watching a show on your iPad, look at it again. Then you buy it on your computer at home, but you don’t get it delivered. You do in store pickup, which is another interface.
Jeremy: Basically, the most complicated scenario you could…
Eytan: But it was, like, touching 10 different devices and 15 servers, and it’s amazing how these big companies are able to aggregate that data and actually take action on it. It’s quite amazing.
I don’t think people realize… I know people don’t realize a lot of that.
Jeremy: What would you have done, Eytan, if you came… You weren’t redeveloping the whole site, but you knew mobile is this important. If 63% of people on eBay are purchasing out mobile, what do you go back and do if you’re not redoing the whole site?
Eytan: So there’s two thoughts on that. responsive is more, like… There’s responsive and adaptive. So responsive has become the more common way to go. Adaptive is, like, if I pull up your site on my phone, it will just shrink a little.
Jeremy: It squeezes it [inaudible 00:34:21]
Eytan: It will squeeze a little based on the rendering of my thing, of the pixels in my frame.
That’s the old school way of doing it, but some big sellers still have that. Responsive is almost, like, dynamic. So it knows. It’ll render it iPhone friendly.
There’s even device specific. So there’s some companies where you have the checkout run through them. So they go to my site. They can read the user ID. They know he’s on a Samsung Galaxy S3 in Madagascar. So the site won’t load.
Given the most minimalist approach just to do checkout. But if you’re in South Korea on two gigabit Ethernet, they will flood you with 4K video. So that’s really…
Jeremy: Very sophisticated.
Eytan: So those are the things that you could implement, knowing the trend.
Although, yeah. Interesting.
Jeremy: It’s really interesting.
Eytan: The trend is growing. I mean, obviously a lot of people are buying on a computer. But since people are using their phones so much, they are using it for everything. Yeah. Some of the numbers blew my mind.
Jeremy: So software-wise, what kind of things do you use to run the business? You mentioned Magento. Like, what kind of shopping cart..? Do you use a certain [inaudible 00:45:41] is this in house, custom? What things do you use for re-targeting?
Eytan: So the website is mostly the traditional type of tools, like re-marketing tools, email marketing, cart abandonment software, analytics, AB testing, conversation. A lot of these things are becoming very commoditized. There’s the [inaudible 00:36:07] that will do it all, or Google [inaudible 00:36:08] that does it. A lot of the shopping [sp] feats, offers, where you can load your products into Google, get the feature there, and it’s a whole big trend now.
Jeremy: Yeah. So what do you use for those things?
Eytan: A lot of it is just third party software. So a balance [inaudible 00:36:25] or something like that for email, or… We’ve outsourced some paid search. Sometimes we use some software that combines different paid search engines to manage in one.
The SEO and all of the content we do here.
The video and some of the technology. We have some strategic partners. But a lot of what we do is unique. We try to be a little different in that regard. I don’t want to use the typical off the shelf email program that everyone else is using. I want to do it differently, and try to get a better result.
Some people don’t like that, because it’s a lot more cost and risk. But it has worked so far for us.
Jeremy: What about shopping cart? What do you use?
Eytan: We use a Magento cart. There’s good and [crosstalk]
Jeremy: Yeah. What do you like in that?
Eytan: It’s very feature rich. It’s a very heavy program. So a lot of times when you’re doing coding, or if things go wrong the whole site can crash. There’s a lot of files to be involved. Some of these new Shopify, big commerce are easier to roll out, but they are not as feature rich.
So there’s plusses and minuses. A lot of the software that we use, also, is for a lot of the channels and other sales places. Overselling on Amazon, overselling on NewEgg or whatnot, different repricing strategies. You can automate how you price products base don demand, based on sell price. We have ways of indexing different sites and seeing what’s popular to identify products… There’s so much data out there. Scrape is not the best word to say… Parsed, or identify.
Jeremy: It sounds less black hat, right.
Eytan: Yeah. You could do research on products and know what to sell just based on the lack of the offering, or the lack of competition. So we have a whole buying team that identifies products with different web tools that we build based on product reviews on popular sites, based on, can we support the margin or the price? Where will we offer it?
That’s on the product scouting side, and then as far as internally, logistics, we have a whole system. Like, from when we bring a product in to when it ships, aging, reporting, all this stuff. We’re trying to do it quite unique.
Jeremy: Automated. Yeah.
Eytan: Automated and unique, where there’s different buyers in the company that are responsible for different lines, and things like that, and everything is transparent and open.
Jeremy: So repricing-wise, do you sue something internal, or do you use something external? Or, if you use something internal, what tool should people be looking at?
Eytan: Right now we’re transitioning. We’ve used Appeagle, which is a general Amazon pricer. There’s a company called fee advisor that we’ve used. They do it in different ways. There’s a lot of them. It’s almost become very popular, and each has its own value. But we have a very unique way of pricing products and selling products. So my partner, Jonathan Goldman, he’s quite adept at knowing how to price a product, and what to buy, and when and how to sell it. So we’re rewriting our own repricing rules…
Jeremy: I see.
Eytan: …Building an engine around that, and that’s a lot of the proprietary data. How to price, where to list. Maybe it’s cheaper on Best Buy, so we should list our price on our site at X.
So there’s definitely tools that do it, but there’s so many variables to teach–
Jeremy: Right. There’s a million different variables.
Eytan: Yeah. We try to automate as much as we can, but a lot of it is really up to the head buyers, or the salespeople.
Jeremy: Yeah. It could be time of year will effect it, or besides anything else.
Eytan: There’s [sp] themality. There’s the Black Friday effect, and they have this Amazon Prime day effect, which is this new fad. There’s products that go end of life. There are things that get recalled. You can’t perfectly define it, but whatever we can, we try to implement without making it too complex for someone to understand.
Jeremy: Yeah. I’m wondering, because I know that some people don’t use repricing tools. So I’m wondering, what’s the advantage and disadvantages? What are people’s reasons for using or not using these repricing tools?
Eytan: Yeah. We used to not use repricing as much, because we didn’t really trust it.
Eytan: Sometimes you were losing money and you weren’t really being able to capitalize. They are much more advanced now.
That being said, with all of these variables and changes to APIs and channels, they don’t always work like they should. But if you have thousands of SKUs to manually do it, you may be making a couple more dollars…
Jeremy: It’s hard.
Eytan: …But, long term, it doesn’t make any sense efficiency-wise. So it’s all about speed and efficiency for us.
There are some things you have to do manual. But if you can program those rules to the best of your ability, maybe it will be perfect.
But it will be pretty good. You could focus your time on other things, and don’t have to be so worried about every single penny of a reprice, what another vendor is selling at, but adding value with customer service or the other tools I spoke about… Improving checkout and things like that, which actually proved to be more lucrative than making another 2% on one random SKU.
Eytan, what is your proudest automation that was so manual that you were just so proud you actually… Whatever it set up, rules, and things that you can automate this process that was taking your company forever manually?
Eytan: That’s a toughie. We’re doing a lot of it now.
Jeremy: Yeah. Maybe name a few. I’m just curious. I know you seem to be…
Eytan: A lot of our browsing. So we used to run this warehouse with a lot of overhead and employees, and HR.
We have a lot of custom ways that we ship, whether we are shipping to Amazon, Amazon Fulfillment, shipping to Europe, shipping to retailers, shipping to Walmarts or Amazons of the world, or small business or government, and it was very unique. I didn’t really think the warehouse would be able to handle it. But I spoke to a buddy of mine and he’s, like, “Why are you doing warehouse? That’s not your business. Let someone who knows how to do it, do it.”
So for all the E-Commerce stuff, like the tools, that is our business. But for logistics, why do I have to be a diagnostics person? So not only did I save probably half of a bill a month, probably 50% of my warehouse fees…
Eytan: …I didn’t have to deal with all of the drama of the warehouse, and the potential accidents, the workers comp and issues, late shipments, etcetera. I can hold the third party warehouse accountable. I was able to trade them within our own, let’s say, special sauce [crosstalk]
Jeremy: Systems, yeah.
