I am Charles Schwartz Show - How I Retired My Wife

Starting point is 00:00:00 Welcome to the I Am Charles Schwartz Show. Today, we're diving deep into the world of e-commerce and entrepreneurship with Steve, a Stanford-educated electrical engineer who transformed a wedding day dilemma into a thriving online business. Steve's story is a masterclass in pivoting. He went from a traditional engineering career to building a six-figure e-commerce empire in just one year, all starting with handkerchiefs. Steve isn't your typical e-commerce guru. He's refreshingly practical with approaches that challenge conventional wisdom in online selling. He'll share his insights on why dropshipping is dying, how to leverage emotional selling, and why owning your products is the key to long-term success.

Starting point is 00:00:41 But this isn't just another how to sell online episode. Steve's focus is on providing genuine value, solving real problems for customers, and building a sustainable business through smart strategies. Whether you're looking to launch your first product or scale your existing e-commerce venture, Steve's got the blueprint. So if you're ready to uncover the secrets of product validation, master the art of email marketing, and learn how to automate your way to success. This is the episode for you. Steve is about to reveal the strategies that took him from a cubicle to running a 16-year strong e-commerce business and hosting his own seller summit. The show starts now. Welcome to the I Am Charles Schwartz Show, where we don't just discuss success, we show

Starting point is 00:01:22 you how to create it. On every episode, we uncover the strategies and tactics that turn everyday entrepreneurs into unstoppable powerhouses in their businesses and their lives. Whether your goal is to transform your life or hit that elusive seven, eight, or nine figure mark, we've got the blueprint to get you there. The show starts now. All right, welcome back to the show. Today, we're talking to Steve, who has done some amazing things with dropshipping and selling your products online. I've got so much to go into. Thank you so much for coming on the show. Thanks for having me, Charles. So you've done a couple of things that most people haven't. First off, you're giving things away. You've been doing this for over a decade. Let's get the audience caught up on exactly what you've done and your success rate.

Starting point is 00:02:02 Tell me what's going on. What do you do? Yeah. So mainly I do two things or maybe three things. I run an e-commerce store with my wife. We sell handkerchiefs online, which is really random. We can get into that if you want. But what ended up happening is, so I have a master's in electrical engineering from Stanford and I was an electrical engineer all my life. That's what I was planning on doing. And then my wife threw me for a loop when she said she wanted to quit. And we live in, I don't know, where are you from, Charles? Are you in California or? Florida.

Starting point is 00:02:31 I'm in Florida. Okay. Here in California, it's really expensive. So in order to get a good house and a good school district, you pretty much need two incomes. And so that's how we just kind of decided to launch a business. So my wife could quit her six-figure job, stay at home with the kids. But what ended up happening was we stumbled upon handkerchiefs because when we first got married, we spent all this money on photography. And she's a crier.

Starting point is 00:02:59 Whenever anything happens, I mean, I made her cry for good reasons and bad. But for our wedding, she knew she was going to cry. We looked all over the place for handkerchiefs. Couldn't find any in the US. Found some in Asia from a factory. We ordered a couple hundred, used a handful of them, sold the rest on eBay, and they sold like hotcakes. So when it came time to figure out another revenue stream, we got back in touch with those vendors, launched the store, made six figures in profit in our first year.

Starting point is 00:03:19 My wife put her job, and we've been running it for 17 years now. Oh, wow. wife, quit her job. And we've been running it for 16, 17 years now. Wow. Then all my Stanford buddies were like, okay, I want to quit my job too. How'd you do it? So I just started documenting it on a blog over on my wife, quit her job.com. None of them ended up reading it, but I ended up attracting a random audience of people who wanted to learn how to do this. So just kind of getting shoved into it. I started a class, led to a podcast, a YouTube channel, and an annual e-commerce conference called the Seller Summit, which I've run for the last nine years. Oh, wow. So you've been absolutely unsuccessful completely. Glad to hear it. I mean, you know how you told me you like to do things on a dare? I do things because I get pressured into it sometimes. i had no i didn't

Starting point is 00:04:06 want to start a class yeah yeah i guess so yeah i guess it is i really didn't want to start a podcast and you kind of didn't want to you wanted to be an electric engineer and all of a sudden you're selling handkerchiefs but whatever gets you there because you know cali's got a you know tax rate with all all of the inclusion around 47 something percent up there it's ridiculous you can live in switzerland and it'd be cheaper it is brutal over there but we didn't florida don't have that level of taxes but also it's florida for a reason so it's a little bit different on the back end it just depends on how long you're here so walk me through this there's a difference so there's all these things there's drop shipping there's affiliate marketing there's all this other stuff you come

Starting point is 00:04:43 back to this from a very different approach. You're like, yeah, we're not going to do that. Your approach is a little bit different because it's talking about your products. Why is it different? What are you doing differently here? So once upon a time, maybe if you looked, I don't know, many years ago, like 15 years ago, drop shipping was a little bit more viable. And the reason I say that is because it was before Amazon. You had all these manufacturers, they had no idea they didn't have distribution, they didn't know what to do. Right. So they relied on drop shippers to get their products out there.

Starting point is 00:05:14 But once Amazon came out, I mean, Amazon is, it's got the biggest distribution platform in the US, they own over 50% of e commerce. So if I'm a manufacturer now, why would I rely on all these little guys, which is kind of a pain in the butt to begin with, or I can just put all my stuff on Amazon, right? And keep a lot more of the profit. And so dropshipping today, especially in light of all the recent events, is pretty much dying unless I would say you sell big ticket items. So I have a couple of friends who do okay selling like barbecue pits or appliances where you can't really hold inventory for that and you just drop ship from the manufacturer. But traditional drop shipping of lower ticket items, I would say is dying, if not dead. Okay. So grim, thanks.

