[3:57] Hi, Richard. Welcome to the show. Happy to have you here.
- Hey Trent! Happy to be here with you.
[4:05] So we’re gonna dive into what I just described in the introduction as part one, which is really the portion of our interview that is going to be of more interest to people who have an Amazon reseller business or aspire to start one. And then when we’re done that, we’ll dive into part two, which is going to be the growth story of the SaaS company that you’re building. And of course, that will be of interest to probably folks who are also working to build a SaaS company of their own. So that said, let’s start with what does your company do?
- Well, um, Sellgo is an e-commerce catalog tracker. It started out as a wholesale tool to help Amazon sellers or businesses to find profitable products to sell on Amazon. And then since then, it has transitioned into an intelligent data platform to provide a better catalog experience, to maximize the growth for Amazon sellers.
[5:04] And when did you launch?
- We actually started out last year, 2019. And we have the product ready earlier this year.
[5:13] Okay. So background folks, Richard and I have actually been in contact now, off and on, for maybe like a year. I think you reached out to me because you have an Amazon reseller business, and you were looking for feedback on the problems that we were facing in our business, and the things that we would love to see software do that I couldn’t find any software to do. And I already have a software company, so I’m not going to build another one. But let’s go into the weeds further on that you said, catalog tracker. So for an Amazon reseller, what is the biggest problem that your software is helping them solve? And if I remember correctly, this is not something that any other software in the marketplace is helping somebody solve at this point in time.
- Yes. Well, there are a couple of different levels of wholesale sellers in Amazon. People like you, you have a multi million dollar business, you have a lot of products. Even people like little sellers, they still don’t know how to tap into suppliers or brand owners, so they have a lot of potential products to sell. The problem is, I remember like a couple of years ago when I was still actively selling on Amazon as a wholesaler, I have a lot of products to sell and I didn’t know which one really can make money. So our software will help them to filter, will help the sellers to sort and as well as to track the potential profits. And we can visualize the chart and we can also export into a spreadsheet.
So the core feature that I will say that will help the sellers that it’s not out there in the market right now, is we help automate this filter and sort. And just to give them an alert, like what’s the potential product that’s making profit. And people can save a lot of time doing this with Sellgo.
[7:30] So, let me give you the use case for us that you and I talked about a year ago, because I want to make sure the audience really understands this. So we are contacting new suppliers all the time, and then we get price lists. So the price list is then we analyze the price list against the current buy box price, whatever it may be. And we make a decision that, yes, there is a margin available, we should carry this product. Or no, there is no margin available, so we don’t carry this product.
But here’s the problem. For company XYZ that makes, you know, 100 different products in July of 2020, the buyer buy box prices are, let’s say $1,999 or whatever. And we’re looking at their price list, and we determined there is insufficient margin. In our world, without your software, we’re not likely to ever look at that price list ever again. It kind of becomes a law. And the reason for that is there’s just so many other price lists we haven’t seen that we continue to pursue. And as a rule, the prices on Amazon tend to go down, retail prices tend to go down more than they tend to go up. But there’s always exceptions to that rule.
A buy box price, when we look at it, unbeknownst to us could be artificially lower than it would have been on average in the last 90 days. And if we had a way to track all these products, the buy box prices on an ongoing basis, we then would have a source of data that says, “Hey, that product that you looked at two months ago or six months ago, while the numbers didn’t work back then, they work now and maybe you should take another look at it.” We’re not getting that type of intelligence at this point in time.
And if memory serves me correctly, that is the single biggest problem. And I know you’ve iterated your software a lot since our first conversation, but that is my understanding of the single greatest problem that you would be helping a reseller to solve. Have I got that right or what has changed?
- Yes, correct Trent. So this is very interesting because most of the wholesalers, most of the Amazon resellers, they only look at the snapshot of the price. And you have millions of UPCs as in I mean, you can overlook the data very easily. So we really hope that we can help you and as well as other sellers by automating everything. So basically, when the price goes up, the system will tell you. And then you can see just like the stock market, right? There’s a lot of like, what is the growth here? What is the opportunity? And we can go back in time, to a historical time, to see what the competition looks like? What’s the market share at the current point? What’s the market share before? So that’s why we are building a very sophisticated product record, as well as a list record.
