#378 – The Real Money Is In Retail with Robert Gomez

#378 - The Real Money Is In Retail with Robert Gomez Speaker 1: Welcome to episode 378 of the AM PM Podcast. This week, my guest is Robert Gomez. Robert started his e-commerce journey many, many years ago selling items that might be a little bit questionable on Amazon. But since then, he's pivoted and he's just blown up. And where he's really blown up is not on Amazon. It's in retail. That's right. He's crushing it in the retail stores of Walmart.com. He's in almost every store across the country. In this episode, he's going to be talking about how he did that and what a huge difference it's made for his business and how you should be thinking about that too. You're going to learn quite a bit. In the meantime, enjoy this episode with Mr. Gomez. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast, where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Here's your host, Kevin King. Speaker 1: Welcome to the AM-PM Podcast, Robert Gomez. How are you doing, man? Speaker 2: Kevin, thanks for having me. It's a pleasure to be on. Glad to be chatting with you. Speaker 1: Yeah, I'm glad to be here. You know, we ran into each other, I think it was back last year at the Accelerate conference in Seattle. Was it like September or something like that, I think? Speaker 2: Yeah, it's all pretty blurry now, but yeah, I think at Accelerate, it's when we finally, you know, talked. Speaker 1: I know you had a pretty impressive story and we'll get into some of that here in a minute. You were telling me some things there. I was like, man, dude, you got to come on the AM-PM Podcast. There's some pretty cool stuff. How long have you actually been doing this whole e-commerce game? Did you start off on Amazon or did you start off somewhere else? What's your story? Speaker 2: Yeah, so if we take just a step back, I guess, it goes way back to 2012, you know, at the time of college and did, you know, made the stupid mistake of kind of launching prohibited items, sort of like sourcing from China, a brand that, you know, wasn't necessarily mine, of course, and so that got me I'm in trouble there for a little while with Amazon. Speaker 1: So you're going like DH Gates or one of those websites? Speaker 2: DH Gates, I think it was called like TVC Mall. Speaker 1: Yeah, yeah, yeah. You can buy like, this is like some beauty product and it looks very similar, has a very similar name or even in some cases the same name. And it turns out it's the gray market or stuff like that. Speaker 2: In my case, it was cell phone cases. And so one thing led to another. I really was just trying an experiment, bought like, you know, $100 worth of cell phone cases. And by the time they I sold and so got tangled up there and just sold more and thankfully they caught me within a couple months and next thing I know I had a copy of a lawsuit in the mail saying I had to pay this much money or I was gonna get sued within a couple, you know, within seven days, I think. Speaker 1: This is the manufacturer of the phone cases? Speaker 2: Yes, it was Otter. Otter Box. Pour one out for them. I hope they're not listening. It's been a decade. Speaker 1: Yeah, you're good. The statute of limitations I think is up, but it's funny you say that. You were in 2012. I've been selling on Amazon since 2001, but in 2015, I actually started doing this whole FBA model and to try it out before I was making some of my own products and sourcing, but to try it out, I did two things. I did some arbitrage. So I went to the dollar store and I want to see how this process works, is shipping stuff in, is Amazon all it's cracked up to be? So I was buying things like Sensodyne toothpaste or something at the dollar store and it was selling for crazy money on Amazon. But one of the other things I did is I went to DH, I went online, I didn't know all this stuff about the differences in Alibaba and 1686 and Tmall and all that stuff then, but there's one called, I think it's DHgate, I think it still exists. I went on the bestseller list on Amazon and the top 100 for beauty, there was this like 3D fiber lash mascara. For us guys, you probably don't even know what the heck that is and I didn't either, but it's like selling like hotcakes and it's women put it on their, it makes their lashes bigger and kind of puts this fiber kind of stuff and like makes their lashes look bigger and more sexy, I guess. And so a lot of them like it. It comes in two different tubes. One's a dry tube and one's like the actual liquid and you have to mix the two. And there's a brand on there doing really well and I found them on a version of them on DHgate and I bought like a $2,000 worth of it or something. It got shipped over by FedEx. I stuck it up on Amazon and I think I even didn't do FBA, I just did FBM. I remember I stuck them up one morning, went to get some cereal and come back and I already sold like half of them. And I was like, holy cow, this Amazon thing actually works. This is pretty cool. Then I started looking at it a little bit deeper and I was like, wait a second, I didn't just buy this from the manufacturer. These are actually These are actually off market or out the back door fakes. And I started seeing reviews of people saying, look at the serial number, look at the UPC code or something. So I actually backed off of it and I'm like, okay, enough of that. I proved that this concept works. Let me go do my own stuff. So it's interesting that you had that same story. Speaker 2: Yeah, I didn't put two and two together, a private label, you know, build a brand and that kind of thing until of course, you know, I was suspended and spent years after that sort of trying to create an account, you know, the legit way and just really, you know, starting from scratch and those many years kind of went by and that was 2016 when I kind of picked back up on it. Because at the time, you know, I still had a corporate job till many years after that still and all that. That's what led me back, but I never gave up. I really thought, you know, like this is it. You know, I really understood e-commerce and this whole thing, you know, fairly well. And I just really, you know, learned my lesson there. But hey, better late than never, which was still proved to be a bit early. Speaker 1: So in the very beginning, how did you find out about Amazon 2012? Did you see somebody online, take a class or see something on YouTube or something come across your Facebook or something? Speaker 2: It was like I started on eBay and it was like selling, you know, five, 10, you know, but, uh, I can't remember how exactly found about Amazon, but it was like one of those things that went from eBay to quickly on Amazon. And then so like, I remember putting it on Amazon and it's like, whoa, like sold 15, like without even trying, you know, like, wow, what is going on? And so I maxed out my credit card so bad, like at some point, like, you know, yeah, we can go into that. Terrible, like decisions back early, early on. But yeah, that was my start. Speaker 1: So, you were up for a little while and then for four, your account got suspended by Amazon and you got a cease and desist from Otterbox. And so, you're just like, oh crap, I just quit. And then what did you do those next four years? Just go back to your corporate job or were you looking for something else to actually sell on there? Speaker 2: I had always thought in mind of coming back to it or really doing that there. I'm very like entrepreneurial, so always kind of tinkering there, but basically this was around the time that I was finishing, I was in college and then I finished college, went on and got an internship at like Siemens. I moved around the US every like six months and just on the side, I started trying to do the whole real estate thing. I ended up buying a couple of properties, flipping them. This was around the time that was kind