070: The Story Behind Two Successful (But Very Different) Online Businesses with Steve Chou

Welcome to episode 70 of the Food Blogger Pro podcast! This week, Bjork chats with Steve Chou from MyWifeQuitHerJob.com about building two eCommerce businesses – one that sells physical products, and the other that sells digital products.

Last week Bjork interviewed Jocelyn Delk Adams from Grandbaby Cakes about building a brand by way of national TV. To go back and listen to that episode, click here.

The Story Behind Two Successful (But Very Different) Online Businesses

Steve’s wife Jennifer decided to quit her job in 2007, and within one year replaced her six-figure income with an eCommerce business selling physical products. Steve started blogging about how she did it and later quit his job – fully replacing his salary – with an eCommerce business selling digital products.

These two businesses had one thing in common: they were eCommerce businesses. Everything else, from the customer acquisition to the time it took to generate a decent income, varied widely. However, Steve and his wife have learned a lot over the last few years running their two eCommerce businesses, and today Steve is here to share some of his knowledge with us.

In this episode, Steve shares:

  • What two businesses he and his wife run
  • Why one business wasn’t as profitable as the other in the beginning
  • How to find what products to sell
  • What it’s like working with vendors in foreign countries
  • Whether he would recommend selling physical or digital products
  • What the best way is to sell your first physical product
  • What FBA is and why you might use it
  • Why they stopped selling on eBay
  • How he markets their digital and physical products

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Bjork Ostrom: This is the Food Blogger Pro podcast and in this episode we talk to Steve Chou about E-commerce sites and the day that his wife quit her job. Hey there everybody, this is Bjork Ostrom. You’re listening to the Food Blogger Pro podcast. This is episode number seventy. We’re talking with Steve Chou all about E-commerce. Steve and his wife Jennifer started an E-commerce site and they built that into a really successful site in a really short amount of time. One of the things that I love to do on this podcast is talk about ways that you can build a brand or build a business online that isn’t just content related.

Often in this industry and in this space we think about content, so we think about building a site with a lot of traffic that comes organically that we monetize through ads or affiliate income but in Steve’s case he’s going to be talking about how we can do that through an E commerce site and potentially get it started a little bit earlier with creating an income versus building something up over the long term with a content based site. I can’t wait to jump in, without further ado Steve, welcome to the podcast.

Steve Chou: How is it going Bjork?

Bjork Ostrom: Yeah, really good. Excited to have you here. For many different reasons as we were chatting about before the call we have a lot of mutual friends but we’ve never connected before so it’s an honour to E-meet you.

Steve Chou: Oh yeah, nice to meet you too man. I have heard a lot about you as well.

Bjork Ostrom: Great, yeah. One of the things that I want to do, we’re going to be talking about E-commerce specifically and your blog as well but one of the things that I’m so curious about is your process transitioning to working on your businesses full time. Much like us you had a really slow transition with leaving your nine to five job as an engineer and then transitioning into working on this full time. Can you talk a little bit about your reasoning behind that and what that look like in terms of time transitioning over into working on your businesses full time?

Steve Chou: Yeah. The reason why I stayed working for so long is because my job … I was a electrical engineer. I was a director of microprocessor design and it kind of exercises different parts of the brain. I studied engineering for I think seventeen or eighteen years and I was just not ready to give that up. Even though my job was such a small fraction of the overall household income, I needed that stimulation because doing E-commerce and blogging and podcasting, I didn’t feel like it would fill all those categories in my brain to keep me interested in.

Bjork Ostrom: It’s interesting. We occasionally talk about in the podcast the different types of income. There’s the income that we think about normally and a lot of times with business oriented podcasts like this that’s the one that we can focus on but I think it’s important because you talk about not only the actual income but also this income like mental income. Like, are you being mentally challenged or other things that you’re interested in working on. There’s relational income which is something that you sacrificed like you had said here.

Like you’re at home and you’re working alone which may is be a nice thing but if you do that too often eventually it can be like, “Ah, I’m alone all the time.” There’s all these different types of income. It’s interesting to hear you talk about that. One other things I’m curious about is what did that timeline look like for you? How long did it take from the point that you were making a full time income from the businesses to transition into working on the businesses full time?

Steve Chou: Great question. I would say … The online store replaced my wife’s income first and that happened after a year. For the blog it was probably about three years and so I started in 2009, so may be it took me four years to do it.

Bjork Ostrom: Can you talk a little bit about those two businesses? You would reference them and I know what they are but I’m curious to know how those operate and what those look like as independent businesses.

Steve Chou: The first business is called Bumblebee Linens. We sell wedding handkerchiefs and linens to special events people and consumers. That one all started because my wife just hated her job. Every morning she would give me this long face and complain all the time. We just knew she had to go out. When she became pregnant with our first child we saw that as a great opportunity to transition. Today that business is run by my wife, like the day to day stuff and I handle all the sales and the marketing and the promotion for it.

Bjork Ostrom: That’s Bumblebee Linens?

Steve Chou: That’s Bumblebee Linens and the warehouse then the place.

Bjork Ostrom: That started then in when?

Steve Chou: 2007.

Bjork Ostrom: Okay, and you said you have a warehouse?

Steve Chou: Yeah and we have employees that do all the fulfillment and that sort of thing.

