492: How Branding Reduces Acquisition Costs with Richard Li of July

0:00Right now is literally the best time to start an e-commerce business and here's why. In 2018, we created something that was a first of its kind, a comprehensive online course to start and launch your e-commerce business from scratch, and we called it Start and Scale. Now, five years later, this course has helped 25 ,000 founders in 65 different countries kickstart their business ideas, including thousands who have achieved six and seven figure results. Founders like Laurieann Trin, who use Start and Scale to create a kids apparel brand that celebrates heritage. Or Samantha Brett, who used Start and Scale to build Naked Sundays into Australia's number one SPF skincare brand.

0:38Or April Scott, who used Start and Scale to gain the confidence to launch her luxury sleepwear brand. Although we've updated the program before, this year proved that right now is a defining moment for e-commerce, and it's because of AI. With AI, what used to be slow is now fast. What used to be complex is now simple. And what used to be expensive is now cheap. Every business is going to look so different in 10 years, and if it doesn't look different, it'll likely be out of business. So we went back into the studio because we knew to keep Start and Scale valuable for your business, we had to update it with the most relevant tools and strategies.

1:13So today, we're proud to introduce the brand new Start and Scale 3.0 course. And this course is for you if you don't have an idea yet. You're going to learn the fastest path to creating brand names, product ideas, logos, images, all through the power of AI. Or if you already have an online store, you'll learn how AI can help you automate repetitive tasks, analyze customer data, create all sorts of different content, and even handle customer service and so much more. So whether you're a start and scale veteran with a flourishing e-commerce business, or you're hoping to take the first step to 2024, this new course will help you completely transform your e-commerce journey with the power of AI.

1:54We're super proud of this incredible program. This is the third iteration. We've spent so much time, hundreds of thousands of dollars. So if you want to know more and want to sign up, which I highly recommend you do, if you want to start the store and you're confused or you're not sure where to start, go to founder.com forward slash build my store. That's founder, F-O-U-N-D-R.com forward slash build my store. I can't wait to see you inside. What you need is thirst. You need to be a thirsty human. is intent on learning. It's a really fascinating exploration of human potential. Now. The Founder Podcast.

2:35Even the greatest entrepreneurs had help. If you want to learn from the most successful founders on the planet, you are in the right place. Branson, Mark Cuban, Tony Robbins, Tim Ferriss, Ariana Huffington, Steve Case, Gary Vee, Sophia Amoroso, Barbara Corcoran, Damon John. Learn from the greatest minds in business today with interviews hosted by Nathan Chan. This is not your average entrepreneur podcast. The Founder Podcast.

3:06So Rich, thank you so much for joining us on our AI e-commerce summit. You're based out of Melbourne. You've created Browser, but then also July. Last time we interviewed you was early days July. You went from zero to five million in revenue in the first year. That was obviously pre-COVID. And then, you know, obviously all travel industry-based companies had some challenges, of course. You guys pivoted. You did all sorts of other things. But now, obviously, post-COVID, you guys are absolutely booming. nine-figure year annual revenues and the business is just absolutely flying you're going big on retail as well but 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 I think back in 2018 I might have you know chatted this with you I was traveling a lot I was looking for a really nice luggage i couldn't find anything on the market uh so i chatted to my friend um athan and he shared the same experience and we were like let's do it um let's create a luggage brand that both of us want to buy and uh and also it's going to be in the travel category it's going to be fun and that's how we started july.com and uh you know the last time we chatted like i said july went from zero to five million a year that was pre-covid that was when we did the interview And then also you taught an incredible program on the Founder Plus platform about manufacturing and sourcing.

4:46But what's changed in the business and how have you maintained success, especially post-COVID? What happened? Talk us through it, man. Sure. I think at the time, the first year we were doing$0 to$5 million, we felt like we were on a rocket ship and we couldn't be stopped. right and then towards end of 2019 beginning of 2020 we realized we were not on rocket ship we're on a roller coaster we're going up up up and then all the way down we lost almost 100 our revenue in 2020 when we had the first lockdown in victoria so it was crazy we needed to make a change and i have to be honest with you, bro.

5:31We actually, we almost decided to shut down the company. Really? We were thinking to launch something else. Yeah. During that time, we were in office testing all kinds of different product ideas. At one stage, my business partner, Ethan and I, wanted to launch a nappy brand because apparently that was the only thing that people were doing during COVID, making babies. We were like, okay, nappies will be a recession-proof concept of the recession-proof business. Let's get into the nappy business. So we had like five or six different brands of nappies in the office, and we're testing all kinds of different nappies and trying to develop something better.