of like a better economy to do that. But still like trying, I remember like once a year or so I would try to like create an account and it would like get automatically suspended or whatever you know like back when you didn't know what was necessarily like still linking it you know together or whatever. So it was until you know 2016 I think that finally my account was made and that was because I think at that point I ran back into an FBA course, you know, at this point it was like FBA I remember and I like, you know, found out more clearly like, okay, like, let's try it again because like FBA is like being pushed like pretty hard. And so, you know, I, you know, made an LLC and all this thing and I finally was able to start that account but I was still in my corporate job and even then switched jobs, I was doing consulting and so like even doing consulting, my main customer was Facebook so I would be on site at Facebook headquarters sort of like doing, I'm in finance but still launching this Amazon thing on the side. I was so passionate about it, anybody that would talk to me about it, I would talk to them about it. I almost didn't care about the corporate job. It was just, you know, a means to obviously get through, finance the thing, and then obviously, you know, sort of like as a backup, but like, it wasn't necessarily about the backup. It was more like building up both things, like, you know, my credibility in both ways. Speaker 1: So what was it about Amazon that really lured you in? What was it that made it so glamorous or sexier, got you so motivated that, I don't really want to do this semen stuff for Facebook. I'd rather be doing this. Is it the freedom of it? Was it the- The freedom of it, yeah, absolutely. Speaker 2: Yeah, I had this thought in my mind. It was not a matter of like, if or like, it was just when I would be like fully, you know, full time into doing something that I entrepreneur, you know, like I started, you know, way before then selling websites and like with Photoshop tutorial, like forums and like just all these things when I was like, you know, 10, 12, 13. And so like all that led to one thing led to another, like those weren't real business ventures. And it wasn't until I went into the corporate world also saw how things were done at a big, you know, at the corporate level, right? Like team structures, sort of like bigger vision. And so I always knew that, you know, like whatever sort of venture I went into next or whatever kind of business in this case, It was Amazon because it just fit the lifestyle I wanted, right? Like that pitch that they always had, right? You can literally manage your business from anywhere in the world. Basically, you're not, you don't have a boss, etc, etc. But like, you know, those things are exaggerated a bit. But like, that's truly what, you know, what a What attracted me to it and I always wanted to do it at the scale that was like a company, you know, out of it. I didn't want this to be sort of like a side, not that there's anything wrong with it. I didn't want like a side sort of gig like Etsy shop, you know, something like that. Like it was like, you know, I'm going to try to do a bigger or not at all, you know. Speaker 1: So that was 2016. How long was it before you were able to quit your corporate job? Did you have some money saved up where you could quit right away or did you have to keep working the corporate job while you got your job done? Speaker 2: Oh man, I didn't quit. I quit one time. So I quit my consulting job for like eight months or so when I thought I was going to sell my business, the Amazon FBA, when the aggregator stuff was going on, probably 2021. And then I got recruited by Microsoft and I ended up working there two more years. Up until earlier this year, I kept my job. So I... Speaker 1: Oh, really? So, okay. Speaker 2: Until I secured the Walmart, which we can talk more into, but, you know, basically I hung on, I hung out, you know, at my corporate job until the very end where I had a team and everything for a long while prior to me quitting myself. Speaker 1: So this was a side hustle then, because you're working a 40-hour week. Speaker 2: Yeah. Yeah. I just never treated it like it, you know, it was more like my corporate job was my side hustle. Thankfully, I was kind of in a situation where I was, you know, I was working for Microsoft remote. My team was in Seattle. It was just like, you know, not super involved. So, you know, my full-time job has been this for a long time, you know. Speaker 1: So from 2016 to 2023, you kept your corporate job. So you had all the health benefits, you had all that stuff that could pay the rent. And so you could basically then reinvest almost everything into growing your business, right? Speaker 2: Yeah, absolutely. And you know, just growing and getting through the tough times that were supply chain crisis and all these things and just You know, starting this brand, right? Because 2016, 17, I didn't launch with this brand. I had another brand, which I still have. It's just like one listing, very like cruise control kind of brand, but it's been sort of basically sunset. But this brand was launched in 2019. And so, yeah, that still allowed me to build up a team and build up, you know, a lot of like, basically the upfront work that goes into what later amounted to, you know, this. Speaker 1: But during the high times of the aggregators, you said you had an offer from an aggregator, so you actually quit your corporate job for a month and focused on this business? What happened there? Speaker 2: Yeah, yeah. So, I had quit regardless. I was kind of like just wanting to sort of quit. Like, I mean, that was the goal anyways. And the deals didn't go through, you know, deal didn't go through. I'm still friends with the C-level there, that aggregator, you know, very well-known name. Yeah, you know, thankfully now that it didn't go through, but it was basically, yeah, a lot of factors went into it. But as you remember, you know, a lot of deals that would fall through based on timing, based on a lot of factors there. Speaker 1: So you were under LOI and everything. Speaker 2: Oh, yeah, yeah. LOI, maybe, you know. More than a month, month and a half in, you know, to the point of basically going back and forth on the APA, you know, the asset purchase agreement. So, yeah, I'm very well aware of that process and yeah, it wasn't. Speaker 1: So you got all your documents, you got your data warehouse and all your documents in order and everything had to go through that whole process of finding every little thing that they requested. You're like, I don't have that. Where the heck? I never did that. Speaker 2: Yeah. Speaker 1: I'm going to go and tidy everything up. Speaker 2: Yeah, thankfully my background is in finance and consulting, so I kind of come from the software, finance software implementing sort of accounting and all these sort of systems. So it's what I like doing anyways, like just looking at a P&L and sort of looking at numbers and making sure sort of the data flows through and like the, you know, the landed calls get posted correctly and all that. So they were very impressed, you know, they basically like I kept hearing, For our size of business, they wouldn't run into a business that was so advanced because at some point in time, I had a job and had no employees and it was still a seven-figure business. It was just like so automated that it was pretty intense but that wasn't the goal. The goal was always to kind of grow it and turn it into the next thing. So when that didn't work out, I kind of just focused on growing it again, basically executing the roadmap. Speaker 1: So now it's an eight-figure business, right? Speaker 2: We're run rating at eight figures at the moment, and that's because we got a contract with Walmart for a couple of our products that are at every Walmart. So when I count