Bjork Ostrom: I would love to talk to you a little bit about that, just some of your reasonings behind that and really dig into the E-commerce site. Also I’m curious about your blog because this is another revenue producing business and another entirely different thing from Bumblebee Linens. Obviously you talk about Bumblebee Linens there but can you talk a little bit about your job or job? That was a foreshadow. Can you talk a little bit about the blog?

Steve Chou: Yes. What’s funny was after we started the E-commerce store a bunch of my friends who were starting to have kids and wanting to stay at home as well started ask me all these questions and instead of just telling the same stories over and over I decided just to document that on a blog. What ended up happening is that it got a lot of traction not from my friends but from just random people and that’s how the blog evolved.

Bjork Ostrom: Okay, so the blog is essentially is telling the story of growing Bumblebee Linens.

Steve Chou: Correct.

Bjork Ostrom: Got it.

Steve Chou: Anything I try something on the store I tend to blog about it.

Bjork Ostrom: Got it. It’s interesting, we have similar not exactly the same but similar types of structures where you have your business that people would see as kind of the front facing. For us that’s Pinch of Yum the food blog that Lindsay runs and maintains and then behind that it’s talking about what’s involved with that. It’s kind of the layer above it talking about the process that goes on with it which I think for … It’s a common theme because so many people are interested in it that there’s this realization that, “Okay, there’s potential to teach people about this.”

Steve Chou: Yeah, absolutely.

Bjork Ostrom: One of the things that I thought was so interesting was there’s a graph that you have on your blog that talks about growing the revenue from the different businesses and there’s a point where the blog like hooks up and surpasses the revenue from the E-commerce store. Can you talk about that a little bit? Why you think that happens? Do you think that’s a common thing in terms of growth from a blog versus an E-commerce store?

Steve Chou: Yeah, I think it is really common. With E-commerce you’re selling something right away and you get revenue right away. That’s why the curve is much steeper early on in terms of how much you can make but when you’re selling physical products there’s overhead, there’s fulfillment and all that sort of thing. After a while even though you’re growing, let’s say you’re growing double your costs are also proportionally growing as well. That’s why the growth curve kind of flattens outwards. With a blog there’s no expenses but in the beginning no one is reading you and you don’t have an audience at all but once you start getting an audience and you start selling digital products or however you’re making money, it just shoots up and it’s pure profit.

Bjork Ostrom: Got it. Interesting to think about in that the E-commerce store fulfilled the need that you had to replace your wife’s income and what’s your wife’s name?

Steve Chou: Jennifer.

Bjork Ostrom: Jennifer, okay, so to replace Jennifer’s income and you were able to do that relatively quickly, is that right?

Steve Chou: Yeah. I mean, we basically did a hundred thousand, a little over a hundred thousand in profit in our first year.

Bjork Ostrom: Which is a really, really good salary, right? It’s more than most people would make in a normal job and it’s profit so it’s actually money that you’re getting back in the first year which is also so incredible. You can do that because I would assume you can do stuff like advertising where you know the return on like the margins on the product and you can right away be selling something from let’s say not day one because it takes a while to set up but right when you’ve launched there’s something that you can be selling and traffic maybe isn’t as big of a thing. Is that right?

Steve Chou: Traffic always is a big thing but if you’re buying ads there traffic is very targeted and so the chances of a conversion is much higher. When we first started that first year we got traffic from ad words, organic traffic from SEO and then we also had these planners that would buy in bulk from us.

Bjork Ostrom: These would be wedding planners?

Steve Chou: Wedding planners or event planners.

Bjork Ostrom: Got it, okay. Then on the blog side you’re going along documenting this entire process. It’s two to three years and you’re not really creating any income from it. Is that right? How long was it before you finally reached the point where it’s like, “Okay, now I’m creating an income from the blog.”

Steve Chou: I guess it depends on what your definition of income is. It started making a little tiny bit of money the first couple years but it wasn’t until year three that I could say, “Hey. I could quit it and I’d be okay.”

Bjork Ostrom: Got it. That was from digital products related to E-commerce?

Steve Chou: No actually. That was just straight affiliate revenue and advertising at that point.

Bjork Ostrom: Okay great. I think people would understand that. You’re running ads, CPM based ads at that point?

Steve Chou: CPM and also Ad sense.

Bjork Ostrom: Okay and then also affiliate commissions for certain products that you were using maybe a host, maybe it’s an E-commerce site that you use or recommend or software or things like that.

Steve Chou: Yeah, basically all the products I was using for E-commerce I had affiliate offers for.

Bjork Ostrom: Okay got it, cool. Good, I want to lay the groundwork a little bit just to get an idea of where things were at for you. I think it’s interesting for people to hear that. One of the things that I’m so excited to talk to you about is this idea of an E-commerce site because I know that a lot of people that we talk to are interested in building out their own thing. It’s such a common refrain that we hear that people are interested. Whether it’s their spouse in your case initially or them individually to leave their job or quit their job or maybe they’ve already done that and they’re looking to supplement their income in some way.

I know that it doesn’t just have to be content over two to three years where you slave away, you don’t create an income and then finally it’s able to switch in a sustainable income. There’s also all these other potentials for building a business E-commerce being one of them. When you first started Bumblebee Lenin’s way back then, did you know that this was going to be something that had the potential to create an income right away? Had you done case studies or did you just jump in and say, “I hope this works. Let’s see if it does.”

