AS 78: How Shawn went from Mcdonalds to 100 Million + Sold in e-Commerce
11 Dec 2016
In this episode you’ll learn:
- Shawn’s tale of rags to riches
- How Shawn went from selling hamburgers at McDonalds to having sold 100 Million + in revenue generated
- How to choose a market
- How to brand build products
- What products to not go for
- How to source directly in china?
- How Shawn deploys strategies for launching new products
- How to use AMS or Amazon Marketing Services and why it’s important
- Products that Shawn goes for, high and low end
- Mistakes and lessons learned from Shawn
- Trips Shawn take to China
- And all the wisdom I was able to extract out of him within 1 Hour
And lots more!
David Aladdin: Great to have you on show.
Shawn Heart: Hello, how’s it going David nice to meet you.
David Aladdin: Can you take us to the beginning, before your first selling. What happened?
Shawn Heart: I come from a small town, in central Indiana. Decided I was a little bit too lazy to work and too nervous to steal so I had to start business you know, that was the next best thing. So, short story long I started importing fresh cut flowers from South America and selling those literally on the road side you know as a teenager. After school I would just go park my truck on the side of the road and be doing my homework as I was selling flowers for about 6$ a dozen that we imported for 2$ and just fell in love with the idea of creating value and being able to buy and sell. You know back then my marketing strategy was pretty simple. Before I even was introduced to the word marketing, I basically just threw a huge benefit on a road sign that said “Roses ahead. 6$ per dozen” which was unheard of you know, so on strictly on price because back in those days in the early 90’s you know, the cheapest flowers you could buy for your wife or girlfriend were about 30 or 40$ a dozen. So 6$ a dozen was like almost too good to be true and that’s really how I got my started in my business world.
David Aladdin: What year was that by the way?
Shawn Heart: That was 1991, somewhere around in there. Yeah.
David Aladdin: I’m guessing, I’m guessing you had a lot of girls wondering where they can flowers with you.
Shawn Heart: Well I was known as the Rose Boy in high school which is not that cool. What happened was, I only had one job David. I got a job when I was 16 years old at McDonalds and you know the reason for the job was to be able to put gas in my car and pay for insurance. So I worked a couple of weeks at McDonalds and had my first pay check and it was 84$ and my brother had just dropped out of school about a month prior to that and my dad said “Look you can even get a job or start a business”. So he introduced him to a business where he could buy fresh cut flowers from a local whole seller for about 3$, 3.50$ a dozen and sold them for 6 to 7$ and how we found that.
Every Friday on his way home from the office, he would stop at this old lady who was on the side of the high way selling flowers and just got talking to her and she told him “you know I do this just to supplement my income”. So when my brother dropped out of school you know, like I said you can either get a job or start a business. This is my older brother so he said “Ok, I’ll start a business”. So he tells him about this flower deal and we are all laughing at him you know, because there was really, my father was the only entrepreneur in my family, he was an independent insurance agent. So everyone was like, you know factory workers living it, the American dream of working for 35 years and retiring with a gold watch and a pension so it was really outside of our normal thinking.
So, you know I’m laughing at my brother as I start my what seemed to, would might be a long career at McDonalds and he comes home that same weekend he had parleyed like a 50$ investment that he started with and ended like 350 bucks you know. Back in the 90’s for a teenager in a small town central Indiana that was, as might as well been a million dollars you know, because we just didn’t see that kind of money. So I’m standing there looking at my 84$ McDonalds check and he’s got this big gipsy role of cash you know, it was like more money that I have ever seen in real life and I’m like “Wow! How did you do that?” So, we got talking about it, next thing you know I take my, my little four cylinder Mustang throw a trailer hitch on the back turn it into a truck basically and go out invest my 84$ in roses and you know just fell in love with the business and the idea that I can double my money you know every weekend to certain extent.
So I started hiring my friends to go out and work for me on commission and I figured out pretty quick that you know, if I could share, if I could hire my buddy to go do the same work and give him 50% of the profit then you know, if I had two of those buddies working of it. Then you know I could stay home and do nothing and still make the same amount of money and you know I just had a natural inclination to be, to be lazy so next thing you know I got four or five guys pedaling my stuff for me and one thing led to another. I started doing whole sale and you know and about every Valentine’s Day I’d get hill Billy rich you know because that was a big flower halo day and then I’d retire for about three to four months. So it was a pretty good life as a teenager.
David Aladdin: I Feel like that could be like a CNN headline. From McDonalds to 100 million this is how you do it.
Shawn Heart: Yeah, yeah. It could be. You know I was convinced back then David I was going to be selling fresh cut flowers for my entire life. You know I started my high school classes, I cut it down to like three hours, three classes a day and then I’d go to work you know and I went to high school for like five and half years. Because as I progressed through business, I got more and more interested in business and entrepreneurship versus you know, learning from people that I could actually have on my pay role if I wanted and you know, I got, I think on my senior year I was doing three classes in the morning. I left school like 10:45 and went to work you know to run my business because I was whole selling and you know importing and all that kind of stuff, it was pretty good.
So, that’s, that’s kind of how I got started and then you know early like when I was 19 or 20 or something like that. I got introduced to what is now called Direct Response Marketing you know, back then I got the, the license to sell health insurance you know I’m just a teenage kid you know, that no one really trusted and it was a really hard sell to go out there to older folks you know and farmers in my area and expect them to trust me with their financial future you know, selling life insurance and annuities.
So I discovered pretty early that I could sell easier over the phone because over the phone, I could be anybody I wanted to be you know, face to face they know I’m just damn teenage kid you know so what I developed was, with my father who was an insurance agent we did direct response marketing where we actually hung these signs all over, like we put up 45 hundred signs over a months’ time all over central Indiana that basically was a benefit with a call to action it said simply “lowest cost health insurance and a toll free number” and we were actually selling insurance over the phone way before Geico and Progressive and all those guys all state. They would dial in and we were just comparing apples to apples.