Eytan: That freed up all the time of managing them, and we could focus on sales.
That’s kind of what we try and do on all fronts, so that people don’t have to spend so much time. A really good buyer or procurement person wants to just find products all day. Not worry about how to deal with returns, how to restock the right amount.
So we have a lot of data people, even data analyst on board that just focus on that with different software. Almost like engineers.
Jeremy: You’re talking about identifying products to buy?
Eytan: Identifying, and then, when you have them, how much should you reorder? When should you reorder? What price should you pay? What type of shipping should you use? All these things take so much time, and we automate a lot of that flow so that, once the product is brought on, it could continue and do as well as it can, based on all the rules that are built into the system.
Eytan: That’s very powerful.
Jeremy: Yeah, because you don’t want to have tons of product and inventory just sitting there.
Eytan: That’s the first thing, and the second thing is, you don’t want someone who is a sales person dealing with logistics and returns and forecasting. Let them just do sales, right? That’s what you’re good at, is do that.
So that’s the thing we learned. Maybe we did it the hard way. Find the skill of a person within the organization, and have them focus on what they are good at, and the things that they may not be good at, or they are okay at, but it just shouldn’t be their core. Give it to someone who can do it much better, or have the software help them with it.
So a lot of our purchasing department was spending so much time worrying about how to buy more and when to buy more. That really shouldn’t be their concern.
It just took us awhile to figure out the puzzle.
Jeremy: So how did you take it off their plate?
Eytan: Slowly building bubbles, and trying and failing and ordering too much, or too little, and realizing why, and understanding the return rate. There are so many variables.
Jeremy: So many moving parts here.
Eytan: Yeah. Cost, shipping, international, VAT. It’s very, very multilayered.
And it’s always improving, but yeah. There’s definitely a lot of moving parts, and a lot of the off the shelf offers… It does something, but not everything. That’s why people tend to want to do custom things.
The problem is, when you do custom software, you’re addicted to it. You just [inaudible 00:45:44] a patch and a patch and a patch. Same thing with Magento. There’s a big community, so if you have a problem, you can ask the community. If you go with a custom solution when your programmer is not around…
Jeremy: If something goes down, you’re up a creek.
Eytan: It’s a big problem, and I’d rather have a community.
So what we do is a hybrid. We have a community open sourced software, but we also have some customizations to it that are documented, so we know what’s going on and we understand how to build it and how to enhance upon it.
Jeremy: Eytan, that’s another thing that I’ve heard a lot of people talk about, is identifying products. They want to keep expanding the product line. What are some things you look for in what to sell next?
Eytan: Good question.
There’s different sites to look at. I mean, Amazon is great just as a data source. Whether you’re selling there or not, you can see what’s popular. So you can see, X product is popular, or is Amazon carrying it? If not, you can carry it on your website and list it on Google, or list it on eBay, or list it on Amazon.
Or, what we’re trying to do and what a lot of companies do, is I’ll just make my own product like that, and that’s a whole different conversation. I know you had that. You had a discussion with, was it Tech Armor?
Eytan: I mean, he’s making his own…
Jeremy: Your brand versus selling other brands.
Eytan: …Yeah. Brand [inaudible 00:41:05]. They do a great job.
They do an amazing job, and we’re getting into that level of advancement. So we sell other people’s stuff.
That’s great. You can sell a lot of other people’s stuff and you can make money. That’s what most retailers do. But the next level is, what if you private labeled something, right? So I sell a router, but I call it the Eytan router, and then the next level is [inaudible 00:47:32] my own Eytan router, or it’s my own chip set or my own patents, or my own IP. So I create a lot of value in my company. I’m not just reselling and turning revenue. I have my own patent and sell my own products and my own ideas, and my own licenses.
So we’re slowly getting into that. Proprietary bundles, diversifying products, up sells to it, adding in accessories, all these little tricks that we learned along the way.
A lot failed, but we’re trying to implement. There’s just not enough time in the day.
Jeremy: Right. What makes you decide to… This is just too much of a hassle. Let’s just sell the brand, versus private labeling it, or creating your own product?
Eytan: That’s a good question. A lot of the private label stuff that does well on these sites is cheap items. Like, a power bank, or the cell protector cases. To make your own… The things that we like to sell, like routers or range extenders, or switches. That’s pretty expensive stuff.
To make your own mold, or to make your own hardware, is costly, and a lot of times you find a factory and they don’t really do such a good job, or they sell it to someone else and he just labels it, and there’s a trust factor.
So it’s very hard to decide which product to go about making. We’re trying to do it on a higher level, where not everyone is doing it, and it’s because it’s difficult. But that’s what gives us the one up.
You understand that we’ve tested similar products. We have a lot of vendors. We go to shows all over the world. They have a great product, but they want to sell in the U.S. .
So I could just put my name on their product, but what if we had our own little twist to it, and it was mine? Then, from that, we’ll learn and create our own.
Eytan: So we’re working at that pretty hard. It’s just a very long process, and it’s really interesting.
Jeremy: Yeah. I ask because, Eytan, I’m sure you have tons of data with, through the years, of what sells well and what doesn’t sell well, and you probably have your finger on the pulse of, well, we could do really well with this because we’ve already sold thousands of this one thing.
Eytan: Right. Yeah. I mean, looking at rankings on Amazon, looking at rankings in Google, even at retail, you can see what sells, what’s hot. Everybody knows Fitbits are hot now, and Android watches. Although you try to stay away from that stuff, because it’s almost too competitive.
But the things that are niche markets that are popular, which are really hard to identify. I can’t tell you exactly how we do it. Some of it is proprietary. Some of it is just hard to understand, or explain in a conversation like this. But adding value to some existing products, or modifying products to create a need or to answer a need… So someone has a product. You make a modification to it. You make it just a little bit better than the other guy at a different price point. Something like that.
Jeremy: You mentioned some things that really work, too, which is… I don’t want to breeze over it, but not just your own brand. You mentioned bundles and things like that.
What else works as far as, I guess, seems to increase the dollar value of the customer, who is already coming for something else?
Eytan: Yeah. A lot of it is the cross sells, the up sells. So within the website, suggesting accessories, suggesting warranty, which usually helps the customer at the end of the day, especially if it’s an electronic product.
Suggesting something that maybe they want to upgrade to later on. We talk about bundles and kits. Gift cards. Things like that. Just little things here and there that differentiate you. If everyone is selling the same camera, and you throw it… Which is this classic camera space, everyone [inaudible 00:51:33] oh, I’ll give you a 30 gig ST card. I’ll give you a 40 gig ST card.
That’s how you get the customer.
Jeremy: The pissing match.
Eytan: Yeah. They really don’t make so much money on the camera, because the margins are tiny. But they make money on all of the accessories they sell with it. The margin is great, because they are manufacturing those products, and they always want to one-up the other guy by adding another accessory, or another value add.
Jeremy: Yeah. What’s another example of that, as a value add? Not with cameras, but another product that people do.
Eytan: So one specific one is… Like, how it started, tech support. So a lot of times people call up. Some of the products on our site are just [inaudible 00:52:15] items. We also sell very high end stuff.
They’ll come to us. We’ll explain, and when they buy it, we do installations often, or we’ll outsource [inaudible 00:52:26], or when we do government products, we’ll try to add value by free tech support, 60 day return policy, whatever you can do to make the customer a little more comfortable than the other guy.
Jeremy: For sure. Yeah.
Eytan: Every little thing, from conversion to site speed, to service, to warranty, goes a long way. We actually measure all of these things.
Jeremy: Yeah. I for sure buy things. If someone provides a personalized service or support, I would hands down choose that over anything else. Yeah.
Eytan: Right, and the problem with the channels in the Amazons is that, as I said before regarding data and content, people just buy it because all of the product descriptions are there. But a lot of times it’s wrong, or it’s incomplete.
So if you can’t speak to a person… If you call up Amazon and ask them about one of their two billion products, they are probably not gonna know the answer. The seller usually will know if they’re telling it, or a website owner really must know. Sometimes it’s a big deal. Sometimes you get government or enterprise customers that don’t really care how much something costs.