revenue, we're counting the wholesale sort of cost, but it's a very You know, very profitable sort of side of our business now compared to, you know, Amazon where it's, you know, it's got its ups and downs. But it's also a bigger kind of a moat, right? When you go into a retail store where you're like a fixture on the shelf and, you know, It's not every day that new products are coming into the shelf and stuff like that, right? So you get like weekly reorders and all that and that's kind of been a lot to handle, you know, originally to implement it back in May. But yeah, it's been, you know, our first holiday season fully implemented at 4,000 Walmart locations. Speaker 1: So there's only like, that's a total of like, that's every Walmart because there's only like 4,400 or something like that. Yes. Speaker 2: It's every Walmart except neighborhood markets. So, okay. Speaker 1: So how did you, did that start off with a small test of like a hundred stores or do you go straight to nationwide distribution? Speaker 2: Yeah, we went straight to that. People still ask me how that happened, but basically, yeah, we got a meeting for a coffee grinder that was a product they were interested in, flew to Bentonville. Met with them there, you know, I showcased some of our other products and they were interested in another product as well, you know, the storage container. And so went back and forth, I thought it would be kind of a nice learning experience, you know, like try again next year, but like, hey, okay, this is really how you get into the retail source, you know, like that's kind of what I was expecting at least, you know, not to get myself, you know, hyped up because we had other close calls sort of with retailers, not that close, but, you know, sort of close. And so they kind of came back and said, you know, like the thing with our products is it's a mass market appeal. You know, think of a coffee grinder. That's like a basic sort of coffee grinder, right? Like it's not necessarily like something that will be bought more in one region than other, like something that's more like Really, you know, leaning one way or another. So, in that case, I remember them asking sort of like, you know, could you handle if we allocate you a large number of stores? Like, I literally remember I think I was driving or something when I got that. And of course, you know, the answer there is, you know, absolutely, this is what we do when we're sleeping. So yeah, I kind of knew that they were planning on basically putting us at every store and thankfully they trusted us with that. So yeah, it's nice to see right away basically how important of a spot or a placement a Walmart shelf is. Speaker 1: So how did, are you, is this your company or you have partners? You said we earlier. Is it, is it your company or do you have partners? Speaker 2: It's my company. It's mine. Okay. Yeah. I own, I own the company. I say we as in, you know, the team I have now trying to be a good leader here. No, but I really, for at least for the very longest time, it was I, you know, a couple of folks from Upwork. But, you know, now I have an actual team, like we're building some cool. But yeah, that's that's the we bootstrapped it the whole way, you know, that and pouring it back into it. Speaker 1: That's the way to do it. And you had another source of income that covered your living expenses that you don't have to worry about that on the side. I think that's a thing that a lot of people... They see this Amazon business as a way to quit their job. They're like, I want to quit working for the man and do my own thing. And I know some of the most successful people in this space don't quit their job for sometimes years, like in your case, and continue selling and building the company before they jump in. Because a lot of people don't realize that it's a while before you can actually take a decent living. If you're in the Western society, if you live in Pakistan, 500 bucks a month, it'd be alright, but if you live in the United States or Europe or most of Asia, That's not going to pay for nothing, barely pay for your phone bill in some cases. So I think a lot of people underestimate how long does it take to actually grow something and get to the point where you can actually take money out. Unless you start with a huge investment up front and can ride that wave, then it's difficult. Like you said, you're bootstrapping it. How long did it take you to get to seven figures on Amazon? So you said the first two years was a different product line. You still have a little bit of that dabbling, but now the coffee products are your big Big, big thing. Speaker 2: How that started, you said about 2018, 2019? 2019. So think of mid 2019 launched in that whole year, that year, the whole year I did maybe 500,000 or so in revenue combined with the other brand, right? Like this cafe brand maybe did, you know, half of that of the total. So went from 500,000 there and then obviously COVID hit. And so, 2020, I did 2 million. So that was kind of the year where I went from from that to that and, you know, like a work and everything. And that's like running out of stock every like two, three weeks, you know, like you ship a container in and it was just like wild times, like easily could have done twice that that year. But the only reason I was able to do that wasn't because of debt or anything. There's no amount of debt at that point that I could have got to buy that much inventory. Right. Not paying up front 30 and 70 or whatever it is. Right. Like, If you're a small business like that just starting off, you can't get like a million dollars, right? Like you need about that much, right? Like floating around and stuff to be able to, it's a huge risk. So basically what I did was I had to negotiate really great terms with my supplier who had gone to China and met already like You know, pre-COVID as part of my MBA, I stayed extra and kind of met a couple suppliers. But basically, I negotiated 15% deposit and like the remaining balance was not paid for like 60 days after the goods arrived at the US, you know, so they were arriving, selling it and I didn't have to pay them, you know, like kind of it's like a negative sort of cash cycle there that allowed me to Sort of scale to that. So, without that, certainly couldn't do it and to your point, unless you have a huge investment or you have a job that was not paying you much at all, you know, in that case, you're not really quitting your job, right? Like anyways, you're just in survival mode, like $500, $1,000 or so dollars. In my case, it became a little harder and harder every time just getting paid more and more, right? Like if you're getting paid You know, probably my total comp at Microsoft was, you know, started with a two, right, not with a one. And so like, it's just really hard to quit that with full benefits and you know, 401k and all these things when you're working not that many hours, right? Like you can hide sort of in a corporate job like that, right, frankly. But that's sort of not what I wanted, right? And as a company, you're also taking a leap of faith on like investing in a lot of things, right? Leases on warehouses, like building up a team, right? Like if you want an actual company, you're going to want actual competent folks that are paid full time and like hopefully you're hiring in advance of like where you want to be. So all those things combined to like me holding out till basically the very last ...moment that I could but yeah that was the goal the whole way along is just to basically you know to do this on my own and to build you know my goal is to build something cool you know something that I see on the shelves like you know like I'm able to like sort of go into any store and like you know I go into friends houses and see my products or like stuff like that and it's just like that brings a lot more joy than like