#457 - Retail Arbitrage Isn’t Dead & How Charles Chakkalo Built a Private Label Powerhouse

Welcome to episode 457 of the AMM podcast. My guest this week is uh Mr. Charles Chakalo. Charles is been selling since he was about kneeh high to a grasshopper. We talk about his entrepreneur journey, about how he says arbitrage is not dead and could still be a great opportunity if you do it right and how he's used that to pivot into building an 8 figureure brand on Amazon as a private label seller. And then also a little bit of talk about should you actually become a brand, does it matter actually? And some interesting uh chat on that as well as a lot of other really cool stuff. I think you're going to like this episode uh with Mr. Charles. So enjoy it. Welcome to the AM podcast. Welcome to the AM podcast where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, plus this is the podcast for money never sleeps. Working around the clock in the A.M. p.m. Are you ready for today's episode? I said I said, "Are are you you ready? Ready? Let's do this. Let's do this." Here's your host. Here's your host, Kevin King. Kevin King. Charles, you're on the AM podcast. I don't know why I did this. I'm just a glutton for punishment. Like, like you said, you you wanted more of me. I say I said yes. This guy is sharp. He needs to be on the podcast. He's fun to talk to. He's got loads of information and loads of stories. But you're like, you didn't get enough of me at the last event or at Prosper or at the one before that or at the one before that. But listen, when I when I got that DM, hey, do you want to come on the podcast? I was I had two emotions going through me. The first being, well, I'm honored. I mean, this is a it's a great stage to be on. Second is, wow, I just spent the whole last freaking week with Kevin. He wants more of me. So, we met at you. We're trying to think that earlier. We're like, where do we meet? I think it was at ASD as you saw me speak probably at and you might want uh you know and after you know those those events are crazy. Um great great crowd, but it's a very very specific crowd. You know, it's the it's the uh uh Jewish audience from Brooklyn. And after you come off stage, you're like swarmed at that event. So you stage and you're like you can't move for like I hope you don't got to pee because you ain't going to the bathroom because there's people around. I mean Jeff Cohen one time had to come up and like rescue me. Uh like I need to take care of Jeff Cohen was there one year. Yeah. He he was actually there. Yeah. Totally didn't know. I It was It's funny actually. Right after Prosper uh somebody I'm forgetting the name of the agency. is probably a good thing. I was running a like 24-hour crash course on DSP and stuff like that at Amazon headquarters and I'm like, "Oh my god, this is Jeff Cohen." I real I recognize him from his LinkedIn posts and I went up said, "Hello." The whole thing. It was like like long lost brothers. Meanwhile, we never actually met in person. It's just a digital thing. Yeah, he's in the he's in my Dream 100. He's one of the Dream 100 guys. He's been around this space for a while. Really really good guy. Really sharp guy. now he's uh heading up like he's like an evangelist. I don't know his exact title for a for advertising at uh at at Amazon. But then you then then we I came with Norm uh and we did an event in in a warehouse and uh in Jersey uh for the ecom collective uh back in 20 cooperative uh cooperative cooperative back in 2024 and I remember you were there and we had a little hat. They wanted us to run a little hat contest. We ran a little hat contest and I was like Charles you got to enter this. She's like, "No, I can't. Uh, my wife, it's my anniversary. Uh, I I got to me and my wife are are going to dinner at this our favorite restaurant down the street here. That's a kind of a tradition." Uh, I was like, "No, just come in." You're like, "All right, I'll do it." But I think it might What happened with your wife? What What did she say? She said, uh, um, that year that year you're running BDSS Hawaii. And, uh, I I somehow I mean, it's it's it was both a good and bad thing. Made it to the final round. final round required me to stay a little longer than we slightly anticipated. And she goes, "Well, you can participate in the final round, but the only way you'll get out of this one, the only redemption is if you're taking me to Hawaii with you. I lost the competition, but hey, still happily married with two kids, so I'll take it." That's right. Yeah. The prize was, I think, a ticket to BDSS Hawaii, right? It was. It was. It was. Yeah. That's That's a That's a good ticket. That's a Yeah, that's a good ticket. Uh but then but you made up for it now. You just recently uh was it a Prosper I think or was it MDS? It's one of those spun you spun you spun the wheel or you you went and you did tell them what you did. So you actually you probably you probably don't even know you probably even know the full version of this. The full version. No, you want to bring a promo at your booth. Uh subscribe to the newsletter and subscribe to the YouTube channel or something like that and you get a spin. I spun the first time and I got a bankrupt or whatever. Like I got a nothing. I got a nothing basically. All right. So then and then you got you were running this passport kind of program where if you go around to anybody who paid into the sponsorship or something like that, you get a stamp. So you you had to go booth. So, we gave you a little passport book and had like 30 some odd different vendors and that their logos and you had to go to their booths and uh you know they all paid to be in this and it's the idea is to get you to go to their booth and so they can talk to you and you go there and you get a stamp and if you get 25 or more stamps you bring it back to us and then go ahead and then I got to I got to give it to you. I mean listen I I even said it publicly on my LinkedIn to and fro. You were like it was a great marketing tactic. I have to give it to you there. I went booth to booth and I got every single stamp. Every single one. I came back to your booth to redeem it and I believe it was maybe it was you or somebody at the booth was like you only had to go to like 20 and there were how many in the booklet? Like 40 or something like that. There's like 35 or something like that. Yeah. And and I and I and I and I did have a scare that I lost the passport during the conference. And then I'm like, "Listen, I look like such an idiot now that I got every single one stamped. I deserve another spin." And on that second spin, I think and and and that part I posted on my LinkedIn, it was like one of those, you know, like wheel of fortune moments where you're like either between the bankrupt or the audience ticket to be the SS or so I I I I was worthy enough to get an audience ticket to to Market Masters to Market Masters. That's the one. Yeah. Market Masters. Yeah. And it's November uh 13th to the 17th in Austin, Texas. Is that typical? Are you doing it over a weekend? No, it's over it's during Yeah, we do it over the weekend. Yeah, it's over. Yeah, it's it's uh it's it's always over a weekend. So, I know that um some of the faithful uh in certain religions that might be an issue, but but you but we can we deal we've dealt with that where someone