Steve Chou: Our standards were actually a lot lower back then. We were shooting for about sixty K and what happened was we were selling on eBay a little bit before we started that. Like some of our products to just kind of see if they are moving. Okay so, if we backtrack a little bit the reason we got into handkerchiefs was because my wife knew she was going to cry at the wedding and we looked all over the place for handkerchiefs, couldn’t find here in the US. The only place we could get them was from China and we had to buy a whole bunch. We ended up using like five or six of those and then we sold the rest on eBay and they moved really well back then. When we came time to start the business we got back in touch with that vendor and started selling on eBay again.

Bjork Ostrom: That’s something that I actually did way early on and Lindsay rolls her eyes whenever I bring this up. I would buy shoes from district like a wholesaler here in Chicago and then I would sell them on eBay. One of the things that I remember being so amazed by was the fact that it worked. Like the fact that you could buy something for less than it cost then less than you’d sell it for and then somebody buys it and then you ship it out to him and then it worked.

I remember having all these shoes in my garage and feeling like, Oh my God.” You can start to see how that is a little bit of a proof of concept. When you’re selling on eBay is that what you were doing, you were kind of proving things out and saying let’s see if this works or was that, hey we have these extra things, let’s sell them and then once they moved you said I wonder if there’s something here.

Steve Chou: Yeah. Once they started moving we actually were thinking, hey maybe we could just do this entirely on eBay but the eBay income wasn’t enough. Like the stuff we were buying was moving but what we didn’t like was at that time eBay kept hiking up their fees and there were just people just copying our listings and all sorts of things. We realized that we needed to have our own site.

Bjork Ostrom: Okay. That was one of the questions that I wanted to talk to you about specifically this idea of an E-commerce site. You make the decision you say, “We know that we want to build out a site and start to build our brand” but where do you start with that in terms of software? Is it something like Squarespace or some pre-built solution like Shopify or would you recommend that people start creating their own kind of like custom set up.

Steve Chou: You know, it really depends on your personality and back when I started those services didn’t really exist and so open source was pretty much the way to go and that’s where we went. I’m an engineer and I really like being in full control of just about everything, like the code and everything. That was the route I chose and today I would still choose that route but I would say for ninety percent of the people they should go with a fully hosted platform like a Shopify or big commerce.

Bjork Ostrom: Okay. What was the open source solution that you used?

Steve Chou: OsCommerce.

Bjork Ostrom: Okay. You did all the coding yourself.

Steve Chou: Well, I had a base and over the years I have heavily modified everything but yes.

Bjork Ostrom: Okay, wow. What did that look like for you? Obviously you have a engineer mindset and background but to jump into that and to start to learn that, how did you go about doing it? Was it kind of copy paste and cross your fingers?

Steve Chou: It’s actually pretty straightforward. Compared to designing like computer hardware, like all this E-commerce stuff is conceptually easier. It’s not like you’re solving like algorithmic problems or anything like that.

Bjork Ostrom: Background as an engineer applied to some of this the coding for the site itself worked hand in hand in order to get you to a place where you’re able to do it.

Steve Chou: Actually my greatest struggle was all the user interface stuff because all that stuff was new to me.

Bjork Ostrom: Sure, cool. Great. The other question that I have is specifically about the product and in your case it kind of seems like the one that you started out with there was a need for it and you were able to build it out and it seemed like you lined up the dominoes and then they all tipped over and it worked really well. I’m guessing that’s not always the case with the people that you work with or just E-commerce in general.

What would your recommendation be for people that are listening and they say, “I want to start an E-commerce site but I don’t really know what to do”. Maybe they’re interested and have a certain passion. Would you recommend they go towards their passion or is it more about finding a product that has an opening in the market and then building around that.

Steve Chou: There’s a lot of research tools out there where you can find out exactly how much sellers are making. For example on eBay you can scrape the listings using a tool called Terapeak. For Amazon you can use a tool called Jungle Scout to figure out how much these sellers are making. It should always be a research based decision. I’m not sure what your audience is composed of but if you already have a blog and you already have an audience, sometimes you don’t even need to worry about the competition. You just need to worry about whether there’s demand for a product and you can just sell it.

Bjork Ostrom: Can you talk a little bit about something like Jungle Scout, so that’s in Amazon. You said it scrapes listings and then you’re able to tell how much people are making. Is that because you can research and see how much the product costs for them to sell or what does that process look like?

Steve Chou: It’s actually an interesting tool. I don’t know if you guys probably noticed but if you’ve ever gone to an Amazon listing there’s a small number at the bottom called The Best Sellers rank. It’s based on that. That number will give you a relative idea of how well a product is selling. What these guys over at Jungle Scout have done is they’ve correlated that data to real sales data. You can go to a product and you can get a pretty good idea of how much it sells in a given month.

Bjork Ostrom: You’re using this product, you’re plugging in using the software, plugging in some product and essentially what they’re doing is they have their little scraper.

Steve Chou: Database.

Bjork Ostrom: Yeah, that goes through and collects information in Amazon and more or less spits out the result of here’s potentially how much this product is earning for these individuals. Both with like how much it’s selling, what price point is selling for and then also it includes what you could purchase that product for or not necessarily?

Steve Chou: No. That you have to do on your own. A popular place to source products is like Alibaba or going to trade shows in China or around the US.

Bjork Ostrom: Okay. Is that what you guys do for Bumblebee Linens?

Steve Chou: Yeah, we go to China every other year to a couple of these trade shows that we go to and we meet up with our vendors, check out factories and that sort of thing.