I mean, obviously they have a budget. They are gonna spend 20% more and trust they are getting what they need. It’s better than buying something cheap and getting in trouble by their boss, or having something fail and the internet be down for…
Jeremy: And their job’s in jeopardy. Yeah.
Eytan: …A week, yes. So that’s a big part of it.
Jeremy: Yeah. In my research, Eytan, I found this was a key differentiator, a huge differentiator, between your company and many other companies out there.
One of the questions I wrote down when I was doing the research was about tech support, and how do you compete when other people have the same router, or the same signal booster, and one of the things you put in was tech support.
How do you dial in that tech support?
What’s your process for actually training the tech support and making sure they are not just doing what they do, but also… Sometimes the techs are a person I’d see as maybe not a sales person.
Eytan: Yeah. That’s kind of the model we developed early on working with those repeater companies. We got trained. So I actually flew to Utah. I used to do it myself… And got certified in this product.
I flew to whatever, and I got certified in this WiMAX product, or this Booster product, or this Cisco product. I would train a lot of the tech guys when we started, and now they go to trainings and we get certifications. So not only do we know a lot about it, but when you do that, the vendor likes it, and they will send you leads.
So a lot of vendors will link to my website, or give you my phone number.
“Oh, I want to do an installation.”
“Oh, call Eytan from Quantum. They could really help you out with your signal booster needs, or your wireless failover solution.”
Jeremy: I see.
Eytan: So we’re experts. We’re certified. We do the training. We have the demo product we can show people, and they will link to our website because they know we’re certified. They don’t want to link to the website of someone who is just selling the product for a 2% margin. They want to link to someone who knows about the product, who can support and help it, and then they don’t have to worry about the sales, because they’re just the manufactures.
All these manufacturers that we represent don’t really know that much. I mean,t hey know. It depends on the size. But the medium to small ones that we find on these up and coming sites, they don’t really know that much about sales.
They made a really cool product. They raised money on Kickstarter. Now what?
How do you sell? How do you fulfill a product? How do you get it into retail? How do you market it, and how do you do tech support?
So we’re able to offer a lot of these things to them, and it’s a turnkey solution to get your products sold anywhere from the internet in the U.S. to the rest of the world, to the government, to retail. Like a one stop shop. That’s newer. Adding on all these different verticals really satisfies a lot of their needs, and they’re just happy making product. We have a lot of exclusive agreements with these.
We’re kind of a quasi distributor.
A real value added distributor. Usually you say a value added reseller.
So we don’t want the product… People selling it below a certain price, etcetera. We’re not distributing it in the classical sense, where we grab thousands of brands. But we have a specific type of brand that we look for that does very well. That’s part of that secret sauce I was trying to explain. There’s a lot of factors.
You know what? I’m glad you said that. That was not the answer I was expecting to get. Relationship is huge, and becoming an expert is huge. Then they trust you, and they know that you’re an expert, and so they want to refer people to you who are going to take care of them, because in the end it’s their product.
I was thinking you were gonna say something, like, “Well, we’re experts in the product.”
So the tech support people know, well, at this point in the time, maybe after two years, the router tends to diminish or something. So you, since you’re an expert in the product, there are certain things that person needs to support the product that would be an up-sell, or something like that. That’s what I thought you were gonna say. Yeah.
Eytan: I mean, that’s the case as well, meaning a lot of times people call up four years later.
“Hey, this doesn’t work.”
I’ll be, like, “Yeah. That software doesn’t work anymore. You need to buy this new thing,” or, “We could support it, but we recommend this product.”
That’s a way to keep the customer. But we’ll still help them with the legacy or old products as well. Sure.
Then, after we get the trainings, we have people in house, or sometimes overseas, that really… We make sure that we know whatever detail we need to know.
Jeremy: Yeah. We talked about boosting sales on the website. What about off, on the different platforms?
Are there nay things people should be doing on Amazon, insights into Amazon and eBay?
Eytan: Yeah. That’s a loaded topic.
Yeah. There’s a lot of things. Again, back to my point of product quality. So a lot of the listings were made by other sellers.
Or, sometimes Amazon, they are not really done well. Improving photos, improving content, improving description and keywords is so big. People don’t realize it.
Having five or six really good high res photos of a product… Now they even support video. Having the bullet points very clear. Obviously trying to get product reviews for your own product, or for the vendor’s product, is very important.
Now there’s this whole world of advertising within the channels. So Amazon has sponsored listings, where you can promote your product amongst another… Or when someone searches this router, you can show your router. It’s almost like Google Adwords on Amazon. They used to send traffic to other websites. Now they are doing it internal.
Eytan: The Neweggs and the [sp] Rackettans, and all those other guys have that as well.
So those are some things you really have to be on top of to stand out.
The classic stuff of good feedback, good customer support. A lot of these channels… As you know, eBay is very, very strict about shipping times and feedback, and Amazon is even more. People get thrown off the channel for silly things that are often not their fault.
You have to really have an insurance policy. You can’t rely… Which I was gonna say in the beginning, on one channel. Which is why you have to have a website. You have to be doing multiple things. Not to be fragmented, but to diversify and ensure your longevity, and be able to pivot as needed.
That’s what we’re working hard to do.
Jeremy: So what about… You talked about boosting sales. What about common mistakes you see other people making, or mistakes that you wish you would have avoided throughout?
Eytan: Yeah. When we stared, to get into some of the channel sales, we were doing a lot of almost deal opportunities. We were buying a lot of one product, like a palette or this, or 5000 of these. That whole Groupon daily deal model, which, as many out there know, didn’t really do so well for many of these companies. I think Google was gonna buy Groupon for six billion dollars, and they didn’t.
Actually, Groupon is doing decent now, though. One of the main drivers of profit for eBay and Groupon are their daily deals of product, not of the… You know, get a free helicopter ride, or whatever.
Jeremy: Not the services, but the product.
Eytan: Right, but all these little sites. I have a lot of friends who have sites like this, and they did it, like, they ran a deal every day. So every day they’re buying a palette from China, or they are getting returns selling it. It only lasts so long. So this whole fad of going after a product doesn’t really last.
It’s very hard to find any sustainable model for it. So we had a lot of purchasing people that were going after deals.
So I call them the one hit wonders. So you can have a lot of one hit wonders. But where’s the longevity?
Jeremy: It’s not sustainable.
Eytan: When you buy 10,000 routers, and it just doesn’t sell. You can go out of business at a $300, $400 matter. That’s millions of dollars. So you have to really be on, and you have to have a plan. If you can sell it, how are you gonna get rid of it? How are you gonna return it?
What’s the reverse logistic process?
People don’t understand returns. Most sealers on channels have palettes and palettes of returns that don’t understand reverse logistics spend a lot of time honing in on that, getting value, trying to resell, refurbish, send to vendor. I think not having any excess of inventory and always being as lean as possible… So once we realize, we can do these deals, but you have a couple of bad ones. I will still take up a deal and look into it if it makes sense, and I have a much better understanding of how much I could move. But for that to be your only model, a deal, it’s almost like you’re gambling every day.
A lot of companies lost a lot of money they were sitting on. I know of some, personally, $20, $30 million of that inventory.
Eytan: Because they just kept buying more and more because the sales went higher and higher.
Jeremy: Yeah. Why was it so appealing to them?
Eytan: They weren’t attuned to the numbers. There were these certain deal sites that people would go to every day and buy product. Then it just got old, just like most fads.
What these sites do now, which is actually interesting, is they don’t hold product. They are just an affiliate. So if you were Jeremy’s deals and you had a new deal every day, you realize it doesn’t make sense to hold all of the debt and the warehousing.
But you have ten million subscribes.
Eytan: So you team up with Amazon and other sites, and you just push deals. Every time something sells, you get affiliate [crosstalk]
Jeremy: The drop ship type of thing.
Eytan: No. You give them the sale, but you get a 6% affiliate, or if it’s apparel, a higher percent affiliate. So just because of your user base of six million customers…
Jeremy: You can partner with them.