they came in on the uh Thursday, they were able to participate on Friday and we got them in on Friday, Friday at sundown to Saturday at sundown. they just went back to their their room and uh did you know observed the faith and then came back out uh for the party that night. And so we we can accommodate we can accommodate food wise. Uh we do it at all of our events. Uh we have kosher food. We have everything. So you know we we accommodate. The only thing we don't do is if you ask for something illegal, you know, we're not going to bring we're not going to do that. Uh uh but no. Yeah. So yeah, that's November 13th to 17th in Austin's Market Masters. And um at the time of this, I don't even know if any tickets are available for the hot seats. The hot seats are are uh just went on sale in u in June. And so I have to double check and see if there's even any available, but audience tickets, there's probably a few, but you you're there in the audience for sure. And um that's if I don't upgrade, you know that that's right. That's that's if if you don't upgrade. That's a that's an awesome event. It's probably my premier event over even over u the regular BDSS which is in Nashville next year. Maybe you'll get finally get to come to a regular BDSS. Uh and yeah, and now that you're doing it, which is on a Friday and a Saturday, by the way, listen, it doesn't matter. Listen, yeah, it's not a religious podcast, right? My observance is not exactly 100%, but there you're good. I mean, we've had guys uh one of our sponsors um you they he's he's very observant and when we would have when uh it was sundown on Friday till sundown on Saturday, he would go to his room and they were a sponsor and his he'd bring another person from the company with him and that guy had to take him the food, had to open the door, had to push the elevator buttons, you know, he couldn't do anything. Um, which is uh, you know, that's that's die hard. Uh, but there's a lot of people that do that. And then I know a lot of people that say, "Yeah, I'm Jewish and uh, you know, whatever." It doesn't. Um there's there's always happy synagogue when I I go to the synagogue when you know when I can. Uh but but it's all good. So So speaking of of these, I mean you how long have you been selling? What's your story? What's your background on this on this e-commerce? And I'm going to give you the short version. The I started selling online on Amazon. Amazon eBay 2010. 2010 I was 14 15 freshman in high school. Uh, so I guess that puts me at 15 years. I'm 29 now. That's that's how long I've been selling on Amazon. Uh, selling being entrepreneurial. Well, it goes back to I think it was like fifth grade selling uh Coke cans. It used to be on special in Walgreens every 3 weeks. Used to stock up when it was on sale and sell them in school. Uh, backpack full of Coke cans to school. You You got it. You got it. And when I had competition, when I had competition, because some people caught up on that, I started raiding my parents' closet for the coolers we used to bring to the beach so that now I can upsell a cold can of Coke. So, you actually took a cooler to school with ice in it and co and Coke. And they they allowed you to put them? No ice, but I just made sure No, I just made sure to put them in the fridge the night before. Wow. That's that's a I mean that sounds like something I did. I when I was about that age uh this is in the days before uh streaming or anything that you had to actually go to the record store and buy albums. CDs didn't even exist. It was albums or cassette tapes I think. Uh and I would listen to Casey Kasem uh Billboard top 40 on every Saturday would air on the local pop radio station. They he would list off the top 40 hits of the week based on airplay and sales. And I would have my notepad and listen for three hours and like make a list and then I would I would type that up and make a little brochure and on Monday mornings take that to school and say here's the the top 20 albums or top 40 or whatever I did. If you want one of these um they're $17.99 a piece uh or something like that. And people would order them. They would bring me bring me money and give me cash. And then on Thursdays I would go to have my mom would drive me the nearest record store is like 20 miles away at the time. So you drive me there and I would buy what everybody everybody ordered for like $13.99 a piece and then take them back on Friday and deliver them all and make a $4 profit on each one. So it was a similar similar kind of story and I've done multiple things like that but um that that's cool. So how did So Amazon in 2010 I was selling on Amazon in 2010. What were you what were you selling used stuff? Uh like said would say what if uh I have one to sell click this button and it was like or what are you doing? Yes. Yes. Yes. Oh my god, you just hit it like you hit a nerve that's 15 years old. Yes. I want to sell quick here and uh it was it was resale I think new like other something like that. That was the first time that was the first so there were two two elements of it. Number one regular resale or retail arbitrage. the second element when I started to get a little more advanced and I actually got suspended something that got lifted pretty recently because um I went on I get I don't know what the Alibaba was of that time or something like that and I ordered PlayStation controllers and I sold them as like Sony PlayStation controllers and obviously they weren't Sony and and I obviously got suspended because of it. I want to get back into the Amazon game, you know, when I'm an adult or something like that. And I had to appeal my decade old suspension so that you know I get out of Amazon jail so I could do it for real. And uh it happened. It happened. I think it was it was officially it was definitely over 10 years ago and I had to dig up those emails and the scam invoices that it was it was like yes, I did bad. I did bad. I did bad. I did bad. I promised a decade ago I'm a I'm I'm no longer a kid and uh seller Performance in their good graces let me out of Amazon jail. Yeah, DHGate's famous for that. DHGate is uh you know some people were talking about that when the terrorists came back in uh earlier this year. Uh oh, just get stuff off DHGate instead of Alibaba. DHGate's a plethora of counterfeit. Right. Right. I just that was Yeah, that was on one of your prior episodes. Uh DHGate was uh a serious thing that the the person who met you at Prosper as well. Yeah. So, did Yeah. So, that So, that's interesting that they still had you in there from way back then. Well, I don't know if they did. I don't know if they did. I just say I was just a kid. I did. I did say that. I said I was just a kid in high school. And listen, I'm I'm an adult now. I know what I did wrong. And so on and so on. And uh yeah, but but going back the decade plus, yeah, it was uh if you have one of these, you could sell on Amazon. I clicked that little button and I just kept on finding different SKs and finding different SKs and uh until you know I was shut down because of that and uh you know now I'm a real guy. Now I'm a real guy. So you weren't you weren't arbitrageing Coke cans on uh on I was not arbitrage of co can segue a good segue into I'm an honest believer in arbitrage. It's far from dead and uh it's something I still do till today. So how are