74. Make $1 Million a Year with Ecommerce (Here's How)

0:00How does reselling healthy snacks and pocketing a million dollars a year sound? Our guest today did exactly that. His remarkable transition from operating a local vending business to harnessing the power of e-commerce and launching Smartbox leaves us with a lot to learn. I know guys in the subscriptions industry that say they work 16 hours a week, okay, and their company makes$500 ,000 a month top line. You got to figure out where do I target people? Where do I want them to see us for the first time? And what do I want them to see? Every entrepreneur is going to sometimes feel like quitting, but everybody needs to know that you deserve to be successful.

0:39You feel like a different person whenever you do something and it works. I'm your host, Alex Freeman, and I'm joined by Brandon Stalling to unravel the world of e-commerce. Everything you need to launch your business and take your slice of this$5.7 trillion industry will be revealed right here today. Brandon, welcome to the show. Thanks so much for having me, Alex. Let's start with your background and story. When and how did you start Smartbox? Yeah, so actually there's been basically two versions of Smartbox or, you know, I've basically done a lot with it with exception to changing the name. And we started in 2012 actually with an original Smartbox company that was vending machine business.

1:21I started with like a vending franchise back in the day during my collegiate days at FSU. We transitioned to our own business. We were able to use a lot of assets from that business. And I eventually launched my own vending business called Smartbox, where we had touch screens and a lot of cool technology, a lot of automation in the business. And it was all about healthy vending. So probably one of the coolest vending businesses in town. And for the most part, we remained local over the life of that business. And I did a lot of other things like self-checkout kiosks, hot food, cafe. and eventually we transitioned to e-commerce and I sold everything that I had done before and relaunched the company as of this past November as a fully e-commerce business.

2:06It actually used to be a side business and we did corporate gifting as well. So lots of different things under that umbrella. Wow. Why ultimately did you decide to make that pivot into e-commerce from the local vending business? Well, it was much more my cup of tea, I think. In vending, it's sort of a night and day difference. In vending, there's trucks, there's equipment, there's assets, there's a warehouse, there's people. So with all those resources, I mean, I can make the machine as glitzy as I can with touch screens that allow you to review nutrition labels, send us a message directly instead of the whole phone call and petty cash thing, digital refunds, everything.

2:46We had the works, but you eventually hit sort of a ceiling because it's all about getting, you know, accounts in a very limited market. So, I mean, the difference is with e-commerce being able to be basically national and international in some cases instantly. And I come from a very digital background. It was much more my cup of tea and I've already had more success in this industry than I have the previous. What sort of skills or knowledge that you gained from running the company in its previous iterations do you think that helped you in particular when you made that final pivot into e-commerce.

3:18Yeah, yeah, absolutely. So plain and simply, I've learned to run a business, you know, running a business that, you know, not just necessarily day-to-day operations, but what you need to do and the capabilities and the flexibility that you need to have to run a business. So being able to just knowing how to deal with people, I've seen like every issue, even though in vending, there's a lot more money in my new business, in vending, what it taught me was just every single issue that I've seen with HR especially and managing people, managing a facility, making decisions. I mean, it's really those things.

3:52I've always had sort of the digital side of things. I just didn't know that there was a better way or like something out there that was just more sort of suited from that perspective. But everything else when it comes to how to run a business and how to deal with adversity and chaos and sometimes financial issues and things like that. I think I've seen a lot of different things now. Therefore, there's not a lot that scares me. What was the most challenging part of that transition from the local brick and mortar ask vending business to the e-commerce business? Well, number one, selling my vending business, it took, you know, about a year to actually sell the whole thing.

4:31You know, you're dealing with a limited market in that it's local. So you got to find a buyer that's local, that's going to take it over. It's the physical labor. There's so much actually in e-commerce to me that was just easier for me. Now, I appreciate the work that my third-party fulfillment center does. They have all the resources to be able to do fulfillment. But I think one of the toughest challenges was learning that it takes a different business model. You can't run the same thing out of the same operation. Now we're in a place where, I mean, 90 % of the business is outsourced. And so I think the hardest thing was just how long it took to get things set up.