6:08But after a while, we realized, look, COVID is not going to be forever. It's eventually going to come. I mean, travel eventually going to come back. Let's work on the products while we have the words of time, and let's do those things while we are not that busy. and then COVID ended, we ended up with a lot more products to offer. And we were at a really good position to capture the market. You know, when people wanted to travel, everyone wanted to travel right after COVID. And that's how we started having a great, great, great business post the pandemic. We were growing like, at one stage, I think we were on a thousand percent young year growth.

6:49And it was just insane. and not only growing the top line but also the bottom line. We had been profitable since then. Yeah, wow. That's awesome. So when you lost like 100 % of revenue, what did you guys do to maintain operations? Obviously, in Australia, we had something called JobKeeper and you could get some funding from the government, not too similar to the US. But how did you drive revenue and what did you do? I mean, JobKeeper really helped, right? but one of the things we did differently compared to the other guys is that we were looking at travel where in the world people were still traveling and we found that China was still traveling domestically even though everywhere else stopped all the flights we made a decision to launch our business in China like it was a crazy idea but in order to survive and that's kind of like the only thing that we could do.

7:49We launched our business in China in 2020. We actually had a great, great year in China. We had an amazing growth. We generated a great revenue, and we actually learned a whole lot of stuff. And that helped us survive during that period and kept our team busy during those most difficult times. And then when COVID ended, we made a strategic decision to focus more on the US market and here on Australia market. We actually decided to shut our business in China, I think coming into 2021, to really focus on the Western market. Wow, interesting. Okay. Yeah. Interesting. And one thing that's been very interesting I've seen is you're opening a lot of retail stores.

8:35Why? Well, we see retail store as profitable billboard for us. And a lot of people don't realize this. offline store is a great way to build brands it's more real and in many retail categories like in suitcase as example people want to come in and touch and feel the product and see the quality chat to the staff even share their you know travel itinerary with our staff it's just it's an emotional purchase so we realize that retail store is an important component of the business and it proved to be the right way to do because um you know if you see the rent as a as a as an acquisition cost it's actually a lot cheaper than paying google and facebook um you know for ads and i mean that's how we see it anyway um you know for the past couple years we just kept opening stores and we have a big um you know a number of new stores opening in the next six months.

9:32That's really interesting. Hey, founder fam, I want to talk to you about something super exciting. We're officially partnered with OmniSend, the email marketing and SMS platform built specifically for e-commerce founders. We've been recommending OmniSend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average, OmniSend customers make$68 for every$1 they spend, which is an insanely good return on investment. And because you're part of the founder community, you get 50 % off your first three months with the code founder50.

10:13Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. So like I was actually at one of your stores i walked past it in qv on the weekend it looked cool man and like one thing i have to say around the july products is you guys have bang on nailed the colors yeah colors are so cool right like talk us through that like was like i know that uh your business partner athan that's really his strength around brand but like talk me through that because that's actually been something that's so like you guys just get it like the taste the colors they are so cool man yeah i'm glad they like it um the one of the things we always um on that when we when we pitch to investors or even chat to uh some external people we always we often tell people that we're not really a suitcase brand we are a fashion brand um and we want the suitcase to be extension of yourself a part of your style not a utility item and because of that we release new colors new styles every season to meet people's demand to meet people's um you know desire and that's how we look at things um and you know people want you know especially in 2023 you know going to 2024 and people want to look more stylish when they travel they want to make sure it's the best version of themselves.

11:45And suitcase is definitely a big part of it. And we want to be part of it. So how many retail stores do you have now? We have six retail stores in Australia. And we just opened up a pop-up store in New York and so forth. Yep, yep, yep. And you said you've got many more coming. So are you guys doing, obviously you guys are doing your own retail, but are you guys doing wholesale or retail through other companies, other big box stores? We are. Our business in Asia is primarily a wholesale business. So we work with distributors and wholesale partners to distribute our products in department stores or multi-brand stores just to spread the brand in Asia because these guys know the market.

12:37These guys have the distribution channel. I think it's an easier way for us to enter those markets. And besides, they know the language. And we already expanded to Hong Kong, China mainland, Singapore, Malaysia, and very soon we're going to launch Taiwan and Japan and also Korea. But however, in Australia, New Zealand, US and UK, we are 100 % DSC, which means that we own our distribution channels offline and online. Why is that? because we think that we can do a better job in these areas. Interesting. So are you guys on Amazon? We're not on Amazon. It's not a channel that I'm thinking a lot of right now.