Eytan: …You can make a ton of money, and you make more money doing that and less headache, than running a huge business that does hundreds of millions in revenue, and almost no profit.
So that’s something. We weren’t really so heavy into deals, but it was a lot of our business.
Now we build long lasting relationships with vendors, whether we have an exclusive, whether it’s a high end vendor, like a hard drive company that we just constantly sell… Whenever they come up with new products, we stock the new products. Whenever they have end of life deals, or closeouts, or refurbished opportunities, we can buy those as well.
But we don’t have to look for this one deal, or one guy calling me up.
“Hey, I have a great opportunity for you.”
Usually those are too good to be true.
Eytan: You can make money on them for sure. People are great at it. It’s just becoming harder and harder, and there’s no longevity. So my advice for people online is, looking for these quick hits, any business… I’m sure you’ve interviewed a lot of people. There’s no quick hits. There’s no easy wins. There’s a lot of failure involved because someone is on whatever list, or they look really special, doesn’t mean they don’t struggle and suffer, and go through a lot of stress.
Jeremy: Right. Yeah.
Eytan: That’s because it’s trial and error. It’s trial and error.
Even when you get better, you still need to hone in on what you’re doing, and try to perfect it. We still have so much we can do, we should we doing, that we haven’t even got to.
But I think it’s a much more sustainable model to build relationships with vendors, instead of just flipping deals and finding this one thing here and there. There’s this whole retail arbitrage sector, so to speak.
I know people that make a lot of money doing it. They will basically go to a store, a Best Buy or a Target. There’s a lot of articles about it. People will go to these Target flash sales and sell it online, and then Target starting restricting who could do that, because the vendor got upset.
Jeremy: Oh wow.
Eytan: And the only reason Target did the flash sale with a big company like… What was the one? [inaudible 01:05:44] there’s a couple of companies… Was because they wanted to bring people to the store. So they would break even on the flash sale, but they would get someone in the store.
As you know, and as my wife knows, once you go into Target, you always come out with $300 of stuff.
Eytan: You don’t know why, but you just have $300s of stuff. That’s just how it is, because they’re great.
Jeremy: I see.
Eytan: So their whole draw of the flash sale was a co-brand and get into the store.
So there were so many of these people buying the stuff to sell it online. It’s like when you buy the iPhone. You wait online , and you go to Australia. You go all over the world just to have different [inaudible 01:06:17] iPhone. Apple sells out, you sell it online for 700% profit. It’s a great deal, right?
But what happens when you buy a bad batch, or you lose one palette, and you’re working on such thin margins?
These are not sustainable businesses, in my opinion. These are quick hits.
So if you’re really could, you could last.
Jeremy: There’s just a lot of hustle, and it’s a lot of work.
Eytan: It’s a lot of hustle, and there’s always cash flow, and there’s always cash flow issues and trust issues.
Building your own brand is much harder to do, and having [inaudible 01:06:50] trust relationship takes a lot of time and effort and travel. But to do it the right way, in long, I think, is much…
Jeremy: Much more sustainable.
Eytan: …Much more sustainable, but it takes a lot of patience and time.
Jeremy: Yeah. So Eytan, speaking on that, daily deals is a big mistake you see people making. What else do people do that you’re just shaking your head, that [inaudible 01:07:13]
Eytan: There’s a lot of unethical practice. I mean, channels. People sell items refurbished. They clean it up and sell it as new. They try to cut corners. Sometimes you get a deal. You think it’s too good to be true. It is, because it was perhaps stolen, or this, or whatever it is, and you wind up losing your Amazon account, or your Better Business Bureau calls you up.
Better to investigate or pay a premium for inspection, and use the right warehouse in China and not… Penny wise pound foolish is the theme of what I’m trying to say.
So obviously I’d like to get things at a lower cost. But not things that break, and not things that aren’t trusted.
Eytan: A lot of people try to cut corners. It’s easier to do online, because you’re just this solo guy in your basement. You can do whatever you want. You’re not a storefront. You’re not Macy’s.
Jeremy: They think they don’t have exposure because they’re not a big storefront.
Eytan: Yeah, and people get into legal issues too because they start selling a product that they’re not authorized for. The vendors want you to sell at a [inaudible 01:08:18] price, a set price, and you violate it. People get sued for things like that.
There’s too much risk to put all of your eggs into that way of doing things.
Eytan: We do a lot of online sales, but we’re very into trusted integrity, and doing it the right way, even if it takes longer, and even if we will make less money in the immediate, long term, we will be profitable and successful, and be able to sleep at night.
I see that’s just an epidemic.
Jeremy: Yeah. I wouldn’t have thought of that either. Maybe I just think people are honest at heart.
But what about common practices in E-Commerce? Things that are common practices. You’ve been doing this a long time. What do you go against the grain on when people… Maybe there’s a common practice of everyone doing it one way, and you feel it should be done a different way. Is there anything like that..?
Eytan: As far as strategy?
Jeremy: Yeah. It could be strategy.
It could be how they sell, where they sell. I’m not sure. I just am curious of your insights there.
Eytan: This may surprise you, but I think a lot of it is not so much on the sales, but on the people.
So we really work hard to find talented individuals, unique individuals, with a certain savviness to them, whether they come totally raw out of college with no experience, and we kind of mold them, or someone who has a lot of experience, and we take from that experience from bigger companies, and mold it in the chemistry.
But my point is that the team that you have, I think, is the most…
Jeremy: The most valuable.
Eytan: …The most valuable. So your question was about strategy for..?
Jeremy: I’m just curious if there’s any common practices out there that you…
Eytan: So the common practices I see… Like, people hire salesman or buyers, and they pay them a set salary. There’s no incentivized commission. We try to make it very…
Eytan: …A great place to work, and entrepreneurial, where people can… They want to make a product, they want to switch positions, they want to try different things. We allow for that. A lot of the companies I see, or people who have left my company tell me, “Hey, when we were with you guys, it was such an awesome environment. We do team outings and we have a really cool office environment.” We buy everyone lunch, and all that stuff that you hear from Google and Zapoos. Obviously not to that extent, because we’re not a public company.
But just having that camaraderie in a team is something that a lot of these companies don’t have, and they do things… I don’t know.
Jeremy: A bit shortsighted, maybe.
Eytan: Yeah. Shortsighted. So you really want to value your employees and empower them to want to [inaudible 01:11:18] be happy. That’s a big part of it, because I’ve spent a lot of time that I wouldn’t even have foreseen… Most of my time, before we got a couple more HR people, was just dealing with personalities and drama in the workplace, as you know.
Jeremy: Tough, yeah.
Eytan: We just want people to come and do their jobs.
Jeremy: It’s hard enough running the business, let alone dealing with all the drama.
Eytan: Right. So I was spending four hours a day dealing with the warehouse, and this person’s personal drama, and this person etcetera, which is fine, and I’m happy to. But…
Jeremy: It takes the focus off.
Eytan: Right. So I think one of the secrets… We [inaudible 00:11:56] a certain culture that we look for a certain type of person. It doesn’t always work out, and we cultivate that environment. So when people come in, they feel a certain energy, and it’s very invigorating and, potentially, it’s the effort.
I think that’s one of the secrets to our success.
Jeremy: Yeah. That culture goes back to–
Eytan: I think the people… What do you call it? A personal… Not a personal [inaudible 00:12:22]
What do you call it? The human commodity? There’s a term for it. Human capital, maybe?
Jeremy: Human capital. Yeah.
Eytan: As one of my friends likes to always say, Google bought a couple of companies just for the talent. Not the product. They shut the product down, but the talent was there. So you have a good person who you could delegate to. You could really scale. You can’t do everything on your own.
Jeremy: I mean, the culture comes down to, also, Eytan, who you bring in.
It seems like you’re looking, and you see specific things or traits. What do you look for? What are you looking for in someone?
Or what are some things that you’ve seen in people that you’ve brought in, that maybe other people wouldn’t have seen, or other companies?
Eytan: That’s a good question. It really depends on the position. Obviously a programmer is very different than a buyer, is very different than a warehouse [inaudible 00:13:24]
Jeremy: Tell me one of your favorite hires. What’s been one of your favorite hires?