Starting point is 00:06:02 I guess my next question is, if someone says, okay, dropshipping is not the answer. Affiliate marketing's brutal. You talk about using your own product. Like, listen, we're going to talk about, and there's a reason for this, and I'm not going to steal it from you because you mentioned it before we got on camera. Tell me why people buy, because most people think it's logic-based, but what's the truth yeah i mean people just buy based on emotions is what i've discovered and i've been married for over 20 years now a lot of these fights that we have they're all emotional they're not based on logic so i stopped trying to reply with logic in general same goes with products so let me just give you a good example of this

Starting point is 00:06:40 you can buy t-shirts for probably like a dollar on Timu today, but I actually get a lot of my shirts from this place called True Classic Tees. Their t-shirts are 29 bucks, just a plain colored t-shirt, which is probably like the most commodity product that you could buy. But here's why I spend the 30 bucks. If you watch their commercials, it's like this overweight guy in the beginning wearing like a frumpy t-shirt and then all of a sudden he puts on a true classic tee and all of a sudden he's got biceps his belly looks flat and everything and he looks buff and so uh there's this book that i love it's called cash advertising by drew whitman and he states that the reason why people

Starting point is 00:07:22 buy anything is due to the life force eight and one of the life force eight is increased sexual companionship or social approval or just feeling better about yourself and that's why true classic teas works you can get away i so when i said drop shipping was dead just throwing up products that other people are selling is, is dying because people comparison shop today, but you can still make dropshipping work. And I still think of it. You can make a couple bucks here and there, but it's temporary money. If you can create compelling ads, you can probably still make some sales, but eventually someone's just going to knock you off. You mentioned temporary money. And recently I was watching one of your videos

Starting point is 00:08:05 online and you talked about a guy who had, for what most people would be a dream, he had a seven figure kind of empire on this dropshipping environment and he was crushing it and things radically changed. Do you mind sharing that story? Yeah, it was my buddy, John Rampton. He was doing dropshipping of containers, like from the container store on Amazon. And he had arrangements of all the suppliers. And when an order came in on Amazon, he just sent it off to his supplier and they would fulfill the order. And he had a whole bunch of suppliers. And he was really killing it on Amazon for a while. One of the other problems with dropshipping, though, is that fulfillment is out of your control. And when fulfillment is out of your control, anything that your supplier does that's bad actually reflects

Starting point is 00:08:50 badly on your reputation. Now on Amazon, this is really important because Amazon has strict requirements. If you do not fulfill your product with a certain time, or if you cancel orders, you can get your entire account suspended. So everything was going well for John for a couple years. But then one year, one of his main suppliers had like an inventory glitch. So what ended up happening is he sold a whole bunch of products that he could not fulfill, and he had to cancel all of them. And then Amazon suspended his account. Fine, he got it back like three weeks later. So he didn't have income for three weeks, he got it back. And then a couple months later, something similar happened where one of his suppliers shipped out a whole bunch of orders late. And then this time he was suspended for good. I mean, it's hard enough to run a business, but it's even harder now you're having to completely throw that in your head and now you're doing it off emotions

Starting point is 00:09:48 that's got to make the engineer side of you just go absolutely mad it's just like oh god so you've already just completely made all of us mad because you just told us what we thought would work or let me rephrase that what social media says oh just click three buttons and magically monkeys will fly out of your butt and you'll make a million dollars in 37 seconds. You've done a great job of dispelling that rumor. So thank you for that. You've probably made a couple of people cry. Thank you for that.

Starting point is 00:10:13 So now that we've recreated the problem as an entrepreneur, let's talk about the solutions. There's a couple of things you do. I know you've got an online course that you give away and you've been doing this for a while and we'll get into that later. What I really want to talk about is kind of what are some of the results? If someone comes in and they do this through, I'm just going to call it your method for now, when you go in, you're like, all right, I'm going to sell my own product. I'm going to sell it off emotions. I have no idea how to do that, which again, we'll get into. We're going to go through the step process. Walk me through the end result. What is the normal amount of time where someone says, Hey, I'm Bob. I just met you.

Starting point is 00:10:46 What's a realistic timeline. What's a realistic energy effort. What is it? You know, what are my financial outlay is going to be if my goal is to make 150,000 a year, I don't know, a random number. What profit? Cause I only talk in, I only talk in nets. I don't talk. So this is a tough question to answer because everyone works at a different pace. I'll give you two, you know, kind of disparate endpoints. So one of my best students managed to launch a product in just three months, made $25,000 in their first month, and then $100,000 four months later during the holiday season. Is that gross or net? This is gross.

Starting point is 00:11:24 Gross. Do you know what the net is? Typical margins are around 30-ish percent, 30 to 35% in e-commerce. So do the math yourself. I don't do public math. That is probably not the norm, I would say. Most people who join my class, there's a learning curve, right? You're drinking from a fire hose in the beginning.

Starting point is 00:11:43 So I would say at least a year is generally what I tell people. Gotcha. And what is realistically how much, what's the average or the mean that most people are making? Yeah. So of my students, if you launch a product and stick with me for a year, you're making at least four figures a month. Like 60% of my people make at least four figures per month and around 10% of people are doing over $50,000 a month. Again, it just depends. You know, those other 30% of the people that don't do well, most of those don't even launch a product. And there's a lot of mental aspects we can talk about too, about not starting and that sort of thing. But yeah. So let's get into that. Let's,

Starting point is 00:12:20 you know, cause there's, you know, we talk about this all the time and I wrote about it, that there's three lies, the lies of what the the lies of how, and the lies of why. There's three lies that you're told, and they don't work in any way, shape, or form. And so this one is the lie of what. If I knew what to do, I would do it. No, you won't. You won't. You've got access to an iPhone.

