When should you diversify off of Amazon? A Strategy Audit Session with Damon Sununtnasuk

In this episode of the Ecomm Breakthrough podcast, host Josh Hadley interviews Damon Sununtnasuk, a supplement brand owner. They discuss Damon’s business growth and the strategy audit session that helped shift his mindset. Damon shares his experience with funding challenges and the transition from a day job to managing his brand full-time. They explore the risks of relying on Amazon and the benefits of diversifying sales channels, including success with TikTok Shop and influencer partnerships. Damon recommends the book “Finish Big” for entrepreneurs considering their exit strategy and praises the logistics company Mothership for inventory management. He also admires Chris McCabe, an expert in resolving Amazon-related issues. The episode provides insights into strategic thinking, platform utilization, and partnership building in e-commerce.

> Here’s a glimpse of what you would learn….

Damon Sununtnasuk’s journey in growing his supplement brand
Challenges and opportunities in the e-commerce space, particularly in the supplement industry
Importance of clarity in business goals and mindset shifts
Risk of over-reliance on Amazon as a source of revenue
Leveraging TikTok as a marketplace and diversifying channel strategies
Visualization tool called the taxonomy of valuation for business
Success of leveraging TikTok Shop and working with influencers and affiliates
Strategic thinking and building meaningful partnerships in e-commerce
Book recommendation “Finish Big” by Bill Burlingham
Productivity tool “Mothership” for moving inventory and pallets

Here are the 3 action items that Josh identified from this episode:

Action Item #1: Diversify Revenue Streams: Take a critical look at your business’s revenue sources and consider diversifying beyond platforms like Amazon. Explore emerging channels like TikTok Shop and prioritize partnerships that align with your brand’s values and mission.

Action Item #2: Strategic Clarity and Mindset: Clearly define your business goals and regularly assess the current state of your operations. Adopt a mindset focused on strategic clarity and operational efficiency, emphasizing areas with the highest impact on your business’s value drivers.

Action Item #3: Prepare for Exit: Incorporate exit planning into your business strategy from the outset, regardless of whether you envision a near-term or long-term exit. Familiarize yourself with resources like “Finish Big” by Bo Burlingham, which emphasizes the importance of preparing for a successful transition.Resources mentioned in this episode:

Special Mention(s):

Related Episode(s):

Episode Sponsor

This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures.

I started my business in 2015 and grew it to an eight-figure brand in seven years.

I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.

If you’ve hit a plateau and want to know the next steps to take your business to the next level, then email me at josh@ecommbreakthrough.com and in your subject line say “strategy audit” for the chance to win a $10,000 comprehensive business strategy audit at no cost!

Transcript Area

Josh (00:00:00) – Welcome to the Ecomm Breakthrough Podcast. I’m your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Michael Gerber, author of the E-myth, and Matt Clark from ASM. Today I am speaking with Damon Sununtnasuk and we have conducted a strategy audit, and he’s going to be sharing his takeaways that he’s going to be implementing in his business to scale it to the next level. This episode is brought to you by Ecomm Breakthrough Consulting, where I help seven figure companies grow to eight figures and beyond. Listen, Damon, I started my business back in 2015 and I grew it to an eight-figure brand in seven years, but I made a lot of mistakes along the way. That made the path of getting to eight figures take a lot longer than it needed to. There were times where I had to take money out of my own personal bank account in order to fund payroll. Because of cash flow constraints, I made bad hiring decisions, and when Covid hit, I watched my business go down 90% overnight, and the amount of stress of knowing whether or not my brand was going to survive was a huge stress in my life.

Josh (00:00:50) – So I remember wishing for a mentor who could guide me through the maze of scaling up someone who had been there, done that, and could share all the secrets to help me overcome those obstacles. And that’s why I’ve decided to offer one on one coaching and consulting where I can share the nitty gritty cash flow strategies, the sales frameworks, and the operating systems that have helped me scale my own business. And because I believe in giving each entrepreneur my undivided attention, I only work with three clients at a time. But first, I want to make sure we’re a perfect match. So, I offer a completely free, no strings attached business strategy audit session before we decide to take that plunge. So, if this sounds like something you’re up for and you get to hear, Damon’s going to be sharing what he gleaned from our strategy audit that we just conducted with him today. But if that sounds appealing to you and you like what we’re saying here on the podcast, then you can email me at Josh at Ecomm breakthrough.com.

Josh (00:01:33) – That’s Ecomm with two M’s. And then in your subject line say I want to pick your brain. And then we can talk about how we can grow your brand. So, Damon, welcome to the podcast. We just conducted your strategy audit session. And I feel like there were a lot of mindset shifts that occurred. I learned I myself learned from you. You’re operating in the supplement space, which is different from, you know, the stationary and a lot of those paper products that I’m used to. So, there’s a lot of different nuances. But you’ve had an amazing journey. So why don’t you give our listeners a background of who you are? How did you start your brand and what have you been doing as you’ve been growing your brand along the way?