you doing it today? I mean that's that's that's a that's a quick win for a lot of people. a lot of people listening maybe like they haven't started their journey on Amazon yet. And I think that's how I started. I mean, I've been selling on Amazon since 1999 or 2000, something like that. Basically, I was doing the same thing. Uh I would put a you if I had a printer in my business or an old uh PlayStation or something, I would list it on eBay and I would list it on Amazon with a you got one to sell, sell here. And whichever one sold first, I took it. Uh and then that that evolved into selling uh calendars and and some other stuff. Uh but when I in 2015 when I decided to actually start doing what people call the you know selling on Amazon now which is basically private label FBA game. Uh I want to get my feet wet and I was like well how does this process work? And so I actually went locally uh to the dollar store and bought some toothpaste sensitive toothpaste or something. Send it in just to see the process. I had to send the receipt that showed I bought 10 of them or whatever to get approval. And I went to a local barbecue place that's the Salt Lake that's got their own barbecue sauce that's hard to find on Amazon and bought a couple cases of that and ship that in just to see how's it work to do FBA labels. How's it work to ship everything in. So, it's basically and not quite arbitrage, but like in a way it's a but I think arbitrage is a great way for someone that doesn't have money to get started to actually get the ball rolling and actually get some money. And that's that's how it happened. Figure out how the system works and what you can do and then then you can go from there. So how how are you doing there's online arbitrage and there's actually foots on the foot on the ground going into the stores or even people I remember I did a garage sale and there I was selling a bunch of old CDs and there's some guy there I had like seven people there like right there 7 o'clock in the morning for my little garage sale. Uh this is like seven or eight years ago and they're with scanners on their phone just like just going through the CDs figuring out which ones they can uh you know which ones are I'm selling for a dollar they can get 25 bucks for on uh on wherever they're selling them. So how does that work today? How are you doing it today? Well, today it's you have to get the most kosher invoices you can out there. Uh not only kosher invoices, but contacts at the company who can vouch for you. That's the only way you'll get away with it without having tons of inventory stranded by FBA on a whim, which you'll still get anyway. And the only way you'll get out of it is with authorization and a contact. That's that's the first thing. Second thing, when you're talking going to the store and buying all the the toys that are on discounted at Big Lots or Dollar General or whatever and putting them on doesn't really work anymore. It can it can work. uh you have to be okay with losing not necessarily losing the inventory but shipping in let's say a $10,000 shipment to FBA and then you get dinged for an inauthentic product even though it's authentic and no Amazon rep will ever reactivate that as just because either they're not exactly looking to reactivate it or they just don't want to give you the time a day to be helpful. I mean, any Amazon seller knows what that sentiment's like. So, it's not dead. It's not dead. It's It It's a lot harder and riskier if you go if you go about it that way. So, how are you approaching it now? Do you How do you find something to arbitrage? Do you find someone that's just not on Amazon? You're like, "Hey, I can throw these up there and uh basically it's almost like you're buying them wholesale in a way and with their permission or are you actually doing arbitrage or looking for those gaps where price?" A little bit of both. A little bit of both. You know, if I if I tell you I have to kill you. But it's it's a little bit of both. It's a little bit of both. Okay. But that's on the arbitrage front, which is not the only thing. It's just it's a train that that that should be right ridden. Well, what's the word? Written now by everybody, but it's it's going to go. So, you you do a little bit of arbitrage, but you're also doing what else are you doing? Private label ends. The private label ends. The private label end. And the the way the business started was our our field of specialty was in the home and kitchen niche. So what whatever we were trying to invest our efforts into was home and kitchen. So we said let's start this business whatever it happens to be with Amazon. And it was retail arbitrage in 2016 foot on the ground. We went into dollar stores from New York up to New England finding light bulbs on sale. I think the statute of limitations passed. There was like a state rebate or something like that. And uh we we bought them, sold them on on Amazon FBA, eBay as well. Used that money over years and years and uh started investing into gadgets in the home kitchen space. we got into the field of making molds, getting into touch with factories in China and so on and so on. Uh that's something so the general structure of the business is using retail arbitrage to funnel into a private label business because one day that that retail arbitrage will not be I in my opinion there for the taking. Every everybody will have to face some online presence at some point. So, the retail arbitrage allows you to generate a little bit of cash that you can hopefully then reinvest. Uh, start small and grow because you can flip. You just you can grow as you flip. And then it gives you an idea of like what works, what doesn't work, how the process of shipping in works, and then you can take that and like see what you like selling, what doesn't sell, and and actually leverage that into private label. And that's basically what you've done. That's it. That's it. And you know, like as recently as recently as last week, we're we're uh we were considering a a new product, doing the keyword research and everything you're supposed to be doing. Yeah. Just go buy 50 of them somewhere and put them up and get the data that that you could do. That you could do. Um and I was asking questions that had to deal with oversized oversized shipments. There's, you know, right now in my current state, I know exactly the fulfillment cost and what it what it physically requires to store something over 18 in. And the difference it would be to the warehouse logistics to make a shipment to an over oversized facility instead of a regular facility like the ones that we all know, AVP1, JFK8, and so on. Um, so when I'm when I was evaluating that new product, I thought to myself, this is an oversized product. It has to what has to go into this calculus is that I'm not going to be able to throw this on any shipment with any other product. This is going to have to have specific shipments going to a specific warehouse. That experience would not have come if I wasn't involved in the volume of retail arbitrage that I was still today. So the products your private label brand is a home gadgets. Is that did I understand that correctly? Yep. Home kitchen gadgets. Yep. and take your dish racks, your pales, your toothbrush holders, soap dispensers, stuff like that. And so you're you said you're creating molds