Starting point is 00:12:35 You've got access to the internet. You have access to everything. You literally could build massive spaceships if you want to. If you had the resources, the knowledge is out there. You're not doing it. For your experience, what are the things that are stopping people? What are the emotional and mental blocks that people are running into? And do you have ways to overcome them? Engineers want to have all the analysis done before they get started. And they tend to be very pessimistic in nature. They think of everything that could go wrong, and that prevents them from getting started. Yes.

Starting point is 00:13:11 Right? Instead of thinking, hey, what are all the good things that could happen to change your life? And the problem with people, I think, in general, is that they're really bad at calculating the probability of something failing. So, you know, this is the funny thing the people that do better in my class actually don't think they just do right and it's interesting science yeah sorry go on yeah the most successful entrepreneurs i know have autism and asperger they have those two things because not only do they not think in that way they also don't feel feel. They just execute. They're the best executors I've ever met. They're some of the best high-frequency traders I know are way on the spectrum and they're doing seven figures.

Starting point is 00:13:54 And I'm like, what the hell are you doing? Because they're just going. It's an algorithm to them. They're just working the system. So yeah, I agree with you. Just do. Keep going. Sorry about that. And more importantly, I think they're just too dumb to quit. Let me tell you when I first got started in this, I was like, okay, engineers underneath the bus selling handkerchiefs is dumb, right? Like I don't even like the product when we first started, it just happened to be a problem that we had. So we decided to solve it.

Starting point is 00:14:21 And I, when I first got started, I was following a bunch of gurus and I was thinking to myself, how hard could this possibly be? You just buy something low and you sell it at a higher price and you keep the profit. And I didn't discover all the subtleties until while I was into it. But the fact that I was dumb about it in the beginning allowed me to get started and kind of follow through. And because I'm an engineer, like I like solving problems. So you just kind of solve them as they arrive. And all my, I had like a really good game plan when I first got started, went out the window in like the first month, you just cannot predict what's going to happen. So what are the things that like how to overcome those mental hurdles?

Starting point is 00:15:06 Because that's all they are. They're temporary conveniences. And people think, Oh, the only way to succeed to six, the only way to have success is to seed succeed. And I'm like, Nope,

Starting point is 00:15:16 you're going to have to fail as fast as you possibly can and just run into it full tilt. A lot of people can't do that, right? They think, Hey, I'm going to start an e-commerce solution. I'm going to create this. I'm going to do drop and it's going to replace my income and it's going to be

Starting point is 00:15:24 monopoly money. And all of a sudden I'm going to be making six, seven figures. I love that you're coming through authentically and playing. No, you're not. You're going to make four in the first year. And then from there, just a lot of it depends on you. How does someone get past that first step of stagnancy of the inaction? How does someone normally get by that? So I think the first thing is to set the proper expectations. Problem with YouTube and Facebook, you see ads of all these people making killer money allegedly in like three months or less. And guess what? When you get started and that's in your mindset, three months will pass by. You're not going to hit those goals and you're going to want to give up.

Starting point is 00:15:58 So my first mindset that I tell myself is I'm going to run this business for at least three to five years and I'm not going to stop. It's a big commitment, but that way you have the, you know, the mental capacity to just follow through with something. The other thing that I like to do, and this doesn't always work for other people, but I play like the worst case scenario game. So what's the worst thing that can happen if you fail? And as I mentioned before, a lot of people over, overblow thisblow this part right for me like in my handkerchief store failed wasn't a big deal my wife would just go back to work right let's say we risked a lot of money on inventory and we felt worst case scenario i suck it up and i moved back in with my parents for for a little bit nothing's the end of the world

Starting point is 00:16:40 or you're an engineer yes i yeah exactly right again yeah exactly where's stuck being an engineer again you're like son of a which yeah so those are two things here's the other thing that's very important too i think you have to have a purpose right if you're just doing this just for the sake of making money you'll fall into this trap that i hit in just a little bit but the reason why I was able to follow through was because I wanted to stay at home with the kids. Like that was my goal. My goal was never to just make like a bajillion dollars or whatnot. I just wanted enough so that I didn't have to go into the office. My wife didn't have to go in the office. And we could basically spend time with whoever we wanted to. And when you have those boundaries, it's a lot

Starting point is 00:17:24 easier to just get yourself off your butt. Contrast that to an engineer in the Silicon Valley doing 250, 300K. I have some students like that in my class. They're kind of working a cushy job. They already have like a good place, a car, whatnot. They're kind of content. Again, they don't want to work, but there's no sense of urgency for them to follow through on this. So, so one of the things that decided that pivoted me, cause I grew up, I couldn't afford the last few letters of poor. My initial push was I got on a plane and I looked and I saw business class and I was like, I'm never sitting back there again. I'm a big guy. The seat sits stops here.

Starting point is 00:18:01 I'm six feet tall. I got broad shoulders. I don't fit in a normal seat. So that was the first push. And the second push was I was working at a hospice and I'm six feet tall. I got broad shoulders. I don't fit in a normal seat. So that was the first push. And the second push was I was working at a hospice. I was watching people die. And there was a sense of urgency going, wow, this is a small clock. The amount of time I'm on this planet is very short.

Starting point is 00:18:14 So that sense of urgency of having some sort of control over my life was huge. And I think a lot of people that are listening to this that are trying to scale their businesses because starting is easy. That's just anybody can start or say they're going to start implementing it and scaling, getting past the failures, getting past the, Hey, I haven't made money in the first three, six months of this, or, Hey, I'm at six figures a year. How do I get to seven? I'm at seven. How do I get to eight? It's a completely different narrative. It's a completely different conversation, which is why we're focusing on scaling. So if someone's coming into this and they've already got past it and they've got their purpose and they're like, okay, this is why I'm doing it.

