Dr. Sacitharan 3:32

Well. Thank you so much. So my thanks to Amy as well. Always good fun chatting today. Me. So thanks for all right. It’s a privilege to be on this podcast with you.

Josh Hadley 3:42

Well, Pradeep, I’m super excited to be talking with you. And you’re currently Why don’t you tell the listeners where you’re currently, you know, staying right now there’s a little bit of background noise, but tell them where you’re at. And just so that they know, for context.

Dr. Sacitharan 3:57

So I’m actually based in London. Unfortunately, there’s a train strike going on. So I had to quickly pop into a hotel lobby. And I know this hotel very well, the people as well. I always kind of conduct business meetings here. But unfortunately today for this podcast, there’s a quiet background. So it’s Christmas. So I’m like who are these people? And then they just start singing. So it might be a good wife. But we’ll see I had the podcast go. So apologies if there’s a bit of background noise.

Josh Hadley 4:25

Okay, that’s all good. And everybody loves a little bit of, you know, background Christmas music as well. So that’s good, even though that you might be listening to this in June of the following year. But with that being said, Pradeep you come with a lot of knowledge and background, you’ve done some really cool things. And what I think is interesting is you have a background that not many people have right? You’ve went through Oxford, you went to Harvard as a scientist, and now you’re you’ve pivoted into E commerce, so why don’t you give people a quick rundown of that career path or history that brought you to where you are today?

Dr. Sacitharan 5:03

Yeah, sure, sure. So, you know, people read this CV and profile. They’re like, wow, I’m like, Yeah, I’m nothing special. So, you know, I always described myself as a serial dropout. And I tell kids, when I talk, I go around the world, and particularly in the UK, and talk to kids about my career. And what I’ve seen, I was actually I left school at a very young age, I hated school, I hated studying and learning left at 16, worked in cafes, hotels and bars, kind of got streetwise got into trouble, but not too much trouble that I said, What the hell am I doing with my life at 21. So I went to a small college, I think the US guys will call it a state kind of school, or, you know, community college, sorry, and I don’t very well there. And then eventually, I got a scholarship to Imperial College, which is like to MIT. Then I got a scholarship to Oxford, then I became a Fulbright scholar at Harvard. So I’ve done that all that in six to seven years. It was ridiculously hard. And I tell kids do it while you can young age, do it in the proper way manner. I kind of went militant in my 20s. But that journey asked me gave me the ability to ask questions. What is society telling me? How quickly can I scale success? And how quickly can I scale scale to actually meet my goals? So when I was doing that journey, I’ve done it very quickly done my PhD. And then when I went to Harvard, they came back and said, Hey, guys, professors give me give me some money, I got some Job Target, and I get the unknown. And, and they said, You’re too young to take 30 years. So I always tell people, life is all about a numbers game, a sales game and a risk game. So I made 272 phone calls, and one guy picked up in China. And I said, Hey, can I come to China discover drugs come over? So I was 27? No, sorry, I was 29. I packed my bag, went to China, within 10 days landed, became an associate professor and VP of Business Development there. So those three drugs that my professors in the West would say 30 years in 18 months. So again, scale, how quickly can you scale? How quickly can you get your goal. And when I when I discovered those, I was really happy that my CEO was like, Hey, come over here and do some business development. So when I was doing business development, I learned about m&a. I wasn’t a numbers guy or legal guy, but I could do the science. I can analyze data. And I think that’s very important for ecommerce sellers and data and you know how data can implement it, then I can do the deals, negotiate, see what a good price is, and the bad prices and pick up these distressed assets, meaning there’s a asset there or company for a cheaper price, or there may be going down and you pick it up with Tony around. And then when I came back in China, the pandemic hit. And it got very hard to live in China because of the lockdown and so forth. So Josh, they told me I have to go to this hotel, to eat some food. And some of these literature’s might be quite normal story by now. But when I want this restaurant, all I see is all the Chinese men or laptops smoking away with their laptops. I said, Hey, what do you guys do? And then I we sell on Amazon, when ecommerce seller I said, was that I had no idea, what, two and a half three years ago what ecommerce was, I said, Hey, I do corporate business development. Can I see your numbers and what is this? I’m a very curious being right? I see. 300,000 days. I see 200% ROI. I don’t know what the hell is going on. So within three days, VPN, no Helium 10, no Jungle Scout, I set up my business. I kind of haggled my way, saying, hey, to one of these factors, give me some toys, but start selling in the UK, taught myself everything on the site are still doing the science. And the toys are selling very well. I’m like, Hey, this is side hustles. And it’s going well, right. And then I had no idea what Blackhat was white hat baseball, I had nothing. Oh, Amy, we exhaust Josh solidly. I didn’t know anything. And then I said, Okay, China’s Great I’ve done my CV adult, all the things inside. Let’s go back to the UK came back to the UK. I went approached the traditional pharma biotech pharma saying, Hey, I got all this experience in your job that I know you’re too young and overqualified. So then I said, I packed my career. And it comes down to what people say what’s the biggest difference? Very successful people I’ve seen in life, not me but others. It comes out the risk appetite, how willing someone is for the risk in appetite. So I quit my career started the E commerce permanently started Amazon started learning about the network. The people started giving talks. I you know, scale to seven figures very quickly. Then I thought, hey, I can start this acquisition. assess the distress acquisition process, the same thing and acquire this down market. So that’s when I started this kind of acquisition journey as well. So launch brands, keep by brands and also acquire as well. That’s a long story. But I think it’s very important people get the background and the mindset because, you know, people get confused when they see these brands and fancy names and PhDs, but I’m just a serial dropout. Yeah.

Josh Hadley 10:25

Pradeep, I mean, what an amazing background and experience you have. But at the end of the day, I think you you never left that you’ve always had that hustle, and appetite for risk that you’ve maintained, right. And I think those are things that are innately within us. And some of us, we need to develop more of that right of hustle and grind. And, but some of these are naturally occurring in many of us to where it’s like, there’s just something that keeps me driving and moving forward, like some people are just very driven individuals. And that’s what I love is that there, the world is so big. And there are so many opportunities for all of us that if you’re driven enough, and you’re hungry enough to succeed, you will succeed doesn’t mean the first thing that you attempt will be the thing. But you’re the type of person who’s never going to give up even when the going gets tough. And so I love to kind of hear your experience, and you are still very successful, even as you know, the VP of Business Development. But you’re you’ve been crushing it in the E commerce space. So tell us about what you have currently going on right now pretty bit. Are you still running your Amazon brand and acquiring other businesses? Tell us a little bit more about what your day to day looks like now and the businesses that you’re operating?