Bjork Ostrom: Can you talk more about what that process is like? I’m so curious to know. Like are you doing business deals then in China? Is that different? Is that what you recommend people would do as well to start? Is that they would be going to these big trade shows?

Steve Chou: Starting out it can be intimidating to go to a foreign country like China. Personally I hate going there because the culture is different. I’m okay because I can speak the language a little bit but it’s just a different culture. I would say in the best case scenario you should go out there and visit your vendors because the quality of product and the relationship just drastically improves when you see them face to face. That being said there’s a lot of people out there who never see their vendor face to face. They do their communications via email or text based chat or Skype.

Bjork Ostrom: I just read the book, oh this is maybe a month or two ago Shoe dog. It’s about Nike and the story of building Nike. Have you heard of the Shoe dog?

Steve Chou: I’ve never read it. No.

Bjork Ostrom: Okay. I would really recommend that you check it out because I think you’d find a lot of fascinating tidbits about the process that they went through as they were working with people. At their time it was in Japan. They had a relationship with Tiger shoes and he talked a lot about what it was like to and then in their case it was letters because when they’re first getting started and how difficult that process was back and forth to get shipments on time and to get deliveries accurate and just how frustrating it was when they are first starting with those vendor relationships. Do you run into that at all or do you, the relationships that you have is it pretty smooth in terms of when things are delivered and delivered on time or is there a lot of inventory related back and forth and quality related conversations that you have to have?

Steve Chou: It’s much smoother today. When we first got started we didn’t know what we were doing and so yeah we had tons of quality issues and I would just give you a quick example here. We would ask for samples and then they would send us samples that looked really good but then when it came time to place a large order the quality drastically reduced. Or every time we hurdled that price and they ended up dropping the price they would send us a product that wasn’t up to quality. Like they cut corners to meet that price.

Bjork Ostrom: Sure.

Steve Chou: There’s ways around it. You can hire inspectors now to inspect the merchandise before it’s shipped over. In terms of scheduling you can incorporate some sort of discount in case they’re late. There’s a bunch of things that you can do but again it all depends on the relationship right? If they perceive that you are going to be a long term customer they’re going to be much more likely to help you.

Bjork Ostrom: They’ll be more interested in winning you over because they know that it’s not going to be a one time thing.

Steve Chou: That’s correct.

Bjork Ostrom: Got it. Let’s do, I would love to do kind of a little example and talk through what that might look like. A lot of people that are listening to this have some type of blog or website, maybe they have, it’s probably food related but not everybody that listens to this has food related content but let’s say it’s a food blog. They have recipes that they’re sharing and they’re interested in building out an E-commerce store. Something that can compliment their site and have another offering versus just like advertising or affiliate marketing or sponsored content. Let’s say they know that they wanted to be in like general kitchen supplies.

Steve Chou: Sure.

Bjork Ostrom: What is the first step that somebody needs to take as they’re getting into the process or starting to think about building that store out?

Steve Chou: We’re talking about physical products or digital products here?

Bjork Ostrom: Physical.

Steve Chou: Physical, okay. Because I was thinking for a food blog I would probably go the digital route first if you already have an audience but you probably already covered that in the past. Let’s talk about physical product.

Bjork Ostrom: Well can you talk about that just really quick, the digital side? Just any thoughts that you’d have on that and why you’d recommend going that way first?

Steve Chou: Yeah it’s just seems like a natural progression and it’s lower upfront cost. For example for my blog my wife quit her job, I knew I needed a digital product because people were just asking for it. If you have a popular blog you’re going to get a lot of emails number one and you’re going to get a lot of questions. I’m sure you get this too with your blog. People will start asking for stuff and you’ll discover patterns. Then you can send out surveys to figure out what they would like and then you could create a product that addresses those needs and then sell them.

Bjork Ostrom: Got it. First step being, hey if you’re getting a lot of emails about a certain subject or a certain question about your blog follow up with those people and say what specifically is it that you’re looking for essentially with the survey. What would you be interested in purchasing? Taking that information and then building some type of digital product around that.

Steve Chou: Yeah, and so we can talk about that a little bit before we get into the physical products but for my blog the way I launched because creating a digital product was pretty intimidating to me. Like I had actually tried to write a book at one point and it was just a drag. What I ended up doing was I just created a webinar and I invited a whole bunch of people who read the blog on the webinar and I just talked about E-commerce for a little bit and then I said at the end, “Hey, I’m going to be creating a course that will teach you how to do this stuff. I don’t have anything yet but if you guys sign on you’ll get lifetime access and I promise I will build a good product.” I made ten grand that day. Then all over sudden I had to create the product.

Bjork Ostrom: You have the urgency behind creating it because people have paid for it?

Steve Chou: Right. Instant kick in the butt so to speak.

Bjork Ostrom: With that product are you then continuing to do like live webinars that then become what the product is or are you going in, this is what we do with Food Blogger Pro. We create courses, many courses. We’ll have ten to twenty videos on a specific subject. Each video is maybe five to ten minutes long. Reading more long form once a week things that webinars or live recordings that then you would use as the course material or then or kind of pulling up and creating a course on a specific subject.

Steve Chou: No, that’s the way I still run it today. Every single week I have a new topic and then that just goes into the course repository.

Bjork Ostrom: Okay, got it. Then what is it that you use to run the course itself?

Steve Chou: I use s2Memeber.

Bjork Ostrom: Okay. Which is a WordPress plugin.

Steve Chou: WordPress plugin. That’s correct.

