Ep 264: $100M Worth Of Ecommerce Scaling Secrets with Alex Fedotoff

Jaryd Krause:

There is a science and some secrets to making millions of dollars online through an e-commerce business. Hi, I'm Jaryd Krause. I'm the host of the Buying Online Businesses Podcast. And today I'm speaking with Alex Fedotoff, who is an entrepreneur running an eight-figure direct-to-consumer portfolio of e-commerce brands in the beauty and education spaces with his company, eCommerce Scaling Secrets. He's been in the e-commerce space since 2016 and generated over $100 million in sales. Alex lives in Miami with his wife and his two boys.

And in this podcast episode, Alex and I had a beautiful discussion around his experience buying an e-commerce business and what he'd learned from it, what didn't go so well and what you can learn from that as well. Then we move on to talking about the psychology of marketing, the journey people take when discovering your brand and what goes on for them when looking to make a decision to purchase your product. And there's so much in this, from how to position your brand using influencers to, if you do use influencers, who you should use, who you shouldn't use and why.

We also talk about email marketing and how to get people on your email list without just asking for a discount code and depreciating the brand of your business by offering discount codes to everybody. We also talk about email marketing tips once people are on your email list for e-commerce brands in a way that's not just shoveling your product in front of them aggressively.

I share a bunch of things around that as well. We also talk about how to encourage your brand to grow and how to make a difference in your business. We also talk about how to increase your average order value, which can help you spend more money on ads.

Now there's so much value in this podcast episode. Also note that if you're thinking about buying a business like we talked about at the start of the episode, make sure you get my Due Diligence Framework. It's what I've used, and all of my clients use it to buy businesses. It's free. buyingonlinebusinesses.com/freeresources. It takes guesswork out of buying a business. For now, let's dive into the podcast with Alex.

Do you have a website you might want to sell either now or in the future? We have a hungry list of cashed up and trained up buyers that want to buy your content website. If you have a site making over $300 per month and want to sell it, head to buyingonlinebusinesses.co/sellyourbusiness. Or email us at [email protected], because we will likely have a buyer. The details are in the description.

Alex, thanks for coming to the podcast and welcome.

Alex Fedotoff:

Thank you, Jaryd. Thank you very much for inviting me.

Jaryd Krause:

We are excited for our chats today. There's so many rabbit holes; I'm sure we're going to go down. You are the man about scaling e-commerce businesses, and we will talk about this, and I do want to dive into that. Before that, though, I know that you've bought some e-commerce businesses as well. Is that right?

Alex Fedotoff:

Yeah.

Jaryd Krause:

So are you cool with sort of sharing some of your experiences with buying some of these businesses?

Alex Fedotoff:

Yeah, yeah, yeah. Definitely.

Jaryd Krause:

Why buy them? What size and what type of businesses?

Alex Fedotoff:

Yeah. So my experience with buying e-commerce businesses was relatively limited. We only bought one business. The business name is Eqyl Actiware. So E-Q-Y-L Actiware. And pretty much that business we acquired, I think, was just an emotional decision. We just like the business. My wife ordered some clothes from them, and we decided to buy them.

At that point, we already have a portfolio of e-commerce brands, so we’re kind of decent operators. But we acquired this brand in a totally different category. So it was in a fashion category, and we acquired it.

The business had good metrics in terms of a 30% to 40% repeat purchase rate. So, which means 30%–40% of the customers would come back and buy again. And so we looked at those metrics and the numbers looked very solid.

But then the business was kind of over, and we just learned. We acquired the business and then we paid all cash. It was all a cash transaction. All in was about $300,000. And we bought that business and then we're starting to try to figure out how to run it. So the business was pretty much predicated on the owner. And when we bought it, pretty much you removed the most important thing that made the business successful, which is the owner. So the business pretty much stops functioning.

And so our specialty is paid advertising, usually for health and beauty products, gadgets, creams, and stuff like that. So that was within our circle of competence. But I don't know. Yeah. So we pretty much tried to run that business for a few months. We tried to kind of build the team.

But at the same time, we have our main business, which is making sales, making money, and making profit every month. And so we just evaluated and decided to just pause it, put it on pause. And we still have the inventory here that wasn't sold out. So that's the whole story.

Jaryd Krause:

Good learning experience. What would you say the top two learning experiences were from that acquisition?