Starting point is 00:18:47 I'm going to commit to this for the next three to five years. And my, my, my purpose is so that I have enough handkerchiefs in the house because my wife is sad that I'm an engineer and I'm crying the whole time. What are the things that I can do? How do we start? What is the steps? If you're looking through this and you want to kind of on a, on a zoomed out level and say, Hey, this is what your year is going to look like. And we're going to this and you want to kind of on a, on a zoomed out level, say, Hey, this is what your year is going to look like. And we're going to go through a little bit

Starting point is 00:19:09 of it, but realistically, this is your first quarter, your second quarter, you know, this is how we're going to break this down. If someone wants to get into this, cause it's not drop shipping and it's a very different ball game. What are the things that they're going to go through? What is their first 12 months look like to actually execute on this so that they can ultimately stay home and be there with their kids? Because because for me that's a huge reason to be able to be home with your kids and educate them and be part of that because god knows we can't rely on other things in the environment if you're outside of the united states maybe you can but here in the united states yeah i think the first step really is to figure out where you're going to sell.

Starting point is 00:19:47 How does one do that? The way I teach it is a lot of people come in clueless, and there's tools out there that'll tell you how much every product is making on Amazon, and it'll make suggestions. I think the problem with those suggestions, though, are that if a lot of people are using this tool, they're going to come up with the same suggestions. So what I usually advise is that you sell something that you have some sort of unfair advantage with. Let me give you an example of one of the students in my class.

Starting point is 00:20:15 He wanted to sell apparel. So we did a one-on-one consult, and I spent probably like 75% of the time talking him out of selling apparel. It's a commodity item. He didn't really have any good value props and whatnot, so I was the time talking him out of selling apparel it's a commodity item he didn't really have any good value props and whatnot so i was trying to talk him out of it and then at the end and like the last five minutes he goes oh by the way uh my parents have a factory in india where i can get this stuff for super cheap and i was like okay you're gonna sell

Starting point is 00:20:40 apparel we just need to figure out what type of apparel you're going to sell now. Stupid stuff like that happens all the time. They make Advil for those days. I've been in that environment. We're like, oh, yeah. Why is my getting along with my wife? Oh, I haven't talked to her in six months. I used to be in IT. They're like, the printer won't print.

Starting point is 00:20:59 Does it have paper? No. So, yeah, I get it. You have those days. So they have to identify what they're doing. And if their family doesn't have a textile mill or a manufacturing, and obviously it's not the tools online because it's going to give the can't answer to everybody else. What are the things that, you know, when you sit down, you're looking for that competitive advantage. If you're just some guy living in a, in the city in a, in a one, one, you know,

Starting point is 00:21:25 two-story Dorito bag, what is the things that they can look at going? All right. How do I give my competitive advantage? Is it based off what you know about hobbies? Is it based off what your interests are? What are the things that they're going to break down and kind of get into it? So I wouldn't necessarily go with your interests per se, but maybe something that you're really knowledgeable about where you actually know what problems people face right and uh and just to solve your own problems oftentimes are the best students in my class so i have a student who's really successful she likes cross-stitching so she decided to sell her own cross-stitch kits i have another student in my class who hates wearing high heels. So she came up with the product so that she could wear high heels longer without the pain.

Starting point is 00:22:10 So scratching your own itch can often be the best way to go. But let's say you're not creative at all, right? Oftentimes, yeah, same here, same here. Handkerchiefs. I came with handkerchiefs, right? Oftentimes, you can actually go on for products that you buy look at the negative reviews see what people are complaining about and just improve upon that product and release a better version pretty straightforward if you're all of a sudden yeah that's because you know for example the eight sleep pod everyone talked about sleep and how important it is. And I get that. I went out and I tried to get eight sleep and I put it on my bed.

Starting point is 00:22:48 And for those of you who don't know, it's a water cooled mattress topper that has a container device in there and it regulates and it reads your body temperature and it reads your HRV and all that. And it's about five grand plus they have the monthly thing. And it was horrible. Absolutely horrible. Turned my bed into a rock. I wasn't a fan.

Starting point is 00:23:02 I've got friends that love it. For me, I didn't like it at all. I found a resource that works magnificently for me. It's like 150 bucks. And it just cured my insomnia. I went from sleeping four hours a night to over seven within two days. And I love the darn thing. So I think that would be one of those examples.

Starting point is 00:23:22 And correct me if I'm wrong. If I was sitting in your course, I'd be like, okay, I found this product that I like this sleepy thing. Now it's trying to find a way to rebrand it. Is that my next step? Or what is my next step? If I was going to do something like that? I think the problem with rebranding it though, is that that other company already sells it,

Starting point is 00:23:38 right? And if you're just selling someone else's product in the long run, they're probably going to be other vendors selling that same product. And it always just generally leads to a price spiral down to whatever the map pricing is for that product. Right. So let's say that other product didn't exist. Let's just hypothetically say, and you didn't like your eight sleep, but you were like, Hey, what if I make a softer version of this eight sleep and sell it under my own for half the price or less than half the price?

Starting point is 00:24:07 I can't remember how much eight sleep costs. It was expensive from what I remember. Yeah, about five grand. Five grand, yeah, yeah. So one-tenth the cost, right? Or whatever. That would be very compelling. Or if there's something that you like

Starting point is 00:24:20 about your $150 product that you might want to change up and make it even better there is there is and i suppose that if it's one tenth the price it can't be as well constructed as the eight sleep model just hype not even remotely yeah yeah it's not i mean there's a lot about it that i don't like for example um i'm just using it as an example for people to understand because i want to brainstorm this with you because a lot of people don't have access to you like this. So again, I'm not selling this, so hear me out.

Starting point is 00:24:49 But like the cables aren't long enough and it has to be elevated and it's a little noisy and the remote sucks. So if I'm in that, I'm like, okay, I've got this product that I would love to have optimized. I would like to get it better. Where does one go and look into saying, how do I go manufacturers differently? Because I don't have a family in India that is a manufacturer for me. What are those? Are there steps there that how do you know a good manufacturer versus a bad manufacturer? How do we do those things? Yeah. So for most people who aren't willing to travel, probably the easiest way is just look on Alibaba. It's just a directory of suppliers in Asia that are willing to make whatever you want.