So it will, hopefully, I mean, you don’t want to put the business decision to people. Especially like, you don’t want to hire 100 VAs to analyze your one million UPCs. But you can just subscribe with our platform and then we can automate everything in the interlist record. And then that one million product will be run in the background daily. And then it will show something that will help you to understand, “Okay, the price is going up right now, what’s going on here?” Let me take a look and go back in time. I may see who is selling it, let me see what their inventory levels, those kinds of things. So the goal is this end of day, we really hope that this will help sellers to understand how they grow their market dominance in the buy bulk as well as outside of Amazon.
[11:49] So there’s two other changes of course, that could make an undesirable product become desirable and that is changes in sales velocity and changes in number of sellers. Is your software going to allow me, so for example, I look at this widget, and I looked at it three months ago and it was doing 50 units a month. Okay, so it doesn’t sell enough, I don’t want it. But the company, the brand owner, has been doing a good job of marketing that product. And now it’s doing 500 units a month without software telling me that happened, the likelihood of my finding that changes essentially zero because it’s just too much. There’s too many products that we’re looking at manually on an ongoing basis. So I would want to know, hey, product now has hit my threshold for sales velocity.
And then the other thing is the number of sellers. Obviously, if there were eight sellers when I was looking at it, which for me would be super undesirable, let’s say there were three sellers. But then it went down to maybe two sellers, that might create an opportunity for me to now reach back out to the brand and say, “Hey, how would you feel about adding back a third seller? And if you do, here’s all these extra things that I’ll do for you.” Does your software allow me to track both of those things?
- Yes, we are still working on that. That will be in our filter presets. So we have some filter presets to tell the user that, “Hey, this is the total sales velocity that I’m looking for.” And we’re trying to reveal the sales equity for sellers, as well as the number of sellers. So I mean, that’s very likely to happen.
‘[13:35] So what else, before we transition to the second portion of our interview, because even what we’ve talked about is wildly valuable to anyone who is an Amazon reseller. Are there things about your software that we haven’t discussed that we would want to touch on before we shift to the second portion of our second phase of the interview?
- Sure. So selling on Amazon, it’s all about tactical. And we are trying to provide the automation to leverage sellers to apply their tactical strategy into what they’re trying to do. This couple of like, very famous keywords or terms like super targeting, like lift sores, we learned that from Dan, the wholesale formula. So we’re trying to build that into our system. Like we can tap into the products to see how many sellers, and we can tap into the sellers to look at their products, and you can find your niche product in their inventories level. So we will be moving forward with one of those strategies, I mean this feature to help you and other sellers to be able to take advantage of this. So we will process millions of data for the sellers, for them to be able to make it so quick.
So this is kind of like a new way of doing product research. Because most of the product research in the market right now, I mean, you start with a keyword. But right now actually, there’s a couple of ways to do research and for resellers. I mean, this is one way we want to help people. I mean, you start with the sellers, you’re stuck with the product, find the sellers, and then you find a product, and then rinse and repeat.
And then, I mean, I believe in a couple of weeks when we do this, you will have a lot of things in your product collection. And then you can start to run the automatic process to track the leads.
[15:44] Alright, all right, well, I am super keen to be able to get my hands on all this new functionality that you’re building. So thank you for sharing that with me and with the audience.
Before we get into the second portion of the interview, which is the growth story of your a company which will be inspirational for all entrepreneurs and a particular value to other SaaS entrepreneurs, I do want to just quickly give our sponsor a little shout out and this episode is brought to you by my other company Flowster. If you run an ecommerce business and you’re struggling to effectively delegate all your repetitive routine work in the area of product sourcing or product listing optimization, or pay per click campaigns or shipping or Amazon account health or whatever it is. Flowster process management software combined with our pre-made ecommerce workflow templates, make hiring, training delegating to your team a breeze, and you can check it out at flowster.app.