for these or are you doing finding something and just modifying it? Or is it all custom like you're designing it from scratch? Both. All it's both. It's it's it's taking your Vogue AI stuff, it's taking your negative customer feedback, it's taking your uh best sellers, finding a niche that the best sellers aren't aren't satisfying, going for those. It's it's a combination of all that. And there was even one that um we were producing domestically in the United States. The manufacturer cut us off. So we just said we'll make our own mold at that point. Okay. That's Yep. That awesome. And this is you by yourself or you have partners in this? No, I'm partners with my two brothers. It's uh dad promised us he'll be able to help us in business, but he won't give us a penny. So it's something that we have to bootstrap. Listen, Kevin, you grow you're born if if you're born to immigrant parents, this is this is it. This is the epitome of of parenting like the old country. So my and I was also blessed with two brothers with completely complimentary skill sets. I love administrative work and I I was I used to be in the in the litigation field. I was a litigation parallegal uh but never got off of ecom. So I love paperwork uh handling handling different administrative tasks. That doesn't mean which is true. I ran warehouse operations for two or three years at some point took a break and now I'm back in it. So I still have that going going as far as my involvement in the business. Brother number two is really sourcing and merchandising. Brother number three is uh managing the third location. So you have your own warehouses. Yeah. Yeah. We don't I don't believe in 3PL's. I don't believe in 3PL's. any any Amazon seller can tell you when you outsource your warehousing and you cannot physically touch your product, it's it's like it's like you're being held ransom. Steve Chu, who we both know, has a story where one of his friends or other sellers that he knows, had to actually rent a U-Haul, go to a 3PL and store his goods and take his goods back because he wasn't getting responses from his 3PL. So, it's stories like that that just it makes me believe there you have to be able to touch your merchandise. You can't just simply farm it out. And uh bad 3PL stories are a dime a dozen. Yeah, that's that I still to this day don't use 3PL's. Um I I Yeah, when I was the heaviest in Amazon, um which was 2015 to 20 I mean I still sell on Amazon now, but I my products most of my products are seasonal. So what I do is I get a store I get four storage units side by side by side at this place out kind of on the edge of town where it's cheaper and that's where they offload the pallets in there. Each one of these units can hold 14 pallets. Everything is offloading there and I'm the one me physically is going and shipping the stuff. I mean people be like crazy Kevin get somebody for five bucks 10 bucks an hour and do that. Like no it's a good workout. It gets me so hold on hold on you're there when and you're there receiving trucks and loading it on the on the on the Yeah. Well, the shipment comes in from on one particular product, the biggest one. It comes in It's not like daily shipments. It's not like weekly shipment. It's like it's one big shipment that comes in from South Korea uh for the entire season cuz it's seasonal stuff. So, we're not ordering. Um and then yeah, I'm there. Um and then two guys, they know me, they've known me for 20 years, the guys that come from the local uh uh bonded warehouse and they come out like, "Hey, Kevin, we got another load for And you know, I let let them do it all and and I give them hundred $50 each tip, you know, some some water bottles cuz it's usually in the middle of the summer in July or se or August in in Austin and it's hot. And then I go out there and I stick the labels on for the stuff going into Amazon and bring some back. I have a condo in downtown Austin um uh on the top floor and on floor number four I have two garages that are meant for cars for you to park your car and charge your Tesla but they're not set up for that. There's a computer there's there looks like a Costco in there with racks and everything and there there's a computer uh connected because there's power in the garage but there's no internet so I have to use my cell phone as the hot spot and to connect to the ship station and to connect to everything and then stuff goes out of there. um and stuff gets moved back and forth. So yeah. No, I I I now you can't do that. That's the way it was when I started the business. I mean still run it that way that way. But this is a seasonal small thing. It's a million bucks. I couldn't do that if it's 10 million, 15 million, 20. No, that would not be possible. But I like it because people like keep telling me, Kevin, quit doing that. Just job it out. It's like no. Yeah. Um I've got it system. I'm like I'm like Southwest Airlines. You know, Southwest Airlines only fly 737s. That's all they fly. And that's their whole business model is like the pilots are trained on every plane. You know, there's slight nuances between the the 800s and the 900 airb No, there's no Airbus on in Southwest all seven. I know. I'm saying there's Yeah, but yeah, but so parts are easy. Um supply and that's what they've done. So that's what I've done. So the way I have the calendar business particular set up is it's systemized. So it's mindless work. So I go down there and I actually still stuff the envelopes during that season during November and December and I listen to podcast because it's mindless work and so I feel like I'm productive instead of me sitting on the couch or driving around listening to podcast and 2x and and learning something. I'm actually down there learning something and making money at the same time. Uh and doing these for about you know a fraction of the cost, saving thousands if not tens of thousands of dollars in fulfillment fees and having control. So I No, no, no. I get that. But so back on your ware, so you have three warehouses. Uh two, it's two warehouses and we just closed an external office to combine into one. So it's really two active locations at this point. And so what are you seven figure eight fig figures in sales? Actually, because we opened the second location this year. No, we just we just crossed from uh we're projected to to hit eight this year. That's awesome. That's awesome. Yeah. Um, all Amazon. Are you doing still eBay and Walmart? No, all Amazon. All Amazon. It's something, you know, last year last year I walked into seller summit saying that I was a recovering addict being so dependent on Amazon. It it makes me uneasy. I'm thankful for the opportunity, but it makes me a little uneasy. Uh, just just because just because of how much dependence we have on it. It's um that yeah, that's that's what I have to say about that. It's something that that I wish were the case. So, are you looking are you and your brothers looking to fix that or you're just comfortable at this point way down now and it's a habit and it's a way of life right now? That's that's my mission this year. My mission this year is so I'm I'm I'm really stuck between two let's call it obstacles. The first one is I think of somebody, let's say like my mom. My mom goes and buys something on Amazon. If I ask her, "Where'd you get it from?" she's going to say, "From