In this episode, host Josh interviews Simon Hammer, VP of Product at Vimbly Group, about acquiring and managing e-commerce brands. Simone shares a case study from the cocktail shaker market, illustrating how focusing solely on quantitative metrics led to missed opportunities. He emphasizes the importance of qualitative customer feedback, brand storytelling, and product-market fit to build lasting brands and avoid competing only on price. The discussion highlights key lessons for e-commerce leaders: assess market potential, listen to customers, and continuously test and iterate to stay competitive.

Chapters:

Introduction to Simone Hammer and Background (00:00:00)
Josh introduces Simone Hammer, his background, and experience in e-commerce and investment banking.

Approach to Brand Acquisition and Quantitative Analysis (00:00:55)
Discussion on traditional quantitative methods for acquiring brands and the limitations of focusing solely on numbers.

Case Study: Cocktail Shaker Brand and Market Dynamics (00:01:38)
Simone shares a case study about their cocktail shaker brand, market share, and the impact of COVID-19.

Competitor Analysis and Information Memorandum (00:03:08)
Simone describes obtaining a competitor’s information memorandum and insights into their strategies and market position.

Market Changes and Increased Competition (00:04:07)
Discussion on rising freight costs, increased competition, and the challenges faced in the cocktail shaker market.

Brand Building vs. KPI Focus (00:05:05)
Comparison between their KPI-driven approach and the competitor’s focus on brand building and storytelling.

Consequences of Ignoring Qualitative Feedback (00:06:59)
Simone explains the negative outcomes of neglecting qualitative customer feedback and the resulting price competition.

Importance of Qualitative Customer Insights (00:07:53)
Emphasis on the value of qualitative data, customer feedback, and brand building for long-term business success.

Lessons Learned and Industry Trends (00:09:01)
Reflection on industry trends, the necessity of qualitative insights, and the risk of competing solely on price.

Host Reflection and Question on Customer Feedback (00:10:04)
Josh reflects on his own business practices and asks Simone what customer feedback they missed.

Specific Customer Preferences Missed (00:10:53)
Simone details specific customer preferences, such as the shine of the shaker and the appeal of the stand.

In-Person vs. Online Customer Insights (00:11:55)
Insights gained from in-person customer interactions versus online feedback and the importance of customer development.

Three Key Takeaways for E-commerce Success (00:13:43)
Josh summarizes three actionable takeaways: market opportunity, listening to customers, and continuous testing.

Closing Remarks and Future Follow-Up (00:16:48)
Josh thanks Simone and mentions the possibility of future episodes to check on progress.

Links and Mentions:

Tools and Websites 
Helium 10

Key Takeaways 
Identifying Market Opportunities: 00:13:43
Listening to Customers: 00:14:47
Testing and Iterating: 00:15:49

Transcript:

Josh 00:00:00  Today, I’m excited to introduce you to Simon Hammer. Simon is the VP of Product at Vimbly Group, a New York City based firm that scales and invests in tech enabled businesses where he has worked for over ten years. He currently runs Vimbly Group’s e-commerce business unit, as well as having his hands involved in a number of Vimbly Group’s eight other business units. Prior to the Vimbly Group, Simon was a healthcare investment banker at a boutique investment bank in New York City, where he focused on raising capital and mid-market mergers and acquisitions involving biotech, healthcare, technology and healthcare service companies. He has a bachelor’s degree from Cornell University, and I met Simon at the Billion Dollar Seller Summit earlier this year. And Simon, I’m excited to welcome you to the podcast. Welcome.

Simon 00:00:50  Thanks, Josh. Really appreciate that. Nice intro. Thanks for having me.

Josh 00:00:55  As you look to acquire other brands, and I love that you kind of were an acquire or aggregator before the aggregator theme became pop became popular. So you’re not on the the bandwagon there.

Josh 00:01:08  You can be like, no, we were doing this long, a long time ago. You know, I think that that’s really interesting, Simon. I think you’ve taken this approach that’s actually a little bit different than I think the typical answer is, right, because I’ve listened to a bunch of other people that talk about acquiring businesses. And I’m looking at these specific numbers and, you know, I’m trying to draw conclusions and, you know, kind of look at 2020 and what happened during Covid and say, okay, this was an artificial bump and it’s all very quantitative, right?