Bjork Ostrom: Okay, got it. How long have you been doing that?

Steve Chou: Since 2011.

Bjork Ostrom: Okay, great. Then for your blog that’s one of the main products I would guess would be that course?

Steve Chou: Yeah. I only have one product really. I don’t think I could handle another one.

Bjork Ostrom: What is that, percentage wise what does that look like in terms of revenue or income that you have from the blog?

Steve Chou: Probably around sixty to seventy percent, somewhere in there.

Bjork Ostrom: Okay and then the rest is that advertising and affiliated stuff. Got it, cool.

Steve Chou: Affiliated stuff. Yeah, correct

Bjork Ostrom: That’s really helpful. I think that’s interesting for people to hear and I think it’s probably something that people think of right away to some digital product or solution that goes along with their blog. Now I’d love to shift and talk about the E-commerce side of it. I think that’s something that people don’t often or don’t as often think about versus the digital side and I think one of the reasons of this is because there’s a lot more involved. There’s vendors, there’s physical product, there’s inventory they have to store but it can also be profitable in a beneficial thing. Can you talk about the first steps that people should take if they’re thinking about getting into physical product?

Steve Chou: I would check out … I used two tools whenever I’m doing product research. Terapeak which scrapes eBay listings and then Jungle Scout which kind of tells you how much people are making on Amazon. Let’s say you’re in the kitchen space or the cooking space. You’re going to actually have to figure out what areas that you want you to look for and then you plug these products into these tools and you’re getting an idea of what the competition is like and how many units are sold in a given month. Now the difference between a blog … If you run a really popular blog you might even be able to get away with just putting your brand on stuff that’s already selling well and you could probably sell it because your fans will buy it from you.

Bjork Ostrom: Sure. For instance in our case let’s say Pinch of Yum was at the point where we decided we want to add a physical product. We were taking preexisting products and then adding the Pinch of Yum brand to it.

Steve Chou: That’s correct. That’s called White labeling but yeah a lot of companies do this because they have a very strong brand.

Bjork Ostrom: Do you think … Do you see that being successful? When I think about buying a branded product from another blog I’m like meh. Or like potentially that it wouldn’t even be as valuable as something that doesn’t have any branding on it. Do you have examples or see that being a positive thing?

Steve Chou: I mean, there’s so many electronics out there. They’re all white labeled. For someone like me or you, I think in the long run you should be creating, you can take something that’s already out there improve upon it and then release it as your own. That is probably a better avenue.

Bjork Ostrom: This would be some type of physical product that already exists and you’re saying I’m going to make this a little bit better and work with the manufacturer to make it better?

Steve Chou: That’s correct. For example let’s say you run a cooking blog and then you want to sell like oven mitts. You can sell oven mitts that are super thin and have more control or something like that and yet still you won’t burn yourself.

Bjork Ostrom: Got it. Where do you even start for that? Like how do you find those manufacturers to work with and start those conversations? It’s such a mystery to me.

Steve Chou: What most people are doing right now is that they’re going on Alibaba. See we don’t really use Alibaba much anymore because it’s become just really crowded with a bunch of trading companies and middlemen but you can go on there and you can easily find someone who can get you a product that’s similar. Let’s go with the oven mitts example. You could go on Alibaba, look for oven mitts and you’ll see a bunch of vendors come up that sell these things. Let’s say you’re looking for silicone oven mitts. Then you could go to that manufacture, send him an email, start the conversation and then tell them what you’re looking for and ask for pricing.

Bjork Ostrom: That starts the conversation between you and them where obviously then it gets to negotiation and things like that which would be an entire different podcast episode. Even just Alibaba is a great place to start. Can you tell for those that aren’t familiar kind of the quick back story with that?

Steve Chou: With Alibaba or?

Bjork Ostrom: Yeah. For those that aren’t familiar with it. I’m just kind of, I know it from a distance but.

Steve Chou: Sure. Alibaba is basically a marketplace for Asian vendors essentially. The vendors on their mainly cater to people who are willing to buy in bulk, five hundred to a thousand unit quantities or higher than that.

Bjork Ostrom: It’s really interesting to go and look through all of the different products they have. Every once in a while I just pull it up just because I’m fascinated by it. There’s a time when I was looking into white label stuff and so it’s so fascinating to see this entire different industry. Essentially then if you were to buy that they would just ship a crate over with all of the product and deliver it?

Steve Chou: Yeah. Usually what you would also want to do is … The reason why you want to buy from Asia is not because the materials are cheaper, it’s because the labor is cheaper.

Bjork Ostrom: Sure.

Steve Chou: In general anything that requires a lot of labor is going to be less expensive over there. You can have all your packaging and everything done over there as well and it tends to be a lot cheaper. What you end up doing is if you’re buying from China you have them do everything and they end up shipping you a complete product that’s already ready to go on shelves.

Bjork Ostrom: It’s packaged, it’s ready to go, it has the UPC label on it. Everything is ready so you can just take it from that container and then put it up on a shelf or send it through your store. It’s ready to go.

Steve Chou: Correct. Yeah.

Bjork Ostrom: Got it.

Steve Chou: For everyone listening I highly advise you just to go on Alibaba just for fun. You’ll realize how much more that we pay for stuff that we buy in the store. Like the mark ups are like ridiculous.

Bjork Ostrom: For sure. You think about how many touch points there are along the way between that final sale of the product and like when it was first created and you’re, “Oh yeah. This does only cost fifteen cents to make but when I buy it, it’s whatever, three dollars or more.”