Damon (00:02:08) – Yeah. Happy to Josh, and thanks so much for your time and the amazing feedback that you’re able to provide for me and the company. I think you and I share a lot of similar backgrounds in history. Both started in 2015. Both dug into our own pockets to fund the business and payroll.

Damon (00:02:20) – But the difference is when you’re at eight figures and I’m not quite there yet, right? So still lots to learn. But as you rightly pointed out, the supplement brand started in 2015 with a focus on immune support supplements, for people and at one point for pets as well. so we’ve been around for, I guess you consider a longer than the average supplement business really started with, with the goal to provide affordable and research based products for folks who are either looking for alternative therapies and solutions, but mostly for like the average American who doesn’t have access to a lot of healthy alternatives to, there’s over 10 million people who suffer from something called medication insecurity where they can’t afford the pharmaceuticals they need to maintain their health. And, you know, several million Americans, they don’t have any health insurance at all. And so that was really the genesis of the company back in 2015, in San Francisco. Since then, we’ve grown a bit. We have manufacturing facilities in four states.

Damon (00:03:14) – We have warehousing facilities and others in 35 states. Our portfolio is still very modest in size, around a dozen or so unique products, and three different brands. But, yeah, supplements, not natural, naturally derived supplements is where we play.

Josh (00:03:28) – And, Damon, I think one other context to provide the audience is that this hasn’t been your main full-time gig until late. You’re like, hey, maybe I should actually focus on this thing. It’s been slowly growing over the years. So, what have you been doing in the meantime as you’ve been working on this thing and your nights and weekends?

Damon (00:03:44) – Yeah, you’re sort of giving me away here a little bit. That’s true. I do have a day job or I did up until January this year. yeah. So, my background is actually in product marketing and strategy and operations. And so, for the longest time I’ve been working with large tech firms and more recently, under my own brands to provide strategy and marketing services for, for tech companies. And, my hobby passion project was always this nutrition business, and it’s sort of been humming in the background in the nights and weekends.

Damon (00:04:10) – And it wasn’t until recently we sort of had to make a choice, as we discussed during our strategy audit, when you serve two masters, neither one of them truly gets the attention that they deserve and need to thrive. And I had to make a call. do I continue to serve the, the consulting arm of my, my time and business, or do I go the nutrition, brand path and, you know, on some reflection or I’m like, what is it that I want to get out of my day to day and sort of my time, within the time that I have, I think that it’s better served through the nutrition company.

Josh (00:04:42) – Yeah, I love that. And, Damian, we started the pot or the strategy audit by first talking about like, hey, what are your goals with this business? Right. What are you trying to get out of this business? Are you trying to become the next, you know, $100 million exit case study that everybody wants to talk about? And you’ve just been.

Josh (00:04:59) – Absolutely crushing it, but you’ve had to build a large team around there to support it and take outside funding. Or are you looking for something that’s more low key? you just want to operate just by yourself. You don’t want any other headaches or somewhere in between the middle ground where it’s like, I want a few team members that can take some stuff off my plate, but I want to focus on the lifestyle. So, tell the listeners why you think that’s like, why did we start there? And you know, what are your thoughts in terms of how you’re choosing to operate your business and why?

Damon (00:05:26) – Yeah, no, that’s such a critical question and one that every business owner needs to start off with is like, sort of, why are you in this space and what is it that you want the business to do for you? Because the reality is the business should be working for you and not the opposite way around. Right. And for me, what I’ve drawn a lot of inspiration from is a strategy class I had in business school where the professor stood at the front of the room and made the class repeat.

Damon (00:05:48) – three times out loud is that growth is not a strategy, right? Growth is one strategy. And I think what she was getting at there is that you don’t need to be a $100 million business to be a successful one. In fact, there is an Inc. writer named Bo Burlingham that wrote a book called Small Giants, which is made to prove that whole point. And apart from that, I also draw a lot from the work that Timothy Ferris did and educated us all on with his seminal book, The Four-Hour Workweek. And in that book, he championed passive income businesses, actually his own supplement business being one of those as a way to liberate yourself from the constraints of a traditional job, which may have physical constraints, that you have to go to an office every day, or time constraints, which means you have to work a certain hour during a certain time during the day. And for me, that’s not necessarily what I want. My background is very international in nature. I lived overseas for many years and lived in Europe and lived in Asia and most recently Latin America.

Damon (00:06:36) – And, for me, like being really, really selfish with my time and my flexibility and my ability to work where and when I need to, I think it’s so paramount for me. So, it wouldn’t necessarily be the $100 million business where I’m really, really committed to the business at all hours of the day. I don’t think that’s necessarily a lifestyle business. Neither is it the solopreneur path. Because, without your immediate input and support of the business, you’re unable to operate in a passive way somewhere. I’m sure there’s some Goldilocks zone in the middle where you’re not too big and not too small, but somewhere in the middle.