5:08And I think the other thing was learning the changing environment of the industry. I mean, advertising now, digital advertising is different than it was during COVID. I was able to really ride this wave of bulk orders and work from home gifts during that time. But then now we've got to be successful in today's day and age in a normal economy and really kind of a struggling normal economy. So like it's been a challenge, but we've figured out how to do digital ads differently as opposed to just this amazing growth that we saw during COVID since everybody was sort of forced to work from home and order things online.

5:45Since you've made the pivot to the e-commerce version of the business, what mistakes have you made and what have you learned from them? Well, so just like I was saying, trying to do the same thing with the same overhead in e-commerce, I learned when I went to these trade shows like SubSummit and from what I've learned from other organizations whose trade shows I will attend like RetailX is that outsourcing is the way to go. A lot of these entrepreneurs in this industry work from home. It's very digital. And, you know, a lot of them know how to do the advertising and know how to do things that I was never equipped with.

6:18I'm very good at a lot of the back end stuff. I sort of operate as the company's e-commerce manager, but at the same time, there are things that I need to outsource as well. So I think the biggest mistake was just waiting too long to change things, especially from like a marketing and advertising perspective. It's kind of interesting how the industry changes, but just learning how to pivot and, you know, even after setting up the business differently, learning that like my model when it comes to acquisition wasn't exactly what was going to work for today's day and age. So you got to change quickly.

6:53And I eventually did it, but it took a lot of hard, sort of costly lessons learned in order to get there. But luckily, things get easier and easier as you fix them. And in e-commerce, once you fix something, you don't have to fix it again, kind of like a vending machine, if that makes sense. And if somebody's listening to this and they're saying, oh, I kind of want to get into this style of e-commerce business, what are some of the startup costs that they might be looking at? If I were to do this all over again, I would be blessed with the opportunity to be able to build a website to really get it right, you know, and to then leverage my experience as well.

7:29So the giving the customers the ability to leave a review, to give us feedback, having a whole feedback loop. I think the startup costs, the building of the website, you know, the digital monthly fees that come along with that. But then before you even go big and start fulfilling orders or doing any of that, doing some focus group-like testing. So acquiring an email list, not by purchasing it, but perhaps by doing some giveaway campaigns and things like that in the beginning to just sort of get some interest and some people on your email list, some followers on your social media. Acquiring all of that before you even make the first sale and then asking people, how do you interpret this?

8:10Where do you get your information? how'd you find us and really just defining your target market, measuring 10 times and cutting once and having that discipline before you really go into business, especially if you're selling physical goods. I guess software as a service might be a little different, but physical goods, I would say before you even make a sale and go to a third party fulfillment center. And then again, there's that setup cost as well. You might have to pay some storage fees in this process and things like that. But yeah, I mean, it's pretty minimal if you can keep it digital, but I would say trying to acquire as many potential customers as you can before acquiring actual paying customers before you go into business.

8:47And that way, you could be profitable right out of the gates, potentially. Listeners, if you're looking for more advice on how to start and grow an online business, check out our interview with Ron Stefanski in episode 50 to find out how he makes 85 % profit margins on his online business revenue. Brandon, can you tell me about the vision or mission that you have at SmartBox and also why it's important for an e-commerce business to have a vision. Yeah, it's important for any founder to have a vision. And for this SmartBox, this iteration, it's about snacking done your way. If you go on our website, there's all kinds of ways to purchase and all kinds of things you can actually purchase.

9:25So the idea is discover new snacks. You can discover products that are not normally on your store shelves. We have access to thousands of items from all over the world. And you'll see in our store that there are certain flavors of goods or certain goods that aren't available, maybe in your local store. That's an ever increasing amount. And you'll be surprised how many things are so good, but they're just not in that grocery store because it just hasn't made it to the main street. There's actually more products like that than there are things that you see on the store shelves. So there's that. And then there's, you know, you can do it your way.