Give me your benefits, what are you paying for premium, here’s what we can offer you, I’ll mail you an application, you sign it and it submit it. It was pretty good business. So I learned how to sell remotely side and seen and that was really the game changer for me.
David Aladdin: How did direct marketing work for you? Did you get like how many inquires did you guys tend to get like just out of curiosity.
Shawn Heart: Oh men. It’s hard to say but thinking back we had probably at the peak we had about four people taking calls and basically they would just sort through the calls and be like, name, address, phone number you know. Who you have your insurance with, what are your benefits and how much are you paying. We’ll call you back if we can help you. Ok, because they weren’t allowed to talk about the insurance so to speak because they weren’t license agents, they were just people that we hired to take the phone calls. So we would look at it as agents and go ok we can save this person money and we call you back and hold to,”Hey David here’s what I got for you”. I got you better benefits a lower deductible and I can save you 20% on your premium. Can you do business with me? And you know it was kind of.
David Aladdin: I’m in!
Shawn Heart: I made it almost idiot proof for you couldn’t afford not to buy you know, for a long time we are tracking ourselves there and we were closing 100% of the people that I would go visit with on the phone or in person, because I pre-sold them before I actually made the trip. It was pretty life changing, but I got kind of board with the whole suit and tie system. So I got back into doing physical products except for with my rose business, our products were always perishable. So if I didn’t sell the product you know I would have to eat it, basically. Couldn’t put it back on the rose tree so I started doing you know like, household goods like art, wall art, framed photos oriental rugs, lots of home decor things that could buy from hold sellers in Chicago an what I would do is all week I will whole sell my product to my group of dealers and then on the weekends me and my friends would go out and pedal on the major cities you know, like Indianapolis, Chicago, Cleveland, Louisville, Columbus Ohio, Cincinnati and it was a fun business because you know everywhere I went people knew. I mean they could see that you were making money, I mean we would go, we’d go out on the street corner and literally do you know five, six thousand dollars in sales on a Saturday and every hustler in town knew it and be like “Wow! How can I get involved?” You know, I’m glad you asked David here, here’s my phone number give me a call, and I’ll show you how this works.
And basically I would say “Look, if you want to do what I do, here’s the numbers ok. Bring 10 thousand dollars and a big truck and be here Monday morning” and they’d show up you know we would sell them a load of goods and more so we would teach them how to go out and flip that, those goods for a decent profit and you know, we lost a lot of dealers that go reining or direct but a lot of them stayed loyal for years, I mean they are still part of my network. So, that’s what really forced me to start doing the direct China importing because you know, if I had a direct line with the manufacture and it was private label then you can’t really go around me you know. I mean I dealt with a lot of people and I know there’s some people out there you can give them the keys to the bank and treat them you know, more than fair and you know like when I’m in the t-shirt business. I was importing t-shirts and having them printed in Chicago and people would literally rather go buy a cotton farm and cut me out, you know make their own t-shirts it was ridiculous.
So, people if you give them a chance to disappoint you they will every time, so you have to try to control your market and you know I went into a lots of physical products that we sold through direct response through google adverts or you know, tv info martials, radio adds, newspaper ads and build up you know several, a head full of businesses over a ten year period and finally you know, I made my first million dollars cash that I could call mine when I was 27 years old and that was in 2003 and that, I mean it wasn’t really a milestone that sticks out to me, I mean it’s something to people are always interested in but what it did for me David was just open up a lot more doors. Because you know with that money you can use to leverage whatever other possibilities you have in your network and just kind of grow from there.
So we grew that into several different companies, I mean the last one I sold 2011 I mean we were doing 25/26 million dollars a year in sales and our last year I ended up selling out to private equity but back then you know I would develop the product, I would import the product, I did my own packaging, I did my own marketing, I did my own costumer service, we did credit card processing, order fulfillment, returns you know, costumer returns it was nuts. So when I got out of that I had 80 thousand square foot warehouse and you know seasonally anywhere from 50 to 150 employees. I mean I had 100 phone lines in my building which and today it’s kind of funny because our amazon business we have no telephone.
I mean I can’t pick up the phone and call my office right now, we are doing over a million dollars in sales. That’s pretty profound if you think about it.
David Aladdin: Solid, yeah.
Shawn Heart: Yeah, so I mean of course I can call someone’s cellphone but, so when I got out of that I swore I was like “I am never going to do fulfillment, I’m never going to do costume service, and I’m not going to have a call center anymore. I’m just going to you know, the next deal I do is just going to be you know either consulting or just kind of an arms link type equity partner. So that’s why I was telling you before we started the interview. When I see in Amazon it was no brainer for me because I had access to all the physical products you could ever want. I mean I can literally buy anything that you can dream of and I can buy it direct because I have inroads in China and I have a heck of a network over there of people that I worked with over the years.
So when I see something on amazon I’d be like, “Wow, this person is really killing it with this product. It’s easy for me I can go out there and buy a cheaper than you can and if I apply a little bit of marketing effort to the Amazon platform, Then I can outsell you”. And then when I was told, it was brought to my attention that Amazon does costumer service. They do all the fulfillment, they do the credit card processing, returns the whole nine yard I was like “Wow! This is a dream come true” so, that’s what drag me out of retirement.
David Aladdin: yeah, I got tons of questions now. So…
Shawn Heart: Alright.
David Aladdin: I feel like when you were selling flowers, you would have kind of pivoted into kind of like those 1-800 flowers companies. You know where they sell direct to like houses like nationwide. But instead you had these hustlers that where pedaling like going direct to the source so that’s why you went to China. That’s funny.