you know any dollar sign or whatever. Speaker 1: So in 2020, when you hit 2 million, how many employees, you had yourself and you said a couple people off Upwork or do you have any full-time employees or just every part-time BAs or what do you have? Speaker 2: Me and the equivalent of two or three BAs part-time. It was very much me. Speaker 1: And when did you go to China to meet your supplier, the one that gave you the good term? Speaker 2: I went early 2019. So I went- Before you had the product or after you made the first- Before I had the product. So it coincided with I had my, I was doing, finishing up my MBA and we went as like a two week trip to China. And so I extended an extra couple of weeks to go to the Canton Fair. And then at the same time, I was already looking to launch this, this coffee brand. And so I decided basically on this product, While I was on the trip or right before or whatever. So I had placed the PO. So I basically like was placing the PO and went to see the factory. And so, you know, he saw that it was nothing, you know, we had that was, you know, like he took a huge risk on me because also it was the factory owner, you know, so going to China and going in person there like eating snake and just like truly like being there with them and like they see like, you know, you're trying really hard to stand up a brand. I think that definitely paid off a lot later on. Speaker 1: Did he give you terms on the first PO or did you have to prove yourself off a few? Speaker 2: No, it was not on the first one. It wasn't on the first one. It was when this started happening and quite frankly, I sort of bullied my way there because I had this opportunity to sell goods to home goods. So like as I was launching this brand before I ever had it on Amazon or whatever, the first sort of container was where the first shipment was coming in and I On LinkedIn, just reached out to like a home goods buyer and they're like, wow, okay, we'll try, we'll try, give us a couple thousand. And I'm like, okay, I'm not going to be able to sell them because they would only buy what's available at your warehouse. So that's kind of how I started with like, hey, if you want me to kind of sell more, especially when COVID hit, that's when I was finally like, okay, you really need to kind of give me these terms if you want to basically more volume. And he did. And I remember at some point, basically back then, trusting me. You know, he trusted me with at least, you know, like half a million dollars worth of goods or payments that were due, but I had the goods, you know, like things that you would not see with another supplier, even at a much bigger scale, like I'm sure you've seen. Speaker 1: And he probably did that because you went over there and you saw, you had met him. If you had not have gone over there and met him, The chances of that happening are far less because in Chinese culture, FaceTime, face-to-face, sitting down, having a meal with them, spending some time with them is crucial. And so that alone right there, probably that trip, yeah, you did your MBA, you finished your MBA stuff, but that trip made you millions of dollars just by going and meeting. Can't underemphasize how important what Robert just said. is that you need to go and meet your factory. Maybe not before you place the first order because you can't, but if you're going to continue a relationship with them, it's crucial that you either go and combine it with a Canton Fair, with a EWU or something else, or just get over there and actually sit down with them because it goes such a long ways. Speaker 2: Yeah, yeah, agreed. And you know, I would say that's the most important part of going to China nowadays is really to meet your suppliers because of course you can go to the Canton Fair, but nowadays, you know, that's kind of like going to Alibaba in person, right? Like you really see all the options, you know, you can feel them, of course, and all that, but really like you're saying, like, Meeting your supplier goes a very long way in their culture, especially, you know, saving face and all these. It's definitely a plus and so that he still remembers that and even now, you know, sort of coming full circle, sort of inviting him back to the US, you know, like saying like, hey, we want to invite you when we, you know, when we go exhibit at the Chicago trade show next March, for example, you know, we we're saying like you guys, you know, actually come and see our brand now being exhibited to buyers. Yeah. Yeah. Speaker 1: Awesome. Awesome. Speaker 2: It's kind of cool getting to come, come back that way. Speaker 1: So you've got in this line, you've got a few different products, right? You have a grinder and a few different products. Is it all the same manufacturer? Speaker 2: A lot of our electric stuff is done through the same manufacturer. So grinders, milk frothers, and then we have coffee makers. Think of a simple kind of coffee makers. But we have other suppliers for other things like our storage containers, like coffee storage containers, coffee mugs. And cups come from another supplier because they're glass. So in total, I have about five different suppliers for different goods. But the bulk, you know, 80% of our business comes from one supplier, which sounds like a huge, huge risk. But we share that risk back and forth like a hot potato. Speaker 1: So what is it? I mean, that's a pretty competitive niche, coffee grinders. I mean, there's thousands of those. What is it about your product when you message a guy on LinkedIn and say, hey, and he wants it for home goods right away? Or at Walmart saying, skip all of our normal process. We're putting you in all 4,000 stores. What is it about your coffee grinder that's so amazing? What have you done to differentiate or to market it? Or what is it that makes it stand out? Speaker 2: Definitely a tough category. I mean, sort of like a staple kind of high traffic, high volume category. I saw it always as like, you know, I wasn't necessarily going to focus on it being too competitive. I saw that almost as a positive. I did see the category sort of being a little stale. There's a lot of like sold by Amazon, which has made it tough, you know, a lot in the past because, you know, of how to compete against them. But basically a lot of legacy brands that don't innovate You know fast or they don't have necessarily all the. Extra little features that us coming from an Amazon world are used to sort of like keeping up with, right? Like, hey, I'm launching this product, let me put the packaging next to it. That was something I did right away, you know, from way back then and it was like the plan all along and it just kind of stands out in the listings, right? Or, hey, let me include a cleaning brush, right? Like just simple things that you will learn how to like block and tackle, you know, in FBA sort of courses, but like that to retailers are like, okay, this brand, you know, I think the way the brand, the name, the look and feel was always with the intent in mind of being on the shelf. Even when all we sold was really coffee grinders, 90% plus, 95% plus, I still had a catalog of products, saying we're a coffee brand, these are our staples. We may not do well with all of them on Amazon, for example, but there's different channels for each kind of things and just looking like the part sort of, it's what gets you in the room. And then of course, once you're in the room, like why would Walmart choose us, right? Like you're asking, why would they choose us? To go in the shelves, we had to take a product out, right? There was already a grinder there. It's not like Walmart has never sold grinders. The thing is like, it's pretty sort of like, When you go into retail, there's no middleman, right? In my case, it's my company, it's my brand and it's between me and the buyer. Normally, those huge brands, they have a distributor