9:59So you can subscribe to a snack box. You can build your own box as a gift or as a subscription. You can do corporate gifting, bulk ordering, and you can actually ship items to multiple addresses in one transaction on our store. So it's really like, I think that's probably the third thing as far as our mission and vision is a meaningful gift. I've learned throughout this process. I mean, we started with corporate gifting during COVID to help companies out and to pivot away from vending, which obviously vending was very affected by COVID. And I learned the power of a meaningful gift and being able to provide a customer the ability to add a bow, write a card, attach it to a snack box.

10:39I mean, the reasons I see some of these people gifting, you know, like for example, rescuing a newborn in intensive care and thanking the doctors for that. I'm just happy to be the material behind the gesture in that case. I'm curious about your proudest moment as a business owner and how that moment may have helped you grow the business. Well, I think one of them was when I first turned a profit back in 2017, we worked really hard on getting these two really big self-checkout kiosk customers. And that was back during the vending days when we were up against a Goliath. We were the David versus like a company called Canteen that was like a Goliath in the market.

11:20They're able to beat Goliath and get in two of the biggest accounts in Jackson. Now, eventually, the empire did strike back, but we successfully got those accounts, had a really good year. I ended up actually winning an award that year for 40 under 40. Actually, you know what? That was 2015. Well, maybe that's the second most proudest moment, winning that local 40 under 40 award. But I think at first, turning a profit felt really good. Whenever you do that, you feel like a different person. It's a fleeting thing as well, because eventually I had to do it again and then a third time. So you feel like a different person whenever you do something and it works.

11:59And if it's a new idea, something that hasn't been done by others exactly, then even more so, you definitely feel a lot less crazy. Even in the industry that I'm in now with snack boxes, there's not anything that's exactly like ours. And if you look at some of the gifting competitors, there's probably less than 10 that I can find that really kind of are part of our industry. There's plenty of room to compete on the internet. So I think that might be another thing is being able to differentiate so much in this industry as opposed to the other. Now, one thing that struck me in that answer was these major accomplishments come along with stress in the process of getting to them being accomplished or even just the stress of pivoting into e-commerce from what you had been doing, all these different moments where I can imagine the stress got really high.

12:50How do you manage stress in those moments? And what advice do you have for other business owners to help them manage their stress? My dad told me one time, you know, if you stick around long enough, you'll get what you want. I think that part of it is, you know, you will go through a period where you're very uncomfortable. But there comes a time where you actually get used to some of this. You come to sort of realize that believing that your idea is going to work and that it'll all work out despite some of the setbacks. Every entrepreneur is going to sometimes feel like quitting, feel like giving up.

13:22But everybody needs to know that you deserve to be successful. And it's very brave of you to take risks. And as long as the idea makes sense and that it can make money one day and you believe in it. Also, if it's helping others, obviously, I don't want to be in the business selling cigarettes. I want to help people with whatever we're doing and make money doing it. So it's something that you can feel good about. So I've gone through a lot of stressful situations, but eventually you get to the point where you understand that those situations are going to happen and you don't panic. The idea is to don't panic and think that it's the end of the world.

14:01Just handle the issue and understand that that's part of the job. I want to dive into marketing and advertising a little bit. And I guess to start, I'm sure the specifics of this answer are going to apply most directly to the actual niche of business that you're in. But I'm curious about building a strategy for attracting customers to a new e-commerce business that perhaps doesn't have a brick and mortar comparison hand that they're used to. So if you're building a new e-commerce business, how do you begin to build that customer acquisition strategy? I would say that there's a couple of different questions to ask.

14:37And that is, I mean, first of all, you got to start with what you're selling. So I mean, say you're selling like cosmetics or something, right? Well, sort of define your target market as best as possible. These cosmetics are going to be for women between the ages of 30 and 55. So then the next question is where do they get their information about that already? Do they go on Pinterest? Do they get it from social media? What are other companies that do cosmetics doing online? And where do you find this? So where do they get their information? And then you build this solution, this website perhaps, but you've got to sort of meet them where they are.