Eytan: Am I dropping names?
Jeremy: No. Position-wise. Just position-wise.
Eytan: As far as, they were successful, or just [crosstalk]
Jeremy: Yeah. That maybe someone wouldn’t have hired someone right out of school for this particular position, but you saw X, Y, Z trait in this person, and that’s why you brought him in.
Eytan: It’s interesting. There was a fellow who actually wanted to go to medical school. He was transitioning in his life. Brilliant buy. Good friend of mine, still.
It was a short stint, so I don’t know if it’s the best example. The guy came in. He knew about Amazon. He knew about online. He knew about E-Commerce. Just a brilliant guy.
He had a degree in physics, and all this stuff. I think in three months he brought in over 140 different lines.
Eytan: So he basically identified lines, reached out, sold them the opportunity, and achieved sales for those lines. It was unbelievable.
Not all of them worked out, but that’s an extreme rapid apace.
Initially he wasn’t sure what he necessarily wanted to do with his life, and I was, like, “Why would I hire this guy? Is he going to medical school? Is he going to leave?”
He wound up moving on, because it was just an experience for him, although we are still really close and he helps us out. But that was something where I was, like, “I have a gut feeling that he’s gonna be unbelievable.”
Jeremy: Yeah. Why?
Eytan: He was 100 times better than I ever thought.
Jeremy: What was that?
Eytan: The personality, the approach, the understanding of the world. Really a brilliant person, and the way he was able to get on with the vendor, really no… Wasn’t nervous. Just went straight to the point, and this was while he was in school, mind you. He wasn’t even working full time. I’ve never seen anything like it. So that’s an anomaly.
Jeremy: Yeah. I ask that because…
Eytan: But it was something that, like, there are people like that.
Jeremy: …Right. I’m asking because you have a gut feeling about that person. I’m wondering, in hindsight, what did that person have that you should be looking at for the next person?
Eytan: Yeah. That person was quite exceptional. There’s a Hebrew word called [inaudible 00:15:43], which means intelligence, but it’s a higher level of intelligence. So I try to look for that. It’s hard to explain.
Jeremy: Yeah. Do you have anything baked into the hiring process?
Jeremy: What do you do to try and..?
I mean, obviously it’s hard to measure that exactly, but to weed that out?
Eytan: Yeah. So we got better at it, meaning… It was random. Now we like to ask different interviewees the same questions for the same position. Have, like, one, two, and then a final interview.
Gut is important, although I learned through business coach type people and whatever that it’s really not always what to go with. A lot of times you really want to ask people situational things. Like, what would you do in this situation?
You don’t want to ask someone, “Hey, what do you really want to do?”
They’re, like, “Oh, I really want to work for Quantum.”
They will tell you what you want to hear. Mixing it up a little, asking them what they like to do for fun, letting them speak a lot, trying to listen as much as possible, and sometimes we give them a test assignment to see how they would do. Sometimes I get back, like, really… Nothing, and sometimes people wow me with what they are able to produce, and it’s very clear that they are appropriate.
We just hired someone, and she did a whole presentation to the company, and I was blown away.
A lot of people don’t even follow up. A lot of times they say, “Please follow up with an email.”
A lot of people don’t even send references. A lot of people don’t even show up for interviewers, believe it or not.
Jeremy: I do believe it.
Eytan: No, not most. We got better at it. But a lot of people don’t. So you have to be there to… What is it? Half of it? What is that [inaudible 00:17:26]
Jeremy: Showing up.
Eytan: Yeah. So you gotta show up.
Jeremy: 90% is showing up, or whatever it is.
Eytan: [inaudible 00:17:30], but giving them strategic assignments. Other ways of assessing talent. I can’t write it down, necessarily. It’s just the kind of thing that we got better at, thanks to our HR department and [inaudible 00:17:45]
Jeremy: Yeah. Giving them tasks specific to what they should be doing, so you see their actual performance. Yeah. That’s a good one. That’s a great one.
Eytan: Right. If you were going to sell something online, what product would you pick, and why? How would you go about doing it? If you lost a product, how would you call the vendor?
Almost role playing a little in the interview has proven to be a little more transparent and indicative of their future success, or lack thereof.
Jeremy: Yeah. I want to go back.
You mentioned earlier about cash flow. How do you grow as a company when these products require a lot of capital?
Eytan: That’s a good question.
Yeah. So we didn’t start with any money. We didn’t have any funding.
We started buying some product, and we started buying more product. We invest the products into more profit. We started with credit cards. We had a high credit card lines. Actually was able to book credit card lines with the payment, had a credit history, and we built it up.
Then, as we built relationships with vendors and we always paid on time, they extended us credit. Then, slowly but surely, we built our credit and we were able to go to a bank for credit, let’s say.
Although we still are using similar methods. We have lines of credit for vendors. We have credit card lines. We have bank lines of credit, if needed. But a lot of it is organic. We haven’t had any, as I’ve said, external funding.
Jeremy: Really? That’s amazing.
Eytan: There’s no VC.
Jeremy: Holy cow.
Eytan: There’s no loan shark. It’s all organic.
Jeremy: That’s amazing.
Eytan: The question is, how much money to put back into the business? How much money to take as a salary?
I worked for a long time… As my parents, we didn’t make any money. We were just building the business.
Jeremy: You just pour back into the business.
Eytan: Yeah. We pour it back, and then slowly… We’re still a small business. We do a lot of sales. Cash was always an issue with companies like this, especially on these big deals. We’re getting a little more advanced at it, and more mature. So it’s definitely complicated.
I think that’s another secret to our success, that we were able to manage these different ways of funding, and reinvesting, and keeping the overhead low, and technology high.
That was pretty important to our growth.
Jeremy: Eytan, that is amazing. That is truly amazing. So how do you keep everyone so disciplined?
You could say for you, let’s say, “Yeah, I’m just gonna take a little salary, blah, blah, blah.” But now you have three people, three founders, that have to get on the same page, that have to be that disciplined. What do you do from the beginning as all co-founders?
Eytan: Ari is older than me. He was about 32 or 33 when we started. I was 23, and John was about 15.
Jeremy: He wasn’t 15, was he?
Eytan: No, he was.
Jeremy: He was really 15?
Eytan: Yeah. You should interview him.
Jeremy: Wow. That’s amazing.
Eytan: Yeah. He was 15 and he was in high school, and he was an intern.
Jeremy: Holy cow.
Eytan: He started working on all the vacations. Then he went to college at night and worked, and now he’s the president of the company. So I don’t know how much expanses he had then, but he has tremendous work ethic. He’s great.
Jeremy: You’re right. No many expenses at 15. Yeah.
Eytan: But regardless, he just wanted something long term and new that he had the ability to focus on this now, and build something for himself. I had a family and other expenses, but we figured it out. It’s not always easy. It’s usually not easy.
Even when you, as you know… Even if you’re a bigger or more successful company, there’s always things that happen. There’s [inaudible 01:21:56] there’s potential issues, there’s legal. So it’s always a struggle.
Jeremy: There’s always something, yeah.
Eytan: But it’s always a rollercoaster. But, yeah. We don’t really have any major funding. It’s all organic growth, and I think sometimes it holds us back, honestly. I think if we want to take it to the real next level, really exponentially grow, you need some kind of fusion. I have considered it. But I think, for now, we’re on a good trajectory. So we’ll see how it plays out.
Jeremy: What’s your biggest lesson or advice to someone who is at where you are, like, three years ago, as far as managing capital? It seems like you guys did a really good job doing that, considering your bootstrap this company.
Eytan: Yeah. Always watching costs, building good relationships with the credit cards, making sure you pay on time, keeping your own credit score good. Obviously I have to have some kind of backup funding. I mean, thank God we didn’t really have to rely on that. But sometimes you need to. Your deal goes bad.
Despite what I’m saying, we definitely had bumps in the road, like everyone. Sometimes those could really hurt you, at this scale.