Simon 00:01:38  All the quantitative stuff that you’re talking about like looking historical, it’s a given. Right. We always do that. We’ve always done it. And for the longest time, that’s all we did. And, you know, one of our brands right now is going through a major shift in that it, for such a long time survived on three products. Basically, there’s a whole, you know, there’s more skews, but there’s basically more Asians.

Simon 00:02:02  But there’s there’s effectively three basins. One of those. basically a shell of itself now. And part of the reason why is because, you know, actually, if you’ll divulge me for a second. So, pre-COVID and even through the first, you know, a couple years of Covid and depending on where you want to, you know, start and stop it, I guess. or, you know, where the beginning till now is, I guess. But first couple of years of it, it was doing incredibly well, right? It was something like anywhere between 25 and 35%, or it accounted for 25 to 35% of our gross margin. That gross margin, including everything from landed costs, three PL costs, FBA costs, advertising, marketing returns, all that stuff. Just not just not like overhead and, and software, things like that nature. But but gross profit. Right. And so it was a large part of our business. this one product and you know, during the beginning of Covid, I got my hands on a competitor, one of our biggest direct competitors.

Simon 00:03:08  Their information memorandum, which is basically like their, this deck. it’s like 50 pages of their business because they’re trying to sell their business. Okay. And through like, you know, like, you know, my partner Sam, he has just a ton of connections in the entrepreneur space, a ton of connections with these brokers. And so we get a lot of deals right across a lot of different industries. and so we just happen to get our direct competitors information memorandum. Right. So this gave us everything about their business, right? We knew the numbers. We knew. we knew, who their suppliers were, right? What their strategy was, what their projections were like. You know, you name it, we knew it. And, I mean, we were like, we could look on helium ten and know that we were dominating. But then we saw the real numbers. We were, you know, we were dominant player in the market. and then all of a sudden, right, like during Covid, you start seeing freight costs go up.

Simon 00:04:07  You start seeing, a lot of sellers into the space. The cocktail shaker space is kind of the space that we’re playing in for one of our brands. and this is where the the set, you know, was established. and, you know, was this, you know, what’s called roughly like 30% of the business. it had basically, started having rank weed, right? The ranks started dropping, dropping. We were doing all these different things, all these different tricks, hacks, things we learned at BDS. Right? By things we, you know, things we things we heard along the way from different e-commerce sellers, like from podcasts like this, just a whole bunch of different things. We tried everything from like traditional white hat strategies to little, like toeing the line like gray hat strategies. Right? you know, we were firmly in this, like, rebate flow game, right, for a long time and they cracked it down. There’s a few different variations of that, right? Yeah.

Simon 00:05:05  you can think of it. We were doing it to try to turn around this product, and, this competitor had stayed true to what they were doing right from the beginning. we knew that, you know, through this information memorandum that basically we’re producing the same exact quality, shaker as us, this certain grade stainless steel. It’s the same as ours. Okay. the. You know, if you strip down all the marketing speech, it’s effectively the same product. And, However, what they did do, though, was they got a couple patents on, like, the, the there’s a stand. They got a patent on it for the design. They did a couple other things and they got some patents, but they built out a product line and that from the beginning, even though they’re they were getting way less sales, they were marketing their, their products for 10 to $20 more than ours. And on a main product compared to their main product. Right. I think there’s like a $17 difference at the time.

Simon 00:06:00  Right in the beginning. that difference is actually grown, by the way, because while they were building that brand and like listening to what the customers were wanting and, and understanding that, hey, there’s this like, there’s this, story that they could paint. We were just focused purely on the product and trying to do all these things to capture more market share from a qualitative basis. We were focused on KPIs. We were focused on conversion rates. We were focused on which hero images were going to perform better. I mean, these are great things that you should focus on. Sure. The things we were not doing right was the, painting a story, right? What is what is our cohesive story for this brand, adding on subsequent products that we can then drive, like cross sales into this product or what? What things can we do from this main hero product to do cross sales and their price? You know, now we’re talking about fast forward a couple of years, right? So today their price has never wavered.