Amazon." Not a certain brand on Amazon. So, and and I think my mom is emblematic of most customers out there. They're they're they would answer the same thing. So, I have to justify to myself, why am I going to invest in particularly in branding when it seems like customers are not as brand aware as like they are for other categories like like automotive or fashion or beauty where people know Coach or Gucci or Nike. So Amazon as the middleman is the brand. That's that's that's the that's the obstacle we're facing. So, to answer your question, there it my my two options that I'm trying to work on is to find uh and break new uh marketplace, which is kind of a beast because you know every marketplace they're a different animal altogether. And then the second one is try to figure out the Shopify route or DTC, but it's hard to justify the customer acquisition cost when we think when we do the math, you know, we we have a we have a um I forget the terminology, but we have like an account manager. Yeah. Yeah. Yeah. Account manager I think with Amazon advertising. Let's just call it Jane Jane Jane. Yeah. And Jane, you know, we we one time we asked her, "Can you give me general ad spend and CPC data for in the kitchen and home space just so I can understand?" And she goes, "Yeah, I can't give you that." But she goes, "I can give you maybe the cost for specific specific search terms and keywords." Well, that's not helpful. So, like I I I don't feel like I have the data to make an informed decision on where to spend my resources. And and as a result, we just stay on Amazon because it's still working for us. But like I said, it makes me uneasy. Yeah, that's that's that's uh been a been an issue with a lot of people. Uh and there's some guys that are going like if you if you build a if you sell on Amazon but you build a brand and you build an audience and you build an email list and you and you you know like using like I know these guys are like they're starting to do like a lot of unboxing videos and stuff showing the personality of the company and stuff so you can build an audience. You know, there's there's a bunch of different routes you can go. And then then the customer acquisition cost for like direct-to-consumer comes down significantly because you've you've built that relationship and if you're on Amazon you can drive traffic to their website. Um, but Amazon doesn't like that, right? Uh, there's ways to do it. But it's like it's like a dance you have to dance. And there's also like a lot of people are going heavy into like paid podcast advertising where they can really target their audience well. Uh, it's it's a complicated uh issue. And and and I think it just depends on the product and the person and uh you know some people are doing 20 million or 30 million. Just single on Amazon and they're fine. And others are like no you got to diversify to protect protect yourself. So, you mentioned that you've what's the eight fingers you're shooting for this year? Yeah. Eight figure. Eight figure. Yeah. Yeah. That's awesome. Now at eight figures, that's a certain amount of volume per day or per week. At that level of volume on Amazon, are you seeing that Amazon is being more lenient or more protective of you? Are you getting your own account rep who really cares about you and helps solve your problems? Or are you still just like an everyday Amazon seller that gets the runaround when you have a problem? I was going to say something here. I think it's extremely platform dependent. We've had other marketplaces where it's it's and it wasn't it wasn't eight figures where it's it's somebody, you know, picks up the phone and solves your problem. Where Amazon, even at eight figures, if you have you you cannot contact anybody directly. So, it's it's it's the volume, but then you still have to submit support tickets. I think I think what eight figures do help with because somebody had said this to me is that when somebody when an Amazon Amazon AI robot and like picks up the case, is this an important seller? You know that you don't want to piss off. So I think there is more flexibility with policy enforcement and there is there is more flexibility with the review system as far as like if you put in a case and you're you're polite and it's legitimate and you explain it well, you you would get the outcome that you want versus there not being the outcome that you want. But there's no like phone number. There's no like there's no like email where you're like, "Hey Jane, Jane the advertising girl. Um can you solve this problem for me for brand registry? No, Jane only does advertising. And if you have a problem with brand registry even Jane can't help you. It's it's that type of uh relationship. So the more the more volume you do, the just the better results you might get when you when you contact them, but it's still same support process. And are you doing PPC on Amazon or are you you're basically are you doing like sponsored products and and and and and those types of ads or are you also doing DSP and some of the other stuff? Oh, we're doing everything. Yeah. For our marketplace is Amazon. We're doing everything. If there is a a campaign type or an ad type that Amazon has, we're we're running it. We we invested in a really, really good uh agency to to run it. There was a time when we ran it all in house. And we actually fired our first agency because for three months we showed no results and that was like that. They couldn't justify the retainer. But the second agency that we hired, they're fantastic. They actually save us money on ad spend and increase sales, which is which is uh the ideal scenario. So So, so what's your ta you said the agency is helping. What's your what's the tacos or your ad spend percentage? What's that look like? It's it's the tacos is about uh around the 15% range and not all products have the same ta same tacos. The average is around 15%. That That's pretty pretty good. 15% is pretty good. I think a lot of people are at like 30 or 40 and higher, especially if you're doing a lot of the more expensive stuff. So you're you're pretty dialed in or you have a really good agency. Both, both and like my theory is if you're not a that means you're not spending enough on advertising in the Amazon world. Uh and then and then on the flip side, if you're too high, you're just throwing money out the window. Uh but the sweet spot is is somewhere where you're you're you're profitable and you're also you're also taking market share from your competition. So you're not just being profitable. You're also you're also doing something offensive. Yeah. Yeah. Now, so you're in the home and kitchen space. That's a very competitive space. There's a lot of Chinese sellers in that space. How are you how are you dealing with that competition? What's the what's your what's your angle or is the your angle the fact that you're three warehouses in America and you can get stuff there faster? Or what's what's your yeah, what's your angle? I think uh I think it's, you know, some of these obvious answers, customer service, quality control, uh but it's I think the biggest one is relevance. And I think the example I like to give is a brand like a brand like OXO. OXO makes some products that work, some products that don't. But everybody knows OXO. And uh so when OXO Ox when OXO is considering whether