Dr. Sacitharan 11:47

Yeah, so at the moment, I do a lot of things. But I like to keep yourself busy. Wake up in the morning, you know, so busy. By the way, just going back to the point of risk appetite, I think if you’re ambitious, and you keep changes go and challenge you go, if your ambition goes up, it correlates well with risk appetite, because you got to take risk for every step of the ambitious ladder. So that’s what I realized as well. So if you keep setting your goals, and keep bumping them up, you have to naturally take more risk. And it is innate or not. Yes, I agree. But if you bump up your goals, you will have more appetite for risk. But coming back to your question. I run brands, I wake up in the morning, I make my China calls, check the inventory, check with my inventory manager, check all my supplies, I always make a case, you know, get WeChat everyone, for my Chinese colleagues, my factory saying hey, how will you check on a daily basis or every three or four days that I go on some consulting calls, particularly in science, I still keep the science also because I like that kind of intellectual side and also try to help young CEOs and other companies grow startup. So I consult on that side. Then I go back and buy probably around one two o’clock, I start looking at m&a deals to distressed asset deals and those deals as well. So we look at you know, companies, as I told you, we probably looked at 30. I told you previously that we looked at 90 businesses so far, in the last two quarters already. I mean, this month is I don’t know when the recording will go. But this is December 30. We already this month looked at 20 Odd deals as well that come to us from all angles. So look at those ma do then, when it becomes a bit more in the evening time UK time. I’ll talk to my teams in Pakistan, in Philippines, my VA is made sure the system don’t check. Everyone knows what’s going on. And that’s my day. So run brands and also look at m&a deals and start trying to make some deals as well.

Josh Hadley 13:50

I love that. That’s great. Well, with as much as you have going on, I imagine that you have teams, which you kind of mentioned that are kind of coordinating a lot of those the day to day operations of the business, right in order for you to have reviewed, you know, 20 different potential deal, you know, m&a opportunities, you have to be able to have a team that’s keeping the day to day of your brands running. Is that correct? Would you mind sharing with the audience? What your kind of organizational structure looks like in order to run multiple brands and what your team is doing for you?

Dr. Sacitharan 14:26

Yeah, sure. Sure. So we have I’m overall manager. Then we have a PPC Manager, inventory manager, account manager. And that’s kind of the Amazon brand. And then on the side, you know, part of the team. I just have a m&a guy, which really means we just an administrator role here, the accounts here, the kind of p&l forecast. Here’s the numbers in all orders. So I can go in and check these on a daily basis or whatnot. I like to get nitty gritty with m&a. Probably when deal flow gets a bit more in my mind needed guy or someone else to step up, but I love to make those posts Germany, UK, we dealt something in Australia in us a lot. So I could make those zoom calls, talk to the owners. I tried to do this a lot to see what’s going on, you know, what’s happening to the brand? Why is it failing, why he’s selling it cheaper, how the call, like how they inventory, and you learn so much of why people are going down why people are exiting, and why sometimes either gators or others who actually well versed in the industry are losing out. So that can also help you as a brand owner, tinker around and say, Hey, this is how we scale Hey, we shouldn’t go to this and, and so forth.

Josh Hadley 15:46

Yeah, no, I love that. I think that as you do get to review, you know, acquiring other brands, you are seeing like mistakes other people are making, why they started slipping and why they’re trying to like exit their business, some people are trying to run away from, you know, the train going in the wrong direction. And they don’t know how to get it back on the right track. And so I think you’ve got a lot of experience. And I want to dive into, you know, what you’re seeing as you look under the hood of multiple businesses mistakes that you’re seeing made there. But before we get into that, you know, our earlier conversation before we hit the record button, you mentioned the you know, that is kind of a unique opportunity right now and you feel like there’s a space for kind of having or being a solo aggregator. Can you tell me more about you know why you think that that’s a, a thing that can happen in today’s environment, and why that might be so important for people to consider?

Dr. Sacitharan 16:41

Sure, sure. You’re quite famous in the field. So some of your listeners might be very sophisticated, or might be preaching to the choir here. But I know a lot of people already started acquiring. While I think it’s a great time. And the way I compare it is to the kind of a.com.com bubble, where you have the internet of things coming in the 80s and 90s. Then you have this big boom, people make a lot of money exiting for millions and billions like Mark Cuban. And then you had the crash, right? And then you had very sophisticated iterations coming through the Google really solidifying this step and so forth. Then you had the Facebook’s, the Amazons coming what Amazon was already there, accelerating on, right. So I think that’s where the space is now with us the kind of E commerce burst of the bubble, right. And so now’s the time where sophisticated individuals or real people who are willing to driven and get down to the nitty gritty will succeed. And the people who’ve made money, and kudos to you go on the right time you made money, get out, and you can invest and have a luxury life really happy for you. But then, you know, the ambitious people can build on those by acquiring cheaper distressed assets, and actually build a couple of brands that empire and then leverage that more for more cash flow, I believe. And it’s that stuff’s fun building stuff. For me, it’s fun. Or you can pick up very cheap assets and turning them around as well. So I think this is the E commerce bubble bursts, where there’s no danger, there’s opportunity. So I think this is the right time to do these things.