15:15So if you decide that, or if you come to find that, okay, women typically get their information about these cosmetics in this particular segment from Pinterest, then you got to go meet them on Pinterest. And then just like sort of what I was saying before, doing some campaigns, some pre-marketing on there to drive interest and see how people react. Ask people, how do you interpret this? I mean, where do you get your information and how do you interpret us? And eventually if someone makes a purchase, what made you make that purchase? I mean, you just get like a few early adopters and it's like, what drove you over the line?

15:54I mean, and that knowledge from those three questions is super valuable because if you ask someone, you know, going back to the, how would you interpret question, then it's almost like they'll use words that you may have not have thought of before, or you can figure out kind of what you mean to them. And that's, I think the core of being able to understand what your core value is going to be to the customer. As you go through that process, how long do you give it for someone to be responding versus, okay, maybe we need to, in the cosmetics example, okay, we think it's Pinterest. We think Pinterest is the spot.

16:28Let's run this pre-marketing campaign. And the response we're getting is not what we're expecting. We need to pivot. How long does that process take versus like, it just takes time in the market for the message to start to get out there versus we're throwing good money after bad. We need to pivot the strategy. That's why it's important to have people with expertise behind you, especially in the field of marketing. I wasn't one at first to have a whole lot of knowledge in digital marketing. And I've learned that it's very valuable to have those who really kind of know what they're doing when it comes to these campaigns and the analytics.

17:00So, I mean, I would think that first, if you don't know how to do it, then find someone to help you that does know how to do it so they can guide you along with this. But that being said, yeah, the question is going to be once you sort of do some test campaigns or maybe just any sort of testing is what are we getting? I mean, are we getting responses? You either will or, you know, you won't get as many as you want. So that'll say something. The truth is always in the data. And the most value I think is whenever you see direct answers to like surveys and people say things like, you know, here's one question we ask in our surveys.

17:33Why have you not purchased yet to people who haven't. And it's like, they'll say things like, well, the cost or the cost of shipping, or I didn't have the ability to add a note. Well, we do have that ability. It looks like people weren't able to find that. So how do we make that more clear? So you got to, as far as how long it takes, it doesn't take long at all if you throw enough money behind it, right? I mean, we do test campaigns for a week, essentially, where we throw$400 or$500 behind something just to see what we get. And then we can certainly tell what it's going to do at scale at that point.

18:09But the devil is in the details. And in this business, the devil is in the data. So the analytics, as far as those metrics that you see on the Google Analytics, for example, but not just those, but people's direct answers, the more of that direct feedback that you can get, it doesn't take very many people to start seeing a pattern, essentially. I mean, your first 100 people are going to tell you a lot about your product. And we've gotten a lot more than that. And it's been very valuable. How much are you spending in an average month on advertising? And where are you finding the best ROI on that spend?

18:44It depends on if it's during a pandemic or not. But we could just throw so much money during COVID at Google ads, for example, because of how many people were forced to go and search for things online. I mean, I think it was like three times the amount of search volume and leads gen activity that was going on at the time during 2020 and 2021. And that being said, I've spent as high as like$31 ,000 in a month on just Google ads. And then you add in social, we've spent a lot of money there, but we've been able to also figure out how to spend a third of that amount to get the same result and then do some things on social that don't even involve getting the sale.

19:29One of the things that I'm getting out of the philosophy of doing is this whole get the sale or nothing advertising strategy where you're sending a lot of traffic to the site. It's based off of conversions. And if you don't get the conversion, then you've essentially paid for that traffic. You might never see that person again. The idea is when you get traffic, if you don't get the purchase, then maybe through your pop-up or your footer or some other page that you're sending them to, you at least get the email contact information where you can follow up with a discount code or something like that.