Simon 00:06:59  Even some of their products are now more expensive. They’ve increased price. Yeah, like even more laying into their narrative of this premium quality. Right. Like all this other stuff. And we tried to add that on now later. Right. Try to like raise price say premium. Do all these kind of little like marketing tricks. And nothing’s really working now. They still don’t actually have as many reviews as us because we they was just such a big difference. But they’ve dramatically closed that gap right there. Their star rating has stayed at five stars. I think it’s like 4.8 right? Ours has stayed pretty consistently at 4.5. I think it’s like 4.5 and actually shows you know four shows 4.5. but again, like we’ve actually had to come down on price a lot. And now there’s this race to the bottom in this space where, you know, if it wasn’t for the fact that we were so diversified and we had this coffee where we had a couple other brands, we’re playing in a couple different markets where we’ve actually grown a lot.

Simon 00:07:53  We would like it is a shell of itself, this product, and we would be really hurting if it wasn’t for that. And I say that because this this is a story of us not listening to again, going back, you know, the squirrel is another one. But going back to this whole, asset of, and I call it an asset because it really is of this qualitative information that you can get from your customers. Right. And what is it that they’re saying, not just about the product, but about the brand, what they were saying about this brand all along, which we just completely weren’t looking at because we were so focused on our KPIs and testing and iterating. Again, not saying those bad, you should be doing those things. You should be doing a lot of that. But the I think the qualitative stuff is something that we’ve now find ourselves having to adopt, right from an e-commerce perspective, and really make it a big focus for us when we look at it. Because with that, you can do a lot of things and it’s become, you know, I think in terms of a trend, right? A, an actual industry trend, it’s become a much bigger thing if you don’t if you’re not building brands, you’re not focused on the the qualitative side of things, then, you know, you’re you’re just selling products and eventually it’s going to happen.

Simon 00:09:01  Like what happened with us with the cocktail shaker where you have, a business that is effectively, suffering and competing on price, and we’re going to lose on price all day long. We’re a competitor now is they’re not competing on price. They’re competing on brand. And so I think that’s, you know, this whole aspect of adding in when you’re looking at when you’re looking at what product you want to sell, even if you’re launching a new product. Right. Like you can get samples from suppliers where you can see you put you can put the current leader and your sample in someone else’s hand and be like, hey, you know, what do you think about this? Right? we do that now. Right. And I think the, the amount that you learn is a much harder to kind of like reconstruct and paint a specific picture like you can with numbers. And so those two things in this day and age, and again, I don’t think this is just applicable to e-commerce. Right. I think that’s applicable everywhere across the board.

Simon 00:10:01  In business, is just a critical piece.

Josh 00:10:04  Yeah. No, I love that story that you shared there. And I think it’s so important. and it’s jogging a few ideas in my own mind of, like, things that we should be focused on in our own brand, because this entire year we’ve been so focused on, like, driving KPIs, establishing a scorecard for the business. Where are we at quantitatively all the time? But what we’re not doing a great job of is kind of like what you talked about is like we do have like our customer service monthly report, but like we’re not building that into like we’re not tweaking our copy or anything like that based off of what we’re learning. so if you could go back in time, Simon. Like, what was it that the customers were saying that you should have done if you could go back in time? Like, what would you have done? What were people saying and how could you have changed the narrative?

Simon 00:10:53  Yeah. So, well, one thing people were really liking a different, And, like, shine on the cocktail shaker.

Simon 00:11:03  And, this is not like, not like we were getting bad reviews, but hidden in good reviews were, and not just our reviews. Like we also look at. I mean, especially now we look at reviews of our competitors, but hidden in a lot of the good reviews was this concept of like, just the different shine on the shaker, right? Like ours is not that it’s not shiny, but I would consider it maybe a little bit more matte than polished. And the look that people like right now is just polished, right? And that’s like a very easy change. Like, hey, it’s like, let me just change it from this look to a little bit more shiny, right? They can do that very easily. Why? I know now they could do it very easily, but it’s just not something that we’re like, you know, we’re doing so well, from conversion rate, how can we go from 20% to 22%? Right. Like that’s a huge like that. 22 that 2% increase in conversion rate is X amount of increase in revenue.