Steve Chou: Yeah, exactly.

Bjork Ostrom: One of the things that I know is really popular in the E-commerce space right now is fulfillment by Amazon. We talked kind of out of super high level about this idea of purchasing products from manufacturer, you get them over and in your case you’re doing the actual fulfillment. You have people on your team that are packing these up and sending them out but I also know that there’s FBA. Can you talk a little bit about what FBA is and why you would choose to do fulfillment in-house versus having somebody else do it?

Steve Chou: We actually use fulfillment by Amazon in addition to our own shop. There’s a couple reasons for that. We do personalize items where someone wants to have their name and date, wedding dates stitched onto a handkerchief. This is our kind of hedge against the different E-commerce marketplace like in Amazon. For the stuff that doesn’t require personalization we ship those over to Amazon, have Amazon fulfill them for us.

Bjork Ostrom: You’re not doing any of the fulfillment for a generic product in-house?

Steve Chou: We are because we also have another hedge against Amazon which is B2B customers. The event planners they don’t want to buy in Amazon because they need more hand-holding. We reserve inventory just for those people and we special handle those orders .

Bjork Ostrom: When you’re talking about hedging against Amazon that’s such an interesting conversation piece because Amazon not only are there other third party people that are using the same tools that you talk about to see where there’s potential profit and then like flooding the market with those products but there’s also Amazon and it’s interesting to see Amazon start to get into the market where maybe they see something that’s being purchased a lot and then they create their own like Amazon version of it.

Steve Chou: That’s correct. Yeah.

Bjork Ostrom: I would imagine that’s another scary thing about E-commerce especially if you are doing it just in one area and just doing it on Amazon for instance. Is that it can so quickly become competitive once people see that there’s profit there. It’s interesting to hear you talk about personalizing some of it or creating some advantages of doing it in-house. In our example with the branding of it I can see how with a blog or a brand that you’ve built up one of the competitive advantages is, is the brand itself as opposed to just a generic plate or whatever it would be.

Steve Chou: Yeah, that’s totally true. If we can just kind of summarize a little bit. Amazon is great if you just want to make sales right away because everyone shops on Amazon. You can get cash flow right away for something that you launch but it’s very poor for branding because like I was talking to my mom a couple of months ago and she didn’t even realize that third-party sellers could sell on Amazon. She always thought she was buying from Amazon because they hide your brand name essentially.

Bjork Ostrom: How do you …I have been triggered to know like when I’m looking at Amazon that it’s a third part product but how do you, is there a clue that you have within Amazon to know that it’s not coming from Amazon?

Steve Chou: Yeah, I mean it will tell you by whatever company.

Bjork Ostrom: Sure.

Steve Chou: If it’s sold by Amazon it will say sold by Amazon.

Bjork Ostrom: Okay, got it.

Steve Chou: Yeah.

Bjork Ostrom: Cool. We have the manufacturing, we have this kind of basic idea of fulfillment, people can do it through Amazon but know that you are exposing yourself to some risks if you’re just doing Amazon because of the reality of other people competing with your product or Amazon itself coming in and creating the product. It would be …

Steve Chou: There’s other dangers too just real quick. Like, if your product gets like a string of negative feedback for some reason, let’s say you made a mistake on the listing or your product quality is bad they could just ban your account altogether and all over sudden overnight you could have your account banned with all this inventory left over in your warehouse.

Bjork Ostrom: Interesting. That would be Amazon just turning the switch off essentially.

Steve Chou: Correct, yes.

Bjork Ostrom: Would you also recommend doing eBay or are you not doing anything through eBay right now?

Steve Chou: The only thing we use eBay for right now is to sell out irregular stuff. The reason for that is eBay is kind of like a nightmare in terms of just managing customers and so it’s just not worth our time.

Bjork Ostrom: Right, because of all of the interactions that customers have within eBay. Just a different, it’s a different community essentially.

Steve Chou: Yeah and Amazon customers are a lot more sophisticated. They have higher incomes whereas eBay you get a lot of these bargain hunters.

Bjork Ostrom: Sure, because in some ways that’s where eBay came from, is people that were … It’s an auction site.

Steve Chou: Yeah, it’s just the culture.

Bjork Ostrom: Okay, cool. I know why this is super high level version of it but we talked a little bit about manufacturing and we talked a little bit about the fulfillment side of it and to start we talked about different solutions. Shopify, there’s Squarespace, there’s building out your own custom solution with an open source, E-commerce site. Are there any other recommendations that you’d have for people knowing that in some ways it depends but are those the big three?

Steve Chou: I would say this also. If you already have a WordPress blog which probably sounds like a lot of your listeners have already, there’s this plugin called ecwid, E-C-W-I-D. Basically it’s just this little widget that you insert and it just will start, it’ll turn your WordPress blog into an E-commerce store. What I don’t like about the existing plugins for WordPress that are out there is that you’re hosting the store yourself so it kind of bogs down your site. WordPress tends not to scale that well with products and customers because it wasn’t designed to be an E-commerce store. Ecwid is something, it’s kind of like a hybrid. Your store part is hosted somewhere else, so it’s always fast and it’s really easy to just start adding products to your site.

Bjork Ostrom: Oh cool. It does that through like a Java Script?

Steve Chou: Java Script. Yeah, exactly.

Bjork Ostrom: Got it. Then so you would upload that on another upload all the products on another site, put the Java Script in your website and then essentially be ready to go.