13:23It could be a channel for us in the future, but as of right now, I think it's not a suitable platform for me. If people really want your product, which I think is the best suitcase out there in the market, people have to come to july.com to make a purchase. And I don't think it's a problem for people to purchase from us on our website. And I think access is not a problem. And if people want to come to our store, if there's a store in the city, they can come to your store. Otherwise, they can just shop on our website. I don't think you know not being on Amazon means I'm gonna lose too much of sales it's funny I asked that question I didn't think you would be because from a branding perspective you guys have quite a premium brand I couldn't imagine you guys being on Amazon as well correct I mean that's how I think right now but like anything life never say never right Yeah, maybe one day if we expand to Germany and I want to be on Amazon in Germany, you just never know.

14:35But as of right now, Amazon is not a platform I'm considering. And what about TikTok shops? What's your take on that? It's definitely interesting. It's an interesting channel. I think right now, I think it's only available in the US. I know that it's working incredibly well in China and many brands are honored. They're getting great conversion and great exposure on TikTok shop. We are definitely learning more about it. We are also trying to adapt and see if this is something that we want a brand to be on. So as of right now, I can't say it's a platform that we know a lot about, but it's definitely a platform that we want to explore and we want to investigate yeah it's really fascinating so um you know i think when it comes to tiktok shops and just kind of native e-commerce happening within a social platform and you guys being a d2c you know focus brand in the western side of the world um how have you found like what is working when it comes to i guess performance marketing well Well, I think this is probably true for any brands or any business, you know, advertising on Meta or Google.

15:56If you have a great brand, if you have a great brand with great social proof, your acquisition cost is going to be low. But if you don't have a great brand and your website sucks, you're not going to have a great conversion. um what we are trying to do is we're trying to maintain the brand and make sure that we build that brand awareness piece um you know through pr through influencer marketing and all that to help um you know our paid marketing conversion and also um you know lower our cost and it's it's been working quite effective for us um you know it's definitely working a lot better in australia where we have a lot bigger brand presence than the other markets are working very, very hard to build up that brand awareness.

16:46And I think a retail store is one of that. If we have more retail stores in the US, I'm sure my customer acquisition cost is going to go down significantly because you don't need to educate the clients what the brand is about, what the product is about, and all the unique features because they've already seen it or the friends already use it. the family already bought it um and that's what we need to do uh in markets like us and uk yeah and it brings a a level of legitimacy right exactly right yeah um and it is part of like the d2c playbook you know apple or the originals right have you guys have you had much inspiration from apple and what they do on their retail stores well i mean apple apple's retail experience just like next to none right we definitely um you know take a lot of inspiration from brands like apple brands like you know like noodle lemon and how they create a really unique experience to the retail store concept um you know we do we run retail um you know events um every month or every quarter in some of the retail stores that bring you know sometimes we have a you know guest speaker and we get people in and our tickets are free and we provide food and drinks and for people to come in because we realized that as i said earlier uh buying you know a suitcase or buying you know july is not is an emotional purchase and we want people to experience the brand to fall in love with the brand before they even make a purchase um so they're not really then they're not really comparing us to samsonite or american tourista um it's because we are unique in that sense.

18:32We're not competing with them anymore. Hey guys, I hope you're enjoying this episode and learning a ton. As you know, in this series, we interview some of the greatest founders of 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.

19:11These are in the trenches stories from our very own successful students that have gone through some of our programs. People 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. Man, I could talk about kind of expansion brand because you guys, I think you guys have done an exceptional job. Like especially here in Australia, like a friend of mine was looking for, you know, going to travel and was like, oh, I need a new bag.

19:49And just naturally just goes to July. I was like, oh, you're going to get a July bag? Yep. Like it wasn't that big on the personalization, customization though, but it works. So I guess the next thing I was going to ask just for the audience is just around AI. How are you guys using it? What are you excited about when it comes to AI right now? Well, I think AI is changing the way we live and we work in every aspect of our life and business, right? even just a couple days ago one of my guys in the office um using chai gpt to write a letter to the to the council to remove one of the parking funds that he got it was pretty incredible but we use ai for quite a few things in the business actually um my tech guys is using gpt4 to build a forecast model to see um you know how much inventory that we need to stock you know during peak and off-peak seasons.

20:47We use a ticket system called Gorgias and actually help us reduce the amount of tickets actually coming to the system. So a lot of the tickets get answered before they even come to our human agents. And I think it's really changing the way we do business and making things that more efficient in many, many aspects. I'm super, super excited to see what's about to come in the coming years. Yeah, so 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.