Josh Hadley 18:20

Yeah, I also agree that right now is the time for micro brands, right? It’s never been easier for somebody to, you know, from their basement, create a new brand and have it on the world’s biggest, you know, shopping platform, which is Amazon, right now. And to, you know, it used to be like getting into retail is so difficult, right? You’re paying for slotting fees, you have to upfront all of this inventory, and you’re kind of betting the farm in a way. But on Amazon’s like you can test stuff out very cheaply, like your risk on Amazon is is lower than if you’re just going into retail. So with that being said, there’s been a rise in all of these micro brands, and being able to roll them up and actually scale them profitably, I think is a huge opportunity. Because many of those people that started their brand from their basement, have no desire to implement operating systems to really do what it’s going to take in order to scale a brand to that eight figures and beyond, or whatever it needs be. So I think there’s a lot of opportunity for people like you and I to get dive in and help you know, strategically position or pivot these businesses for future success. And it’s a rewarding opportunity. So pretty deep. With that being said, tell me how are you sourcing these deals? Are you going to, you know, I know there’s a lot of brokerage firms out there you have quiet ly e-comm You know, Empire Flippers. There’s a lot of those kinds of well known m&a websites right that do that list businesses for sale. Is that where you’re sourcing You know, are you find many of these businesses that you’re reviewing their deal structures for? Or are you doing, you know, kind of cold calling and outreach to discover brands that haven’t even listed publicly that they’re available for? So

Dr. Sacitharan 20:13

yeah, I think if you commit to healthy assets, let’s say, the brokerage but look like the Empire, flippers, flippers, whatnot, those broke because I talked to independent brokers as well. They’re quite good as well. distressed assets, people still have very guarded have an ego, you know, a bit shy and a bit embarrassed to say they’re failing, which is fine, right? So it comes down to personal connections, getting on podcast or go to bed, seeing people telling them what to do, and then reach out to yourself. So all of the all of the above, you just have to get out there hustle all for love. People come to talk to brokers, maybe even talk to aggregators, maybe talk to people who have multiple brands saying, Hey, you have something that’s going wrong or whatnot, we can take over. So talking about the micro brands, so far at this podcast, we actually acquired only one brand per se, but when talks with according to healthy kind of smaller brands, we think we can pivot and scale up, we brought Brian for 99 P, and he really just wishes like, dollar 13 cents. So that inventory. Yeah, so you know, sometimes you don’t have to compete with 200 300 million raises with aggregators. You know, I’ve done big money deals in corporate pharma, but sometimes you will get the best, these are very cheap. And then the multiples are crazy. So we looked at this business was a husband and wife business. And we can get down to the failures, if you want. But what we saw is that inventory was overstock and one particular inventory, in this case, a baby product, I’m not going to go into the product itself was worth scaling in the UK market. So what we did was, we essentially white labeling the inventory that’s already here. Luckily, for us, the trademark was on the product itself, but not a trademark in the registry. So we trademark the logo, the brand as well. And we brought the inventory. Now we gave 99 P ever, so why would we sell because they were spending eight to $10,000 a month on inventory for the whole kind of their portfolio. So if they can get rid of 5000 units of their backs, and reduce that price, that we’re doing them a favor. So you’re going to go in that saying how can I do your favor, but in return benefit me as well. So I took inventory of them. And to make a transaction deal. I paid 99 P. So that’s one of the ways we kind of micro acquired and scaling now.

Josh Hadley 22:51

I love that. Yeah, I think that would be a great case study to dive into a little bit deeper, right? So you bought a brand or you know, a business for you know, as little as $1 $39.13, whatever it was, is a very small amount as your upfront, you know, payment. And we’ve actually had Roland Frasier on the podcast, as well. So he’s one of the first episodes. So I encourage our listeners to go look at that, because he does talk so much about how to acquire businesses for no money out of pocket. Right? So he’s talking about, Hey, how can you get creative with your financing, just like you’re talking about here Pradeep and this is a great case study of like, how to be creative with deal structure. So anyways, Roland Frasier is one to check out. But pretty deep, why don’t you go a little bit deeper into this case study? How did this all evolve and what have been the results since then, and how did you structure things with this husband and wife?

Dr. Sacitharan 23:55

Yeah, sorry. So coming back to your sources. One of the sources are VAs VAs are highly connected in any country, Pakistan, Philippines, South America. So one of the VAs content of my VAs. And this is important. Everyone is someone big in their world. That’s why I kept telling so I never looked down or look up or people just look straight, right? I think I nicked that from Sadhguru. But anyway, then so so my view is appropriate, saying hey, I we know this VA he’s he’s working with the husband and wife team in the UK, they’re a brand and they’d have like three or four brands ready to launch. But their first brand that was a major cashflow kind of cash cow is failing, so they have no money to no charges. So again, we can go into it. For this podcast, I got four things I think we see very much in all of the distress brands, well, we can go into that. But for this specific case study, so then I said yes, let’s let’s have a chat. So talk to them. And I said hey, what’s going on? Missy? What’s up? happening. I said, Okay, let me see all your inventory and your brand and see what’s happening. And that’s how we got creative with deals. So yeah, I mean, you can get creative with financing, you can have seller know, you can have revenue based financing, you can have a US, I think you call it SBA loan and a percentage of fun yourself. But really, what you’re doing is trying to buy inventory, and then rescaling and rebranding, and it’s even better if it’s already in Amazon, and they will, are willing to give that away for free or for very low cost. And you could even say, Hey, let me pump some PPC money in with the credit coming already in my account, or maybe use daily allowance a week loss and whatnot, if you don’t have it, or a credit card. But let’s take over your account, let’s make a deal. Take over your account, I’ll take all the inventory, and I’ll pay you for the inventory and calls after sell these. So usually these people are trying to get out. So you’re trying to give them money on the way out. So the earn out is in half the month. So it’s how you negotiate a deal. And sometimes about you know, being looking down looking naive, not being embarrassed to have a low offer, you know, sometimes people are not willing to look cheap. Yeah, you got to be willing to ask,

Josh Hadley 26:16

that’s good to know. So you acquired the entire brand, or just their inventory.

Dr. Sacitharan 26:21

So in this case is a distressed inventory purchase. But lucky. And this is where if you if you go out there, you make your own luck. In this case, the inventory had brand name, and the image and logo, but they didn’t trademark the actual logo. So we trademarked and made into a brand.

Josh Hadley 26:43

Okay, good to know. Interesting. So yeah, pretty. You mentioned earlier that you kind of see four common pitfalls or mistakes that these other companies are making, as you’re reviewing, you know, potential m&a deals. So why don’t you let’s dive into those four things. And let’s get as detailed as possible with actionable items that our listeners can make sure that they’re not making those same mistakes, so that they don’t become a distressed, you know, sell or exit.