to add a new product to their product line or not, they're probably doing and hopefully they're doing keyword research and making sure the market actually wants the product that they're thinking of developing. Where a lot of the Chinese competition, they they make stuff and then they try to find an American market for it versus making something for the American market. And OXO does both. OXO does innovations and OXO does also addressing what the market actually wants. But so many of those Chinese competitors either do stuff that's more on the innovation side or just like whatever they felt like making and then they try to they try to sell it. And and even if the innovation is is is fantastic, if you're not addressing a need for the consumer, you you get you get what you get. So, staying relevant, staying relevant to what the market wants is is huge. And then obviously the product development has to be on par. At minimum. I prefer it to be better than the than what's currently out there. So, um and and and and we also we also try to bring like a little bit of a design element where we're able to because maybe it's not necessary, but we wanted to be also aesthetically pleasing and not just functional. So that that's really important. And and that's that's just different. Different perspective on I think on things. Yeah. And then the customer service piece, I think is big as well. Being able to actually being able to actually um get back to customers and address their concerns. Yeah. The branding thing though. I noticed you're cha you're Charles Chakalo and your your your your business is with your brothers. Do you do you sell everything under one brand or you have like multiple brands? Multiple brands. Multiple brands. Yeah. We have about. I think it's uh 9 or 10 brands at this point. Yeah. Multiple brands. But they're all they're all the same team. They're just they're just different yeah, different brand names and there's there's um yeah, it's just it's just different brand names. OK. So So so each brand is targeted at like it a different sub niche of home and kitchen or they're all just home and kitchen you just wanted to have more broader coverage of the category in general? I think it's a It's a little bit It's a little bit of both. It's a little bit of of both. I think some some of them are because of sub niches and then some of them are because we we wanted to be able to the example I like to give is the Coca-Cola company. Coca-Cola has Coke, Sprite, uh uh Fanta. And from the customer's standpoint, those are three different companies. Coca-Cola company doesn't like advertise that they they own all of them, but they do. So we we we we just follow that model. I mean, that's our that's our version of the Coke company in in a sense. I I I don't get those numbers, but yeah. Yeah. We try to follow the same model. And I think it's also risk mitigation. I think if Amazon were to go after one brand for let's let's say whatever reason that happens to an Amazon seller, and it were to impact one brand, the other brands hopefully wouldn't be impacted as as significantly. So, it's it's a it's a little bit of diversification. Yes. OK. So you have multiple brands. You're looking to diversify outside of Amazon but it's difficult. What's what's the plan going forward? What's what's the ultimate goal? Is the ultimate goal to you know build this to maybe do an exit in a few years or is it more of a lifestyle? family business that you guys want to you know keep doing or what's what's the ultimate plan? I think it's it's we we've looked into the aggregator acquisition route. But my feeling about it is every aggregator that's reached out to us, they're all giving different you you they're all evaluating the business with different uh the same business but they're all giving different valuations. And that makes me feel like it's more of like a guessing game versus like a science. So like somebody would you know one aggregator would give us a 4x multiple, another one would give us a 5x multiple. another one would give us 3. 8x. And that that's like a huge difference. That's It's It's a huge difference. So I so I think either either the aggregator space is just too immature right now and can't properly evaluate Amazon businesses. Or, and this is my bigger fear. They are and they're all correct and the low ones are and the ones giving low offer are more accurate. And the more attractive offers are not based on actual sustainable business practices. So, just on their confidence in their ability to come in and scale the business. So, if if somebody gave me a 5x multiple and this and and and and let's just hypothetically the business is doing a net profit of a million. So let's say they would pay us 5 million for it. In in their calculus, they're saying, \"We could take this business and uh get it to 2 million in profit within 5 years or within X amount of years.\" If they can't do that, they they lost money. If they can, they they made money. But on but from my standpoint, I'm like if you're that confident you can double our profit, let's partner together and you and you uh both make money. right? And and and so I I haven't seen a I haven't seen an offer from an aggregator that's so attractive that I think that it's the It's like it's the better route than just building and continuing to build. Yeah, that's interesting because when the aggregators were hot two or three years ago, some of them paying like 6, 7, 8, 9x, I actually heard of some people, couple people that I know, that get 10, 11, 12x for their business. They were getting crazy multiples. But some of those aggregators went bankrupt. Right. And and and now it's it's and now it's like back down to to to normal normal levels and you're right, it does feel like it's like gambling. It's like you know do I take the bird in the hand or do I go for the two in the bush type of scenario. And you're right like a lot of these aggregators if they feel like they can double your profit in three or four years, then why not, you know, why why not do a joint venture or some sort of partnership where you maintain ownership but they get a piece of it? That might actually be a better route. And I noticed more and more people are doing that now. They're doing partnerships uh with with other groups rather than exit and selling just for the the protection and and that's and if you're if you're family business type mentality um that might be a way to go. So for people listening that are maybe they're struggling they're they're you know they're maybe doing a million or 2 million and they want to get to eight figures like you guys. What's what's the one or two key things that you would tell them to to focus on to to to really level up and take it to the next level? I think the first one is get get the operational side under control because operations is what allows you to scale. Because you you know, you you might be able to uh do X dollar amounts on a on a weekly or monthly basis. But if your operations are you know your operational capacity is capped at you know let's say it's capped at uh shipping out 2000 orders per month. Then you're not going to be able to grow past a a certain point. So having the warehouse and the staff and the system and the automation in place allows you to actually handle increased volume. And and then and then once