Josh (00:07:08) – Yeah, I like that. I think it’s so important to have clarity on that and so that you can already feel success coming your way, even though, you know, you may hear, whether it be myself or somebody else that throws out revenue numbers and you’re like, oh man, why am I not there? Right? I think that comparison games are probably one of the most damaging things that you can do to your own psyche, because it all starts in the way you think and the way you approach life.

Josh (00:07:31) – And so the best thing to do is to focus on where you are now and look back at things like, what have you done over the past year? Have you learned, have you progressed, have you gotten closer to your ideal lifestyle, and if so, then you’re already a success. You’re already heading down the right path. So, I think that’s just an important framework in a way to start. But Damon, I want to get into the real meat and potatoes of the conversation that we had today. You came prepared. You were probably the most prepared strategy audit session that I’ve had. You came here with your entire 2024 roadmap and plans. The rocks you follow are the iOS framework. You had your rocks, your tactics that you’re going to be implementing in the business. You shared your financial statements like you buttoned up. And another fun fact for the listeners is like, Damon’s actually had multiple offers for his business. He’s gone to market a few times. Each time he’s like, it’s not worth it.

Josh (00:08:16) – I’m going to keep running this thing myself because I feel like there’s more meat left on the bones. but that therefore your financials are in order. You have annual goals and quarterly goals that you’re working towards, which makes all the difference. So, with that being said, we didn’t talk about basic stuff like, well, what are your goals? Do you have quarterly plans like, so tell the listeners, what were some of the big mindset shifts that did occur to you, and what were the things that we talked about?

Damon (00:08:40) – Yeah. No, thanks. Josh, you really challenged me and pushed me on a few things, and it’s very flattering of you to say that, you know, that we’re buttoned up, but there’s still so much work to do as you can, as you know, and as many listeners can empathize with. But look, it’s all about prioritization, right? There are a million things that I would like to do. And there’s a lot of opportunities that I’d like to try to capitalize on, a lot of risks that I’d like to try to avoid.

Damon (00:09:01) – But, as a very, very small business, you need to make a lot of very conscious decisions about where you focus and where you want. And you offered an interesting anecdote because one of my major objectives for the year was to reduce marketplace risk. And what I mean by that is that I’m heavily skewed towards Amazon as a source of revenue. When we began the year 2024, 87% of our revenues came through Amazon. And for me, that’s quite scary. because as many listeners probably appreciate, you know, you can wake up one morning and the product has been suspended or an entire category or an ingredient, or there’s been some mix of robot mistakes you for something that that you’re not, or that you get flagged for being a pesticide. And it’s happened to us before. And things can change very dramatically and almost literally overnight with, with Amazon, there’s a quote that’s maybe not great to build your house in someone else’s backyard. So that’s been very top of mind for me. But you were you were very interesting in your challenging of that concept, where you made an observation that looking back in, I think it was 2018 or 19, you felt very similarly, like, hey, we should maybe diversify off of Amazon, you know, send folks to our own website, and you invested an awful lot and you spend a lot of cycles, I think, unnecessarily rebuilding infrastructure and things that Amazon had already provided for you.

Damon (00:10:14) – And if you spent an equivalent amount of energy and resources on just building the Amazon business, you may have been in a better spot. And while I really appreciate that anecdote and historical reference, I think it only partially applies to my business as, almost as a controlled substance or at least a category which has a lot of compliance considerations. Amazon has famously banned entire ingredients across their platform. If you have a product that contains ingredients, you’re off, you know, almost immediately. And so, for me, having the diversity I think is critical. But the way I was thinking about it maybe was a little bit immature. Right. So run away from Amazon as quickly as possible and then, you know, try to go and spread all the revenue across other platforms, including Walmart and TikTok and Shopify and, you know, maybe grocery chains, for example. And you really helped, you know, bring a little bit of reality to that, like, hey, look, you know, we need to be a little bit more surgical when choosing our next steps.

Damon (00:11:10) – And, and as we as our conversation evolved, you know, we uncovered, like, look, there probably is an opportunity to diversify a little bit off of Amazon, but to a marketplace that, you know, maybe a little bit more open or forgiving or flexible. And clearly that marketplace is TikTok sharp. We’ve seen huge growth in TikTok shops. It’s come to represent about 30% of our overall revenue in just the first quarter of 2024 alone. We launched our shop the last week of December, and since the first week of January is just growing very, very quickly. And, you know, we were able to unpack some things like, okay, well, if that is where we want to focus, you know, how do you go about it? You had a great quote that, you know, something is I think if something is working well for you, don’t run away from it. Lean into it. Right. And so if TikTok is working for you, like try to unpack like what are some of the attributes that make TikTok successful? Is that the frictionless buying experience that the customer has where they don’t have to exit the app, go to another app, add a code or credit card details, whatever it may be.

Damon (00:12:03) – Or is it like the experience they get through relating to a creator? You know, an influencer, an affiliate, something along those lines like, is there something to better and further exploit when it comes to that? So those are some of the things that really stuck out to me from our conversation today.