Shawn Heart: Well yeah. At that point we were importing from South America, Columbia but you know the flower business kind of dried up because I’m not sure. How old are you anyhow?
David Aladdin: I’m 29.
Shawn Heart: Ok, how young are you? OH you are 29 ok.
David Aladdin: I’m Pilipino so I look young yeah.
Shawn Heart: Ok. At 29 you probably don’t remember this transition then but it happens over and over again even before Amazon. Like now when someone kicks off a product on Amazon like the little cozies we were talking about or the insulated tumblers the same thing happens. People see that opportunity and there’s actually no barrier to entry there, I mean at this point you can literally go to Walmart and buy it for eight bucks and sell it, put your own label on it or something. So back when I was doing flowers they were 30 to 40$ a dozen and 60 to 70 on the holidays.
So, the flourish shops had the monopoly on the market you know they basically had it seemed up. But soon after I started my business, started making money with that it become more and more known. Not because of me but just because the industry changed that flowers were really not that expensive and now as you were my age you know when I was a teenager they were 40 bucks. When you were a teenager you probably don’t remember a time that you could not go to Walmart or your local grocery store and buy, walk in the door and you get a dozen roses for six or seven dollars, I mean they are there every day right?. It wasn’t like that when I was growing up. It was like this super high dollar commodity that was hard to find and hard to buy.
So you know the industry changed and a long with a lot of products that I was involved in and as you know we chatted there for a little bit I said “Walmart used to keep all the sealers and hustlers honest. Well now that Walmart is Amazon” Now the first thing you do, when you are out trying to sell a product at a trade show or something. You show the product everybody pulls out their smartphones and like “oh I can’t compete with that, it’s, you want 25$ whole sells. On Amazon for 32”. You know what I mean.
David Aladdin: It a different world, yeah.
Shawn Heart: Yeah, much different world. So just being flexible and being able adjust to those changes in industry you know, keeps me in the game I guess.
David Aladdin: So in 1991 you started 12 years later in 2003, you hit your first million and then 2011 you sold your company. How much did you sell it for?
Shawn Heart: Well the, I think the no compete you know all that ran out in September so it was like a five year deal so I can tell you.
David Aladdin: Sweat.
Shawn Heart: It was sold for 13.5 million.
David Aladdin: Nice. That’s a bout of reinvestment you got. I meant capital or re-invest too.
Shawn Heart: Well I started that business with 30 thousand dollars out of my pocket and the first year we did nine million in sales. Actually the first year consisted of four months, so I started that business like in August and it was a seasonal business. The product only sold in the fourth quarter. So in that first year we did nine million in the second year we did like 19 million the third year we did like 27 million and then I ended up selling out in the fourth year. So it was pretty good, I made a few good decisions, had many blessings a lot of people taking care of me and had a pretty decent network so, that was actually the second time I sold the business for those types of figures so it was, it was not so much a revelation but it was a relief because I don’t know if you have ever went through an acquisition like that but once you get that you know, that check in your pocket you know, it’s kind of like. It’s almost like a drug, somebody says “Here’s a check for 11 million dollars” The next thing you want to do, you just want to do it and again and again so.
So we started our Amazon business with the whole idea you know creating these high value brands using the Amazon platform because it’s simple right. I mean a lot of people that just started on Amazon don’t realize how simple it is but you and I can assure you that I’ve had the warehouse I’ve had the call centers, I’ve had all the employees, I know that Amazon is. You know, even though they take about a third of your money when it’s all set and done they deserve it because that’s a part of the business that you don’t want to be in and they just made it super simple for me so.
All I have to do now is go and find products that people want to buy, give them a better option, launch them on Amazon build a brand up until we believe its mature and then sell it to someone else who can take it too the next level and that’s our whole business model.
David Aladdin: So simple, like.
Shawn Heart: Yeah, it really.
David Aladdin: You know you say it so simple like, “OH yeah, it’s just add products Amazon and sell it for like 13 million and then boom”.
Shawn Heart: Yeah, we try to keep it simple. I was actually talking to one of my clients that I do coaching for this morning and he is in the middle of a deal right now. His aim on business does just north of two million dollars per month. He only has one product line in about four, five different sues and he’s got an offer on the table for 6.5 million. I mean he’s two years into it. There’s no other business that I’m aware of that I’ve been exposed to that you can do those types of numbers.
David Aladdin: What do you think he should do?
Shawn Heart: He’s has already signed the deal to sell it.
David Aladdin: I think, I think I would to. Just because the competition, you just never know what’s going to happen in two days. You can have like 10 sellers selling, selling a similar product.
Shawn Heart: Its funny because I was, I actually had another he wasn’t part of my, he wasn’t in my coaching but he was actually just friend you know, that I met through a conference and he was in the middle for an acquisition for 10 million dollars for his aim on business and got sued you know, someone filed a law suit against him class action foursome type of consumer fraud and that killed his deal. So you know like I said, if this guy doesn’t take the deal, tomorrow it could be a different story.
David Aladdin: Exactly. There’s so many variables on selling on Amazon, maybe even e-commerce but Amazon in itself there’s so many things that could happen that would change your business metrics overnight so.
Shawn Heart: Yeah definably. Competition being the main one. We tend to gear more towards ever green products that are really high margin but really high price. Something that, I mean I’m sure you are familiar with like ASM and things like that. But what they have always teacher early on to five or eight thousand people, who knows how many. Was you know, find something small light weight you can fit in your pocket, you can buy it for a dollar and sell it for 12$ and ship it for 30 cents.
Well that’s what 99% of people are doing, they are looking at private label FBA. You know, we, we went a different direction. I mean I literally sell like computer desks, speed bombs, wheel barrels, I mean things that people like “Wow!” you know that’s a lot larger than a loaf of bread and you know, it can’t be shipped by air frat but the thing is for us. We would rather sell one product a day of 500$ than 100 products of 5$. Does that make sense to you David?