21:35Try 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. When it comes to customer satisfaction, you talked about Gorgeous and you guys pride yourself on customer service at July. Like you and I have talked about this in the past. What are some things that you've done to make the customer happy that differentiates your brand? And before you answer that question, I'll just share with everyone a story. in the early days uh my partner at the time she bought a july bag and she had some problems with it i didn't even know you this is before we were introduced this is before i interviewed you this before you taught a course for founder you actually came to our place in richmond and like wanted to see what was wrong and sorted out the problem but actually like can we expand upon like how like obviously that's not scalable anymore and you've got a massive company nine-figure business can you tell us kind of how you look at customer service and how you take it to a whole new level at scale now yeah i think to build a great brand or build a great business and to one thing we learned from the founders at airbnb was that try to do things that you cannot scale at the beginning do you not always think about scale because if you think about scale from day one there are a lot of things you will be missed you'll miss that human interaction you will miss the the way to um to solve some of the fundamental issues that you have in the business or in the processes right i think the early days i mean we still do that now believe it or not uh we chat to customers we'll go out to customers' houses to resolve issue for them.

23:29And I don't know if I mentioned this in your interview last time, but there was actually a story when we raised the last round of capital. We went to our investors' house for lunch, and I actually went to a customer house to fix a locker after the lunch. and the customer took a photo of me, posted on her Instagram, later found out that her sister worked in our investor's house as the head chef that served us during the day. It was an incredible story and probably a lot of people don't even believe this, but it was true. And I think that helped us, you know, gain a lot of trust and confidence with our investor as well.

24:15And this is something we do, you know, on a daily basis. We have one retail store right here at HQ. Every single day, we are chatting to our customers. We're hearing feedback. We are making improvement based on this feedback. And, you know, just like this help us, you know, get to know our customer better and make us a great company. And that's what we do. And I think to sum it up, for us, we always do things that you cannot scale and go from there. and how do you do you have any kpis to track customer satisfaction in your business yeah we do we we every customer uh after one month uh we're using the product we send them a review capture email um you know powered by this great company from sydney actually called or candle and we get some customer feedback you know if they like or not anything that we can improve on You know, do you have any photos or videos and all the reviews that you see on a website, they're all real from customers, which is something that we measure.

25:18We don't really do NPS because part of me don't really believe that system because I just don't think it represents the true experience from a customer. we use the five star review system for our customers so that people can actually talk to us the issue they are experiencing or whether they have a great experience if you have great experience do you have any photos or videos you can share with us and this is what we do and on top of that with our ticketing system we are on a daily basis we're monitoring our first response time you know are we you know are we complete all the tickets within you know within x amount of time all these things help us um you know provide better customer experience to our customers yeah got you love it so brother we have to work towards wrapping up uh you're a wealth of knowledge and experience and man you're just really good at this stuff and it's uh awesome to see how much you guys are killing it.

26:22Couple last questions. Where do you see the future of AI in e-commerce for founders in the next five years? What are you excited about? And then are there any questions or words of wisdom that you wanted to share that I didn't ask you any questions about? I think you asked a lot of great questions already. I can't think of anything that you haven't asked. But the thing I'm excited about is that I'm seeing people using AI to launch a business from a name to imagery to website, even the entire product design using AI tools. And this is incredible. And I'm going to see more and more individual founders, you know, release a product or launch a business just with the help of AI.

27:13instead of going to different people, product design firm or their accounting firm or even hiring people for various things. So I think there's a trend we're going to see in the next few years. And on top of that, I think people are just going to become more and more efficient with many of those manual tasks. You'll be able to spend more time on the growth rather than all those boring administration stuff. that you're wasting your time on. That's, I think, probably the most valuable things that AI tools can provide. And how will you be able to compete in the market if there's going to be more players than ever?

27:53Yeah, I think that's when building a brand is so important. You know, I think brand is this invisible thing, but worth a lot of money. People come to the brand and, you know, like people want to follow the brand. People want to be part of that movement. And I think building a brand is more important than ever. And that's what we think, how we can compete in the market. You can't take away that. And same thing with Apple today. If Apple business go bankrupt and they don't sell any products anymore, I think the Apple brand itself is going to be worth trillions of dollars. Yeah, I agree. Awesome.

28:39Well, we will wrap there, brother. But thank you so much for your time. This is a fantastic interview as always. You always deliver the goods. And congratulations on all your success thus far. And I continue to enjoy watching your journey. Thank you, man. Thank you so much. Let's catch up soon. Hey, guys. I hope you enjoyed this interview. As you might already know, our mission at Foundr is to help tens of millions of people every single week with our content either start or grow their business, which is exactly why we're partnering with world-class founders such as Damon John, Alexa Von Tobel, Greta Van Riel, and so many more to teach crucial skills such as negotiation, finance, e-commerce, and so much more.

29:25So if you'd like to get access to these free exclusive trainings, please go to founder.com forward slash free. These are 100%. We go super in depth on teaching a particular topic. And I know that you're going to love them if you enjoy this podcast. So just go to founder.com forward slash free. All right, guys, I'll see you in the next episode.