or a wholesale sort of setup and then they have offices in New York and then a huge team in Europe and all these things. I have none of that. Walmart could retail it lower than the one that was there before. They're likely going to get it at a better cost from me because I don't have those huge overhead costs there. And for me, I'm going to make more money on it than I would have because I just go straight from the factory owner to them. So it just worked out that way where, you know, we're used to just battling a lot harder on Amazon on ad calls and like, you know, like just doing all these things like, you know, to make sure that we stay relevant and like, you know, you can, you can be in the top four, you know, by 9am and then by, you know, by 1pm it's like you, you're in the top 12 and then, you know, there goes, you know, some of your revenue. So, you know, having those skill sets really helped at least sort of try to stand out for retail. Speaker 1: Well, I think the name is important too. You did good branding with the name. I mean, instead of, you know, I know there's other companies out there, OXO and other companies, but those names don't really say enough, but your name, The Cafe, the way in the way it's spelled and the way it's done is actually That right there gives it almost instant credibility, like this is what I want over something else. I mean, I think that was really, really smart. So naming something is crucial and don't overlook the fact of a brand name, even though if you're not known, a word like that and the way you spelled it, you spelled it interestingly, It instantly says something. It's just like when somebody else launches a, I don't know, I'm just trying to think of an example here, where the Netflix of auto repair or whatever, immediately you don't have to explain how is your auto repair shop different. This is probably not a good example, but how your auto repair shop is different, you just like immediately plant a seed that where the Netflix, everybody identifies and they know what Netflix is. You've kind of done that in your branding name as well, right? Speaker 2: Yeah, no, exactly and it's funny because some people at times have been like, oh wait, I've seen your brand, you know, at Target on the shelves, you know, I know we're not at Target on the shelves but like they'll say something like that where it's like, okay, it just sounded like, you know, a brand that you've seen on the shelves or something and it means literally like coffee and some other languages in Europe. So it was a little tough to trademark at first but, you know, that was kind of with the intent in mind of just like, You know, you go on Amazon and you see some brands, some products that look great, right? But you see the brand names and it's like, okay, I can't even tell, you know, necessarily what it is, right? I'm not even gonna go into sort of Chinese brands. Yeah, some, you know, to tell them. Speaker 1: Some of those weird like brands are just made up weird, strange words just so they can easily get a trademark on them. Speaker 2: Yeah. Speaker 1: Yeah. I know you did a good job there. So when it comes to back on the Walmart, so when you, did you, reach out to Walmart and set up the meeting in Bentonville or did they reach out to you or did you go through an agent or a special program? Speaker 2: We went through a broker, you know, there's many brokers that do this. We had brokers already in the past and they just were not successful in getting us a meeting, but You could also reach out directly, you know, like the way that I did with HomeGoods or I do that myself also for other retailers and you know, we're in talks with other retailers as well. But it's basically reaching out to the buyer and then, you know, most retailers review their lines, they call it line reviews, once a year or so, you know, so basically Allowing them to sort of let you in the line review. So, there's a lot up to chance there, right? It has to be a buyer that wants to change their shelf, right? Because as we mentioned, the shelves are filled up, right? So, it has to be a buyer that's motivated to change whatever is on there. Either just, you know, a new buyer that's coming into and wants to like, you know, spice things up or, you know, it could be that you're locked out because the buyer is just sort of a lifer and doesn't want to change many things, right? But like, If they invite you then, you know, it's a matter of proving, you know, presenting why you're better than kind of what's on the shelf, you know, and I went through that process of like, okay, like, here's what you have on the shelf. And here's how they do on Amazon or Target.com or whatever and versus us, right? Who has more views, who has the lowest DSR, like all these kind of things that I put on a chart, and I just kind of easily presented in front of them and said, you know, like, give us a shot. And you know, it takes a buyer that also, you know, trust you with that. Speaker 1: How much of your success in getting in Walmart do you think was based on what you've done on Amazon? Like the reviews and the ratings and the sale. So that actually got their attention. Very much. Speaker 2: In the meeting, in fact, the buyer had Amazon pulled up and she was saying, why were you at this price at certain dates? So they were very well aware of Amazon. And, you know, in fact, you have to sort of guarantee EDLP, you know, everyday low price. So, you know, on Amazon, we can't go kind of competing on that specific SKU, you know, UPC against the Walmart one. So very much that Amazon led to this, you know, they wouldn't have even found us, they wouldn't have paid attention to us if we didn't at least look and play the part on Amazon. And of course, that led to other products kind of coming in, right? So once you're in, Their ideal situation is less vendors rather than more vendors, right? If their whole coffee section could be covered by just, you know, four, three, four or five vendors, it's much better than every item is a different vendor, right? Because they have to onboard the new vendor. It doesn't look well on the shelves, right? No product looks the same. And so that's kind of our pitch to them is more like, hey, we don't just, we're not like a one hit wonder. We have like the key sort of staple items and they all look great on the shelf, you know, and like, and Better cost, better retail to you, all the things above, but like, they're also going to look better, you know, like, and you're going to deal with one vendor, you know, so that's kind of like our, our approach there and certainly works. Like, We're being listened to a lot more in like grocery stores. So think of a grocery store when their coffee section is very much that way where it's all different vendors. You may find a coffee grinder from here, a milk frother from over there, a French press coffee maker from there. And it all looks like just random products on the shelf, right? I suppose so. Hey, here's five to six, you know, products in a row that are, you know, like well branded and like basically all the products you had anyways, just at better prices and better costs. Speaker 1: So is Walmart selling you on Walmart.com as a 1P then? So you're not doing 3P, you're as a 1P. Speaker 2: We have a 1P account, but those two items, they do 1P and the rest, we still do 3P. And when they run out of inventory on 1P, it falls back into our 3P. So that's a backup. Speaker 1: And your broker, how does that work? The broker that got you in, does he just take a flat fee? Does he get a cut of every PO or how does that work? Speaker 2: Percentage of sales. So, he'll take roughly 3% of sales. Speaker 1: 3% of sales? So, 3% of every payout you get from Walmart, he's getting? Speaker 2: Yep. But keep in mind. Speaker 1: For how long a period of time? Speaker 2: There was no upfront commitment from us, right? So, that's