486: What AI Will NOT Replace in Business with Michael Fenech of SKUdrop

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2:43Michael, thanks so much for joining us on this incredible e-commerce AI summit. I think this summit was built for you, mate, with your content, everything you do, your background as a founder. So the first question I ask everyone that comes on is, how did you get your job, aka how did you find yourself doing the work you're doing today? Basically, just to give you the 50 ,000 foot view, I've started multiple different startups and I've been from the idea to growing validation, raising funds and everything like that. and that whole journey has given me all these different set of skills that I've applied to other ventures and stuff as well.

3:27So yeah, I suppose the experience I've gained with all these different startups has just helped me sort of get to where I am today and I'm very fortunate to have been mentored by some very powerful entrepreneurs along the way like ex-Facebook executives and stuff like that. So what we're doing currently, it's a culmination of all the skills I've learned in the past and I'm applying all those powerful learnings to basically solve problems, which is the key. So I'd love to unpack that a little bit further. So what are the current businesses that you run right now? How'd you get into them? Talk to us about your, yeah.

4:03Yeah, got a couple of different things we're doing. Involved with obviously an Amazon brand. My wife's got a very, very awesome brand on Amazon and I support her with that a little bit. And then we've got some logistic stuff that we're working on as well out of China direct into Amazon FBA. So it takes up a lot of my time, but it's well worth it because, again, we've identified a problem and we've built the actual infrastructure to solve the problem. Yeah. Awesome. So can you tell us more about SkewDrop? Yeah, yeah, yeah. So basically, SkewDrop reinvents the supply chain tactic that Amazon sellers need to use.

4:47So traditionally, they produce their goods in China, for example. They ship all of their goods over to a US 3PL, and then from there, they drip feed into Amazon. We actually made a massive discovery during COVID when shipping prices were going through the roof. And we worked out mathematically, if you store in China and have cheap storage in China, and then ship direct into Amazon FBA, you can save so much money on your supply chain. and you make it way more efficient, then that converts to more margin. So we validated it. We used spreadsheets. We checked it all. And then when we worked out that we had the secret sauce, we actually created the whole infrastructure, Chinese warehousing.

5:32I'm the software guy, so I wrapped around the whole operation, this beautiful software system to give you full control of your supply chain. And so basically, SkewDrop becomes your storage facility in China. And then we become your logistics partner as well, where we help you go from China direct into Amazon FBA, eliminating 3PLs and saving massive amounts of money on your supply chain by making it more efficient. Yeah. So when people want to sell on Amazon, typically if they want to get into selling on Amazon FBA, tapping into the prime service and buyers, you have to ship and freight all your stock to all these different places, right?

6:15Yeah. Yeah, so what happens is usually people ship it to a 3PL because Amazon have inventory limit restrictions. So you can't ship everything in because if you do, they just charge you through the roof of your storage. So when you land in a 3PL, you've got all those costs to consider. So we've actually reversed engineered and thought, hang on a minute. We asked ourselves better questions and said, well, how can we do it better and cheaper? And we actually worked it out. And we've built the whole infrastructure. And we've launched basically a year ago and we've got 600 brands using our service with no marketing.

6:54So what that says to me is that these unbelievable sellers are doing their maths, they're self-validating the model and they cannot ignore what we do. Now, any freight forwarder out there who just ships your goods from China to the port, they cannot reduce your supply chain costs because they've got no means to. We have gone to the next level and we've gone, okay, well, let's reduce your supply chain costs because a normal freight forwarder cannot remove your 3PL costs, but we can. So it's fast growing, man. And we're just holding on just, yeah, like we're scaling really quickly, which is exciting.

7:36Yeah. Interesting. One last question. Then I've got to ask you about how you got into AI and all that incredible content you put out. But does that mean you guys can service people if they want to also sell on Shopify, like and they have their own brands? That's coming. Yeah. Okay. Yeah. Yeah. That's, we had, yeah, we had, I was in China a couple of weeks ago and we had extensive meetings and we've got a massive roadmap. We've got big plans. We want to really assist the e-com space and sort of take tomorrow's supply chain. We want to bring it forward and give it to people today, which is what we strive to do every day.

8:13That's our mission. So watch this space, mate. We've got so many things sort of coming up that's very exciting for e-com sellers. Awesome. So let's talk about AI. How'd you get into it? Yes. How are you using it in your brand or brands, your e-commerce businesses? And yeah, how did you discover what happened? So I love this word leverage. So I love the word leverage in business. And the definition of leverage for me is how can I do more with less effort? because if I can do more with less effort, that means I can actually get more done and achieve goals, hit milestones a lot sooner. Now, all the talk was this chat GPT.