All right. So Richard, let’s now transition over to you talking about the journey of building a SaaS company. So your company, are you funded or bootstrapped?
- So I was starting at bootstrap. And by the time it was possible, I was selling physical products on Amazon. I was selling like wholesale. And I think I was at the point of, I wanted to expand my wholesale business. And then I talked with my wife and then we had an idea. Well, if we just expand a physical business, a physical wholesale business, we can. But if we can provide a software to help people to provide value to other sellers. I think that’s great. We needed a fund. So I was able to present this idea to some of the really, really good investors. And yeah, and we got the fund to start off.
[18:02] How much did you raise?
[18:05] 1 million?
[18:07] And how many people did that come from?
- It comes from a group of angel investors. I think it’s, I’m not sure how many inside, but it’s like a couple of people. More than one, yeah.
[18:21] And was there an angel, how did you raise it? How did you get in touch with these people? Was it through an angel investor network? Was it a pitch meeting? Did you manually reach out to them? How did it happen?
- Yeah, it’s all about one call. I mean, it’s very interesting. I lived in the Bay Area for a while, so I learned to tap into the right start-up investor community. So basically, I prepared the deck. I got a team, the jockeys. And we prepared the prototype, the horse of the product that we are going to make, and then we pitch to the investor. So it’s like combining between, like, the technical expertise, the team, as well as the, you know, like, who is really driving this product. That was not an easy task at all. I learned through every failures, starting with different people.
I think one interesting fact that I found like, investors usually they invest in the same thing, in the same companies type at the same time. Because they look at the waves, they look at, you know, I mean, even if they have money they might not be familiar with your concept. That’s a good opportunity, because usually they will refer us to different investors.
[19:47] Okay. Now, you mentioned prototype. So did you have a functioning prototype of some kind when you were pitching these investors or did you just have a wireframe?
- Very early. So I will say I was focusing more on the business concept. And rather just jumping into the coding, I myself, I’m a well-trained engineer, so I know exactly like, if we just jump into coding without really writing the business concept it might be a waste of time. So I was just focusing on the wireframe with some little, you know, just proof of concept available. And I think that’s great. I mean, don’t spend too much on coding in the beginning.
[20:32] And by little proof of concept, what do you mean by that?
- Proof of concept, I mean, like, just do some little amount of coding, just to make sure that you can show… I mean, let’s say, so that we can gather the data. We can do, let’s say data acquisition. We can show it into some kind of graph, some kind of thing. And then show how the communication everything inside the product is working. So it’s a very simple one.
[21:03] And you now have been developing the software for roughly how long?
- A roughly less than a year.
[21:13] How much different, when you originally had this idea, there was undoubtedly a set of features that you thought the software would include. And then you go through and you start talking to folks like me, and you’re doing research and you’re talking to Dan, and you’re getting feedback, and you’re iterating, and you’re writing code and so forth. How much did the core functionality of the app, how much is it different from what you thought it was originally going to be?
- Very good question, Trent. So I would say, this is part of our competitor analysis that impacts our positioning. We talk with many different people. So we learn about our competitors’ products. Ongoing that was changing, shaping our product to be much, much more focus.
So in the beginning, I thought I would avoid the path—that I would not build any product that doesn’t have any opportunity to scale up. So I thought, “Let’s think big.” And then I realized quickly, that was not the best way to start. So in a matter of a few days, I jumped into different concepts. It’s totally different. I was thinking to think big and then I realized, “No, let’s think small. Let’s build a small team. Let’s start with a very small budget, and in a small time, and then in the small scope.” So that, with all of this concept, I literally chose to focus on our specific audiences—the Amazon wholesale sellers.
[22:50] You think that you have achieved product market fit at this point in time, or is that still a work in progress?