Josh (00:12:16) – I think you summarized that really well. And I like that you, you know, you came back and challenged me to say like, well, that’s a nice experience that you had. However, I also play in a different industry and arena and by a set of different rules than you do. And I think that’s an important thing for the listeners to understand, as well as just because I say one thing is working really well for my business, or one thing is not working well for my business, doesn’t mean that applies to all Amazon businesses or all e-commerce brands, because there are so many nuances in all the different industries and categories that you could possibly sell into. So, I think what’s important is that everybody needs to do this right.

Josh (00:12:51) – You need to listen to the advice or feedback or something, a strategy you hear, and then pass it through your own filter in your own brand because you know your own nuances. And so, for you, it is true, like you have this outlying risk of what if Amazon decides that you know, the FTC or who the FDA keeps coming after Amazon for a particular ingredient. So, Amazon’s like, we’re not going to deal with this. No. Nobody that has this ingredient can sell it here. That is a reality. However, with that being said with all of that being said, I think that, you know, one thing that I’m a big believer in is that, you know, the universe, a higher power God, you know, there going to be doors that open to you at different times. Right? And so, my encouragement to you is like, hey, if TikTok shops are already working for you, right, and you’ve got some legs there, then lean into it. And so likewise, that would be my encouragement to the listeners.

Josh (00:13:37) – Like if a door opens to you. Right. And it’s providing good success and it’s leading to the results that you want. Then lean further into it right until that door closes. But don’t, you know, keep a blind eye at everything and think that this is going to be the future for the next ten years. It is good to plan and be proactive and know that there are risks associated with it. But while the sun is shining, man double or triple down, I wish I could go back and I wish I could go and double down and triple down on my business back in 2018, 2019. It was less competitive. The FBA fees were lower, advertising costs were a lot lower. Good grief, we could have quadrupled the business to where we are today. But you can’t play backwards, right? And so you take those lessons learned. It’s like whenever I get the next opportunity, if I see it, I’m all in. Even though there may be some risks, it’s important to take that into consideration.

Josh (00:14:25) – So with that, Damian, what are some of the other, I guess, mind expanding, learnings or lessons that you had from the strategy audit?

Damon (00:14:32) – Yeah, that was a fantastic tool and visualization that you had shared with me called the taxonomy of valuation. And I really enjoyed it because it was visually displayed. And what are the value drivers for your business starting clearly with revenue. What are the different channels in which you’re selling the new SKUs? You’re introducing the existing SKUs and how they’re performing and, and forecasting out a little bit, maybe what’s the expected unit price? Or you said you might move. And that’s the exercise I think is very, very valuable in its own right. But then it went beyond that. Right. There was another branch of this tree, which is around EBITDA, which is really a great summarization of operational efficiency. What’s your overhead, your payroll, inventory laws, gross margin, cost of goods, things of that nature, which is, I think things that because they’re so, I don’t know, not benign, but they’re not very top of mind always.

Damon (00:15:19) – They don’t get the attention they deserve. And the third was like, what are your capabilities as a brand? You know, the IP that you have, the quality of your team, etc. and if you’re able to visualize this and look at it from end to end, you can really start selecting what are the areas that you know, we think we do well and can continue to improve on. And one of the ones that are really going to move the needle, right, we had talked about well, there are a few ways to improve margins. You know, one is you can drive down costs through efficiencies of scale, through placing bulk orders, you know, running additional our example was labels like, well, gosh, if I can print another thousand labels, maybe I can shave off $0.05 per label. But on the flip side of that coin, you could say, well, if you double down on a new product, a new channel, a new revenue driving element, it may produce bigger and better and more valuable returns for the company rather than a cost savings.

Damon (00:16:06) – So I love that visualization. Not only does it help me think differently about our own USPS and how we think about supporting the business, it’s also a great way of sort of grooming the business for a potential exit in the future, because if you’re looking at your own business through the eyes of of evaluation exercise, well, you’ll empathize really, really well with the future potential buyer and how they’re looking at your own business.

Josh (00:16:28) – Yeah, 100%. And it all comes down to prioritization. Right. And that’s what you talked about. And you know, you shared your rocks for the year. And I said that’s a lot that’s a lot to accomplish. You’ve snuck in a few extra things, such as launching new products underneath some of your other rocks. Because again, as every entrepreneur likes, we’re very ambitious. We have goals. We want to go crush them, right? But there are times where, we have too much and maybe we get so caught up with, like there’s so many things that are distracting us that we end up never really moving the needle forward enough to make a significant impact because, well, I got to get Etsy up and running, and I also need to get Walmart up and running.

Josh (00:17:06) – And at the same token, I need to be up on GNC, and I need to be applying to Target Plus. Com. And if I’m not doing that, then, you know, my business is going to fail, right? And so being able to systematically I think that’s the way I love to approach business in any annual and quarterly goal planning is taking it in bite sized chunks at a time, right. And say like, okay, this is great. We want to have an omnichannel approach. This probably isn’t going to happen in a year, but it’s a great 3-to-5-year game plan. And we’re going to chip away at this and we’re going to focus on which sales channel we feel like is going to actually move the needle the biggest with the least amount of effort first, right? And so that’s why I immediately told you I was like, sounds like from the conversation we’re having, you’re already having good success with affiliates. You’ve already seen good success with TikTok shots. So go lean into that.