But, yeah. Make sure your credit is great. Moderate your credit score. A lot of times your credit score will dip and credit cards will cut you down without you even knowing. Dun & Bradstreet is important. Building a good Dun & Bradstreet profile for your business. Listing all your vendors and having them verify your prompt payment. So you build almost like a community.
Most of the distributors in our industry know each other, so they ask about us. So just good name. Always paying on time, no matter what.
If, for some reason, you can’t pay, or there’s a cash flow problem, being very transparent. Oh, we had an issue, this and that, funds. Obviously, the truth. Just being open and honest. No games. Just straight to the point, and building relationships with different accounts payable people, and just growing slowly.
So we’ve got credit lines with some vendors just by paying on time and building our accounts.
Jeremy: Trust, yeah.
Eytan: And exceed any bank [inaudible 01:24:16] companies would get. Obviously, they have insurance on it. There’s some risk on their part. But if you can get credit lines with hundreds of vendors and you add that together, that’s a lot of money.
Eytan: The tricky part is to sell the product within 30 days, when your payment is due. You have to stock the right product, and that goes back to my discussion about how much to order.
Jeremy: Right. What was the biggest gamble? You kind of knew this was gonna sell, a certain product, and you just bought a ton of it, and you knew you’d have to sell it in that 30 days to pay it back.
Eytan: Good question.
I don’t do a lot of the purchasing. Actually, I don’t really do the purchasing. Jonathan does the purchasing.
I do a lot of the other stuff. I’m involved in the process and the software and the system. I used to be more involved in finding the vendors and building the channel relationships, but John Goldman does most of the purchasing. When he was probably… How old was he then? This was our old office. I think he was 18 or 19.
There was a company. Maybe I shouldn’t mention the name.
Jeremy: You don’t have to mention it.
Eytan: You could sell this… It was like a mobile router, where you could attach a wireless dongle so you can make a router off of cellular. There’ a great product. Very unique. Nothing really like that, and we did very well on the new product. So they had decided to offer us some of the refurbished product, which was usually something I shy away from, as I explained before, [inaudible 01:25:53]
Jeremy: Right. Returns.
Eytan: In this case, it was certified refurbished by the manufacturer. We actually went to the manufacturer, saw how they did it. It was tested. He bought very large amount, because there was a minimum quantity for them to actually do it. If not, they were gonna maybe throw it in the garbage, or just scrap it for parts, or just sell it to some end user.
So we bought a significant amount. This is one risk that I fully trusted him with, and it was successful. We tried to build a name for it. So hen someone could buy the cheapest mobile broadband router you could buy… Was, like, $100, and this refurbished model was $50. So half the price. Your margin is not so great in the beginning. as it gains popularity on your website, on Amazon, in the channel, you could raise it.
So you do all of the process. Like the Tech Armor guy. You build the reviews. You build the rating. Then you can command the higher price point.
This is before we really knew exactly how to do stuff. We built this profile for this product to the point where we couldn’t get enough with it. Just such high demand at that price point, from carriers, from overseas.
Jeremy: That’s a great problem.
Eytan: It exploded, and we were making much higher margins because, again, we were buying it at a risk.
So that was a really great success.
Jeremy: Yeah. How do you ward off competition? Other people are probably looking at what you’re doing, if you’re a leader in the space.
Eytan: It’s very hard on some of these channels. People are doing the same things, or someone is sending a product to Amazon, or selling on their website, featured… You could do it too. So one of the ways… We have these deep relationships with vendors where we get special opportunities, special buys, special SKUs, special kits. One way is like I told you in general. We try to do things differently.
The support side…
Jeremy: More support, yeah.
Eytan: …The training side, the government side, the branding, the team. All of the things I mentioned are different. John likes to say, I think we look at other people and we do the opposite.
Not as if they don’t know what they are doing. But we want to differentiate.
Jeremy: You want to be different.
Eytan: Yeah. Sometimes it doesn’t always work, but usually it creates this unique niche for growth.
Eytan, I want to talk about… You’ve done some amazing stuff with partnerships, with Asia, Europe, South America. So let me ask about that, but first, what were some of the challenges early on compared to today?
Eytan: Like, when we were doing the 4G type site business?
Jeremy: Yeah. Three guys in a cubicle. What were the biggest challenges then?
Eytan: Yeah. It was two or three guys in a cubicle. I mean, I still have this problem, just delegating. I mean, now I have these people to delegate. Thank God. Really good people. Even though I like, I guess… I’m not such a good delegator. I like to do things on my own, mostly because I never really had people I could trust to do it.
But through the trial and error, I’ve learned to find those people, and that’s the only way you can scale. That’s important.
Jeremy: So early on, just doing too much..?
Eytan: So early on I was working very, very long hours.
Jeremy: Tell me, what’s the typical day during that time?
Eytan: I mean, it was funny. You saw the growth and you mentioned some of the numbers. But the first year or two we weren’t really producing any revenue. We were just tinkering. Should we do this, should we do that.
Jeremy: Figuring it out.
Eytan: [inaudible 01:29:33] we work at this network. I was learning the business, and we were calibrating. Then we found some models that worked and didn’t, and we slowly built off of it.
Since once we launched a website, did some ads, it was, like, “Hey, we have something here.”
I can’t tell you how many other things we tried that failed. How many websites I’ve built, or initiates I’ve tried, or people I’ve spoken to, or vendors I’ve spoken to, that just never ever worked. So working really hard to find something that sticks. You’ve gotta try a lot of things, and then, even when you do those things, you have to go back and say, “Hey, what’s the most efficient?”
So you don’t spread yourself too thin.
To me now, we’re in a place where there is so much opportunity, and I think for everyone there’s so much opportunity. It’s a question of focusing, and that’s one of my biggest challenges.
But thank God we’re in a position where it’s a good problem to have, let’s say. But there’s still so much stuff out there, and when you focus on one thing, sometimes other things give. So in that instance I was doing everything. I was doing finance, I was doing channels, I was doing development, I was doing partner relationships. My partners were doing the same thing. We were all doing all of that.
Slowly, we were trying to build an organization where all that’s in place. So, to go from that to what we have now… When I look back, it’s unbelievable.
Jeremy: What was a typical day that your wife would kill you if you still had today?
Eytan: Oh, you’re saying..?
Jeremy: Like, you’d wake up.
Eytan: If I was a doctor and I was on call, you wouldn’t mind. So why does it matter now? Seriously. You’re not making any money. [laughs]
I don’t know. I would work probably from 9:00 to 7:00, 8:00, 9:00. Then I would go home. Try to see my kids in the morning. If not, at night. Well, now I have three kids.
Eytan: So it’s even harder.
So I’m trying to make sure I see them at least once a day, and the weekends. But sometimes I have to go in early, or leave early. It depends.
But aside from that, ever since smartphones came out, I’m very into gadgets and stuff. I was constantly working. I wouldn’t say 24 hours, but…
Jeremy: You’re always [inaudible 01:31:46]
Eytan: …It’s not because I want it to be, or I was a workaholic, per se. I love to just chill out and go to a Mets game, like we were talking baseball before. But I was the only one who had the answers to some things, because we were only five or six people, and the credit cards were in my name, or this or that.
So I couldn’t go on a trip. I went to Asia for some stuff, and I was getting called every four minutes. Like, “Oh, what about this? What about that?”
Then we started documenting things and scaling things. So it’s very hard to exist in that state. I mean, I liked it. I enjoyed it. But you burn out, and I definitely burned out a few times. You reinvigorate yourself and try to change things.
Jeremy: Yeah. What do you do when you burn out?
Eytan: What do I do when I burn out?
Jeremy: Yeah. To get back.
Eytan: I think I haven’t really burned out.
Jeremy: I don’t mean permanently. Yeah. I just mean…
Eytan: I like to travel. I travel a lot. This year I actually did, and a few years ago I did. When my kids were younger, I paused. But I think three years ago I traveled, like, over 300,000 miles.
Eytan: I was in Asia, I was in Panama.
Jeremy: For business, though.
Eytan: Yeah. Business development, shows. A lot of it was learning, training, partnerships, meetings, setting up a European entity. It was a lot. Maybe too much.