Dr. Sacitharan 27:14

So the four things I noticed, and it’s quite interesting, because it wasn’t a fourth thing I expected, but it’s the foundation. As we always say the foundation is COGS is the ability let’s look at call is ability to locate negotiate calls in the first place with factories in China or anywhere in the world. And how to renegotiate calls, as the brand grows, is the ability to manage inventory flow, timing, shipping and storage and three PL right. It’s also the ability to I say not spend too much on gurus and consultants, and not the items in the field. Because, you know, we’re always inundated. And these are great people, they don’t mean bad. But we see excessive spending in the business to do things that are not necessary. And we can get to examples of those as well. And it’s the first one is the ability to think scaling means multiple brand launches and product launches. At the same time. Sometimes scaling means to level of horizontally for a while, particularly in this time and bro, what we don’t see and this is very interesting is that we don’t see massive differences in a polling PPC or listing optimization. Those two things we we believe, yes, everyone is up to their own flavor how they do PPC and SEM, right? Of obviously, we can change those things. We can do those things. But they’re easier to change when you get cogs and inventory and mismanagement of cashflow. That’s harder to change. And that’s all a dent already in the business. So you have a lot of people in the space in conferences so forth over PPC listing, optimization, branding, imaging, which is all fine. But those things can be changed very quickly. But you know, generally for a good seller, you’re a seven or eight figures already. Those things are worked out. So we don’t see massive flaws in those. But we can look at cogs, we can look at inventory management and flow, unnecessary spending. And also, the fourth part now just totally escaped my mind.

Josh Hadley 29:30

For multiple brands right and products. Yes.

Dr. Sacitharan 29:34

Yeah. So if you want to, I don’t know, Josh, if you’re in deep dive into all those four things individually. I think that’d be very good.

Josh Hadley 29:42

Yeah, let’s deep dive into each of those individually. I love that you made the mention of when we go to conferences, and as you listen to speakers speak on stage or even listening to podcasts. Time and time again, we hear the same optimization strategies in the same key word strategies. And it’s just a new tool that people are using. But instead, what you’re saying is like, the hard stuff is what people aren’t necessarily talking about. People aren’t getting into the weeds of cogs and negotiating with suppliers and renegotiating on an ongoing basis, and the finer details of logistics, and where you’re warehousing things and with Amazon, you know, reducing inventory limits across the board for people, what are people doing now, to kind of prepare themselves for a world where Amazon does limit you completely? And with maybe one or two months worth of inventory? And that’s it? And how are you staging your inventory and still winning on Amazon in that environment? And then cash flow? I mean, all of these things are such great topics. So yes, let’s dive, do a deep dive into each of these. Let’s start with the cogs first.

Dr. Sacitharan 30:54

Yeah, sure. So what we see is quite interesting with cogs, the code numbers to start off with sometimes the minimum we say three to five, but as Amazon and ecommerce goes more expensive, I think it’s about eight to 10. So if you’re buying something for $1, you should be about eight to 10 times the selling prices, if not more, right. And what we see is again, and again, people are saying, Hey, we have particularly beginners, hey, we have this three to four. But with inventory, PPC shipping, and all these things, it’s just the profits have gone before the pandemic or during the pandemic is very profitable. And this is, by the way experienced. This sounds stupid, I find I find myself finding myself stupid explaining this to someone, but we actually see it every day 789 figure sellers saying you want this, Brian, because the calls have gone too expensive because they haven’t worked out fundamentally, the multiples and multiples have to be really strong now, and the bigger multiple margin to sell. So those cogs are fundamentally negotiable, and got to have the right product and the call to achieve price. Number one, it sounds stupid, but that’s what we see. Number two is a renegotiation. Hey, we bought 100,000 units. Next time, we’re going to have three 400,000 units, but you’re still selling for the same price, why your your factory shouldn’t be giving you a note or you know, the 100 cash flow or cheaper price because they’re getting raw material cheaper. And what we see is, you know, I signed NDA, but what we see is some of these aggregators, and others who are famous when they go back, and some of these factories are quite savvy, say, Hey, you raise X amount of money, all of a sudden, your contract or not. So, you know, I think that’s again, how you negotiate and how you have exclusive agreements for a period of time, particularly on your best selling products. We do this informing other business, schools all around the world, you want it for five years, this is the price if inflation goes down, or if the market changes, this is gonna be a price, we have the power to change and not new. So might be having exclusive agreements. And that’s how sophisticated you guys, we have to get in ecommerce. Because this is no longer a mom and pop kind of operation. This has to be sophisticated. Even if you’re a mom and pop or a dying basement. That’s how you should be thinking, you know, solar, it could be a corporate on your own. But you got to think like that. So cogs and how you define the first cause or renegotiate the cause is very important. Then thirdly, how are you people storing calls, right? How are you doing unit economics? And how are you storing Excel sheet or software and so forth. And that has to be updated on a daily basis. We see fundamental mistakes, and we see fundamental errors as well, they can put figured out straight away from profit and loss statements as well. So that’s something people have to be aware of, I think it’s really hard because you’ve got multiple brands, multiple products, multiple inventory, you know,

Josh Hadley 33:59

place gets complicated really quick. So basically, what you’re saying is that, especially in the environment, the inflationary environment that we’re in today, a lot of sellers, I think, are stuck between a rock and a hard place where their cogs have gone up dramatically, right. And then let alone, the container prices have come down recently. But those were sky high for a period of time. But yet, what I found on Amazon, is you still find a lot of those overseas manufacturers still charging the same price for their product, or even less. And so while people should be raising their prices, they’re doing the exact opposite. And just squeezing every you know, dime of of margin from their business, which is, you know, dramatically impacting them. So what do you do in that type of situation pretty cheap, like people aren’t raising their prices on Amazon, right? So if you’re going to raise your price, you’re going to be higher right than the average market. But now your your cost of goods have increased. Is this literally just a negotiation with the supplier and saying, Hey, that like my business is not viable? If my cogs are at this point, right? So you’ll lose my entire business, if we can’t come to a resolution? Is that what you’re saying? People should do? Are there different ideas that you would give to people that are in that situation, their cogs have gone up a lot, but the price on Amazon that they can charge really hasn’t changed in the markets about the same as it was even pre COVID?