Josh (00:17:50) – Don’t worry so much about Shopify and Walmart, although those are good, and you can generate sales there. there’s a lot that goes into each of those platforms in and of itself. And you could refine TikTok and that could be your main growth lever. so, Damian, on that note, I think our listeners would be really interested to hear, you know, how did you have so much wild success with TikTok shots? Because literally, as I reviewed, your financial statements are very clear. I was like, something happened here in January and February, and it was like you had this huge success at the TikTok shop. So how did that come about? How did you find affiliates and how did you begin working with them?

Damon (00:18:25) – Yeah. Great question. Really. It was just a translation of work. We had been previously doing another platform like YouTube and Instagram to a brand-new platform that just seemed to be at the right place at the right time. So, for about a year, we’ve been engaging community leaders.

Damon (00:18:39) – Influencers and content creators, because being in an environment or in an industry that requires a lot of compliance, there’s a lot of things we cannot say. But we’re also very cognizant of how consumer behavior works and how people seek out information. So, for example, no one’s going to search for like, what is the best vitamin C, right? That’s not how we innately think. Instead, consumers usually search for like, I have this problem, I have a cold. What is the best natural solution for my cold? Right? And so that’s the reality I think of how people discover information and products. And therein lies the challenge for us as a company who really labors over being as compliant as possible. We can’t talk about it. We can’t talk about disease states and their impact with supplements. And so, what we’ve done is we seek out community leaders, educators, practitioners, influencers that play in these spaces. So, let’s say your big thing is like, you love to travel, but you hate getting your average cold and flu, and you’re on a plane with 300 people.

Damon (00:19:37) – Well, we love to partner with people to help with that storytelling. Right. And so what we did is we sought out early last year, folks, through more traditional media, through Instagram and YouTube, people that had audiences and talked about solving, you know, challenges through natural means. And that works fine. But there’s a lot of friction, I think, to those channels. There’s no direct purchase route. And, you know, people have to remember the special code that they get from the influencer and go to another site to complete the purchase, etc. And so, when TikTok came out in the US in late November, it was mid-December. I think I was, I was playing around with it and I thought, hey, let’s give this a try. And so I set up a TikTok storefront, and I reached out to these community leaders that we had already had existing relationships with and said, hey, you heard of TikTok shops? If not, would you be interested in experimenting with it? And I was very, very fortunate that a handful did.

Damon (00:20:27) – And maybe it’s a novelty. Maybe it’s the fact that during the holidays, people are a little bit more engaged with their devices because they’re maybe sitting at home, not at work or whatever it may be, but the same content that existed on Instagram and YouTube just performs so differently on TikTok. I think the audience is different and has a different style of engagement. There’s a very frictionless purchase experience on TikTok where everything is held within the app, where you know, the customer sees the video, the link is immediately there. they make the purchase, they get their confirmation and shipping and logistics, and everything sort of all in the same, wrapper. it’s really, it’s really been transformational for how consumers expect to interact and shop and the affiliates and influencers love it as well. They told me, look, you know, when we’re on other platforms, more legacy style platforms like, we don’t really get the same amount of information, data, real time feedback or even things like payouts as quickly as we do with tick tock, tick tock, as I understand it, does daily distributions to creators versus other platforms, which may do a monthly.

Damon (00:21:30) – So it’s just a little bit of like, you know, porting over something that we had been using for a while before with established relationships that we had, applying it to this new, new, channel and platform and just being very lucky in the right place at the right time. I think as we chatted just before hitting the record button, some statistics that I heard and I can’t verify whether they’re correct or not, which was that in the very, very short time that TikTok shop launch from the end of November to the end of December, they’d already captured 8% of all holiday sales revenue, which for me is mind blowing for a brand new platform. so that was I guess we sort of were very likely to be. We rode that wave a little bit. The second part of the question was, how do you find some influencers that are a good match for you, your brand and your business and your company? Look, there are two principal ways in which you do that. From my experience, one is sort of like the shotgun approach.

Damon (00:22:15) – I, after coming back from, from prosper, the show where you and I met Josh, last month, I met an agency that does influencer and affiliate outreach, and their whole thing is like, we guarantee we will contact 10,000 affiliates per month, and you’ll get some small fraction of that. versus the way we do it is very surgical. We seek out people who are reflective of the brand, who carry some of the same values and relate and reflect the mission and the vision of the company. People who are trying to do good work to help with, you know, things like breaking down stigma and, and give education and promote research and, and mental health and things of that nature that all come along with, you know, treating or not treating, but addressing and supporting your overall immune health. Right? So, I don’t really align with the shotgun or the spray and pray approach that the agency was offering. I’m sure it could work for some categories of product, maybe beauty products, maybe electronics or home goods or things of that nature.