Steve Chou: That’s correct. The advantage of that also is you could take that same script and put it out on a bunch of different sites or on Facebook or whatnot and sell on different platforms and it’s all tied to the same.

Bjork Ostrom: Oh cool. It’s funny because I go here and like the example on the home page is like truffles and candy. It’s food related stuff. It’s interesting to think about man, even with this site they’re using examples of food content. I think it would be interesting for people to check that out. One of the things that you talked about at the beginning of the podcast was using advertising. Can you talk about why advertising works better for an E-commerce site. I know you’re using that for your blog as well and has that been effective?

Steve Chou: Yeah. The strategy is going to be different depending on physical products versus digital products. The main differentiating factor there is with digital products the profit margins is enormous, so you have a lot of headway. I don’t know what you want to talk about first.

Bjork Ostrom: Let’s hone in on the digital side. Is that something …

Steve Chou: Okay.

Bjork Ostrom: Are you using advertising, paid advertising for your digital products and in what way?

Steve Chou: Yeah. I use Facebook ads for that. I have a really good funnel, like a sales funnel for my digital product and so the primary way I use Facebook ads right now is I’ll either drive them to a really good piece of content that has sign up forms embedded in there or I’ll send them straight to a landing page where I’m just trying to get their email. Once they sign up I have this thirty email sequence that just walks them to the process, tells them stories and gets them excited about signing up for the real product.

Bjork Ostrom: Thirty email, that’s quite a bit. Are you plugging your course within that sequence or is that thirty emails over a month and then at the end you say, “And if you want to you can sign up for this course.”

Steve Chou: No. The way that one is structured is I give a really detailed mini course that’s seven emails long and it has videos in each one of those lessons. Then I have, at the end of that I talk about the actual class. Then for the rest of the emails, the twenty three, it’s more like talking about the psychological aspects of starting a business, telling stories, getting people to like me or just get to know me as a person because people tend to buy from people who they like. That’s the whole sequence at a high level.

Bjork Ostrom: It’s interesting because you mention the personal aspect and with a course or a digital product one of the trends I see is that a lot of times they’re very personal. You know who the person is, you know their experience, you know their history. The idea of a funnel or essentially in this case an autoresponder email sequence that people are going through, getting to know you it’s good high quality content makes sense for a digital product. I’m guessing that doesn’t make as much sense on the physical product side. Is that right?

Steve Chou: The answer is yes and no. It depends. If you’re using Google advertising where people are typing in some sort of search query which means that there’s an intent to find something or buy something. In those cases you want to send them straight to the product page or the category page.

Bjork Ostrom: Sure. An example from Bumblebee Linens would be what?

Steve Chou: If you search for wedding handkerchiefs it’ll take you straight to our wedding handkerchief landing page. On Facebook it’s different. On Facebook people are on there to shop and so you have to interrupt their attention and in general if you just put a product on Facebook and have it go straight to a product page it’s not going to do that well.

Bjork Ostrom: Because the difference is in Google they’re saying, “Hey, I’m interested in finding this or buying this” where you target a specific keyword and say if somebody searches this keyword show this ad but on Facebook it’s not like somebody is going to Facebook and shopping for a certain physical product. They’re going there to consume content, to be entertained.

Steve Chou: That’s correct.

Bjork Ostrom: What is your strategy for the physical content on Facebook or are you using Facebook for that?

Steve Chou: Yeah, we’re using Facebook for that. There’s a couple of different strategies and it really depends. You have to try it out depending on your product. One thing that you can do is you can send them a coupon for something where it takes them to a landing page where they have to give you an email in order to get the coupon. Then you have a funnel also that introduces people to your brand and your product.

Bjork Ostrom: This would be … Can you give an example of how you would do that?

Steve Chou: Of an email or the ad?

Bjork Ostrom: Of the ad. Like what would the ads be saying.

Steve Chou: Sure. Save twenty five percent off of whatever widget that you’re trying to sell. Click here to save twenty five percent. The landing page will just literally be an email for them that say, “Enter your email address here to redeem your coupon.”

Bjork Ostrom: How do you target those Facebook ads? Are you doing it for people that have recently changed their status from engaged, single to engaged?

Steve Chou: Yeah. For us it’s easy. There’s a way to actually only target engaged people.

Bjork Ostrom: Okay, got it, which makes sense. It’s so nice to have that set.

Steve Chou: Then other things that are interesting you can target magazines like Brides Martha Stewart Weddings. People tend to read those publications because they’re engaged.

Bjork Ostrom: You’re targeting based on interest and personal information that’s entered in like a status of engaged.

Steve Chou: We also target based on income as well because people with more money tend to be the ones who are actually shopping.

Bjork Ostrom: Got it. That example was leading somebody to a landing page, they enter their email. Not only do you have their email address and you can market to them but also you’re sending them this coupon where hopefully they use that to redeem and purchase the product.

Steve Chou: We actually never send out coupons. That was just an example. What we do is we actually send out … We either put them to an interesting blog post that talks about things that you can do to make your wedding really special or we send them to a landing page where they can get a free DIY wedding crafts book which we’re sure are things that you could make yourself.

Bjork Ostrom: Okay, cool. How are you tracking all of that?

Steve Chou: All that is just tracked through Facebook and then on the email side which is where all the conversions take place we use Klaviyo.

Bjork Ostrom: Okay. I’ve never heard of Klaviyo.