David Aladdin: I like it, I like that strategy a lot.
Shawn Heart: And there’s no competition.
David Aladdin: The more I sell on Amazon, the more I realize how much more value it is to sell those more expensive profit margin products.
Shawn Heart: Though they are not sexy or anything like that. It’s not like you know I don’t have the next best mouse trap but the way we look we have over 400 unique products in my physical products business. So I don’t have like that on hero that goes out there and does 500 thousand a month but we have you know it’s still 20% of our products, are still making of 80% of our sales just like anyone else. But all those other sales that we make you know we sell one or two a day make a couple hundred dollars profit on, they add up and we are the only game. I mean nobody is doing that, who wants to go out and invest 20 thousand dollars in one product line you know, and not even knowing if it’s going to be successful.
David Aladdin: Yeah.
Shawn Heart: But once you have done it long enough just like anything else, it becomes more of an art then it is of science. I can look at a product right now and tell you if it’s going to work. I mean I discovered two this morning that’s what I do for our business, my, the scope of my work is to identify new opportunities for our Amazon business, that’s it period. I say “Here buy this”. I send an email, go buy 500 hundred of these tomorrow ad my team builds out the listings and does the launch and everything else.
David Aladdin: There’s a lot of golden nuggets you just mentioned there. The fact that you know your exact focus and then you know the rules of your other team members focus and you are able to just understand that, keep moving the source and pushing products into your line. It allows for a very, very effective business execution.
Shawn Heart: Yeah. I used to have all kinds of funny things to say. Now I just tell them, I do very little and I got a bunch of people helping me. because they don’t understand, I used to say you know when I was doing direct response on google I’d say you know, I do paper clip advertising you know, and for a long time all my friends thought I sold paper clips. I mean they don’t know, they don’t know what paper clip is. You tell people you saw on Amazon they figure you are like an EBay prostitute you know, you go shopping at yard sales. I mean they just don’t know, so I just say look I’m semi- retired I do very little and got six people helping me and then they just look at you like you are stupid. So, that’s the best answer for me or if it’s someone that is halfway intelligent and understand entrepreneurship I just say I do online marketing, simple.
David Aladdin: How have you positioned the six other people in your organization?
Shawn Heart: Well what happened was I discover the Amazon opportunity sort of accidently because I was always a product guy like I said and one of the guys in my network called me probably August 2013 just guessing and he said “Hey, I’m talking to this guy that’s doing 50 thousand dollars a month. He is selling products on Amazon” You know and this guy was in Orlando at the time I lived in Indiana. I was like alright, I’ll be there in the morning Bruce or maybe tonight. So I booked a flight you know, I mean that’s what I do. It’s like our whole mantra with our coaching business is “Quick Fast and then Hurry”. I don’t sit around and wait on anything. I just do it. When we made this call, you were like well I was expecting an interview. I was expecting just a telephone conversation so, but we did it. Didn’t we?
David Aladdin: Yeah, I was cool with either one. Everyone is listening now.
Shawn Heart: So I ran out there, met with him in Orlando and this guy showed me. His name was John, bless his heart. He and I don’t get along anymore because we have different value systems and we just didn’t really mash which is really strange for me. I usually get along and love everybody. So, I wish him the best but he just has a different mentality basically he said “Look I find a hot selling product on Amazon. I list a similar product on their listing and you know, I sell it and I’m doing…” He showed me all the stuff he was doing and I’m like “You know John really what you are doing is illegal because what you are selling is not the same thing that they are selling.” He’s like “Well, it looks similar. No one cares” you know like, he was delusional, he was selling counterfeit product and he thought it was real because some guy in China told him that, they just brought it out the back door. So, I just don’t like to associate with people like that. I wish him the best but we just don’t think alike.
So long story short I went home…
David: It was an ethics issue.
Shawn Heart: Yeah, I mean. I just have something fundamentally wrong with stealing from other people its intellectual property. So and I have been on the other end of that so many times so I know what it feels like. Si, basically I went home you know and this was like, I’m two years into my second retirement you know, I’m enjoying my family and we are travelling and stuff. But as an entrepreneur you always want to have your finger on the pulse, you want to have something, some kind of game so that you can stay focused or stay, I don’t know sharp or relevant. You know how many old folks you know, you know like these old sales guys that still go around knocking doors and you know, trying to sell vacuum cleaners door to door. I mean people don’t buy like that anymore. I just order my groceries on this cool new ape called Shipped, have you seen it?
David Aladdin: Yeah.
Shawn Heart: It’s amazing.
David Aladdin: One day ship, I think its same day delivery and they use [INUADIBLE] through the AP.
Shawn Heart: It is.
David Aladdin: It’s like the Uber in shipping.
Shawn Heart: Yeah, it is. While we use Amazon prime now but you can’t get fresh groceries like meat and produce. So I just did it for the first time today and I love it so.
David Aladdin: That’s in Tampa.
Shawn Heart: I don’t even know why.
David Aladdin: It’s got to be in Naples.
Shawn Heart: I went off on some kind of tributary there but what the heck were we talking about David?
David Aladdin: We just…
Shawn Heart: My old age man I’m ADD.
David Aladdin: Don’t anything, yeah.
Shawn Heart: yeah. Oh yeah John. So anyway I go back and I’m like “Ok, this is a good opportunity.” This is like we are looking at fourth quarter in the face in 2013 and I don’t look having kids or not but back then, there was this super-hot thing called Loom Band, do you know what that is?
David Aladdin: No.
Shawn Heart: Rainbow Loom. Well basically, I’m going to shut my notification because of fly I’m tired of hearing that.