Damon (00:23:12) – But for us, the company who obsesses over, our brands and obsesses over how we’re viewed in the eyes of not just our consumers, but also the law where we try to be as compliant as possible, going sort of like hand to hand and going very, very specific to these influencers and affiliates is really critical for us. And we will find someone who is reflective of the brand. Will learn as much about this individual as possible. You know, what type of work are they doing with the community they’re leading? How are they? Present themselves and other products just to ensure that they feel like a really good match. And then we’ll craft a very, very precise, very, personalized outreach where, we’ll refer to as many, Activities or, you know, videos or other or other projects that the influencer has done to let them know that, like, hey, we know who you are, we know what you’re about. We’ve watched and consumed and appreciate your content. Now, here’s why you should work with us.

Josh (00:24:10) – I love that. And I think what you’re doing there, Damon, is like, you’re going the extra mile, right? Because I think a lot of these guys get hit up with just, like, spam messages. I think anybody that’s on Instagram, like you’ve probably received a bunch of spam messages like, Will you promote this? Will you promote that? And it’s like, I’m not even an influencer. Like, why are you even wasting your time reaching out to me? Right? Right. so, I think that goes a long way. And so, I really love that, Damon. I’m also curious, you were working with these affiliates a year ago, were they trying to point traffic to Amazon or to your Shopify storefront? Where were they pointing traffic before?

Damon (00:24:42) – Yeah, they were given a choice. Amazon has their own built in affiliate program called Amazon Associates. But as we all know, the profit sharing or like the fees associated with it are very modest 1% maybe for supplements. So, you’re not it’s not very lucrative to send traffic to Amazon for these affiliates.

Damon (00:24:58) – But we give the option, of course, instead we encourage them to drive them to Shopify because we own our own affiliate program, and we’re able to provide much higher affiliate fees for the same product. So instead of getting 1% for a completed sale for Amazon, maybe you get 10% for completing sale on Shopify. So, we gave the option. But just given the financials, I think Shopify made a lot more sense.

Josh (00:25:18) – Yeah, yeah, it makes a lot of sense. But so, you’d been working with these people for a year, and then all of a sudden, they moved over to the TikTok shop. Right. Because they originally posted on YouTube or Instagram and you’d had mild success on Shopify, but then it just exploded on TikTok shops. Right?

Damon (00:25:35) – That’s exactly right. Yeah. And for all the reasons that I just covered is that it’s a better experience for the influencer. They see real time data and get real time distribution that’s better for the consumer because they don’t have to exit the app. Remember a code to purchase, add their credit card details on another site that they’re not familiar with.

Damon (00:25:50) – Everything is done within the app, and it just is very, very seamless.

Josh (00:25:53) – Yeah, yeah, I 100% agree it’s the wild, wild west of the TikTok shop right now. I think it’s the buzzword. Everybody continues talking about it right now, but for good reason, because other brands like yourself are seeing success and we ourselves have seen success on TikTok shops. So, Damon, as we start to wrap things up here, what are the actionable takeaways that you noted from our strategy audit that you’re going to be implementing in your own business?

Damon (00:26:16) – Yeah, no, I think one is that, I love to perform one of those taxonomy evaluation exercises on my own company to see what are those value drivers, you know, which knobs can we turn to make the highest impact on the business and which ones can we, you know, not safely but comfortably deprioritized, because we know it’s just not going to have the biggest impact. secondarily is, you know, I think respecting my instinct to diversify, our channel strategy and our dependence on one particular marketplace.

Damon (00:26:45) – But instead of going for five marketplaces, for example, maybe we go with just one, which would likely be TikTok shop, just given the current success run rate, its attention and its ability to to potentially continue to grow at a very, very quick rate. The third thing was you talked about, you know, what are these big value drivers, how are you supporting them? Address them today? And could you create SOPs like standard operating procedures to, sort of mechanize these movements and hand it over to another person to shepherd through sort of the day to day? Right now, I do an enormous amount of hands-on activities for the business, from checking inventory levels and managing logistics and handling customer calls and emails. Right. And so are there opportunities to sort of pick out some of those elements of, you know, formally standardize them, create processes, and then find someone to help support those activities on an ongoing basis. And I guess, the last point would be, you know. What? It’s like a double click on the TikTok shop.

Damon (00:27:46) – It’s like, okay, so we’ve seen some success with community leaders and influencers and content creators. How do we double down on that? Right. So don’t run away from something that’s working. As you said earlier, lean into it. And so affiliates really are a burgeoning opportunity for the business. Why not double down, especially when the tools are getting so sophisticated, when the environment for content creators and influencers is getting so hot, like this is the opportunity to capitalize on that. And so those would be my big takeaways.

Josh (00:28:14) – David, you summarize this up eloquently, and I was wondering if you were reading off the notes that I had written down, because I had already written down my three action items. and you basically said literally in exact order. So these would be my three actionable takeaways. And I’m just going to regurgitate a lot of this information, but maybe from a different mindset. So may, may, hit your brain centers in different areas. So number one, it comes down to prioritization, right? Damon talked about that taxonomy of value, which is this.