Starting point is 00:25:25 Now, if you were to do this, if you were to make this product, one of the great things about Alibaba is that they'll send in third party inspectors in to actually view the facilities and give you a report. So for example, let's say you don't want any child labor in any of the factories that you want to use their certifications that you can look for for that. Okay, so you go on there, you click verified supplier, and then you look for sleep mattress or something like that. And find something that's kind of close to what you want to make. It could be like, you know, an eight sleep clone or something like that. And then you work with them to make the changes to whatever you want to make. So I've gone through this process.

Starting point is 00:26:06 I've decided I'm going to sell things based off of emotion. I'm going to try and fix a problem. Even if I don't have the resources to do it myself, because I don't have my own, I've found a vendor that doesn't employ Oompa Loompas or children. I would be excited about Oompa Loompas though, just because that would be fun. And the ones I grew up watching,

Starting point is 00:26:24 not the new versions, because no, but I go into that environment, I create it. Now I've got the next hurdle, which is how do I penetrate a market? How do I market as a whole? How do I put things together so that people KOT me? So no like and trust, because we talked about this before. People don't buy products and services. They buy stories, identities, and ways out of pain. And we talk about the book you were sharing earlier now all of a sudden i'm going in there and i want to market this how do i do this in a way and before i do any of this should i look at having some sort of realistic budget on hey it's going to cost me i'm doing this for three to five years based off what what you're telling me to do i need to have some sort of budget. What is a realistic costs and reserves of capital that

Starting point is 00:27:07 I need to have for this launch for, to be able to sustain myself, not even to make a profit, but normally just to survive this ballgame. So I think it depends on which advertising avenue or marketing avenue that you're going to choose, right? When we first started out, we did not have the budget for anything except for content marketing. Fortunately, today, it's easier than ever to do a lot of this stuff for free using short form video on TikTok and Instagram. And we were talking about emotions. For sleep, it'd be so easy. I think you threw me a softball here, right? You could have like a wife who's grumpy all the time. And then all of a sudden the husband buys this thing, she's sleeping well. And all of a sudden she's in a great mood

Starting point is 00:27:49 all the time, you know, just a little piece of content, little skits like that, uh, to just kind of market your product and get, get the idea of what some of the effects are of your product. And over time, you know, one of these is bound to go viral if you, if you produce content every day. And when it does, people will just naturally Google whatever your brand is and find your product. Yeah. All right. So then this can take time though.

Starting point is 00:28:15 So if you have the budget, uh, for this particular product, I would probably run meta ads. Same thing, right? You're targeting someone's emotions in a video, they're going to click on it, you have a really nice landing page, you can generate some immediate sales. And your goal with that would be to just try to break even or make a tiny bit of profit on whatever ads that you're running. And the idea here is each time you make a sale, you're going to be gathering email addresses. And the goal here is hopefully you have some accessories that you can upsell or whatnot, because once you

Starting point is 00:28:49 have that email list, you can sell a lot to the people who've bought from you already and create another revenue stream there while still building up your brand with content. So once you get through this and you've given me a lot of stuff to go through, let's say magically we've broken through this point. We've got momentum. We're selling things. I've got a distributor. I've already got a profit loss center. I've already got some returns coming in.

Starting point is 00:29:14 I'm basically moving. We now need to scale because we're not selling myself as a product, which is the number one thing people mess up with when with scaling. They think, you know, if you are the product and you don't own a business, you've created a prison. I now have this. What are the tools that you look at saying, okay, I'm making four figures.

Starting point is 00:29:32 I need to make six figures a month, or I need to make five figures a month. I need to be in that 50 to a hundred thousand dollars a month of gross profit in order to create a net profit of that low fives in order to survive and go forward. What are the tools that you found that increase your scalability and your automation? Because we talk about this all the time about systems are the way to create freedom. Yep. Just systems set you free. What are the tools that you found that you've used and your students have used over there?

Starting point is 00:29:59 Because you've been doing this, what, a decade now? Over a decade. Too long. Too long, actually. Too long. We're getting old. It happens. Too long. You got my Oompa Loompa too long actually too long we're getting old it happens you you got my oompa loompa reference so yeah we're already old so what are the tools that you found that are really really helpful for you yeah so i i think um let's talk about e-commerce

Starting point is 00:30:15 specific ones as well as just some general principles on e-com in e-commerce land typically you're the bulk of your work is going to be just moving products around. So if you want to scale, you ideally aren't doing the fulfillment. So there are 3PLs, they stand for third-party logistics houses, where you can just have your inventory shipped there and they'll take care of the fulfillment and returns. Amazon FBA is like a 3PL if you want to send all your stuff to Amazon. The next thing that's usually a hassle is customer service. So one thing that I like to do is I like to outsource customer service to people in the Philippines. They speak English, the cost of living over there is a lot lower, and you can get a lot more bang for your buck.

Starting point is 00:31:02 Now on the operations side, here's how I often do it. I look at what's going on on a day to day basis. And I just look for a lot of repetitive tasks. So let me give you an example. We do personalization in our store. So people can, you know, monogram whatever they want on their handkerchief. And typically, the way it works is they they monogram they select something on the website they make a purchase and then you got to create this file that the sewing machine understands but obviously the website isn't connected to the sewing machine so back in the day when we first launched this there was a person whose only job was to prepare these files for the sewing machine cut and paste from the website to the

Starting point is 00:31:45 sewing machine. So I'm an engineer. So I guess I have an advantage in this. So I just wrote a little program that literally takes what's on the webpage and automatically generates these, you know, these programs for the sewing machine. And that eliminated one person's job right off the bat. And I don't think that's an engineer advantage. If you've got access to Fiverr or Upwork or anything, you now have that advantage. You know, especially now with chat GPT coming out, no offense, your engineer jobs are, they're gone. I remember. Yeah. I agree with you now. Yeah. It's funny that you say that in Silicon Valley, a lot of my buddies are not hiring college grads anymore because chat GPT can code.