9:03I jumped on it and said, okay, what is it? Conversational AI, large language model. I thought, okay, so I started using it. Then the light bulb went off above my head and I thought, right, now this can help me with leverage. So anything, I mean, if we want to skew it towards an e-com flavor, you know, just simple things like your bullets, your bullet points in your page, let's say your Amazon listing, okay? We can write it as a human and do a pretty good job. But then when you provide, you know, a few really cool prompts to chat GPT to say, hey, I want you to act as though you're, an expert marketer and your expertise is in conversions, I want you to analyze this bullet point.

9:54I want you to tell me how you can improve it and why it will improve conversions. Now, that simple exercise, if you look at generative AI where you go back and forth and get it to iterate, iterate, iterate, at the end of the session, you'll have a bullet point that's way better than what you could create, even though it's probably pretty good, but there's science behind the words they've used, the tone, because they're taking into consideration the way it's been trained, how customers think. And at the end of the day, an Amazon listing has one job, and that is to change consumer behavior. And that is to get your credit card out of your wallet, and you've got to buy the product, and you've got to have these persuasive angles, and people are making micro judgments on your listing as well.

10:42So that's just one use case. So to answer your question, it got me really excited. It could save me time, but then the benefits towards e-com is just incredible, which we can unpack further. Yeah, let's do that. How else should people be thinking about using it? How do you use it in your e-com businesses? Well, I'll give you one example. Let's say you go to Amazon and you want to put, let's pick a niche. And I love picking under the radar niches. So let's say RV steps. So you know the RVs that everyone drives? There's actually a niche RV steps that they can pack away and it helps them get out of their RV easier.

11:22There's a big niche in Amazon. So basically what I would do and what I've tested is that you can actually download all the negative reviews. Let's say three, two, and one star reviews. You can download that. You can provide ChatGPT now using ChatGPT plugins, a PDF where it can read all those reviews. ChatGPT plugins, that's a whole other session because that is just the next app store. But anyway, more on that later. So now that it understands all the negative reviews, now what you can do is actually allow ChatGPT to come back to you and say right here's the product here's all the negative reviews what do I need to do what do I need to produce to eliminate the negative reviews but win the niche and then you can tell it to create a table and it's amazing what it can come back to it can tell you that you know you shouldn't just all these specific things because it takes into consideration what all the negative responses were and it actually understands what will hurt the product and it will provide what will give you the edge when you launch that product.

12:32It's absolutely amazing in terms of that. That's just one use case. Turn all the negatives into a positive and then input that into your design and then launch and hopefully take over the whole niche. Yeah, that's crazy. It's crazy. It's crazy and it's conversational. So you can say, yeah, okay, but what else can you do? What else? Like it's just – and then you can say, okay, think of the production process. How can I save money on my cogs? And it's just – you can have this conversation where you'll end up with something at the end of it that would have quite possibly have taken you two months to get and you can get it in 45 minutes.

13:12And then it comes back to leverage. I want to leverage my time to get the maximum output and AI, chat GPT and all these other large language models help you do that. And at the end of the day, we all know being an entrepreneur is very difficult. It's tough. We need all the help we can get. We need everything. Every little one percenter that can give us the advantage, we need to take a hold of that and never let go of it. And AI is a big part of everything that I do anyway, in terms of, yeah, e-com, but business in general. It's extremely powerful. If you're not jumping on AI now, your competitors will, and you will be left behind.

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14:31Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. Talk to us about tools. Obviously, ChatGPT, do you use BARD? No, I don't use BARD. I've had a look at it, but look, at the end of the day, I just stick with just ChatGPT because for me, the responses I get are just phenomenal. I can provide it feedback and it will learn and stuff. So yeah, I mean, I've seen some funny stories about Bard actually, I think it mentioned once that it wants to take over the world and stuff like that. But look, ChatGPT is a really big part of my arsenal in terms of AI.

15:16And then there's other tools like, I suppose it's a Google Chrome extension, but Merlin's really clever where if you're doing a spreadsheet for your e-com business and you need to create a specific formula, you can talk to Merlin and that actually creates the formula you need to get the job done for, let's say it might be a, I don't know, a COGS analysis or something. You can create formulas and it does it in one second rather than you have to look at Google. And again, it comes back to leverage. Now I could probably work out a specific formula, but if I've got a little AI tool, like a little Chrome extension that I can click on and I can write in, I want to create a set of numbers that go up by two, whatever the formula is, it'll just spit it out in one second.