Jeremy: That’s a lot. Yeah.
Eytan: I like it in the fact that you get away, clear your head. I also get more done out of the office than in the office, because when you’re in the office…
Jeremy: A lot of distractions.
Eytan: …You’re just distracted by a lot. But you still have to be there for the face time.
Jeremy: So what’s the biggest challenge today?
Eytan: Yeah. So sometimes I would take a vacation or two just to clear my head, turn my phone off, not deal with it. Sometimes it made me a little more anxious. It would just make me think about it too much.
But I’m working on my…
Jeremy: Detach a little bit.
Eytan: …Life balance, as [inaudible 01:33:55]
Jeremy: If that exists, right?
Jeremy: What’s the biggest challenge today?
Eytan: For me?
Eytan: Probably the work life balance. Dealing with a lot of different personalities and people. The constant rollercoaster of a business of, let’s say, of this size, that sometimes… Find a good talent. That thing, how important it is, is very hard. It took me a lot of people.
Those are some of the big challenges. There’s others for sure.
Jeremy: So I wan to talk about partnerships. It seems like you’ve done some amazing things, going to Asia, Europe, South America. Give me, I guess, an example of one of the ones you put together, how you even found that specific company to creating this international deal for your company.
Jeremy: Which was the hardest to get into, country-wise?
Eytan: There’s a couple of good examples.
Eytan: I mean, it’s not so unique, per se. But one of them is when I was doing those larger wireless deals. Like, six, seven figure deals with three year turnaround time and foreign governments. I had a deal in central America that’s still going on. It’s just, like, forever. Someone emailed me regarding products. We built a relationship. I went there, and just one thing led to the next. We provided [inaudible 01:35:43] situations for them.
That was more on the integration side. It’s still a saga. A lot of these countries move very, very slow with procurement and budget, and things like that.
Another one is an example of a product that we found online. It’s a video streaming type product from Japan. We checked with the vendor. We saw they were selling it online, but there was no real presence. It was selling very well in Japan, but not in the states. They didn’t really understand.
It’s one of the really interesting things we could do. Aside from finding vendors who don’t understand, finding foreign vendors who understand the U.S. landscape.
Eytan: In other countries, in Europe or Germany, or even Japan, product quality is very important. But the packaging or the design doesn’t matter. In the U.S., for whatever it’s worth, people are very into design and looks. Maybe a little too much.
Eytan: The product quality, they don’t necessarily care much about. So convincing a Japanese company that they have to make a box like this, that it has to be clear what it does… The instructions have to be straightforward to appeal to people. You have to get it into retail stores.
Jeremy: You’re giving them a lot of feedback.
Eytan: Yeah. You have to pay for placement in a store. They are not gonna put it on their shelf, things that they don’t know.
They’re, like, “What do you mean? In Japan we just post it on the blog and everyone buys it, because we’re so advanced.”
So we’re gonna take their company… They were doing no sales, and turn it into millions of sales in the U.S., was just that…
Eytan: …Tweaks and the culture, and the barrier. Now, it’s very difficult. Very different cultures. Very difficult.
But with that comes the opportunity.
Have some European products. This was a product from Japan. Some of the Chinese stuff that we’re trying to manufacture, same idea.
But it doesn’t come easy. There’s a lot of hard work.
Jeremy: That’s why I ask. I’m curious of what makes you decide to actually expand internally when it is so much hard work and long sales cycle.
Eytan: So some of these were just, I went to different shows in different places trying to find differentiation in the market. I didn’t want to be a me too [inaudible 01:37:56] product. What if I could bring a different product that’s in the states?
On the flip side, which I didn’t really mention before, a lot of the products that we carry, or have exclusives on for vendors, we sell that overseas. So we sell in Europe, and we have warehouses in the U.K. and in central Europe, and looking into South America and Australia and Japan, and Canada and Mexico, and all those things.
The reason is, and I think I wrote it some in my notes, that we were speaking about before… Is because you have to be different in that way. So we mentioned being different channels. We mentioned being different up sells, cross sells, customer service culture. Coming full circle here.
What if I’m the only one selling this in the U.K. ? What if I’m the only one selling this in Germany? What if I have a different spin on it? What if I could translate my listings, provide international shipping at a low cost? Provide landed VAT and duties with different softwares that people will buy? Mail forwarding addresses to people who would never want to buy from the U.S., but now they have a consolidator.
eBay did that with global shipping. You can sell to a customer. You ship it to Kentucky, and they forward it on. You don’t have to worry about any international.
I spent a lot of time figuring out all of the headaches of shipping internationally and selling internationally, whether you are setting up an entity, or you’re an importer. There’s different thresholds. Europe is very complicated.
The next big thing is China. Alibaba is seven, three, four times the size of Amazon, eBay and another combined, although it’s not the easiest country to… I’ve been there. It’s not the easiest country to deal with or be successful in. It’s very different, although there’s so many people, and they are all getting internet. Believe it or not, we could sell our product in China. A product that’s made in someone’s backyard in China, we could buy it, produce it, buy it from a distributor, ship from China to the U.S., and then ship it back to China and sell it to an end user on Alibaba or [inaudible 01:40:10] for less than they would buy it in the mall down their block.
Eytan: People are starting to capitalize on it, and that was that global show that I went to. It was all about that.
Eytan: ThinkGlobal, yeah.
Well, about that. South America, this E-Commerce craze, everyone with their mobile phones. But the reason I do… You asked me, why or how? That’s what differentiates you. If you spend three months understanding taxes and duties, and have different fines and issues and legal, and you’re the first to market, and you do all of the hard work, I won’t say you definitely succeed. But you have a better chance, and once everyone figures it out, you’re already three steps ahead.
Jeremy: Yeah. There’s a larger barrier to entry there. Yeah.
Eytan: I did a lot of research and planning for that, and now we’re revamping all of our systems to capitalize on all that we know, even though it changes every day.
[inaudible 01:41:02] capitalize on what we know to be successful and different.
Jeremy: Yeah. So we’ve talked a lot about a lot of things here. Just to wrap up, what are some of the milestones that you’re proud of that you’ve hit?
Eytan: Good question.
Well, I told you we were tinkering in the beginning. But once we figured out what we were doing, we grew over 100% for three years in a row. So we went from, let’s say, 300,000 to 3 million, to 6, to 12, to 24.
Jeremy: That’s amazing. Yeah.
We made the Ink 500 fastest growing companies for three years in a row. We also made the Internet Retailer top 500 the last two years, which was great. That GSA schedule, which we’re trying to build out, was another biggie. The government contract as a milestone.
I think, on the high level, just being able to really have nice software systems and integrations, and outsourcing are housing, and getting rid of a lot of the…
Eytan: …Random systems and putting in real processes and procedures for hiring, for protocol, for workflow, is something that we’re very proud of, and we’re gonna continue to improve upon, and is very important for continued growth.
What makes you decide? I’m always curious. People have such differing strategies, or ways to handle this. What makes a company decide to release numbers? Like, be very public with numbers. Like, go on the Ink list and release their numbers, as opposed to not.
Obviously that was a conscious decision that you made.
Eytan: Yeah. I mean, to be on that list you need to submit your financials. Obviously not everyone… It says you’re the number 50th fastest growing company. You’re number one in telecommunications, which, actually, we were. Obviously there may be a company that’s much bigger that just doesn’t want to be out there. Some people want to be out there and get the publicity, or the good that comes with it, and some people just are quiet about it strategically, for vendors or whatever.
It’s important to show growth and to show that you’re successful and growing. Obviously, there’s a lot of companies on that list that may not really be so profitable just because they’re growing. It’s not just about top line. It’s about bottom line, and that’s the kind of thing that we’re working to improve now.
Especially an E-Commerce. Just to touch on what you said before, most people don’t realize, if they are making money, how much they are making. All of these different fees and overheads and services. It’s not like a traditional business, where you can really understand that.
Jeremy: It’s not so straightforward all of the time, yah.