Starting point is 00:32:24 They're relying less on new new people i don't know if that's good or bad yeah it's a good thing you know because it's forcing the change i'm a huge fan of ai i think it's i think it's wonderful it's just like when the you know we've had these revolutions we have the technological revolution we've had the we're having the ai revolution we've gone fromland. We've had these huge revolutions. And the jobs that most people have, they're going away. But new jobs are going to be created. When I was in college, the idea of being a network admin or network engineer, no one even thought of that.

Starting point is 00:32:55 To be a web developer or a UX expert, user experience expert, no one thought of that. So things are starting to change. I remember in the early 2000s, we were getting paid five to $10,000 to create a website. And I figured out really quickly, I can outsource it to someone for a couple hundred bucks. Now you can do it for free. Just go click, click, click, and you have a full website that's going to happen with anything that can be automated. Because people like Steve are out there and they're bastards, because they're engineers, and they're going to figure out how to automate these things. And that's just the reality. So if you don't know how to do these

Starting point is 00:33:26 and you don't understand how to code, you don't have to, that game's over. You know, everything that we do, you were talking about, you know, people from the Philippines, the person who makes all of this possible. Hi, Christine is the one who does that. She's based out of the Philippines and without her, none of what I do is operational. The book that everyone, you know, people rip on me. How did you write a book in nine days? I'm like, well, I threw up on a screen and then I gave it to Christine and she cleaned it up. Now we just did a new one, which the AI cleaned it all up for us.

Starting point is 00:33:52 And it took five minutes. I literally went and made a sandwich and came back and that was it. It was super easy to do that. So yes, things are changing. And if you can master this tool, you will have a job. If not, well, you can't even work at McDonald's anymore because that's going to be automated as well. So how much is Charles paying you?

Starting point is 00:34:10 I'll pay you double. Just if you're listening to this right now, not going to happen. You could try. People have tried to poach her for years. Actually, this happened two, three days ago. So we tried to poach her. I love that woman. She's like a little, she's family to me.

Starting point is 00:34:23 So no, you can't have Christine. She's a gift. I wish I could make more Christine's someone invent cloning. I need more Christine. She's like a little, she's family to me. So no, you can't have Christine. She's a gift. I wish I could make more Christine's someone invent cloning. I need more Christine. She's a, she's a gift. Let me tell you something that I'm using right now that has saved a lot of time also.

Starting point is 00:34:33 And this doesn't really affect the example that we gave here, but we sell aprons and previously you'd have to get models. You have to do a photo shoot. Now you can just literally have AI generate the models wearing your merchandise. And it looks really good. You don't need to hire models anymore. So my favorite one is 11 labs. Yeah.

Starting point is 00:34:53 It's my, it's my favorite automation tool. We were just talking about this for anybody who listens to the show, the pre and the post. That's not me. Unless you see my face and me yapping, it's not me talking. And we do it with social media posts. We do this with audio books. We do this with, we just give it to 11 labs because

Starting point is 00:35:11 I've got hours of me yapping into a mic and the team's like, well, maybe 11 lab is going to learn. And it's not perfect, but good God, is it faster? And the ability to create content because my voice is such my brand, we now can create this viral content leveraging 11 labs. And we used to have someone on the team who edited these things and did these things, just like you used to have someone who used to code it in for your sewing machines and that person needs a new job. That's going to continue to happen. So in some ways, it's really good. In some ways, it's going to force you to change. And it's one of the three rules in life is you've got to change that paradox humor and change those are the three rules yep so if someone comes in and they're going all right this is not what anyone else is telling me everyone

Starting point is 00:35:54 else is telling me that affiliate marketing and drop shipping and everything is super easy and it'll get done and i've had one other person her name is leanne johnson she came in she's like nope you're the second person who comes in authentically. And we try and track down individuals who are authentic and are proving this over and over again, that you're going to have to do this a different way. You've shown us a very different way. What is the normal experience though, when someone walks into this as far as, because we get the idea now, right?

Starting point is 00:36:22 We get it. You've got to find your own unique product. You've got to find a unique problem. You've got to kind of put this together. We kind of go through this. What is the time allocation when someone does this? What does this normally feel like for someone? What are they walking into? And would you recommend this to someone who, you know, do they quit their job? Do they not quit their job? If they're a single mom, what do they do? If they're a kid who's 14 years old, can they do it? What is the spectrum of saying, you know what? If someone had a, you know, a gun to my head and I had to, you know, supply for my kid

Starting point is 00:36:51 and provide for my family, would you do this? Or would you do something else? Okay. So number one, you asked a lot of questions in that, in that outburst there, but number one, I would never quit the job. You never want to be running a business worried about skimping on things and whatnot. So it's hard enough as it is. You don't want stress to be another factor involved.

Starting point is 00:37:13 So all this stuff can be perfectly done on the side. Like we created all of our businesses on the side. And as people, we waste a lot of time, right? So all I had to do is I cut out TV, and I cut out going out with friends on like one night of the weekends, and we just worked in. If you want something bad enough, you'll find the time to do it. Now, in terms of time allocation specifically for e-commerce, the work is bursty.

Starting point is 00:37:40 So in the beginning, when you're trying to figure out what you want to sell and finding suppliers and whatnot, that's going to take a lot of time. But then there's this downtime of like two or three months where your stuff's getting made and you're going to figure out how to market your site and whatnot, but it's a little bit more lax. And then when your product comes back, then it gets busy again. So the work is kind of bursty. And in the beginning, it's going to be a lot more work because you got to set up all your systems and your processes and whatnot. But in steady state, like today, I work about 20 hours a week running out 20 hours a week running all my businesses. Once it's that steady state, and you have the systems in place, you can get easy.