Simon 00:11:55  Right. Like great. so that that actually was a really big one. The second thing is, People were really liking the aesthetic of their stand. and we had some stands, but we didn’t. You know, when we ran some tests, it was never the first thing that people pointed to when we did stuff online. We’ve gone back and we tried to do different things with this product now. But the interesting thing is when we did stuff, in person, people would pick up the stand and they would play with the stand a lot longer. And their eyes were drawn to this stand. And so while, you know, we ran, you know, a whole bunch of pixels and we’ve been running Pickfords forever. We used to do it on different products. We’d run five second tests on a whole bunch of different products way back in the day. Like landing pages, home pages, different things, you know, for different businesses. And so these are things that we brought into e-commerce, too, when we did that.

Simon 00:12:54  People weren’t saying that. Right. People would say like, oh, I like the shininess or oh, like, this just looks more premium. And so we were focused very much on, on like the cocktail shaker and the tools and those things, because people like the concept of a stand never came up that much. However, when we got people in person, you could see their eyes, like really drawn to the stand. Oh, right. And no matter if it’s the the thing was together, we laid out all the tools and the stain was on the side. People never inevitably came back to the stand, but no one verbally talked about it. Right. And so I think, you know, going back in time, we would do a lot of these things that we were talking about now. Right. Getting people in front of you. Right. Doing much more. Customer. We call customer development. and really finding that like right product market fit. We would do that because we just we didn’t and it shows.

Josh 00:13:43  So here are the three takeaways that I noted Simon. Let me know if you think I’m missing something. So number one I’m going back to my notes here. So as we go back, three takeaways that people can implement is identifying the market opportunity for your products. Are you playing in a big market or are you playing in a small market? And you used a good reference where you know the amount of effort and time that it takes to create the listing images, the title, the copy, and all of that. For a product that is in a small market is actually the same amount of time that it’s going to take to launch a product in a bigger market. Now, with capital being aside right those, as you look at your return on investment, you need to start seeing like if I launch this product, what products am I saying no to? Or if I’m acquiring this brand, what other brands am I saying no to? And I think you can use that kind of like big or small, market opportunity.

Josh 00:14:47  It no matter what business you’re in, whether you’re looking at products, acquiring businesses or you’re looking at new opportunities, for yourself. So that’s takeaway. Number one is, is identifying that. number two is actually listening to your customers. And so we we talked so much about the KPIs understanding conversion rate, click through rate impressions. All of that stuff is good. But at the end of the day, get back to the basics of like, do you understand what your customers are saying? When was the last time that you actually looked and and fielded some customer service emails? we just had our VP of operations for our business cover customer service for three days. And although, you know, you could you could say, hey, like this guy’s pay grade is is much higher than, you know, doing regular customer service. Cut and paste. you know remarks. He now understands our brand. Some of the pain points that customers are having better than he did before. And so I do at least once a year.

Josh 00:15:49  I cover customer service. So does my wife. So we can get a little flavor of like, wait, what are people actually saying? so that’s that’s a quick takeaway. And then last final takeaway is get back to the basics and keep testing. Keep iterating, because that conversion rate is one of the most important things, whether you’re selling on Shopify or on Amazon. Don’t just set it and forget it. Again, there’s a lot of the gurus that preached, oh, Amazon make all this passive income. Like that’s not what e-commerce is about. It is not passive income. You have to be regularly testing or like you kind of shared in your story, there’s someone like somebody else is going to start to chip away at that market share, and you’re going to look back a couple of years later and be like, oh crap, where did it all go? We’ve seen that happen in our own business as well. And so this is me talking to myself at the exact same time. So those are, I think, three real actionable takeaways that everybody can apply to their business.

Josh 00:16:48  Well, Simon, thank you so much for your time. Hopefully we’ll follow up, in some future episodes and see how things have been going for it for you later down the line. But thanks for your time today.

Simon 00:16:59  Yeah. Awesome. Josh, thanks. This was a lot of fun.