16:06Copy, paste. Thank you. I'll move on. Time saved. That's what it's all about. Love it. What else? Keep hitting us, man. Unbound is a pretty cool, I suppose, a generative AI tool for creating imagery. Not Mid Journey. You've got Amazon. Yeah, and Mid Journey as well. That's another one as well. But Unbound is pretty cool. So you can upload your product in a PNG transparent file and then you can actually get the AI to, you can describe the background that you want or you can actually insert that in pre-created backgrounds. Now, for things like Amazon Posts, Posts gets you impressions for free. So, you can actually use those generative AI tools for photos to be able to create things like Amazon Posts and they're pretty good.

17:04And they're really good now, but the scary thing is in 12 months, they're going to be so good that, I mean, it's frightening the speed at which AI is moving for improvement. So yeah, I just can't wait. I'm going to fully embrace it, when it's happening because again, I want to leverage and save time.

17:37of our generation to find out how they did it. However, if you're thinking of starting your own business and you want to hear from some incredible stories from everyday people like you or I who are actually in the trenches, only been building their business for maybe one year or two years, like that are building right now and they're really in the early stages, but they're getting success. You should come and check out our new podcast from zero to founder hosted by our community manager, Molly Flynn. These are in the trenches stories from our very own successful students that have gone through some of our programs.

18:12People just like you who are deep within the process of building their very own successful business. These are the founders of tomorrow. You can find the From Zero to Founder podcast on all platforms. And remember, it's founder without the E. All right, now let's jump in the show. and what challenges do you think businesses face when it comes to implementing AI or becoming just an evolved CEO or founder? It's a great question and I'll say it, I'll answer it sort of in two ways if I can. Firstly, if they're a CEO of a startup, they've probably got a million other things that they're doing and probably AI is the last thing they can think of because they just haven't got the bandwidth.

18:59But challenges, I would say, and it might not be what you expect, that potentially CEOs aren't hungry enough to learn. So I was hungry. I thought, hang on a minute, look what this can do if I don't jump on it. Competitors will, I need to be hungry for this. And I just devoured everything about it. I tested, I learned, I just experimented, you name it. So I was really hungry. And the biggest thing with an entrepreneur, I think is a great quality to have is to be inquisitive. If you're an inquisitive entrepreneur, not much is going to get past you. But if you're not, you're going to miss the AI thing or if we go back a couple of years, the NFT thing.

19:47I know it's crashed and burned, but still, if you're inquisitive, you learn about different things. And you can sort of get on that rise of the industry. But that's what I would say. You're either too busy or you're not hungry enough or inquisitive enough. Do you think AI is the newest fad and that it's going to come and go like the NFT thing? 100 % no. It's probably not the best way to answer it. So 100 % AI will be around and it will not be stopped. It can't be stopped. I mean, think about all different industries. There's an AI model, a large language model in China that can out-diagnose the best doctors in China.

20:39Yeah. I mean, their accuracy for diagnosis is, I think, 18 % greater than the best doctors in China. Now, that alone for that silo, you can't ignore that. As humans, we cannot ignore that sort of stuff, which will make the world a better place. So AI has been used in so many different areas, automotive industry, a lot of car manufacturers actually create their chassis by using generative AI. They'll give it a model and say, here's our current design for the chassis. We want you to make it 15 % lighter and 10 % stronger. And then it just iterates, iterates, iterates, iterates. And then at the end of the day, they've got this new chassis where they can actually make it a lot stronger.

21:30So it's just, it's here to stay, mate. And it ain't going anywhere. What's your take on the rise of chatbots and having that balance, I guess, with chatbot AI-driven solutions versus the human touch in customer service? I think if you get the balance right, it's perfect. So I think in support, you go to a lot of SaaS products and they've got a little chat widget. You type in a question and it'll say, oh, can we help you? Have you considered this knowledge base? Here's a link. And it's trying to sort of give you the information to be, again, I'll go back to this word. it's using leverage. Let the chatbot answer your question rather than tying up an agent.

22:16But then I think what's key is that when the chatbot gets a bit lost, it has to hand over to a human. That's the key. So I don't think human support will ever be replaced. It's really important that if you can get a quick answer from a chatbot, I'm all for it. But if you need that personal touch obviously you've got to get that get that ratio of chatbot and human touch correct and what tools do you think ai like what ai tools do you think will not replace be replaced like what will ai not replace in business networking the best thing any business person can do is network now we've obviously had the pandemic it's it's behind us now but But I mean, I don't know about you, Nathan.