Dr. Sacitharan 35:33

Yeah, so So there’s different ideas. Number one out renegotiate particularly if you’ve got a hero product, and you’re buying lots of it from the same factory, renegotiate number two, if you see a lot of Chinese or new players coming to market and you’re out price get out. Or if you think you’re branding strong, what you do is rebrand. In a western style. Obviously, people know that already, like keeping normal pricing structure, your pricing Strategy is important, sometimes value propositions in the price itself. So if you think is so stunning, and you got good reviews, and keep your price high, and people might see a difference just in the eye and your value proposition. But if you think you’re getting squeezed out, you know, it’s fine leveling, leveling out the selling out and saying, Hey, I had a great run, by the way, you know, I hit like, eight homeruns, American kind of analogy, it’s been a good ride, made a profit, made a brand enjoyed it. Let’s go to the next one. So let’s see how we can rebrand this into another kind of product is not not by building out a number four, what I’ll also do is try to understand and this is, is that the Chinese and other factories, obviously there might be manufacturers and they can afford to keep the price to go down. But what I think is happening, and what I have seen is even these factories have overestimated the inventory. And that’s the second point inventory. I think they have made 100,000 units on this talk on in China say What the hell do we do? Just flood. So out and get out. So in the case of you phoning all the Chinese networks, you have saying how much of this is happening. So you might outlast them in that niche in that until they sell out. But that’s a risky Strategy. But I know by talking to my prior networks that, you know, Chinese exports have gone down, if you looked at it, you know, you know, one of our pet supplies, they said, Hey, we have 100,000 of these products. Do you want it? I’m like no, because you’re distressed and you’re the manufacturer, like so that might be a case where they might sell out, and you might just have to hang in there. It’s like It’s like war. On the western front. You just have to trench dig the trenches and stay out.

Josh Hadley 37:54

Yeah, yeah. And I think from my experience, I see kind of the same thing. There are a lot. I think the where I see Amazon going in the next few years, is I think Amazon customers are kind of getting tired of buying the cheap stuff on Amazon, so to speak, I think it’s becoming very apparent when somebody gets something. And doesn’t it comes in a polybag. Right? There’s no branding on it. They can’t even pronounce the brand name itself. Right. If they look at it on Amazon, it’s you know, it’s amazing that those overseas sellers, like, can’t come up with anything more than throwing a bunch of consonants together that don’t even make sense. But I think the US consumers kind of getting tired of that, and realizing like, okay, maybe I don’t need the cheapest thing on Amazon, if I’m looking for, you know, a new tumbler mug or something like that, because the quality is going to be a little bit lower. Instead, you know, I think the US customer will shift now with inflation and, you know, pending recession and all these things like US consumers are being more, you know, discerning with their money at the same time. So they are looking for cheaper options. But I still think like they’re, they’re looking for solid quality as well. So to your point, you’re positioning for your product. And price bid can become very, very important. For example, we and our one of our most competitive spaces in our business, we are two times the price of our other competitors, two times the price, right? They’re selling for $12 and we’re selling at 2499. Yet, our products are ranked consistently in the top five every single day. And so who do you think is going to win and Outlast? I recently saw one of our overseas competitors that has been around for a long time. They continue to drop their price by $1 $1 every month and I was like what is going on like the Amazon fees are only increasing and yet you’re like just throwing it all away. A and I think to your point like, we have essentially outlasted them now whether they come back or not, I don’t know at this point. But I mean, they just kept, they were like the market loser, so to speak like 999 cheapest price. And I’m like, There’s no way like you’re making like maybe 10 cents a unit here if that. And so there is a Strategy in play there for business owners to like, consider and how you need to test it out. Right, it’s easier said than done to be able to charge double the market price. Right. Now, a lot of that goes into branding and testing all that out. But there is a space, like you’ve talked about for it. You don’t always and you shouldn’t be the low cost leader.

Dr. Sacitharan 40:41

No, I agree. Coming back to one of your points, it is a case study again, we looked at a distressed asset. Now, in terms of cogs, and we’ll get the inventory. Next is that we saw abroad, we didn’t buy this brand, it was a baby product. And you go through this list. I’m like, What’s this? It’s so expensive. Why is it so expensive? So I’m like, Hey, we signed NDA. Can I speak to your supplier? And it turned out that COGS is also about saying how much this is metal costs? How much? How much does each piece component cost? How do you manufacture? Where’s the raw material form? What do you actually assemble? It turned out and I’m like, why is this 80 to $20 more than a normal thing, even when you Google on Amazon Alibaba, right? It turned out this manufacturers sent a component out to boy got stamp that brand to get stamped, sent him back to the factory assembly that and then shifted, that’s $20 or $17. For that price, you can actually air Express ship into the US and save some money on PVC. So is the ability to deep dive on the calls as well. So they were losing out because they thought the branding was so much important in terms of stamping. And they forgot, by the way, that the $17 was part of a cult, because they’d be running the business for two years under the aggregator that was looking at it, who said we’re not gonna do it didn’t even look at it, because they just had cogs $100 or whatever it was, right. So they don’t know how that quality is, what is what is $50 on? I mean, what are these components, so you’ve got a deep dive as well. So that’s very important. And I’ll be savviness of this is how you keep a high brand, but cut down on essentials, you don’t need a polybag. But can you get a more luxurious packaging with a cheaper kind of weight? You know, you got to talk to those Chinese manufacturers or whatever manufacturers and get that branding and cogs down on an individual basis as well.