David Aladdin: Alright so the Rainbow Loom was a product that you know they have all these little miniature rubber bands and the kids would as Loom to twist them together and make a bracelet out of it. So I see it on Amazon, its selling for like 18$ it’s not branded it’s just a cheap old product it just says Loom kit you know, no brand 34 sellers if that tells you anything on one listing. So I did a little research and found out I could buy it from some of my people in China for like a buck sixty. No one could compete with me because they were all buying from local hold sellers here in the us. They are paying like 3, 50$, 3, 75$ which is still good mark up. But you know, 17, 18 bucks. So I get like 20 thousand of them on the way and they get here ocean freight just in time to get them launched and I think that first, that first in 2013 my first time on Amazon I launched that product and I did a little over a quarter million dollars in sales you know, in September, in October and I think I sold out November. So, I had other products that I had going to like I was trying to arbitrate thing and all these other stuff so, this kid at the time he was a kid Seth, he actually is my business partner now.
David Aladdin: How old is he?
Shawn Heart: He actually… He is 27 now so, at that time he was like 24 I guess. He emails me, he did internship in my marketing company before I sold out and you know worked, his… My personal assistant and his mother were good friends, so he emailed me or something and said “Hey, I’m looking for a mentor. You know I’m out of college now and I got all this stuff going on but I want to start my entrepreneurship”.
David Aladdin: He’s a hustler.
Shawn Heart: So, Yeah exactly. So I met with him and he turns out, he is a hustler a lot more stable then I was. I was a heathen growing up you know, I didn’t really have anybody tell me what to do. But he come from a very structured, I mean the kid still lived in the house he grew up in you know he was like Brady bunch style you know. He didn’t even move out until he got married.
David Aladdin: It reminds of Wolf of Wall street. Did you see that movie?
Shawn Heart: I did. I love that movie. I’m glad you seen it.
David Aladdin: I was like, I will quit my job right now.
Shawn Heart: Yeah, yeah.
David Aladdin: Let me join you.
Shawn Heart: Exactly. I love that movie. It’s one of my favorite.
David Aladdin: It’s one of my favorites.
Shawn Heart: And I have I have referred to it a lot and people are like “I haven’t seen it”. Well, you are doing yourself a good service. So anyway I’m watching the clock here but.
David Aladdin: Yeah.
Shawn Heart: But Seth he reaches out, so I’m like “Ok, I don’t have anything to do.” and I just started doing this whole thing on amazon. So I met with him at Starbucks and you know, I’ve always been blessed with a nose for opportunity and you know high energy. People call hipper forever, but I’m always while people sit around while talking about doing something I’m doing it you know. So, I’m out there. I got a garage full of products from China, I’m pedaling on Amazon you know, it’s working out pretty god and Seth meets me and you know. Oh that’s what I was going to say so people come to you and would be like “David give me an idea? What I can do for my business? What I can do to start a new company? “And you talk to these people and they do absolutely nothing with it. That’s what I’m used to.
So I sit there and meet with Seth at Starbucks, I buy him you know, five dollars cup of coffee and then I remember who he was, so we just got to talking. It was like you know I’m ashamed to tell you this Seth but what I’m doing right now is I’m selling on Amazon you know, last time this guy seen me you know, I probably had 100 employees we were doing you know a couple hundred thousand dollars a day in sales and he is working in my marketing department literally attaching dollar bills to direct mail pieces to go out. Old school you know, to our customer list.
So, now I’m selling on Amazon which sounds crazy but I gave him a quick thumb nail sketch of what I was doing and he called me that night. He goes “Alright, we need to get back together” I said “Why?” he goes “Well, when I got finished I went back to my cubicle” he worked at Simon Properties at the time, said “I went back to my cubicle and I listed, I created a seller account. I listed something online and it sold. Now I got to go ship it in the morning. So what do I do next?” I’m like “Wow! This is crazy. This kid actually did what I told him to do. I like that”.
So I met with him a couple days later and I said “Here’s what we should do. I see an opportunity here in Amazon but I really don’t want to work this hard. So here’s what I’ll do. We will form a partnership you know our company will be built around selling products on Amazon. You put in 16 hours like I did when I was 24 years old, you manage the company, and you handle everything. I’ll just plug you in with all my resources and my network and my experience and you know we will build the company from therein not going to come to the office every day, you’d be lucky to see me once a week but ill support…”
David Aladdin: Smart, yeah.
Shawn Heart: Yeah. So we did and this where I’m answering your question about getting these six people. So we kicked it off and you know we did real well right from the get go and you know, we didn’t know anything about private label but I accidently discovered it because I had to create a few products that I had. Had to design a listing and I just made up a name, I mean I would literally in those days. I would go in just type in a UPC code and if it didn’t take, I’d just make something up and make something up until, until…
David Aladdin: Interesting.
Shawn Heart: the system finally said “ok, I’ll take it.” You know, just trying to get stuff listed. So, we did like 50 thousand maybe like 30 thousand the first month in January. But you know I met with him, I think this was probably November and that was when I proposed that and he goes “Yeah, I’ll do it.” and I said “Do you got 50 thousand dollars?” He said, “Well no, I just paid off my student loans and data “. So, I said alright. Well I have 100 thousand dollars’ worth of inventories so if you can buy in for half of it, we’ll just wait until January. We sell it down and start our business in January which we did. I did like 30 thousand, 50 thousand, and 70 thousand by March and then we started discovering private label and things just took off from there.
So, first thing we did David was just recruit from within our network you know, friends and family and then they would know people be like “Hey, I know somebody that can build websites”; “Hey I know somebody can do customer service”, that type of stuff. So, now we have seen Seth and myself which I don’t do much but, we have Michael, Shane, Tasha, Zii, Eric and somebody else. So, we have like there’s eight people and you know it’s just kind of you just grow with the over time.