23:04I'm sure you've done plenty of networking in your day. But when you, you could Zoom with people and you can have a mastermind on a Zoom and that's all great. But when you get in a room and you're shaking hands and you're having those little discussions in the corner with another entrepreneur or something like that, that's gold. You cannot beat networking and AI will never replace that human interaction, that interpersonal skills ever. and you know i've i've had i've had some of my biggest leaps forward as an entrepreneur from purely being in the room and shaking hands with other entrepreneurs so it'll never replace that what are the skills any others ai will never replace your gut instinct and i've used gut instinct plenty of times in business and ai can't teach that it can't there's no language model that it can learn to give you that gut feeling.

24:00And sometimes as humans, we're energetic beings. We have to listen to, we have to feel what's inside and just run with it. And, you know, there's been plenty of times throughout my career where I've actually thought, yeah, this feels right. I've got to do this and it's come off. If you listen to your gut, very rarely is it wrong. Yeah, I agree. There's this interesting thing when it comes to decision making where you've got to use data, right? And AI is incredible at analyzing data, providing insights. And that's what you're looking for patterns, right? To get leverage. I love that word too. But then there's this balance where you need to follow your gut too, right?

24:44And it's sometimes the data will point to everything is going to work or you've got to go this way, but your gut tells you something else. and you got to use a mixture of both. Yeah, absolutely. Absolutely. You can never ignore the gut instinct. So if you were to start a brand new e-commerce business from scratch, talk us through your process on how you would use AI. What would you do? How would you bring it all to life? And I know it's a big conversation, but I'm just curious kind of how you would go through that process. Well, the first thing I would do, I mean, look, at the end of the day, we can all talk about e-com businesses and the pretty packaging and everything, but an e-com business lives and dies by the product selection.

25:31Yeah. So if you've got a very subjective product that people are purchasing based on taste, that's a very difficult game to win. but if you've got a product that solves a problem and then people identify with the problem and they go wow this this company has thought of me and you can get that micro micro judgment in their mind to be in your favor and positive and you can get them to purchase that's the whole game but how do you get there well that's picking the right product and then ai obviously through different ai tools you know chat gbt in particular can help you create the best possible product in terms of, you know, does it particularly suit your avatar?

26:22I'll give you an example. Like, I know this is a very broad example, but let's say you got all these one and two star reviews, you've downloaded it, and the niche is coffee cups. And every negative review was saying, oh, I wish it had a handle. My hands, I know it's a sort of funny thing, but if you just hear me out, the penny will drop. And so you've got a coffee cup and all the reviews are saying, oh, I wish it had a handle on it. And then so through AI, you could actually develop a product where it says, well, they're all talking about this. There's the problem. This is a solution. Here you go.

26:57There's the idea. And then you can go and execute and then release that product.

27:04So yeah, and then obviously writing the listing as well, copywriting and stuff with AI is just incredible. So there's so much to talk about in that in terms of like that. That'd be like a whole one-day sort of seminar talk thing because I could just sit here and talk for 15 hours like that. But initially, yeah, it all lives. And so if you want to use it towards something, don't use it to design your packaging. Use it to make the best decision in terms of product selection because if you get your product selection wrong, you cannot. how can I word this nicely? Yeah, if you've got it, no matter what you do, a bad product just won't sell.

27:45And more or less, you can spend all the money on advertising, but if no one wants it, you're gone. So that's what you've got to avoid. Yep, 100%. Are you hesitating to take the next step in your e-commerce journey? Founder Plus has you covered. With proven frameworks tailored to your business needs for fast results, a supportive community of over 30 ,000 like-minded entrepreneurs, and weekly live mentorship sessions, Founder Plus is your key to success. Try Founder Plus today for just$1 for seven days and start building your dream business with confidence. You can visit founder.com forward slash start dollar trial or click the link in the description to claim your trial.

28:23Okay. Well, look, man, this has been awesome. You've shared so much goals. We have to work towards wrapping up. A couple last questions. is there a question that you wanted me to ask you that I haven't asked you that you think will really help people when it comes to where they're at in their e-commerce journey somebody that's either recently launched something just working on something or they've hit product market fit they've got the right product but they want to take things to the next level with their e-commerce business that's a really good question I've got about 18 answers for that um give us your best one.