- Uh, yeah. I, myself, am an Amazon seller. And I know like, the thing that business. And I know what it’s like, do and don’t for the sellers, I know how to think. And I love to attend some conferences. That’s when I met people with the same mindset. So I interviewed many sellers through an informal chat. I asked them, like, “What do they want? What do they need?” Sometimes they don’t know what they need, but they know what they want. They are an expert of their problems. So based on this, I found that, well, I have an idea of our product market fit. And it was kind of straightforward for us, yeah.
[23:42] And you picked Amazon resellers as your target audience, because you were or are an Amazon reseller. So you’re kind of scratching your own itch to a certain degree. Did you look at, you know, there’s this whole community of private label sellers out there and their business model is different than ours? Then there’s folks who do retail arbitrage. And my understanding is you’re not building software to serve, at least at this point of time, either of those two business models. Is that correct? And if so, why was that the case?
- Yeah, um, that’s a really good question Trent. So, we are at this point, we are interested to tackle the Amazon resellers first. And our product tracker can solely be used by the private label, that we are still trying to ship the product into the market. So I mean, no matter what, right now, the game in Amazon is different than two years ago, even last year. This year and last year, there was a big change. So people using this product tracker, it was not very specific to wholesale. But this feature I talked about previously about filter sorting, that is more to wholesale. But for the tracking stuff, private labels can use it. But we don’t necessarily serve the arbitrage as well as the drop shipping at this point.
[25:17] You mentioned analyzing competitors. Tell me a little bit about how you did that. And then how did it impact your positioning?
- So, analyzing competitors. So this is very interesting because everyone has almost the same solution in the market. And we decided that we don’t want to do the same thing. I mean, if we are doing the same thing and we come to the market a little bit later, we will be staying in the small fry.
So we are thinking to come up with a different approach in what’s other surface in the market. So that’s why we will be having a new feature in about three months. Yeah. So this one is going to hopefully help Amazon sellers in a different way. Like I said previously, we can start with a seller. We can do some inventory scouting, things like that.
[26: 28] But with respect to researching your competitors, what does that look like? I mean, are you getting demos of their software? Like how did you actually research them?
- Oh, well, that’s a good question. I mean, it was natural for me because I am an Amazon seller. So I’m also one of their customers. And I know exactly, I mean, it’s just a tool, right? But the most important is like, “Why did I use the tool?” So I always start with why. Like, did this tool help me to solve my core problem? And how was that? So I was starting with that. And then, you know, I know exactly like there’s no perfect solution. So we just have to pick our, you know, what’s the best tool for our current need? And that really helped me to understand who they are and why did they provided that. And as well as sometimes I learned about the team. Because every team, every founders, they bring their DNA into the product
[27:34] That we do. So you still haven’t really aggressively publicly launched the software. You’re working with a core group of beta users. I think you said somewhere in the neighborhood of 30 different users or so. Is that about right?
[27:52] How did you select them?
- So basically, it’s more about internal network. And it was organic. Some of the people like friends of friends, they also get in touch with us. But I mean, we show up in some conferences like ACTG, ecomChicago. And we’ll be showing up in the Prosper Show this year too. So it’s more organic.
[28:18] Okay, so just folks that you’ve gotten to know by being out in the trenches and doing research and so forth.
[28:25] Have you started to do any content marketing yet?
- Yeah, we are starting to do some of the bloggings and copywriting. Yep.
[28:36] Okay. And when it comes to knowing what to write about initially, because it’s a competitive space, how did you figure out for your first say, all eight or 10 or dozen pieces of content, what topics should you focus on? Was that gut feel or was it data driven?
- It is both, I will say. We focus on the importance of analyzing data to make business decisions. So our company, I realized that our DNA is more into building solutions. So we focus on helping people like, “Hey, this is the data.” To create awareness of how to analyze, how to process that data.
So, we also cover how to take advantage of the automation to leverage technical steps to find products to sell. So basically, we are covering how to provide value for people especially like the new sellers. Because I realize that, I mean, people need help. And it’s great if they can take some of the advice, some of the, you know, just like how to open an account on Amazon, how to be a wholesaler, how to reach out to suppliers, how to do something like that in a very basic. Because we provide that for free. And then just for them to understand how to, you know, how to scale up their business from zero to, let’s say, six figures in about a few months. And then from six figures to be able to scale up into seven figures, and moving forward with the automation.