David Aladdin: Let’s talk about China.
Shawn Heart: Ok.
David Aladdin: You travel to China a lot, how often do you go?
Shawn Heart: Well, I go, right now I go twice a year. I used to just go for myself actually and what happened was when we had, when we got our business kicked off at that point and time me hadn’t been going to China. I told you know, I’m not going to China anymore it’s really not a fun exotic place to go anyway. I call it the arm pit of the world. So, I didn’t like going there but the opportunity was available for me to go to build our business because we decided in 2015 we were going to add 350 new products to our Amazon catalogue.
So I booked this trip to China in March 2015 and I told Seth, he was like its really tight wide close to the numbers, been counter or accounting type guy. I was like “look man, I’m 6 foot 6 and half. I don’t fly 18 hours coach, so my ticket is going to be ten grand that’s just, you just will have to live with it” you know and at that point we are doing like, I don’t know four or five hundred thousand dollars a month anyway. So, it was small compare to the whole overall picture. But he is like “Wow! Ten thousand dollar ticket.”
Now this is a kid that never left home until he was like 21 years old. So you know where his head is at and I’m like, “Well yeah its 18 hour flight basically, 14 hours to Tokyo and then on. So its ten grand I was like, but I have an idea.” All these people that we were sharing Amazon opportunity with like we started this local meet up group, just because I wanted everybody to do it because it was so easy.
So I started training all these people in Indianapolis and I was like “here’s what I’ll do. I’ll offer to take four of those people with me and plug them in to what I do and charge them 25 hundred bucks that will pay for my ticket. Fair enough?” Ok, so we did it. Well those four people was like “Bam!” I us sent out an email to like I don’t know about 25 people I had in my network at the time and said “Hey, who wants to go to China with me, I’m going to source new product”. Well everybody wanted to go. So, I picked four people and then, and this was probably like in December of 14 or like January 2015 and over time all the sudden people were like “Hey I got a buddy, who want to go”; “Hey, my wife wants to go”; “My business partner and these two guys” and somebody, next thing you know I got 40 people like 45 people going to China with me and so what we did we kept, we took them over there for three days and basically expose them to the secret market place that, you know I’ve been going too for years buying product, where you can literally look at 80 thousand whole sale stales that are all represented in different factories from all over China and sit done with these people and put in an order to buy small quantity of a product, anywhere from one piece, 50 pieces or 5000 or a whole container load.
Which really opens up a lot of opportunities to the people that understand Amazon, you understand when you add product you make more money. You know, when you add super buyable product that has a high profit margin on Amazon you make more money and you just build your business that way. So, I had all these people there and I really enjoyed being on the ground in China with all these folks because I’m sitting here pouring all this knowledge over the years that I’ve accumulated into these people and I’m watching them go out there and implement all these strategies and there source in product and they are all juiced up over it. You know, which get me more excited.
But what I hated about it was all the logistics to get people on the same page and charging them for the trip and I was uncomfortable with that. So, I partnered up with the marketing group Rapid Crush which I’m sure you’ve heard off. Jason Fladland and, Fladland and I we decided “Hey, Let’s do this together”. Ok. I’ll take care of everything in the Us side, you take care of all the stuff in China and we will split it. So we put the price where it should have been at that point, at five grand a piece you know, we got more of a higher tier person. You know, that was more positioned to grow their business versus someone who is kind of working of their credit card you know. Nothing against those guys but you know, the more you charge for something the higher caliber people you normally get. As far as like business you know.
David Aladdin: Works for the costumers too, you know the products that you see you get different types of costumer based on the price point. But just to interrupt, this is how I actually found Shawn Heart for those tuning i.e. was looking for a way to go to China and I didn’t want to go by myself. I was looking for someone that knew the lands that could direct me right to where I could search for product right away. So I actually might be going in March if people want to go to that. You can also meet as well.
Shawn Heart: You are going.
David Aladdin: What’s up?
Shawn Heart: You are going because I just extended it to you. Now everyone knows. I offered you as eat right next to me so you have to go now.
David Aladdin: Yeah, we will check the calendar and see if the girlfriend is ok with it.
Shawn Heart: We’ll just to rewrite your calendar because it’s going to happen. Because when you are exposed to that opportunity David, it literally like trying to take a drink from an fire hydrate.
David Aladdin: Yeah.
Shawn Heart: You are going to be drowning in opportunities.
David Aladdin: How many products do you guys source you know on that trip?
Shawn Heart: The last time we were there I actually tracked it. I know you software people, you have been tracking it from day one but our group last time. There were 80 some people with us and we, they sourced over 15 hundred unique products in three days.
David Aladdin: Yeah, that solid.
Shawn Heart: Yeah.
David Aladdin: One of the things that I usually, you know.it takes many days to just get that product sent to me and then making sure that product is ok. I think it’s actually the smartest thing to just talk to the vendors like face to face you know. Feel the product and see if it’s a good match and then just make that logical decision at that you know point and like, probably get the best price too.
Shawn Heart: Have you. Are you, you are familiar with Ben Cummings right?
David Aladdin: I’ve heard of him, yeah.
Shawn Heart: This guy, this guy is smart. He does the some type of Amazon like coaching program or something. So he was on my last trip kind of like you are talking about now. He was reluctant I met him in at a conference in Vegas and he is like “I’m never going to China. You have to knock me out and drag me to China”. Well I got that doing a little presentation on the opportunities in china, his wife was like “hey Ben, you are going to china”. So long story short he is with me ok, he’s smart though. Because he took a lot of this video footage of him and I walking through the market place buying products and we spotted three or four opportunities right there together in a rowed up orders.
David Aladdin: Yeah.