Eytan: There’s so many variables, especially with the channels, the fees they take and the fulfillment charges, and the taxes and the state taxes, and the chargebacks. It’s a good jungle.
So being able to be profitable with these longevity models, and not just quick sales, is a big milestone, I think. We continue to work at that.
I mean, I guess it gives confidence in the vendors and all the people who do business with you. That’s a big factor.
Eytan: Yeah. For sure. It’s important to divulge for that.
Obviously… I mean, if you’re a public company you have to show everyone your profit, loss and balance. You [inaudible 01:44:52] things that are private. Our sales number, maybe not. Most people understand that.
Amazon does billions of dollars, but they are not profitable, but they are still worth a lot of money. I mean, there’s so many variables in it. It’s not really straightforward. It’s a multifaceted question.
It definitely helped the buzz around us. I think, now that we’re leveled off, it’s not as needed, because we’re established, to a certain extent. But this and all this other publicity helps, because it’s just good to get the word out for sure.
Jeremy: Eytan, I have one last question. I really appreciate your time and expertise with this. I know you speak at conferences, and you’re gonna be doing a lot of speaking, too, and you go to a lot of conferences.
First, before I ask, where should people find you? Your website, or social media?
Eytan: Yeah. So our website is quantum-co.com. That’s our corporate website.
You could check out my LinkedIn. It’s LinkedIn.com. I think it’s slash my name, /eytanwiener.
E-Y-T-A-N, W-I-E-N-E-R. Feel free to connect, ask me any questions. You can send me an email as well. It’s just Eytan@quantum-co.com,and I’m happy to be in touch and help anyone in the E-Commerce world, or in the business world, if I can, with whatever I’ve learned. I’m still pretty young, and learning a lot every day.
I have a Twitter account now. That’s actually new.
@eytanwiener, E-Y-T-A-N, W-I-E-N-E-R. You could find me on Skype. You could find me on Facebook.
Jeremy: But you have three kids.
Eytan: You could find me on a lot of other things.
Jeremy: You have three kids and a company. You don’t want too many contacting you.
But last question, Eytan. What’s top of mind now? What do you see is gonna help the most growth in the future for the company?
Eytan: It’s hard to put a finger on it, but the government and this B to B play, where we diversify more from E-Commerce and have that be a big part of our revenue, I think, is gonna be huge. It’s a huge sector. It’s underdeveloped. There’s a lot of need for product. The technology within the procurement is kind of old. We’re trying to bring anew edge to it, so I want that to be a lot of our new business.
I think a lot of people could do what we’re doing, even though we do it a certain way. But this is more proprietary, in a way, and hopefully some of our private label and our own branded stuffy and licensed stuff, and things like that, I think, will lead to the growth. Then the idea is, hopefully, as we hone in on the model, helping vendors sell product… And sometimes you arrive at a situation where you can acquire such a vendor, or you can acquire [inaudible 01:48:10] E-Commerce [inaudible 01:48:12] that we do.
So instead of selling electronics, we’re selling, I don’t know, sports wear. But it’s the same model. Online is just a widget. Obviously, [inaudible 01:48:22] understand the market. But it’s probably easier, description-wise, to sell sweatpants than a firewall.
Eytan: Let’s say acquiring companies, using some of our proprietary technology and tools as a service… Amazon makes more money on their AWS hosting service than their retail business.
Jeremy: Right. I was reading about that.
Eytan: The only reason the have the hosting service is because they need it for the retail business. So through all of our development, we’ve created a lot of proprietary tools that would really benefit other sellers, from the logistics side to the ordering, shipping, to… I could list 50 things, if I had to.
Jeremy: Right. Yeah.
Eytan: That’s another thing that we’re looking into, without getting too spread thin.
Jeremy: Yeah. What have you learned most from your other co-founders?
Eytan: What have I learned most?
Jeremy: Yeah. I mean, obviously people have mentors that they learn a lot of lessons from, get advice from. You have co-founders. Whether it’s a co-founder or a mentor.
Eytan: Yeah. I mean, we’re all different personalities. I guess perseverance. Pushing forward no matter what type of attitude. Like, we’re gonna succeed, we’re gonna be different, we’re gonna not take shortcuts. The things I told you was a lot of molded by just being together, a lot of learning from what was wrong, or doing wrong.
Traveling, going out to meeting people… Skype is great. This is really cool, but I think meeting you in person, which hopefully I’ll do one day, is more important. Just shaking someone’s hand. You lose that personal touch.
I learned that from my partners as well.
Now that we’re more mature, setting up structures, procedures, policies, documenting things more like a corporate company, than just…
Jeremy: Winging it.
Eytan: …Some kids, which we were, and we’re growing up. So we’re focusing on that and learning that as well.
We’re able to hopefully adapt to such challenges.
But those are some of the things.
Jeremy: Yeah. Eytan, this has been fantastic. I really appreciate it, and thank you so much.
Eytan: Thank you for having me.
“So one of the things we’re doing now is video content. So since retail is going away, you want to bring that retail experience to the web. So we partnered with a company that does a lot of video based marketing. So every product that we have on our new website, there will be a video. But it’s not as though there will be a custom video from the vendor, but the beauty of a lot of the software and the process is that it will pull from existing content. So if I’m selling, let’s say, a NetGear or switch or router, I don’t have to really do a review on that, because there’s a lot of existing content. So I can pull from YouTube. I’ll pull from iTunes. We can serve up the best video, and aside from the video being on our product page, we’ll also have a dot TV. So if the site is jeremy.tv, you’ll have all your products, videos. Then people will click there and it will take them to the actual checkout page. The conversion is almost 60% to 70% higher. You’re getting relevant content, video content of what they want to buy, and explaining it to them. Almost like a customer service person explaining what this is to you.” (00:13:55)
“The reality is, people search YouTube a second after Google. YouTube is the biggest search engine. [inaudible 00:19:42] YouTube into a product video generator, research, that’s where people are going anyways. So why not just put that on your website? It’s easier said than done. The way we’re doing it with these advanced algorithms and testing, and cross selling items and different videos per channel, per category, is quite advanced, and it’s almost mixing a retail experience on the internet.” (00:19:35)
“So it’s hard to have one website create the messages. So a lot of these technologies that [inaudible 00:21:30], like responsive pages to the consumer, seem to win. So Amazon will tell you, “Oh, if you like this, you’re gonna like that. You’re in this zip code, you’re gonna want this deal. You recently viewed this, that.” Those kind of automated, algorithmic things seem to be much, much more efficient in converting than just AB testing and manual types of things that were more prevalent when I started. Now there’s technologies that know everything about the user when they log on your page. They track all these different things that most people don’t even realize. A little spooky. I’m not saying I’d do anything in the wrong way, but there’s so much data you can get about a person when they sign up with Google or Facebook, and this and that, and cater to them, that it’s almost an easier sell than when they are in the store.” (00:21:23)
“But the reason is, a lot of times you’ll do research on your phone. I do this sometimes. Like, on the bus I want to buy a wallet, or example. I needed a new wallet. So I was looking on my phone this morning, or wallet on Amazon and on some sites, or Nordstrom, or whatever. But to actually go buy it on my phone, it seems like my wife likes to do that. I don’t really like to do that so much. Then I’ll go to the computer and really buy it. So that’s the idea. Finding it on the phone, edit the cart and then go into your online profile there and have it be in your cart. So this company is, like, “No, don’t even do that. Just send it to your email and complete the transaction. So it triggers you. That, I think on the mobile level, we’re getting a little deep here. That’s the right way to… Even less, less friction than a computer. There’s very little real estate. People are all over their phone getting texts and this, and WhatsApp. If you really want to sell them, it has to be as simple as possible, and we’re working on that as well on our new rollout.” (00:27:48)
“It’s hard to put a finger on it, but the government and this B to B play, where we diversify more from E-Commerce and have that be a big part of our revenue, I think, is gonna be huge. It’s a huge sector. It’s underdeveloped. There’s a lot of need for product. The technology within the procurement is kind of old. We’re trying to bring anew edge to it, so I want that to be a lot of our new business.” (01:47:08)