Josh (00:28:39) – There are so many different levers you could be pulling in your business endlessly. Right. It could be optimizing your Cogs. You could be optimizing your FBA fees. You could be optimizing logistics, you could be optimizing the main images. You could be optimizing the A+ content. The list goes on and on and on. As you can see, of all of those levers, which is going to provide the biggest ROI with the least amount of effort, that’s where you need to run towards. So that’s prioritization. That’s action item number one. Action item number two is as you’re prioritizing things, that doesn’t mean you turn a blind eye to everything else and say like, I’m not going to worry about my main images. I’m not going to worry about the sales channel. I’m not going to worry about the FBA fees. You do still have to do those things, but you need to just be testing, right? So can you do a small test and say, hey, we’ve mirrored all of our listings on Walmart.

Josh (00:29:24) – We don’t have an advertising strategy. I’m not really focused on the SEO, but they’re just they’re they’re live. And similarly to what happened in the TikTok shop, you’re like, let’s go live. I’m not super optimized. I don’t know what I’m doing. But you tested it and you saw what could take off. So action item number two is like, you should always be testing, always casting out another pole in the water. Right. Assuming you’re fishing, cast another pole in the water with some different bait and then leave it. Let it sit. Let’s let it do its thing. But then the number three thing is to double down on those areas where if you’ve got a fishing pole and you keep catching fish off of one particular bait, why in the world are you so determined to go say, I like the pink bait and the fish need to be eating the pink bait, so I’m going to force feed it to them even though nobody’s biting. Right? I mean, it’s a stupid analogy, but that’s sometimes the way we approach it.

Josh (00:30:11) – It’s like, no, but I want to do this. I want to grow it this way. Whereas it’s like, all right, fish love the worm and marshmallow today. So that’s what they’re going to get more of. And I’m going to keep doing that until it stops working. And I’m going to swap out everything around that process so that somebody else can repeat this, so that I can execute more tests for my business and allow me to cast out more fishing lines, because who knows, maybe there is another bait that catches even more fish than what I’m doing now. So that would be how I wrap things up. Damon, anything else to add there?

Damon (00:30:41) – Now. We worked out a compliment. You, as I did earlier, that your great host and listener and your recaps are our world class.

Josh (00:30:47) – I appreciate it, Damon. Damon. The favorite part of the interview? You were initially a little worried. You’re like, I want to make sure I have some good answers here.

Josh (00:30:54) – So my favorite part of the interview is the three questions I get asked each guest, which is the following. Number one, what’s been the most influential book that you’ve read and why?

Damon (00:31:02) – Okay, here we go. One of the most influential books I’ve read in the last year or so is a book called Finish Big by Bill Burlingham. He’s that same ink writer that wrote the book Small Giants, but I honestly think that Finish Big is a much more influential and much more important book for entrepreneurs. The book is all about an entrepreneur’s exit, right? And, you know, every entrepreneur exits as he begins his first chapter. You know, whether by choice or not, we would all love to imagine a very lucrative exit. But that’s not always the case. Something could come up in our lives to prevent us from continuing to operate our business. We could fall into financial hard, you know, financial issues where we’re unable to continue and sustain the longevity of the business or an enormous number of reasons why.

Damon (00:31:42) – But everyone should be prepared for an eventual exit, either under your terms or not. What’s cool about this book is that it goes through five principle, considerations for a healthy and successful exit, ranging from the most obvious. Like do you feel like you’re being compensated fairly for your, your, your business to things like, do you feel like you’ve made an impact on the world? Will your employees be looked after after an exit? But the fifth and final one, which I think is most interesting, and what he stresses the most in the business is, well, have you fully committed yourself to whatever is next, whether that’s another business, a hobby, volunteering, travel, whatever it is like? Have you found something to capture your attention and your passion at the same level as your current business? And have you fully transitioned your mental energy and space to that next project, the next big thing? Because if you haven’t and you have not completed your exit yet, and as someone who was going through the early parts of an exit late last year, I was really concerned about this and really agonizing over what would I do if I didn’t have this business tomorrow.

Damon (00:32:37) – And this book really, really helped me in a big way, navigate some of those big and sometimes existential questions.

Josh (00:32:43) – And I’ve got that one jotted down on my list. It sounds like a great book to really frame up. You know, everybody talks about an exit. Speaking of like, oh, I hope I get paid millions of dollars for my business. I think more than 99% of people exit their business, not under their terms. And stuff happens where it’s a financial hardship. There’s death. There is a medical issue, there’s a family issue, something. Then causes that business to then or that person in a business owner to have to point their attention somewhere else out of necessity. And so I’m really excited to dive into that book. So thank you for that, for sharing that, Daymond. All right. Question number two. What’s your favorite productivity tool or new software tool that you’ve recently discovered that you think is a game changer?

Damon (00:33:22) – Right. And I may deviate a little bit from productivity tools or platforms here.