that's under control, then it's the fun stuff, it's the advertising and the keywords and the launching the products. But if you don't have the operational foundation, then that stuff all that fun stuff is useless. So So you're saying outsource the warehouse or get your own warehouse like you guys did or what's what how do you handle operations if you don't have money for multiple warehouses yet? Yeah, I would say if I was if I was advising somebody who was doing a million or 2 million, I would say get your own warehouse. I would say get your own warehouse because it's it's financially way way more profitable to do it yourself than to outsource it to a 3PL. Uh and it gives you control over like over the customer experience. Whereas even even if a 3PL does everything right, they still they still lack the urgency that you're going to have for your own business. What what should they look for? I mean some people are like I don't know how to even start. I mean should they get a 1000 square foot 2000 square foot? What do they put in it? Do they just get like um just basic shelves and packing stations and like what's what's what's a a good starting point for someone that wants to open up their own little little warehouse fulfillment? Yeah, I would say the first location is uh 3000 to 4000 square feet and you're going to use that for yourself. Maybe next next step you go to 10,000 feet or whatever. Uh 3000 to 4000 square feet should should should be a good size to fit whatever volume you're at and hopefully grow into. Uh I think I would say don't don't go don't start with more than that cuz you might be overwhelmed. Uh and then I would say get a basic ERP, whether it's ShipStation or SkuVault or any any basic ERP to manage your workflow and your orders and your uh your barcoding and so on. Um I would say definitely invest in a good barcode scanner. A good barcode scanner is is is massive. And I would say start with 2 employees, yourselves and 2 employees. Because yourself is there to supervise and manage. And then the 2 employees are are the ones who are working. And uh and then as far as I would say basic warehouse equipment, the the the things you would want to have is obviously workstations uh for for people to stand at and pick and ship. I would say you want to have pallets. You you want to have obviously some pallet jacks and uh you're going to want to have uh a thermal label printer and a regular laser printer for invoices and PO's and so on. That's probably that's probably the basic setup. Are you are you printing your own Amazon FBA labels or you're sending that in non labeled? We print our own FBA labels. Yep. And and do you have any recommendations on like equipment like where to get the barcodes scanners and all that or is that just basic stuff that you can get off Amazon? Basic stuff, you can get off Amazon. The barcode scanner that I like is a Zebra. That's Zebra. Yeah. It Zebra is is the and it's expensive. It's like a couple hundred dollars, but but it's it's worth it. The cheap ones break very easily and and and the Zebra one will last you forever. And then for label printers, I like the the the Zebra label printers as well. Uh and for the ERP, we used ShipStation for for awhile in the beginning and now we custom built our own. And for somebody starting, I would start with ShipStation. OK. And then like do you guys fulfill Amazon you fulfill your own stuff or do you guys still do Fulfillment by Amazon as well? We send most of our stuff to Amazon. We we do fulfill some ourselves when when Amazon is out of stock or during peak season times. we use ourselves as the backup backup warehouse uh mostly. So it's not like the primary fulfillment, but it's it's it's useful as the backup. OK. And if somebody's doing a million 2 million, should they consider having somebody full-time managing advertising or that's when they should consider an agency or should they still do it themselves? How do you know when to make that transition? I I I I think well if you're if you're starting and you're under let's say $100,000 a year, you could do it yourself. Maybe between $100,000 and and one or 2 million, you could probably hire somebody full-time that that's in the US, uh an advertising person. And and then above 2 million I would go with an agency. I'd go with an agency because at that point you you you you want the expertise of multiple people on one account. Whereas one full-time employee is limited to that one person. The agency has they they probably have some senior people, they have some junior people, they have some technical people. They have some account management people. So you're getting a team versus just one individual. That's good advice. Um so so actually since we're on advertising is there is there like a is there like a is there like a tool or something that you're using in addition to the agency to keep track of things? Is there like a dashboard that you like or uh or or do you just depend on them for the reports? Uh we we we let them run it and then we we have a call every two weeks where they're they break down the the performance with us. And uh they they sent us monthly reports. Uh but we're not we're not looking at any dashboard on a daily or weekly basis. We we just trust them to do their job and if something has to be escalated then they they call us call us about it. Nice. Nice. So you're you're not in there like tweaking bids and and looking looking at your numbers every day and stressing out. No, I used to and it was and it was making me crazy. And and the the the results were worse. So I'm I'm I'm much happier now than I had. And you you mentioned you you guys are using your reviews and negative reviews and stuff to develop product. Are you guys using any like particular tool to to monitor those or to scrape those and like keep track of what people are saying or is it just more manual? It's more manual. We we we go through product by product and we and we see what the what the negative feedback is. And and if something keeps coming up, then then we we address it in the next. In the next iteration. Yeah. Uh and we we try to make our product differentiation is is very often uh fixing what the what the leading products are not doing right. Uh and then on and then on top of that, trying to have like a design element where we're able to. right. And and we and also we also try to solve not just one problem but multiple problems in one product so that we so that we have like different different angles to market it, different value propositions. That's good. That's actually that's actually really good advice. A lot of people I think go in and just like look at a product on Amazon and they're like \"OK, I can get this made for $5 and they're selling it for $30. I'm going to go I'm going to go source this and sell it.