Starting point is 00:38:17 So I don't know if that answers your question. A lot of upfront work. Yeah. But since I'm a systems guy, and you and I both have kind of a geek background, because you're an engineer and I'm an IT guy, I immediately go to systems. How can I implement a system into this? Is there a way to do what you're doing purely with VAs? In other words, hey, I've got this idea. I want to sell XYZ, some widget, whatever it is. How much of this do you actually have to be involved in if you've got the budget to outsource it to a VA, can you hire a team of VAs, the Christine's of the planet,

Starting point is 00:38:49 which I wish there was more, there's only one, it breaks my heart. But for those of the planet, are there, is there a way that you're like, yeah, absolutely. You can do this or, you know, no, you've got to be involved. You got to be sweating, you know, got to put in the sweat and the blood. So you absolutely can. In fact, there are entire companies devoted to training VAs and e-commerce in the Philippines that already know all the tasks. That's generally not how I roll though. I like to do everything myself in the beginning. So I understand what the problems are. And that way, when I outsource it, I can have them do it the way that I want it done. And I typically just use a tool called Loom. I don't know if you're familiar with it. It's just

Starting point is 00:39:29 a way to just record your... And I just put together these SOPs on Loom, and then I just train them. And it takes longer this way, but at least I know what I'm outsourcing. What are some of the companies that... Are there any of the companies that do train these people throughout the Philippines? And good God, we're promoting the philippines they should contact us um so i just i don't speak i think it's called tagala i don't speak tagala tagalog it's it's language they all speak english over there uh so they do they're amazing but it's funny because again christine's getting talked about a lot this episode her her ability to grasp in this language is light years better than I am because I'm a classic American I can barely speak and everyone's

Starting point is 00:40:08 like oh you're a writer I'm like no I'm an author it's a very different conversation I can't spell my grammar is horrible hers is light years better than me huh and it made it more impressive when I heard her speak her native tongue because it's not even close it's not even the same they're not even close the roots are not the same but is there a company and again we're not even close. The roots are not the same, but is there a company? And again, we're not sponsored by anybody. Is there a company that you're like, yeah, you know what this one, if I was going to do it that way, I would look at X, Y, Z company. Or if you're like, you know what, you're killing your success rates. Don't do it that way. So this VA that's been with me for, I shouldn't call her. She's, she's like my confidant at this

Starting point is 00:40:43 point. I think VA would be an insult uh i've had her for i think eight years now i found her through a company called second office they specialize in e-commerce and the beauty of it is you pay an extra fee they provide an office and everything and they they hold her accountable you know for coming in and whatnot. But after a year, you have the option of hiring her directly. And then I whoever your person is directly, and then you can hire them. Another place that I go to is online jobs.ph. This is how I found all my customer service people, I'm sure you're familiar with that service. There's another service, if you don't want to hire them as an employee, and you just want like a contractor there's this company called your tasker again for e-commerce where you could just hire them on a project basis

Starting point is 00:41:29 gotcha so if you're going to find out let's say you want to sell mice and you're like i've got a better way to make mice i'm going to make them fluffy and they're going to squirt out slurpees whatever your idea is god bless you and you're like hey i need to find out if this is a viable product. I need to figure out this is going to work. I need to find the wholesalers. I need to do that, but I don't know anything about this. And I've got three kids. I'm working six jobs. I've, you know, whatever it is, is there a way to say, listen, all right, Steve, can I just hire you to do that? Or would you say, Hey, that's not how I roll. Go to this company, hire this one person

Starting point is 00:42:05 for a little while, see if it's, if it's viable and then get back to me. Or what would you recommend? Because I know you offer the ability that you work with people because then there's also then just entrepreneurs like me who just want to systematize everything. Cause I like doing that. Are you asking me personally, or are you, do you want me to give a method of validating? Either. I'm asking what you would do that you would trust that you would stand behind because that's the whole reason we had you on here is that you're authentic i i think for validation you should do that yourself and typically the way it the way it works is you'll get some samples made of whatever you want to sell and the easiest way to just give yourself confidence to place that

Starting point is 00:42:40 bulk order is to just to try to sell those samples. I mean, just list them on eBay or any marketplace. And if you can get a couple of sales that way, you can be pretty confident. You can also look at tools like Jungle Scout that tell you how well a certain product is selling. And because Amazon owns 50% of e-commerce, if it's selling on that platform, you can probably suspect there's going to be a demand for what you have to sell. And at that point, you should feel confident placing that order. All right.

Starting point is 00:43:10 What are the, you know, a lot of people are going to be afraid because it's going to be returned a lot. How do you handle that? How do you handle, gosh, my product, I'm just creating it. It's new to market. I'm going to deal with these returns. How do you deal with that situation? Well, for our store, we do personalization and there's no returns on, on that merchandise.

Starting point is 00:43:30 But I would say even for the non-personalized merchandise, our return rate is super low. I think the only reason I, again, it's going to depend on what you sell. If you sell apparel, the return rate is like 20% plus, but for most things that don't require sizing and whatnot, return rate is typically pretty low. Like ours is like a fraction of a percent. It may not be involved with this. And I always ask everybody as an entrepreneur, what are the tools that you use? You talked about loom, which I don't understand how people function without loom. I'm on loom multiple times a day. It's how I communicate with my staff. What are some other tools that you use?