Damon (00:33:27) – But look, with the ongoing changes to FDA’s requirements for in-stock levels, everyone who was selling during the pandemic will remember the the inventory inbound thresholds that we were all receiving, because your capacity limit would be sort of punished if you had too much stock. When I was the opposite reason, opposite issue I think we are facing, we need to have a minimum amount of inventory before we start incurring per unit, low inventory fees. So this obsession over this Goldilocks zone of having just enough inventory, even a two month inventory, has been requiring me to be a lot more conscious about shifting inventory around from flex port to WFS, Walmart services to FBA owned by Amazon. And that’s a lot of movement and a lot of movement of Case Pack, a lot of movement of LTL, less than a truckload. Palestine’s product. And so a company has helped me a lot, actually called mothership. I’m not sure if folks have heard of it, but it’s kind of like the Uber for pallet moving if I can be so crude.

Damon (00:34:22) – look, Fedex and UPS are really expensive to move pallets. Incredibly expensive. And you especially need a dedicated truck. You need the same day. Like if you have very specific delivery windows it can be quite cumbersome and very expensive. Well, what’s cool about mothership is that they have service areas where they can guarantee same day delivery and appointment honoring specific delivery appointments. You get dedicated trucks with tracking so you know when your products have been picked up. They take an image of it. Then you can track it to its destination. And when it’s been delivered for me, it’s been really helpful during these uncertain times where I’m having to move a lot of pallets and a lot of inventory.

Josh (00:34:55) – That’s awesome. I have not heard of mothership before, but that is another great tool. So Damien, love this. You’re dropping lots of knowledge bombs here. Answers I have not heard before, so I love that. And I’m sure our listeners do as well. All right. final and third question, who is somebody that you admire or respect the most in the e-commerce space that other people should be following and why?

Damon (00:35:13) – Yeah.

Damon (00:35:13) – Like, He’s a bit of an OG in space, which is why I really like him. And you know, people will be lucky if they never have to work with him. But his name is Chris McCabe. Also known as an e-commerce Chris, he’s a former Amazon employee who’s made an entire business out of helping people get out of trouble with Amazon. If you get a random suspension, notice, if you get a product takedown, if you get, you know, something happened to your account health. Chris is like the guy you go to to solve for that, right? He’ll help you construct your case, help you articulate it in a way that Amazon is specifically looking for. And he’s just been doing a great job. He’s been doing it for a really long time. I think I met him back in. 2016. I believe at the very, very first Amazon conference, Amazon Boost may be either in New York or in New Orleans, maybe the 2017 and Amazon boost in New Orleans.

Damon (00:35:59) – I think it’s called Amazon Accelerate now, but he’s helped thousands of people get out of hot water with Amazon, which is why I say, like, I hope you never have to use Chris or his services. But if you do, he’s one of the best in the industry.

Josh (00:36:10) – Yeah, 100% echo that. We’ve had him on the podcast, so he is another one. Go back and hit the repeat button on his episode. So Damon, this has been awesome. Thanks so much for reaching out to have the strategy on it and being willing to be open and to share. Hey, these are our challenges. These are our goals. What do you think? So my final question to you, Damon, would be this, you know, was it worth your time and be what would be your encouragement to our listeners?

Damon (00:36:35) – Yeah. Thanks for allowing me to end on this very important point. Look. And there’s so much to learn from, from other people and more importantly, other people’s mistakes.

Damon (00:36:43) – Right? And what was so beautiful about our conversation is the first thing you shared with me is one of the biggest mistakes, you know, that you had made in your growth, in your trajectory, with your own business. And I, I completely value that. So was it a good use of the time? Of course it was. Yeah. Like, like there’s so much knowledge to be gained from people who have gone through your path before to sort of, you know, borrow some of the best practices, but perhaps more importantly, avoid some of the pitfalls. So that’s been very, very important. what what I, what might I convey to other listeners? Well, I think actually one of your former guests said this, and I hate to repeat this, it was only the guy. He’s like, look, if you’re not always changing, if not always evolving, then you’re not in the game, right? You can’t, you know, depend on activities and strategies and processes that worked a few years ago because the Amazon today or any marketplace, Walmart or TikTok or whatever is not the same marketplace as it was several years or even months ago.

Damon (00:37:33) – The market is so incredibly dynamic and and so quickly moving that you have to reflect that in your own behaviors. You need to be equally as willing and open to change as the marketplace will force you to be. Right. So that’s what I would encourage people to keep in mind as they navigate this rather challenging space.

Josh (00:37:51) – Damon. Excellent words of wisdom. Thanks for coming on the podcast. Having the strategy audit and I’m sure our listeners will love and eat up this episode. So thanks for your time.

Damon (00:38:00) – It’s a pleasure. Thank you. Josh.

When should you diversify off of Amazon? A Strategy Audit Session with Damon Sununtnasuk

When should you diversify off of Amazon? A Strategy Audit Session with Damon Sununtnasuk

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