Josh Hadley 42:37

Yeah, I think what you talked about right there with like, talking to your suppliers and discussing like, what are the individual components that go into it, right, and, and you’ve got to get to a relationship with your suppliers that you can get their honesty on that right and be like, well, it’s this much to source this component this much to source that, that that and then you’re like, oh, wait, this thing cost that much. Do we really need this little widget to go into our product? Or is there a cheaper alternative? And it’s like, oh, yeah, there is. But you asked for XYZ. So that’s what we’ve been giving you. And it’s like wow, like that, that opens up the to a whole new ballgame. So I love that pretty let’s go on to number two there with inventory what issues are you seeing let’s deep dive their

Dr. Sacitharan 43:24

inventory. It’s everyone’s always stopped for some reason. They thought q4 is the time is this kind of formula. And I see in different industries, every farm, hey, go off to this Hot Topic drive on this. You know, rule of thumb, q4, lets everyone stock up is going to be our biggest quarter. It doesn’t work out sometimes. You know, you don’t have a crystal ball. So too much overstocking of inventory to use of expensive spree POS get somewhere cheaper, actually might be easier to have shorter bursts of supplies coming in than in huge quantities, storing it somewhere or, you know, if people we see ridiculous deal 100,000 units 3000 purchase for a year, and they can’t sell out. So for inventory management forecasting and also shipping as well. I think it’s really bad. And that’s where when you’re picking up distressed assets or even healthy assets to really get creative and say hey, give us a seller note inventory because overstock so that’s a real leverage point people can use. And you really need to manage that very well.

Josh Hadley 44:33

Yeah, I completely agree. And I think that with a lot. I mean, Amazon’s changing the game as it relates to you know, how they’re warehousing products. So what advice do you have in terms of like finding less expensive three pls and getting the product closer, but more cheaply and knowing that Amazon’s not going to be the place where you can just dump your products anymore? It comes

Dr. Sacitharan 44:58

down to for me and You know, my image manager is making a false, getting the conferences, hunt out for new three playoff and New Kids on the Block, because they’re willing to give cheaper deals and make deals. And you can be creative with those deals, particularly if you’re a big seller, you can bring volume to them, because they need new business. So, you know, we’ve done very well to work with the smaller guys, not because they have smaller warehouses, because the new New Kids on the Block, I hope you’re very much and you know, and, and they need their business to boom. So they’ll give you a very good deals and for long term storage is bought, you know, and get out there and help them as well advertise, you know, do some advertising and you know, for them, and they’ll they will in return three to kindly so it’s all a business negotiation. So that’s the tip, we’ve learned very well. You can’t control Amazon, you can only control what you can do. So there’s all these people are restocked, limits everything. I’m like, Okay, that’s all good and good stuff, popping up control what they might kind of area. So that’s the only thing I would say. And, you know, I think the cheaper inland, particularly us New Kids on the Block will give you a big deal. And that’d be very good.

Josh Hadley 46:18

That’s great. That’s great insight and great recommendation to go find some of the newer startup three PLS, maybe they don’t have all of their processes, you know, ironed out, so to speak. But if you’re willing to grow with them, you could get some really good deals, because yeah, it’s true. Even three peels are getting more and more expensive. So great insight, don’t also over order your inventory, pretty cheap. I’m interested to kind of get your perspective on, how do you balance ordering inventory, right to get your, obviously the higher volume of units that you place, you can get a lower cost. But that also is going to take into consideration warehousing. And if you order a year’s worth of inventory, and your projections don’t line up with that, wow, that’s going to be really tough. Now, now that’s 18, maybe two years worth of inventory. So what is your recommendation and best practice as it relates to inventory purchases, like buying four months, six months worth of inventory at any given point in time, any guidelines that you have there? No,

Dr. Sacitharan 47:23

this is what we’ve done. And we’ve never bought one years of inventory. The maximum we bought is probably six months worth of inventory. What we’ve done is actually given the factories, in our case in China, enough money for raw materials, so they can purchase and store that in their factory, make it a while request. So we see growth, we’ve never seen 200% or 300 Plus or 100% growth where that must inventory is not necessary. So we’ve only seen 25 to 30% growth. So it might be a rule of thumb. And this is me speaking on what we’ve seen. And I might be totally wrong. There might be bigger 10 figure sellers. But we only seen 30% growth in terms of inventory every time we ship it. So that’s that’s kind of a buffer safety zone as well, because your cogs can manage that. But if you have 100, or 200%, or one year’s worth of inventory, we’ve never been able to kind of store that. But we made deals with Chinese factories to actually store it for us until we finish shipping. So the cycle is short on the three PL side. But storage is actually free on the China side, if that makes any sense. Yeah, and we actually pay for the raw materials. So they have a lump of raw material. These are boxes all laid out in the factories. So that I think is key as well. Yeah, fascinating. But that comes down with real negotiating and building a relationship and rapport. And I think that only works with your products or big volume products as well.

Josh Hadley 49:00

Yeah, at the end of the day, paying attention to your suppliers, your manufacturers, creating real partnerships with them. And then you know, this even goes into your next thing which is going to be cashflow. But your your supplier should be your biggest partner in your business. And I know for our business itself, our supplier is one of our biggest partners. We’ve been working with the same manufacturer for seven years. And I have a great relationship with that other business owner. And we know it’s a partnership. He goes out of business. I myself, am out of luck, right? And so it’s always a balance of like, Hey, can you help me out here? Can you help me out here? You know, when COVID hit for example, in our business overnight, they Amazon introduced inventory limits for the first time, right? And we were immediately overstocked. And I was like, oh my goodness, let alone we were in like the party space. And so no party goods were moving at the time. I’m, and I was like, I can’t even sell this, even if I wanted to like this. We were in a world of hurt. And our supplier said, Hey, all warehouse it for free for you, right? And they helped us get through that. And in addition to that creative financing with your suppliers as well is super important, right? You’ve got to be able like, can you get them to, you know, actually produce the inventory and even ship it before you’ve paid anything for it right? There are situations where you have no deposit because you have such a good relationship with that supplier, you’re not paying anything upfront. And you may even have terms where it’s 30 days, where you’re actually selling the product before you even paid for the product, right? Imagine what a shift that can have in your business, if you’re making money before you even have even paid for that product. And that leads into cash flow. So let’s talk about you know, cash flow, excessive spending is what you kind of mentioned, what issues do you see there that sellers are making?