usually a pretty low percentage as well. I've seen more like 5 or 6%. But essentially, forever, forever. But the thing is, They were going to work and do all this work, even if they didn't get us in, they didn't get us in, but we were not going to pay anything unless they ever got us in and we were able to execute and we got paid, you know, so it was like a lot sort of had to happen for that. And, you know, gladly sort of, we had the same arrangement with another broker for Target, you know, that's how we got on target.com as 1P, but we're only on .com and for other retailers as well, you know, like sort of some that are kind of spreading. Speaker 1: How do you deal with the financing? You get a big PO from Walmart. Is your factory still doing the financing or do you have to go out and factor invoices? Or are you in a position now where you've got some money and you can ride those ways? Because Walmart's what, net 60? And then they don't always pay on time? Speaker 2: Net 55. They pay on time from what I see. They're pretty upfront and everything has been straight up there. But still you could imagine if we're always sort of tied on cash for a holiday season how this holiday season was just you know, even Even more tight because of because of Walmart, right and you know, thankfully our supplier does honor those same terms, you know, so the same kind of 1585 sort of terms but it did require extra financing basically getting extra debt, you know temporary sort of debt and And of course, just the cash flow and stuff. But yeah, certainly, at least it's something that you see moving, right? You land a container, it goes right, almost right out, right? Like, and you see it sort of move at profitable, very predictable sort of, you know, clips. So, you know, then it makes you feel a lot more comfortable and just investing at least into those cues and like the ones that they want to further bring in and stuff. Speaker 1: You said earlier that you were able to, one of the reasons Amazon, not Amazon, Walmart was willing to kick out the other guys that you could work with better margins. And so the other guys had too many layers of bureaucracy involved. So how, when you go in and sit with Walmart, do they, do they dictate the price to you? Do they, do you go in and you say, Hey, um, you know, my wholesale price is $4.26. Uh, or do they say, we're going to sell this for, we're going to, we're going to sell this for $8.95 and we're going to pay you $3.20, take it or leave it. Um, how does that process work? Speaker 2: They ask you for your cost, um, for sure. And then they may even ask you to kind of sharpen your costs, you know, that kind of thing. Speaker 1: Your true cost or your wholesale price to them? Speaker 2: No, your wholesale price to them. When they say cost, that means to them. You never reveal what your cost is, but they do ask for your wholesale cost just because that's how they talk to brands. Yeah, it's a tricky thing because you don't want to be so far off that they were expecting some hemisphere and you came in from another hemisphere, right? And at the same time, you kind of don't want to leave money on the table, right? They were willing to take it for this much, but you came in right at that much. So, it kind of depends where the conversation or how they started the conversation. I mean, that's just kind of... Negotiating one-on-one is don't be the first one to talk. But at the same time, if they kind of ask you for costs, you kind of want to go with a little bit of room. You know, you got to keep in mind that you have a broker and you have kind of these things. So we went in, you know, with pretty healthy, you know, what we consider healthy. And, you know, we were asked a couple of times to sort of Lower it basically, but it wasn't like we were far off. It was like you're talking about cents and stuff at that point. So thankfully it was that. I would say on the reverse side, so for another product that we're kind of going to Walmart, at some point they came to us and told us at what price they wanted to retail it, which is very different. And it's sort of key piece of info, right? Because if they tell you where they want to retail it, You can reverse engineer your way into what cost to tell them rather than going cost plus on what you got it for, right? So basically, that's something that we did after with another product. It wasn't like, they didn't say, hey, come to us and give us your best cost on this product. It was like, hey, do you have a product like this that we can retail for this? And we said, yes, you know, say no more. Speaker 1: Even though you didn't have it, you figure it out. Speaker 2: Yeah. They're not listening. Speaker 1: It's like the Chinese way. Can you do this? Yes. Yes. And then they go back and like figure out how to do it. Yeah, exactly. That's, that's the right answer. Um, for sure. So on, what about, um, they have, there's other fees that a lot of people don't realize too. There's like co-op fees, advertising fees, um, you know, allowance for returns and stuff. How much of that do you have to factor in when you're building these costs? Speaker 2: Yeah, so that you know those they'll tell you that in the negotiation but Thankfully in this case, it's like a true fixture on the shelf We didn't have to like commit to advertising or anything like that for them to like give us that spot It's basically, you know on the shelf as part of their modular and there is a very small return on allowance fees, which is like You know, very low, like less than 2%, you know, when we're used to, you know, like a return allowance of like much higher than that on Amazon, right? Certainly nowadays. So it was kind of like that, like less than 2% for return allowances and like 1% for basically for them to come pick up the goods at your warehouse, which is gladly do it, you know, like because They schedule shipments, send the trucks and all these things. All you do is have the pallets ready every week and a truck will show up and they'll take it. Speaker 1: One of their trucks or they partner with? Speaker 2: One of their trucks and they do partner on some of them, but mostly it's their trucks. So yeah, we have about one or two trucks that come every week. Speaker 1: Oh, that's cool. And they just charge 1% of the PO for that? Speaker 2: 1%. It's amazing. Yeah. And you don't have to like call, you know, schedule an LTL or do all these things sent to Amazon, right? Like it's really like you package it, you know, label it, palletize it, and it's just there and they come, you know, pick it up. Speaker 1: Where's your warehouse? Is your warehouse in the Atlanta area or where's your... Speaker 2: Yeah. Speaker 1: So they don't care that they don't tell you, we need you to have a pickup in California and a pickup here. Like Amazon has you split to three different warehouses. They just come and get it in nearby Atlanta and they take it from there and put it through their distribution system and get it where it needs to go. Speaker 2: Yeah, because every week we ship out to 42 different distribution centers, but they actually come pick it up together. So they take it actually to a consolidation center and from there they split up the 42 pallets and send them to their distribution centers, who sends them to the stores or whatever. But yeah, basically we ship every week to all their distribution centers, which is like 42. But yeah, but it's amazing the way they just come pick it up in pallets and that's it, you know, don't need to arrange for that. So it makes the transaction and just the relationship there so much easier, right? Like you focus on like, you know, other parts of the business rather than like the Just scaling that, you know. It took like getting a PhD, you know, like just to be able to like apply the labels correctly and like all these things. And quite frankly, that's why I hadn't even