Starting point is 00:44:17 I got, I wish I knew about this earlier for what it is because it helps me scale. I think any email marketing and SMS marketing tool is essential. Here's the amazing thing about email marketing. It makes up about 30% of my sales. And in e-commerce land, this email marketing tool, I use Klaviyo, can literally be your repeat salesman on autopilot. So let me just give you an example

Starting point is 00:44:42 of what we do with our store. So we sell matching napkins in our store, dinner napkins, tea napkins, and cocktail napkins. So if someone buys a cocktail napkin, but not the matching dinner napkin, this email marketing tool will know that, and it will automatically try to cross sell them the matching napkins. So you can set it all up once, set it and forget it. You set up once. So if they bought this, but not that, you send this email there. And so it's like a virtual salesman for you. And what was it called again? Klaviyo. Klaviyo. Jesus. Okay. So now the next

Starting point is 00:45:17 question is marketing, right? Because people have to learn how to market in a specific way. It's telling that story, putting them in there and having that arc and getting it through there. There's lots of different ways to do campaigns. There's nurturing campaigns. There's Seinfeld campaigns. There's a lot of different campaign strategies. Which strategies have you found for the e-commerce space that are just bulletproof and they work

Starting point is 00:45:39 better than really anything else? Yeah. So for the longest time, we relied on search engine optimization. We put out like craft guides and content so that brides could do a lot of DIY stuff. And that drove a lot of the traffic and sales. I would say that in e-commerce, all you really need is one good traffic source to hit six figures and maybe two to hit seven figures and beyond. So you just got to, you just got to pick the traffic source that matches whatever you're selling. And it just so happens that our search terms were pretty easy to rank for. Um,

Starting point is 00:46:15 I, I, can you repeat your question again regarding the marketing? Yeah. Yeah. So I'm trying to figure out, you know, there's,

Starting point is 00:46:21 there's ways to grow. There's ways to get reach. And you talk about the way to build an audience. There's four ways to get an audience. Yeah. You build it, you borrow it, you beg for it and you buy it. Right. And that's really the four ways to do it. And in there, there's very specific strategies to do this outreach for do this email marketing or marketing as a whole. There's different campaign strategies. What are the strategies that you found that have been the most effective for scaling across your clients and even some of your students that work with you?

Starting point is 00:46:47 Yeah. So if you look holistically, so we rely on SEO and meta ads, and then a lot of repeat business. So one thing that we do is we actually did this analysis several years ago, where we looked at our customer base and our average order value is about $60. And we noticed that 50% of our customers spend like half of our AOV, and only 10% of our customers spend $120 or double our AOV. But if you look at that from a revenue perspective, we found that those 10% of customers who spend double our AOV were generating 50% of our revenues, whereas the bulk of our customers, our cheapy guys spending less than half of our AOV, we're only representing about 10% of our revenues. So that's when we started focusing a lot on just getting those big whales to spend more money. And for our store, it turned

Starting point is 00:47:37 out that they were event and wedding planners. So today, whenever we get a large order, like someone orders like 40 dozen napkins or something like that we call them up and we say hey we notice you bought a crap ton of linens do you happen to be an event planner and if yes we say hey here's a coupon code for you here's a dedicated rep from our company that will handle all your orders and make sure they get to where they are on time and once you do that you get a person who buys from you consistently and in large quantities. Uh, another thing, I mean, there's, there's a ton of things we can talk about. I don't know how much time we have left. Yeah. So I was about to say, so, I mean, there's so much value here. There's so many things that

Starting point is 00:48:17 we can talk about and you have an entire course over this. You've got so much stuff. You have a, you give away a course. Tell me more about this course that you give away. Yeah. So the course is meant for total beginners and it mainly focuses on the first step, which is finding a product to sell that's going to be profitable, validating it, and then finding suppliers. And then one thing that I like to do, and it's funny, we talked about websites. I give them a free template so they can end that mini course with a website ready to go without hiring a designer, which what I found over the years is one of people's biggest hurdles in even getting started in this.

Starting point is 00:48:55 And speaking of websites, how do they find you? Where's the best way? People are like, Jesus, I just listened to Steve. He's completely changed how I view e-commerce as a human being. How do I find them? Where do I track them down? Where do I get more information? Where do I get this free course?

Starting point is 00:49:09 What's going on? How do I do that? Where can they find you? Yeah, the easiest place to go is mywifequithejob.com. And on there, there'll be a link right there that you can sign up for my free six-day mini course. I came up with that title because that's how this whole thing started. Because you're an engineer.

Starting point is 00:49:28 It just made sense to you. It's like, what are we going to name it? This. I love that you take this very practical approach. So if people wanted to get the course, they go there. If they want to get access to you, what's the best way to get access to you and pull more information in? Probably just send me an email over at steve at mywifequitterjob.com. I love that you make it very complicated. I appreciate it. We could probably talk for

Starting point is 00:49:51 another three, four hours just on this and pick your brain on it. I love that you gave tangible things. I really appreciate you for being on the show. Thanks for having me, Charles. As we close out this episode of the I Am Charles Schwartz Show, we hope Steve's remarkable journey from electrical engineer to e-commerce entrepreneur has inspired you to rethink your online business strategies. We extend our gratitude to Steve for his candid insights. Your wisdom on emotional selling, product validation, and the power of owning your niche is invaluable for aspiring and established e-commerce professionals alike. To our listeners, your thirst for knowledge and entrepreneurial spirit drives us to bring you these episodes. We're truly grateful for your ongoing engagement.

Starting point is 00:50:31 If you're eager to put Steve's strategies into action, don't miss out on our exclusive companion guide. It's packed with practical tips, including detailed guides on finding your perfect product, mastering email marketing, and leveraging automation for business growth. Download your copy of the companion guide now at podcast.imcharleschwartz.com. It's your blueprint for e-commerce success. Always remember, solving real problems is the cornerstone of a thriving business. So go forth, identify those market gaps, create products that

Starting point is 00:51:02 resonate emotionally with your customers, and watch your e-commerce venture flourish. Until our next episode, keep innovating, keep adapting, and never stop scaling.

I am Charles Schwartz Show - How I Retired My Wife

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.