Dr. Sacitharan 51:03

Yeah, we see three things particularly unnecessary spending on outside consultants, gurus or external agencies, for human resources. And also for negotiation of terms, as you just mentioned, to number one, you know, I feel everyone obviously, is trying to make money and everyone, consultants, gurus, agencies don’t like actually quite nice, I go to conferences, that mean, well, once a seller, you really need to pick and choose, it’s like a kid in a candy store. Most of the sellers are in their 20s or early 30s. And they’re very highly influenced trying to like boom, boom, boom, boom, boom, you really say, Hey, here’s my weakness. For the next six months, can I just spend on this case study beauty product, doing very well. Wondering, rebrand, went in trying to get a good manager, paying, I think, $10,000 per month for brand management, not even pictures, but consulting, went down. Distressed asset. Now, another prominent business, which has five, six good brands, hired human resources. A former US Army supply chain expert, I’m sure this guy is super bright, brighter than you and I, Josh used to get bulletin times into Afghanistan in Iraq, apparently, and they came out. But they’re paying when we saw it, they’re paying 100 120,200 40,000 for this day, you don’t need that kind of expertise for 10 ASINs, or six aces into Amazon, you USA. So sometimes it’s just over thinking, you’re still a amazon seller. You’re not a corporate, I think that’s who am I and I will get as my religion and say who is this guy, but I think that’s also a space where aggregate the failing out as well. You can get five or six guys VAs for the price of one MBA, let’s say MBAs are bad for MBAs might not be the right thing for that job description. So for human resources for excessive spending conferences, we see a lot of expenses on composite, you only see the same guy, same talk every time. It’s just a what we call in England, a piss off you just getting drunk with the same people with the same knowledge. How much time can you say? Well, if you’re paying for you, if you’re a guest speaker, if you do it once, no clear one international spine, use that money to actually go to cheaper country like Vietnam or India, China make good networks with people at cheaper price, the same guys in the US or UK. And there’s nothing wrong with these guys, but you can use the money more fruitfully and cheaper. And really, I mean, this we see the p&l. So and this is this is a real issue. And the third is poor terms. So you need 3060 days 90 to 90 day terms, sometimes even 120 day terms we we’ve used as well, to say hey, we would ordering this much, you got to give us terms 30% deposit 50% deposit, so it helps your cash flow as well. Coming back to the point if you’re going to acquire brands, cash flow is king, the quickest thing you can do to increase revenue is by revenue, so buying brands, but the brand’s cash flow has to be cashflow positive, even if you’re buying a distressed asset, you have to go in and say I’m cutting all the spending out to make a cash flow positive so it pays for itself. So now this cash flow and we look better, and then you leverage that cash flow to buy even more and there’s more cash flow as a surplus going. Terms are very important for that as well. And how you negotiate terms is very important and you can actually you know get a guy you know when you when when you go to new field or new category, you might bring some along say here’s my friend, Josh Just use the potty. Now, when you bring Josh along, you actually credentials are now matched with Josh. And Josh has agreed to come along. So now Josh can say, Hey, I know pretty, can you give him terms, not like 120 days for me, but the 30 day terms were pretty good. And he will go into office space. And I know him, I can vouch for him. So cash flow and terms might be also by networking your local group as well, bringing some people along as well. So that’s the solution. I love

Josh Hadley 55:27

that pretty, what great insights that you shared with all of us. Thank you so much. Last thing here is creating multiple brands and trying to launch multiple products simultaneously. Tell us more about that.

Dr. Sacitharan 55:40

Yeah. Don’t do it. If you can’t afford it crashed very simple. It sounds so stupid. But because you, I think I personally think I’m guilty of this going through, you know, Jungle Scout or helium 10. All the software’s or Amazon Scott, by the way, no one’s getting partnerships, I’m still matching your name anyway. But going through these places, right, is addictive. You as an entrepreneur, as Amazon ecommerce person, you see that the call, you see the growth and margin, oh, my god, let’s do this. Let’s do this. Let’s do this. And it’s fun. And then you got to try to make deals, it’s fun. But the thing is, if you can’t generate the cash flow, don’t do it. And we’ve seen time and again, big companies, small companies trying to launch primes. And they go distressed very quickly, because the PPC spend is so much now. And the launch criteria is so much now, you just can’t catch up, the best thing is to level your business, make sure you got a healthy profit coming in for three to six months, and you have that buffer. And then you slowly launch as well. And use as much momentum you can and cash liquidity, if you can, or leverage to launch that one product where you think it’s kind of a home run at this stage where the market is so fragile.

Josh Hadley 56:54

Yeah, you know, I completely agree with you pretty. One of the things that you know, another reason why it took our business so long to grow to that eight figure mark is because honestly, I we started while I was still working a full time corporate job, right. And so what I used is I use that money, my salary is what we use to pay the bills, right. And we kept funneling, you know, any profits back into the business by launching new products. But that didn’t mean we were launching new products like multiple products every single month, right? We did it very judiciously. And it was just my wife and I and a VA to begin with. For years. For a few years. It was just ALRIGHT, we can launch something maybe every three to six months, right? When we saw that cashflow come back in, then we could be comfortable in investing into the new, you know, products. So I think for people that are in that earlier stages, maybe you just stumbled upon seven figures. Because we did that as well, we did seven figures our first year on Amazon. But that still did not mean great, we have a million dollar business. That means we can go crazy, like launch a new product after new product like we did it very slowly and methodically. And now we’re at a different point in our business to where we can launch multiple products per month. That’s only because we’re an eight figure business and you know, the product categories we’re going into, we’re not talking about huge cog expenditures and huge PPC budgets either. So like, we know our budget at the same time. So it comes down to budgeting and forecasting your financial statements as well. Would you agree?

Dr. Sacitharan 58:34

Yeah, absolutely. And even if you’re going to go into distress as a business acquisition business, or launching products, or even scaling a product, I think this period at any period is to learn to caught caught anything of waste. I hate this term, or it’s my baby, it’s your business. It’s not your baby, your baby’s your kid, your baby, your business is in business, right? And you got to learn to cut things out. And if it’s failing, cut it out. And maybe this is scaling now is this right? Scaling can be horizontal golf, TPM writing three to eight. So number one, steal that money is coming in and let time help you to stabilize and go again, then go again and go again. You know, I’ve I felt items I feel, but about how you caught it and how you manage those egos and expectations, and you know, get out of the rut and make those creative deals.

Josh Hadley 59:27

Yeah, I completely agree. You’ve got to be quick to cut things that aren’t working and doubling down on the things that are working.