Shawn Heart: So, imagine this ok. Right now most people what they do, is they look on amazon they want to look at the best sellers. Then they go like juggle scout or one of your software’s or something, they want to check and see what people are doing. Alright. Which is fine, I mean I never let software make a decision for me but I allow the software to validate something that I think it’s going to work.
David Aladdin: Yeah.
Shawn Heart: And then their next step is to go to Alibaba or MadeinChina.com something like that. See what the price is and then maybe if there, if they have that you know the fortitude to do it. They will order a sample to come you know, you are talking 30 days later they’ll check out the sample maybe they like it maybe they don’t then they lose interest. So here’s what I want you to imagine. Go to a market place that has 80 thousand whole sellers ok, that are all there representing direct manufactures alright. The pricing is good David, don’t get me wrong but it’s not the number one benefit.
The number one benefit is being able to being exposed to all this opportunity and you can, like you say you find this product “Hey, these sunglasses look cool. I think they will sell “you know, you can do your due diligence if you want and all that. But what we train people to do is go find opportunity, use your instinct and then when you get back to the hotel which is literally across the street with high, you know high speed Wi-Fi. Then you can do your due diligence and validate it. But you sit down with this manufacture on the spot, face to face toe to toe you know and not. You know in real person you say “Look, how much is this?” and they will go “Here’s the price” and the price is always shocking you are like “Wow! That’s cheap” but you try not to like jump up and down, grab you pipi right. You try to stay cool and you are like “Ok, what if I buy 5000 pieces” Boom, they just knocked another 20% off and you are like. “Ok, wow! This is an opportunity” and this is when it hits you like, I don’t want anybody else to know about this because this is like my secret honey hole and that’s how I used to look at it and then the guy says “Well what kind of packaging do you want?” and shows you on this wall, “You want this packaging, you want an OPP bag, do you want a gift box, do you want a plane white box? Here’s the price for the box. Here’s the shipping, here’s the manufactory led time. Here’s the shipping time. Here’s you landed cost.” You walk away with a written order ok.
Then you can go back to your hotel and you go “Ok, this makes sense. Let’s go ahead and do it.” so you email me and say Ok, I wanted to submit this purchase order. Where do I send my deposit?” I mean you negotiate your payment terms, you negotiate your price, your packaging, your color all the customization right there on the spot and within minutes you walk away with a sample in hand and the confidence that you already have that product bought at the best available price. And what happens if you go three doors down, you find another manufacturer. He has the same product, he may be 20% cheaper. You just take that purchase order tear it up, throw it away and write a new one. I mean no one’s mad at you and being able to have that opportunity right there in front of you for four days ok.
David Aladdin: Yeah.
Shawn Heart: And the entire market place is organized by commodity. Like this whole floor in this building is only selling claw hammers, in the next isle selling toilet seats, in the isle after that is baby buggies and the horse, you know buggy wipes or whatever and so you look at a map and you are like “Ok, I want to sell kitchen products”. Well you go to building number three, third floor, isle H, I and J and that’s pretty compelling right.
David Aladdin: Yeah, for sure. My mind is just moving right now, really fast trying to think of you know, how many products do I got sourced, how many, how much money I need to have in surplus to figure out how many products I want to source there and just the opportunities that is available you know, with that many products in one spot so.
Shawn Heart: Yeah, well can actually read all about that on. I set up a website about it. It’s called www.yiwuguanxi.com have you been there? Was that how you found me?
David Aladdin: Yeah, I think. It was either YouTube or that.
Shawn Heart: Oh ok.
David Aladdin: I will put that in the show notes as well.
Shawn Heart: Ok. yiu or yiwu which is the name of the city, YIWU and Guanxi just means connections in Chines, G-U-A-N-X-I. www.yiwuguanxi.com you can read my whole story about how it all came about, what I’ve done there. You can see videos and pictures, it’s pretty awesome. I love doing it now because, everybody.
David Aladdin: It sounds fun. I think it’s fun. I think it would be fun to network with people. For those tuning in, I’m going to try to get like some type of AMZsecrets discount for people listening. This was not planned at all but.
Shawn Heart: Well the problem is David we can only logistically handle 100. . .
David Aladdin: Yeah.
Shawn Heart: Because here’s what we are doing. We pick you up at the airport we take you to your hotel, we are talking about the most foreign of foreign countries here ok.
David Aladdin: Yeah.
Shawn Heart: Nothing is like it is here in the US. But My Guanxi my network in there helped me put this together so we are going bring you into the hotel. The reservations are already made for you in a five star hotel that’s just barely over a year old. You’ll be exposed to all western food so you not have to worry about all that crazy Chinese food and it’s not like the China buffet in Naples trust me.
David Aladdin: I like Chinese food.
Shawn Heart: You won’t like Chinese food in China though because it’s nothing like the china food that you are used to. Anyway, we pair you up with a translator who is actually going actually escort you around the entire time you are there. So, you have that same level of comfort that you would have if you went to Miami or New York to a trade show. So, this person is going to be hand to hand the entire time. English translator for you, so you can sit down, negotiate in real time with manufacturers and suppliers and actually come up with a deal that makes sense for your business and walk away with an order and with the confidence knowing that I’m going to give you all my vendors, all my supplier or my service suppliers, logistics companies, export companies, procurement agents, costumes import agent here in the Us. Everything that you need to walk away basically with 20 year education in three or four days, you’ll have all the same contacts that I have. That’s what’s amazing for people and then when they come back and they are like “Man, I can’t believe I didn’t go with you the first time I had the opportunity”, because honestly David the only thing I regret about going to China is that I didn’t do it when I was very young. I mean I didn’t go until I already had money you know.
David Aladdin: Yeah.