[30:23] Okay, so we’re going to finish up with sharing with the audience what you and I are working on behind the scenes. So Flowster has—we are beta testing, essentially a white label program, to help SaaS companies to reduce churn by improving the onboarding experience for their new customers. So typically, what a SaaS company does is you go and you sign up, they send you a bunch of emails, those emails have links to training videos. And the problem with training videos is that they play something of a burden on the user, like Richard with you. If you’re watching a training video that covers how to do something that’s moderately technical, and that training video is 10 minutes long. Can you remember every last thing that was covered in the training video?
- Yeah. So it’s kind of like yes and no. I mean, I think Flowster really delivers a high value. I’m really hoping that this trend that your Flowster will be growing into multi million dollar pretty soon, because I really see that. You know, there is a quote somewhere, I think the guy was James Clear. He said, “You don’t rise to the level of your goals, but you fall to the level of your systems.” And the system, by all means, is your SOP. And I really think that. This is one thing that all businesses or entrepreneurs should put in mind that they really need to have a really strong SOP.
So with Flowster, we played with that. We are trying to provide value for your audiences, as well as we can also help our audiences through Flowster. So it’s very easy to have step by step, the process documented. And it’s very, super easy to delegate and also not very difficult to master the KPIs. If we have all the step by step written, as well as you can edit your SOP in Flowster. That’s phenomenal. That’s all we need to scale them.
[32:58] So to put this in plain English for anyone who’s maybe not been privy to all of our prior discussions, the real problem that we’re trying to solve for Richard’s company and for any other SaaS business, including our own is, how do you get your users up to speed in the shortest period of time so they get the maximum benefit of your software quickly, so they don’t turn out. So they make it to a paid subscriber. And then you experienced, you know, ideally, revenue expansion because they’re adding other users.
And what I found in my life was that well, a lot of times when I’m learning something new, I’m only going to do it once or twice or three times, and then I’m going to delegate it to somebody else. So this is really the reason why I started Flowster and so I thought, “Well, other SaaS companies must have the same issue.” And it became very real for me back when I signed up to use some SEO software.
And it’s a really great piece of SEO software, and they had really great training videos. But I got to the end of a 10 minute video, and I’m like, “Man, there was way too much detail in that video for me, one, to be able to remember everything so that I could go and repeat.” It was a video about keyword research. So I knew that keyword research was going to be this thing that I was going to use their software to do over and over and over again, product research would be something that people will be using your software for. And I also knew that in my organization, I wasn’t going to be the guy doing keyword research using that software over and over and over again. Once I figured out that, “Yes, this software does meet our needs,” that task was going to be delegated on to somebody else.
So this SEO software company had actually put this pretty significant by only providing me with a training video, they put a pretty big burden on me because now I needed to create my own workflow. And so what Richard and his team are now doing, because I explained this problem to him and he said, “Yeah, that makes a lot of sense,” is for their new users rather than providing only a training video, they’re going to be providing workflows that live in their own white label version of Flowster. So as to make it very, very easy for new users to come up to speed to use their software, as well as if whoever their customer is, has a team like I do, and they want to delegate certain portions of the work to the other people, it’s going to make it a lot easier for your customers to delegate those highly repetitive tasks that your software helps them to do to other people on their team.
[35:38] Okay, well, Richard, for anyone who is interested in learning more about your company, they should go to sellgo.com. And if by chance we have another CEO or founder of a SaaS company that wants to get a hold of you to talk about a partnership or something along those lines, what would be the single easiest way for them to do that?
- You guys can reach me out at email@example.com. Okay, my first name @ sellgo.com, that’s it. Thank you.
[36:15] All right. Well, Richard, thank you so much for making some time to come be on the show. It’s been a pleasure to have you here.
- Thank you, Trent. Appreciate it.