\" But but you're actually like looking at the problems and figuring out how to solve the problems and make it better. And then you're solving multiple problems which gives you multiple angles to to to market and to write copy. Yeah. I mean I think I think if you if you just going to resell the exact same thing that everybody else is selling, then the only value proposition you have is price. And that's uh that's that's a race to the bottom and and and I don't want any part of that. Yeah, absolutely. So like what what's what's what's one of your what's one of your best best selling products? what's what's what's what was the process like for developing it? Um we we have a we have a um a magnetic lock for kitchen cabinets. So if you have kids and and you don't want them getting into the into the cabinets where you have like cleaning supply chemicals and such, you put this magnetic lock inside the cabinet and the kid can't open the cabinet. And what and what our our version does different is that most locks in that category require either assembly or or screws or drilling holes or any technical setup. And our product you just stick it in and it works. So we we took the pain point of assembly and we made we we made our product require zero assembly, zero setup. You just stick it in there and and it works. And it costs the same as all the other ones. So so why would you ever choose the one that requires assembly when you can choose the one that doesn't require assembly? And so that that's been that's been actually probably our our best seller. How'd you how'd you so how'd you go about finding that? Did you see it on Amazon and see people complaining that they had to assemble it or use tools? Or were you like shopping for your own kids and you're like man this is frustrating? Or how did that process work? I think it was a combination of of both. I think I think somebody in the in the company said that they they bought one that they had to they had to put it together and they they they thought that that was more involved than it should be. And then we researched the category and we saw that every single product on the first page of Amazon was the same. It was the exact same thing. and then we developed our own. That's that's great. And so you went so you went to the manufacturer and said hey can you make this without the assembly? Or did you find a different manufacturing in China? How'd you guys approach the the the actual sourcing and and developing? We we did it we did it from scratch. We we we came up with the the design and then we we found a factory that could manufacture it. Yeah. Nice. And that's and that's probably where having the three brothers comes in handy. I bet like one guy's like the sourcing guy, he's good at talking to the factories and knowing how to deal with those guys and knows the the ins and outs of that part of the business. Exactly. Exactly. Yeah. That that's that's exactly how it works. So so overall where it sounds like you guys got a good system and you're at you're at eight figures and congrats on that. I mean that's that's awesome. For people and just want to kind of summarize for people that are listening. Seems like you guys from your your story. You did the arbitrage to get started, get money coming in and learn the system. You took that money that you made from arbitrage and invested it into private label, but you didn't just go out and find some random product and resell it. You actually you know you guys came up with like some some good process of looking at what the pain points were in a particular niche. You solve multiple problems with one product. You actually developed the product yourself and had a a mold made and everything. You got your own warehouses so you can control the operations and control the costs. You hired an agency so now you're not stressing out every day about advertising. You have multiple brands. And you're you're happy to be dependent on Amazon for now, but you're looking looking to diversify. And is there anything else like that I missed on on the formula? No, I think I think you got it. I think you got it. The one thing I would add is is stay stay consistent, be persistent with with running the business every single day, day in and day out. The little operational changes and tweaks that you make on a on a daily basis compound over time. I think that's that's the the key behind anything is just just consistency and and persistence. love it. Love it. So I know you're Jewish, so you're going to be you may not be you may not be online probably next week or so. Is that right for for the holidays? That's that's right. Yeah, there's Rosh Hashanah, which is the new year. And then there's there's um Yom Kippur which is the day of uh day of atonement, I guess. Those are the two Those are the two big ones. And when when the other companies that you compete with kind of uh shut down, does that does that impact you? Like is there is there less competition? Is it easier to get more more sales during that time because some other people some other companies are not operating? Um I don't I haven't noticed uh I haven't noticed a change. I don't think I don't think my competition is sleeping. But but yeah, I think I think most my most of my competition is not is not Jewish. So they're they're they're still going. I don't see a break. But yeah. um I'd be I'd be I'd be curious if if any if any other Amazon sellers who are religious have noticed uh have noticed a have noticed a a change during those during those during those times. I don't know. Yeah. Well that That's That's interesting. You you might pay attention this this time and see see if if if there's any any any any difference and maybe send me a note and let me know afterwards if you if you see any any change. Because there are I know there are a lot of uh sellers in that that that that's of that faith selling on Amazon. So it would be interesting to see. Um cool. Well, Charles, this has been this has been great. If people want to follow up with you or uh you know follow you or connect with you, what's the best way for them to do that? So my LinkedIn is is Charles Chakalo, C-H-A-K-K-A-L-O. Uh you can you can follow me there. I try to post uh e-commerce content uh with, you know, a dose of of uh Jewish humor uh on a fairly regular basis. So uh so feel free to follow me there and and and engage. love it. And and that's also where you posted about getting my wheel spinning. Right? That's right. That's right. Yeah. Yeah. And you said you deserved the second spin since you went to every single booth and got every single stamp. Yeah. Yeah. Yeah. I mean any any reasonable person would would agree. Yeah. Yeah. No. I I I thought that was pretty I I thought that was pretty cool actually that you went to every single one. I was like this guy like this this this this guy like really like wanted to win that that thing. Yeah. Yeah. Yeah. And you still get you still get to come to Market Masters. So So that's that's That's awesome. That that's awesome. All right, Charles. Well, this has been great. Thanks for thanks for coming on and uh and sharing and uh sharing the story and some good advice for for people. I appreciate it. Thanks, Kevin. I'm I'm excited to spend another week with you in Austin. Yeah. Yeah. That That's going to be fun. And and hopefully maybe we'll uh maybe we'll see each other in Nashville too at at BDSS in in the spring. And and that that would be cool too. All right. All right, man. Take care. Thanks for listening to the AM podcast. If you enjoyed this episode, please leave us a review on iTunes. Just search for AM podcast and you'll find us. And remember to subscribe to the weekly AMM newsletter at for great tips and advice. All right, everybody. That's a wrap for this week. We will see you again next week. Same bad time same bad channel for for more episodes of the AMM podcast. Thanks a lot.