Dr. Sacitharan 59:36

So and also don’t take too much out of your business. As you mentioned, I’m still doing the consulting and that’s the majority of how I paid my living day to day expenses, you know, living cost analysis, I enjoy it and but I don’t take too much out of the business. You know, and you don’t need to learn too much by traveling a lot. traveled to the right places meet meet the right people. I’m usually in the West Some hemisphere that quite easy to connect over the internet or by his to connect. So don’t take too much as a business keep it in cash is king cash flow is the name of the game. And particularly during this time, I know it sounds silly. But if I can show you what I can show you in every business, it’s just bought management truly is

Josh Hadley 1:00:20

pretty. This has been awesome, I think so many actionable takeaways. And even for myself, there’s things that I’ve jotted down that we can improve in our business as well. So I love to leave our audience with three actionable takeaways from each episode. Here are the three takeaways that I noted Pradeep, let me know if you think I’ve missing something. But number one, I think you need to be like focused on your supplier partnership. First and foremost, right. Like if there’s anything that you can do, as you set goals for the following year, or for the next six months, whatever it is, I would focus on highlighting and improving the relationship with you, you have with your supplier, and manufacturing partner, and seeing them as a true partner in your business. That’s foundation. Step number one, which then kind of leads into foundation, you know, Action Step number two, which is start negotiating with your supplier, right? Start asking those hard questions, discuss your terms, right? See if there is an opportunity to get better terms for your product, so that you, you can get the product and start selling it before you’ve paid for it. Right, that can be a game changer, talking about you know, opening the curtain and peeling back the onion, so to speak, so that you can know the price of all the individual components that are going into that product to manufacture. And maybe there’s an expensive component that you don’t necessarily need product packaging as well. And so that would be action. Step number two is start opening those negotiation conversations. And then I would say kind of the the last takeaway for our audience, is to be better at cash flow management, and really analyzing all of the expenses that are going into your business. We’ve had previous podcast guests, Scott Dietz, was on here with the north bound group that talked about how one expense a $1 expense now could actually be considered a $5 expense, when it comes time to exit, right? If you’re paying 500 bucks a month for a particular software, well guess what, if you’re not fully utilizing that software, it’s not necessary, when it comes time to exit, that then becomes a $6,000 a month type of expense to the Business Times that by 12. And then times that by your you know, what you’re going to get. And you can see like, all of a sudden your $500 expense can be a you know, $1,000 multiple $1,000 expense to your business that you don’t need. And then like you said, cutting back on a lot of those the conference like spend, and always thinking like, do I really need this? Does my business need this right now? And being efficient with it not taking too much capital out of your business? So that would be my final takeaway. Pradeep? Is there anything else that you would recommend, from our conversation as an actionable takeaway for our listeners?

Dr. Sacitharan 1:03:25

No, I think you summed up everything very well, you know, whenever you talk to China, or suppliers or your agency is always, you know, I would like to say it’s not a transaction is a human interaction. Get people on your side, try to try to cut costs down, go down to basics and the basics if you get them right. I think we’ll be recession proof. Because the basics always are strong foundation.

Josh Hadley 1:03:50

Yeah, pretty. I love that. I’m going to make that a quote, put that on in my office, you know, your your partnerships with your manufacturers, your agencies, they’re not transactions, they genuinely are human interaction. So it causes us it’s it’s extra work, right to go the extra mile and create relationships. It’s easy to just click on a website and be like, oh, yeah, I need this. But if you actually open up a dialogue with people get to know them, doors start to open for you in ways that you can kind of never imagine. So pretty deep. Last thing, I’ve got my three final questions that I like to to ask all of our guests. So number one, what’s been the most influential book that you’ve read and why

Dr. Sacitharan 1:04:36

The Second Bounce Of The Ball, how to take risks, how to turn risk into opportunity, The Second Bounce of the Ball of the wall, apologies. The author’s name doesn’t come to mind, but he was kind of a pioneer in the P field. And he was the first to kind of aggregate or buy businesses and so forth. Second, basketball how to take risk and opportunity. Very good

Josh Hadley 1:04:59

book Awesome. I have not heard that one before. And I have jotted that down. Very exciting. Number two, what is your favorite productivity software tool or a software tool that you’ve been using in your business? That has been very helpful? And maybe some of the other sellers don’t know about it? Or should consider using it?

Dr. Sacitharan 1:05:21

Yeah, we just thought to use this for three or four months. It’s called Parsimony . It has the ability to do a lot of things. HMI accounting inventory of brands, unit economics all in one.

Josh Hadley 1:05:34

Awesome. We actually had that Steve Simonson software. We had Steve Simonson on the podcast previously, and he talked about that. So, Parsimony, definitely go check that out as a great software tool, and kind of an ERP system. Correct? Is that the way you guys are using it? Yeah. And

Dr. Sacitharan 1:05:53

the beauty is that you can actually call those guys to kind of fine tune it for your, your needs as well, you can I kind of have our own white label product as well.

Josh Hadley 1:06:02

Awesome. Love that. All right, pretty. Last question here is who is someone you admire or respect the most in the E commerce space? And the other sellers should be paying attention to and following.

Dr. Sacitharan 1:06:14

You said his name. Probably Steve Simon said, the old you anything I do in life, science, academia, always go to the oldest and the wisest. And to see you find someone who’s done it, who’s done it, and done it well. And I think he’s done it very well. And he’s proven in over a decade. So I think Steve Simon, is the map. Awesome.

Josh Hadley 1:06:37

I love that pretty. Well. Thank you for sharing your great knowledge with us today. If people want to learn more about you or get in touch with you, what’s the best way to do that?

Dr. Sacitharan 1:06:47

On LinkedIn, just Pradeep Kumar Sacitharan or PK Sacitharan on Twitter. PK Sacitharan on Instagram, I think you will have post maybe my details. Just type my name in. I’m here for everyone in the community, like helping people out the rest of the chat and see what we can do. Always hear.

Josh Hadley 1:06:55

I love it. And we’ll we’ll link your name there and LinkedIn in the show notes for people to connect with you but pretty, thanks so much for joining us today. It’s been a pleasure to have you on the show.

Dr. Sacitharan 1:07:17

Yeah, thank you, Josh. Really appreciate it. It’s a good chat. And thank you, Jamie as well, for connecting us.

Outro 1:07:25

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