Shawn Heart: And had I done that, when I was coming up. You know when I was a teenager in high school selling roses and thing like that. It would be a totally different world for me right now.
David Aladdin: What are the. I feel like 80 thousand square ft. is like a ton of area to cover. What would you recommend people to think about before…?
Shawn Heart: 80 thousand? No we are talking about like 60…
David Aladdin: They said around 80 thousand square miles.
Shawn Heart: 80 thousand square feet. was my warehouse. We are talking 80 square miles, ok.
David Aladdin: 80 square miles.
Shawn Heart: That’s the biggest convention center you have ever been to. Like the Sands in Los Vegas maybe.
David Aladdin: Maybe, I don’t know. That’s a big question. I got to compare everywhere.
Shawn Heart: alright, so let’s think of. You know how big is a football field is?
David Aladdin: Yeah.
Shawn Aladdin: It’s like 50 yards by 100 yards ok. So imagine, ok. A football field times let’s say eight, eight football fields together ok. Alright! That’s one floor of one building.
David Aladdin: Yeah.
Shawn Heart: Stack it five high, ok. So you got eight football fields times five.
David Aladdin: I’ve heard it, yeah. I’ve heard it’s so insanely big.
Shawn Heart: That’s one building and there’s five building. So, there’s no way. You can spend the entire year there and you are not going to cover all the ground. That’s why you need a plan, you need to focus, and you need training. What we do is we bring you in and team you up kind then we give you the training that you need every morning we have a meeting which is like “Here’s your plan you the day” and every evening we have an hour, two hour debriefing.
First hour you will spend in a small group with a mentor that’s been there before. Then the final hour we do Q and A and I give you strategies on how to grow. It’s pretty, it’s a pretty detailed instruction plus you get a training manual you know, we have all you cheat sheets all the stuff that we present on is in the manual, ok. And then you basically, everyone in the market place already knows our group. So, just having that tag that says you are part of urn group you get instant credibility. Because you have talked to buyers before and like “No you just.” You are just a dumb kid you don’t know what you are talking about; you sell on Amazon get out of here”. Well they know my people are for real so you get instant credibility and you know, then you get like I said plugged in all my service suppliers. But enough about that, you know the information about that. Hit me with the Q and A we got seven minutes lefts.
David Aladdin: Yeah, we got five. We have about five minutes left. I was about to say that. Ok. Is there anything that I missed, I know, like I feel we could have gone into so many different things and time went by really quick? Amazon marketing services, I’ve heard you talk about it before versus Amazon seller PBC. I’ve heard Amazon marketing services you need that vendor express account right?
Shawn Heart: Right. Now that’s something David you are going to have to interview my partner about Seth because he manages that on a day to day. Remember what I do for my business, financial support and opportunity seeking. I know just from doing our own coaching and stuff that the MAS is absolutely no brainer and you cannot have a seat at that table unless you either have vendor central or a vendor express account. But every single time that someone that we are trying to help out Seth says “Are you doing AMS?” Amazon Marketing Services, I say “No”. That’s the lowest hanging fruit out there. You absolutely have to pull a trigger on that, because I mean it’s a no brainer its easy free money so. I mean yeah. I mean we can even have a part two of this if you want sometime because. . .
David Aladdin: For sure yeah. I guess just to extend, I don’t know if you know the answer to this. You have to have to sell the product directly whole sale to Amazon in order to advertise AMS wise or?
Shawn Heart: No you don’t.
David Aladdin: You don’t ok.
Shawn Heart: Because we have both. We have several Amazon seller accounts based on different brands. Because you know my whole model is to build a brand and sell it. So we have some accounts that actually have vendor central relationship, where Amazon buys our product and resells. But all of our other accounts just have vendor express. So you don’t actually have to whole sale to Amazon.
David Aladdin: Awesome, that’s one of the biggest questions I have always had. And let’s close out, what are you trying to get from your brand or brands? Wants your close out? Your acquisitioned target?
Shawn Heart: What we try to do is build where it does at least a million dollars or close to. We have one now listed for sale, I think needed 900 thousand so we try to do at least a million dollars in net profit over the trailing 12 months and we try to sell it for three and half time earnings. So for a business it does a million dollars we list it you know for like 3.7 and we will take anywhere 3.2 to 3.5 something like that, depending on the business. If it’s an Ever green product you know like we have a bidding product that we are selling that gets a better multiple because it’s not seasonal. Each one is a little bit different. We have a fitness brand that we are trying to sell, that is being sold at a four times multiple but that business is a little bit premature. I think it trailing 12 months is about 500 thousand in net profit. So we are trying to sell it for two million, so we will see what happens there.
David Aladdin: Who are you guys reaching out to potential investors or are they coming to you?
Shawn Heart: They are coming to us. I have a hand full of brokers that we use when we list a business, depending on what kind of business. Like if it’s a retail arbitrate business it’s different like my friend I told you. Does two million dollars a month that’s a different buyer, that’s a different caliber person. When you get, if you can have a business doing three to four, five million dollars in annual net profits; then you can look more private equity and those types of buyers that are more sophisticated but if you have a business you know its two, three hundred thousand to a million in net profit you are dealing with a lot less sophisticated type of buyer. You need to make financing so there’s, you know it’s a different process and it’s a different costumer.
But I have brokers that I can share with you and your audience, I mean when the time comes I’d like to look at what you are doing and then I can make a suggestion. Not just put a list of them out there you know.
David Aladdin: No, yeah. How about you give us a list in March.
Shawn Heart: I will definitely do that. Hey, guess what just showed up my groceries.
David Aladdin: Awesome. Well anyways Shawn it was awesome to have you on the show. We appreciate you coming on and sharing your expertise and sharing your golden nuggets. Definitely have to get you back on the show and see you in March.
Shawn Heart: Yeah.
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