quit my job because I was still like nervous leading up to it. You know, we were supposed to deliver, you know, like I think like 75,000 units or something like next week or something. And I didn't know how to label them necessarily because they gave you about three or four days that you have to like label everything and send it out. So I'm still thinking, Who knows? I'm going to send these 75,000 units. A truck is going to come pick them up, but they're going to be lost somewhere in the Walmart network world and they're not going to make it to the stores. Of course, that's not what happened. We didn't label them correctly. They didn't apply fees and stuff like that, but there were parts where it took a while. The way we automate labels now and all that, it was just coming like a fire hose. I couldn't drink from it fast enough. It was just like we did what we could, but now we got it down pat. Speaker 1: A lot of people don't realize like when you're dealing with these big wholesalers that the labels have to be in a certain spot on the box like a quarter inch off the bottom left or quarter inch off the bottom and facing this way and there's all these rules and a lot of them will penalize you. They'll take deductions if you put it in the wrong place. Speaker 2: There are certain retailers that are known more for that like they take almost advantage of the vendors in that way. Walmart like really makes it known like what they want like the standards and all that they give you all these booklets like It's a matter of like really sort of like going through it and your carton has to be a certain way, certain markings, like your box, you have to have certificates, like all these things that had to go on like at such a time timeline for us to hit that go live of May. Speaker 1: So when it comes to this, let's look at a little bit of math here. So how much do you sell this item for? What's the retail price for like say the grinder? Speaker 2: We retail at $24.99. It's like the MSRP. And so at any time on Amazon, it's anywhere from $20 to $25, you know, in that range. Okay. Speaker 1: So let's call it $20. It's $20 on Amazon. Amazon's taking 15%. So they're taking $3 off of it. And then they're taking the fulfillment cost, which I don't know how much this is. Speaker 2: $5.80 or $5.60. So roughly $9 right there. Speaker 1: So now you're down to $11 left over. What's your landing cost roughly? So, $7 land cost. So, for every one you sell on Amazon without PPC, without storage fees, without any of the other fees, it's roughly a $4 in this example. I mean, this is not exact stuff, but this example, it's $4. So, then what do you, when you sell it to Walmart, what do they sell it for in the stores? Speaker 2: They sell it for $17.88. So $17.88 in the stores. Speaker 1: What's your wholesale price to them? Speaker 2: They get it roughly for mid-elevens. Speaker 1: Mid-elevens. So you're making about the same $4. Speaker 2: Yes, clear. Free and clear. Speaker 1: Free and clear with no PPC, maybe the 1%. That's after the 1% for picking it up and everything, the 3% to your broker, all that's already out. So you're making about four bucks. So you're making almost the exact same money with no hassle of hijackers, no hassle of PPC, no hassle of what's the latest trick and hack to get this in. Which one of those sells more per month? Speaker 2: Walmart still, of course. Yeah, Walmart will do. On the slow months I just passed, 25, 30,000 units a month at least of that grinder. We have two products. The other one doesn't sell as well. It sells, you know, maybe like a fourth of that, but we're talking about just the grinder here. Yeah, we sold 25, 30,000 units of it. Speaker 1: So 30,000 units through Walmart in a slow month before the holidays kicked in. And then what would that same month on Amazon be? Speaker 2: It'll be 8 to 10,000 units. Speaker 1: 8 to 10,000 units and out of that $4 you're having, I'm assuming you're probably doing some PPC and some other stuff, right? Speaker 2: Of course, PPC, yeah, absolutely. So, yeah. Speaker 1: So, basically the lesson here is Amazon, without Amazon you wouldn't, you said it earlier, you wouldn't have never been in Walmart because you wouldn't have had that history and the reviews and the show how you're different. But the real money is not on Amazon, the real money is in Walmart. Speaker 2: It's in retail. Yeah. Speaker 1: And that's a lesson that a lot of people I think can't get their head around is that they're like, I'd rather go. Most people don't realize that yet as big as Amazon is and as great as Amazon is something like 85% or whatever the number is these days of all sales still happen in retail. People want to go down, they need a coffee grinder now. They don't want to wait till tomorrow to get it from Amazon or four hours or six hours. They want it now. They want to touch it. They want to feel it. They want to open it up. They want to see what it looks like. And then there's a lot of people that just, they don't have credit cards. They don't shop online. They don't trust it. So I think there's a big lesson there is that Amazon is still an amazing opportunity and it's a great place to launch and to prove out something. But once you've proven that, do your damnedest to get into retail. So you're in Walmart, you said you're also with a couple of products in Target now, right? Speaker 2: Well, we've sold for a while now Target.com, Macy's.com, Home Depot.com, like QVC, like all the dot coms, you know, the goal, we were just throwing darts, making sure our brand could be basically everywhere in stores. But basically, they all told us to do the dot com sort of thing, right? Those were just easier to do. But yeah, that was the goal is always to get into retail. So any sort of vendor relationship is much better than 3P in our eyes. And so any sort of partnership that would It's kind of stuff that I've been working on for a while. Speaker 1: So once you get into Walmart, that's the granddaddy of them all, that basically everybody else then follows in line. So when you call somebody else and they're like, Oh yeah, we'll take you're in Walmart. Okay, we'll take it. It's almost like a justifier, right? Like you've made it to the cool kids club. Speaker 2: Yeah, we're seeing a lot more people accepting our samples. Yeah, yeah. And the key thing is like, for example, Target, we had a buyer there that's been there for 12 years, doesn't want to change anything, because she goes by whatever market share reports, right? She doesn't care what you do on Amazon sort of thing, right? Like, and so now we're showing on the market share reports as the number one grinder in all of retail, literally. Throughout all retail, our grinder sells almost three times more than the second place, KitchenAid and these brands that you've heard of, right? So we stick out now, right? Because of that Walmart placement being the intro offer there, but they start basically answering more because of that, like basically the success there or like knowing that we were able to execute on that level, right? Like that kind of like to them says something as well. Speaker 1: So what's the biggest pain I mean it is there is the what's the biggest issue with going going from the mindset of Amazon to the mindset of wholesale is it you have to. Do a lot more documentation and prove that it's child safety and meets all these regulations that you might not have had to do on Amazon? Or is it filling out, setting up on what they call the ERM, the EDM system or ERP systems or whatever it's called? Unknown Speaker: What is the... Speaker 2: That's tough. That's tough. But it's just equally as tough to sell like on target.com, you know, because you're a vendor and you had to do all these things anyway. So we've been doing these kind of onboarding things for a long while. And so like the documentation really from Basically you need