Steve Chou: Klaviyo is specifically for E-commerce.

Bjork Ostrom: Okay, got it. Then for your blog I’m guessing you use a different one, different emails service?

Steve Chou: For blog I use ConvertKit right now.

Bjork Ostrom: Okay, got it. Then there’s one other example that you’re going to give for Facebook. I didn’t want to lose that one. Do you remember what that was?

Steve Chou: Was there a third example? Basically the fundamental principle behind Facebook is get the email and create a funnel. We can talk about the funnel for my physical products. It’s a little different than what I do for my blog. For physical products I actually have a three to four month sequence. Basically the first couple of emails are introducing the brand and then talking about all the products that we have to offer. Then we just offer them … In the case of weddings we offer them cool little wedding articles on a periodic basis. The idea being that they may not be ready to buy now but at some point in the future when they’re ready to buy we want them to be thinking about our shop.

Bjork Ostrom: Yup, and so you are front to mind by using content that’s helpful and valuable and interesting. Not necessarily selling but just reminding people, “Hey, we’re here in case the time ever comes where you need to purchase something.”

Steve Chou: That’s correct. I would say that the majority of content is not there to sell but there are links to like our best selling products and all the product categories in every single email.

Bjork Ostrom: Got it. Then are you doing any retargeting on Facebook?

Steve Chou: Yes.

Bjork Ostrom: Then can you talk about if that’s been effective and how that works.

Steve Chou: It’s very effective. The main driver for us right now is Facebook dynamic ads retargeting. What that is, is when someone browses a certain product on our store, they will get an advertisement in Facebook showing a picture of that exact product.

Bjork Ostrom: It’s a product that they didn’t purchase.

Steve Chou: They did not purchase, yes.

Bjork Ostrom: They are reminded of it when they go back to their feed. Something they looked at, maybe they even went through the checkout process but didn’t get all the way there and then they come back and it’s like, “Oh, here’s the ad for that product.”

Steve Chou: That’s correct.

Bjork Ostrom: Got it. It’s so effective because these are people that you know have at least some remote interest in it. Maybe they got distracted or left the site but it’s relatively affordable to pitch to these people something that they’ve already looked at.

Steve Chou: Yeah and those incidentally are the highest converting ads that you can run.

Bjork Ostrom: Sure. It’s almost like a no brainer to set those up if you have some type of product whether physical or digital.

Steve Chou: That’s correct.

Bjork Ostrom: We’ve done that both with Food Blogger Pro which is the membership site when we do open enrollment which is twice a year. We do really big public enrollment. We’ll turn on Facebook retargeting for that and then we just recently launched a SAS app, a web SAS app and we do the same thing. If somebody want to experiment with it, not that I want you not to purchase Nutrifox but you could go to nutrifox.com and then when you go back into Facebook what you’ll see is an ad for that. I’m guessing the same would be true for Bumblebee Linens. If you went in, looked at some products and then went back to Facebook you’d start to see those start to pop up.

Steve Chou: Yup.

Bjork Ostrom: Yeah, which is incredible that we can do that and it’s all … I was talking to somebody the other day for, he does that paid advertising for a major retail store. He said ninety percent of their paid social advertising is going to Facebook. He said it’s just above and beyond worth it to run those advertising dollars there.

Steve Chou: Oh yeah totally.

Bjork Ostrom: One thing that I will say real quick for those listening, we’ve mentioned this a few times. Even if you know that you are not going to turn that on within the next month it’s really smart to still go in and put that pixel in, the Facebook pixel because you don’t have to pay for that and then it’s collecting data just in the background that then you can use to run ads against if the time should ever come. That’s always a tip that I love to give just to encourage people to have that there even if they decide not to implement it. Steve we’re coming to the end of the podcast here and we covered a lot of stuff but …

Steve Chou: Sure, we have actually.

Bjork Ostrom: It’s also, just a, it’s a tiny sliver in terms of how deep you actually need to go with this stuff. I know we’ve referenced it a few times but you have a course that’s available. What would be the best way for people to check that out? Would it be to start with that mini course that you offer and to go through that?

Steve Chou: Yeah.

Bjork Ostrom: Great. Where can people do that?

Steve Chou: If you just go to mywifequitherjob.com, like right smack on there in the front pages is an email sign up form that you can just fill out your email address and we’ll send it to you right away.

Bjork Ostrom: Great. If nothing else it’s a great little case study to see how you do it and then at the end there’s also like you said they’re offered to join and to go through that course and to learn even more about building an E-commerce site which I think is such a smart thing to do especially if you’re looking to get up and running a little bit quicker in terms of creating a profit or creating an income. As we often talk about the blog, the content side is such a long term thing and you can do it but I want to be intentional about offering other angles and ways that people can create an income and talking about E-commerce was a great way and you’re a great person to do that. Thanks so much for coming on the podcast Steve.

Steve Chou: Cool, thanks for having me.

Bjork Ostrom: Yeah, I really appreciate it. That’s a wrap for episode number seventy. One more big thank you to Steve for coming on the podcast and sharing his insights on E-commerce. We covered a lot of ground like we said but for those of you that really want to learn more about what goes into an E-commerce site I’d encourage you to check out Steve’s course in his site which we will link to in the show notes which you can get to by going to foodbloggerpro.com/70. That will redirect you to the show notes for this podcast. That is a wrap for this episode. We will be back here same time, same place in exactly seven days. Until then make it a great week. Thanks guys.

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