19:59And to create a funnel so that you can nurture those leads. So that's where retargeting comes into play. And you got to figure out where do I target people? Where do I want them to see us for the first time? And what do I want them to see? How do I put the brand in front of them? And then how do I nurture those people who may have hit the website, but they're not ready to make a purchase? Because in e-commerce, people make purchases on their own time. They do not just stop what they're doing and make a purchase right then and there. They're going to do it on their own time. So you've got to get in front of them on average seven to 13 times in order to get that purchase.

20:35So this is going to bring us to a section of the show that we call our Fan Blitz questions. These questions come from our YouTube community. Listeners, you can go join the community, go to youtube.com slash upflip, and you can post questions to future podcast guests. Brandon, I've got five questions we're going to try and do in approximately a minute. Are you ready? Wonderful. Yes, I'm ready. All right. At this stage of success, what advice would you give to your teenage self? Don't worry. You're going to get what you want. Everything will be fine. Stay the course. What's the biggest purchase that you regret?

21:06Remodeling our office and warehouse four months before I had to close it down. Oof. If you could sell your product to one celebrity, who would it be? This was a tough one. I had this one. Okay. I would say an athlete, someone who could get me in front of others like, you know, oh my gosh, why don't we just go with Tiger Woods to keep it going? I love it. What are some of the nicknames you have for customers or co-workers? I thought about this. I don't have like nicknames for customers and co-workers, but I do have plenty of nicknames for competitors and vendors. Like, you know, there's this one company locally.

21:39I love them. I do plenty of business with them, but they're called fast signs and I'll refer to them as slow signs if they're being slow and things like that. Last one here. If you wanted to sell your product to aliens, what name would it have? Oh, well, I would say, I guess something with a good ring to it, space case, you know, or, you know, sold. That's great. That's a great one. That's going to do it for our fan blitz questions. Listeners, let us know what you think of this episode by reviewing it on Apple, Spotify, or wherever you're listening right now. Brandon, how would you describe the SmartBox brand and how did you establish that for customers when you were first starting?

22:20Yeah. So we were in a transition where it was a vending business. And when I discovered the subscription trade association subta and what you could do with e-commerce, I was just so excited. So I was so ready to convert SmartBox. What I didn't know was just how much I would have to do in order to accomplish that and how much I would have to basically give up in order to do that. So the brand had always been before about like healthy snacks, vending, healthy snacks in a vending machine, basically. But I floated the idea several times of doing a complete name change. The SmartBox brand, sort of like I was saying before now, is about three things, all right?

23:02Access, convenience, and meaningful gifting. So access to an array of snacks. We believe in snacking. We love our snackers. That is our customers. And the convenience of being able to snack your way and being able to do that on a regular basis. But we're also going to be a provider that can help you send someone a meaningful gift. So discovering new snacks, the convenience of being able to do it your way anytime, anywhere. And for both companies, because we do do corporate gifting as well, but for companies and individuals, sending a meaningful gift as well when the holidays or a birthday or an anniversary comes around or what's most popular I see is the birth of a child or the rescuing of a child.

23:50I mean, there's quite a few super meaningful reasons and I'm happy to do that. And that's what we see every day online. We've kind of talked around this, but can you give our listeners just kind of an overview of the different offerings that SmartBox has currently? Yeah. So basically we've got eight different snack box themes. We've got the family box, for example, which is, has our highest item count. It's going to have an array of healthier options for both kids and adults. It's great for if you want to send it as a subscription box to your home, stock your kid's lunch box with some Annie's bunny grams.

24:25We've got so many of the popular things I'm going to name like cliff bar and kind and Annie's and those things that you see. But then we've got some less popular things that are super delicious, like the malk cookies or the muddy bites. To be honest, a lot of people like a lot of the sweet stuff and we're here for it. But the majority of our products that we carry contain all natural ingredients. We stay away from refined sugar and some of the big no-nos, but we're super flexible yet still. And so just to give another example is our celebration box is our most popular corporate gift. It's going to be your higher end items.