certification on your products, but you should kind of have them already for Amazon. So like if you're selling already sort of a high volume item on Amazon, it's likely you already had that or your factory already had that. So it's not even that, it's just like basically being able to execute and making sure you manage your catalog so that it doesn't conflict with your Amazon, right? If you had a one product Sort of catalog and then you sold it on Walmart, it's gonna mess up your buy box. Similar how it did to us, you have to sort of look at the, you know, the SKU mix or like sort of launch it as a different variation or something like that. But it's just sort of structuring your catalog and roadmap so that it fits a retailer and it fits your online thing. Because you need Amazon sort of, even if it's like a branding exercise where you're just there, people see the brand or whatever, but like you need to be there at the very least. Speaker 1: You use the same UPC across all channels or do you have a specific UPC? Speaker 2: We do, yeah. Speaker 1: Do you use the same? Are you in Amazon's transparency program or that's not an issue really? Speaker 2: No, it's not really an issue. They can't necessarily get it too much cheaper to make a profit on Amazon so we don't necessarily run into that problem. Speaker 1: Are you hoping to go international with this? Is there any talk of Walmart taking you to Mexico, to other marketplaces? Speaker 2: No, not there, but we're starting with the low-hanging fruit of just literally Amazon Mexico, Canada, and then Europe on the FBA side, just because we can offer our suppliers ready for that as well. Just a low-hanging fruit, but we really have so many retailers here in the US that it's kind of like we're just attacking that full force because like it doesn't have to take a Walmart. So like if Walmart takes one product at 4,000 stores is the same as like Publix taking four or five products with their thousand stores, right? So which they're likely to do because they want kind of like that selection like we were talking about, right? So it's really like a lot can happen and it's just like products we already have. So it's a matter of like, okay, here you go. We'll ship them out on a weekly basis. Fairly simple. So we really want to just exploit that retail strategy there. Speaker 1: Do you have your own warehouse now or are you still using 3PL? Speaker 2: No, yeah, I've had my own. It's only 7,200 square feet total now. So we make do with what we've got, really maximize it. Speaker 1: How many people working for you now? Speaker 2: We have about 12 full-time people and seven agencies that we use for various things. Yeah. Speaker 1: So like PPC and all that kind of stuff is job. Unknown Speaker: PPC, yeah. Speaker 2: Production management for Walmart actually in China. I use an agency now. They handle basically my contact with the factory. PR agency. They were very well for us. Email marketing. Yeah. Those kind of things. Rather than having employees, you know, sometimes we feel the agency relationship works a lot better and sometimes, you know, like our executive team now is basically just, you know, our full-time and we consider that like, you know, the core. So yeah, and then of course, the contractors. I use a lot of contractors when containers are arriving and loading and loading. I don't count that as employees. It's just, you know, kind of daily workers. Speaker 1: So from $500,000 in 2018 to $2 million in 2020, what's 2023 roughly? Speaker 2: We'll do likely seven and a half, but we're run rating to do maybe 10 to 12 in the next 12 months. Speaker 1: So now I bet one of those aggregators that turned you down before might be, if they still have any money left to invest, they may be like, man, we missed out on one here. Speaker 2: Well, they're very close friends. Let's just say that they're pretty close friends. We still keep in touch and everything. Speaker 1: So are you looking to sell then at some point? Are you building this to sell or are you just enjoying running it for a while and see where it goes? Or do you hope to Take some money off the table. Speaker 2: I don't want to sell to the same kind of buyer that would have bought in 2021. Let's just say that. But, you know, it is the type of business that you got to get to profitability and like we're profitable. So that's great. You know, you just want to be profitable and see what happens because you have a lot more leverage. But at the same time, I know that when we hit certain thresholds like, you know, the eight figure or like the, you know, mid seven figure sort of profitable business, you get a sort of different buyer, sort of a PE buyer, potentially inject money. And sort of like really try to blow it up. Speaker 1: So if KitchenAid comes to you and says, we want to buy you for $25 million, you might listen. Speaker 2: I may listen, that's right, that's the sort of buyer. But they better hurry up before it goes up. Speaker 1: Hurry up while the price is good because it's going up, right? Speaker 2: That's right. Speaker 1: Cool man, Robert, it's been a pleasure speaking with you and thanks for sharing your journey, your story here. Hopefully it's inspired some people that they need to wake up and take another look at retail and see what they can do there because there's tremendous opportunity in that space. Speaker 2: Yeah, absolutely. Glad to help or consult, advise some folks as well. But yeah, I do this, you know, I'm passionate to be doing this. I feel like any day that I get to do this and not the corporate world is, you know, living out my dream. Speaker 1: Awesome. I agree with you. So if people want to follow you or learn more or see the story, what's the best way for them to do that if they want to get in touch with you? Speaker 2: Yeah, just directly LinkedIn, Robert Gomez, you know, just go directly in the DMs and that's where all the business transactions and things go down. The LinkedIn DMs. Gladly. Speaker 1: Awesome. And is it okay to say the name of the company or do you rather keep that? Speaker 2: Yeah, no, the name of my brand is Cafe, K-A-F-F-E, so cafeproducts.com or amazon.com slash cafe. Yeah, the holding company is 4Q Brands because we have a couple of brands, but yeah, that's the name of the brand. Speaker 1: Awesome. Well, Robert, thanks again for coming on. Speaker 2: Sweet. Thanks, Kevin. Nice talking to you. Speaker 1: As we all know, Walmart's a great opportunity, but there's a lot bigger opportunities out there as well, especially if you can get into retail. Retail is still something like 78 to 84% of all sales, depends on whose study you're looking at. And as Robert has shown us, getting into all the Walmart stores is just a major, major boom for his business. So hopefully you've got some insights and you learned a little bit of things from Robert. We'll be back again next week with another awesome episode. Also, don't forget, if you haven't yet, sign up for my newsletter. It's free every Monday and Thursday. BillionDollarSellers.com is the website. BillionDollarSellers.com. You don't want to miss it. It's like a $25,000 mastermind in your inbox twice a week. And don't forget, the virtual Billion Dollar Seller Summit is coming up February 20th to the 22nd. That's right, online, you can do it from anywhere in the world, February 20th to the 22nd. Information's at BillionDollarSellerSummit.com, BillionDollarSellerSummit.com. Brand new website's coming out in a couple weeks, so don't miss that. They'll have all the speakers and they'll have all the information for you, so hopefully you can join us. And before we go, I've got some words of wisdom for you. The fastest way to get to where you want is to follow in the footsteps of someone who has done it before. The fastest way to get to where you want is to follow in the footsteps of someone who has done it before. See you again next week.