Alex Fedotoff:

Number one is first. I mean, just project what would happen if you removed the founder from the business. Just project, like, okay, so what if the founder tomorrow leaves or the boss hits him or her? And you're taking that business over, so will you be able to operate it? Will the business still be able to generate sales profits or not?

And if not, it pretty much becomes almost like a full-time job for you to maintain it. And so, it depends on what you want to buy. If you want to buy a full-time passion job for yourself, then that would be a tremendous decision. You buy something that you like, and you sell it, and you spend a lot of time with it. But if you're looking to buy a business, then it's probably not going to be a great decision.

So that's number one. And number two would be, yeah, just a circle of competence. I think this is so important, especially if you come in with particular knowledge on how to operate a specific kind of business.

This is also exactly the same reason why so many people have burned—not burned, but made poor investment decisions with crypto, with other investment projects where people are kind of investing in something, they get excited, but they don't have specific expertise or knowledge about that industry, that market. And most of the time, it turns out to be a bad decision. So these two things would probably be the biggest learnings.

Jaryd Krause:

Yeah, absolutely. I love that. Thanks for just being open and honest about sharing your experience with that and knowing that it wasn't probably the best financial decision when you're already making money in your primary business, but you learn a lot from it. And we really appreciate your sharing.

I find that when people buy e-commerce businesses, we teach them to buy media businesses, content websites, e-commerce, SaaS membership businesses. When we're teaching people to buy e-commerce businesses, the number one question I like to ask people is: How does the business make money? What's the traffic source? Is it paid ads? Typically, an e-commerce business is single-source reliant and dependent on paid ads.

So if that's the case, how much experience do you have with paid ads on that platform? And do you believe you can achieve the same result as the previous owner, if not better?

Or do you know somebody like Alex who could take over the account and produce the same results, if not better, than the previous owner? And if so, how much would that actually cost you? And then factor that into, when you're purchasing the business, the actual fee that it may cost you.

Because for me, my circle of competence is not in beauty care, e-commerce businesses, and/or managing ads for beauty care businesses. However, I could buy a business and use you as that person who has that circle of competence, and you can hire people in to make sure you get those results.

Now, yeah, you mentioned two big things. There's a big difference between a business owner and a business operator and some people do go away and buy themselves a job. And typically, most people that I'm teaching are happy; they've already got a job, but they want a part-time job as well, so they can replace their income, have more time, and spend time with their friends and family. And then I help them move away from that being a job and create systems, processes and stuff like that. Much like what you would have in your business.

So with that said, would you go away and buy another business in the future? Because it's an interesting one to play. A lot of people here either have a business or are buying a business. The thing about building a portfolio of them or just focusing on one.

Do you think you would buy more knowing what you've learned from that experience? Knowing that if you bought something in your circle of competence and it wasn't tied to the owner too much, would you go again?

Alex Fedotoff:

100%. We would just buy a different business. And I mean, at this point, we would buy a business whose bare minimum would be $5 million or $10 million in revenue. We would finance it. We would buy a business that has diversified streams of sales.

Ideally, if it's e-commerce, it would be Shopify and then Amazon. And then if there's maybe some organic YouTube, so some source of organic traffic. So then, okay, even if something happens on the paid advertising site, we can still generate sales and keep business afloat.

So it would be kind of not a super, super massive business, but at least a business that has some legs already and structure in place that can sustain itself. And even if the founder moves out, again, coming back to the same kind of thing, even if the founder moves out, the business is not so predicated on the founder, tweaking the website and changing some things there. And so those would be the businesses we would definitely be interested in acquiring and growing.

And also, I mean, probably the number one thing that, both for people who want to start a business and for people that want to acquire a business, I would really look into is the cost structure and unit economics.

You mentioned some of those business models, like content websites. You mentioned membership websites, where it's probably digital products. So those have very low overhead compared to the price that you sell the product for.

So with e-commerce, it's a very important factor. Because, for instance, if your product costs—I like to use the rule of three or even four, which means if, let's say, the product costs you, I have a product here, let's say, if the product costs you, let's say, $10.

And you're selling the product for less than three or four times to $30, $40. Then it’s just not enough margin for you to go ahead and acquire customers, whether it's with Facebook or any other of these channels, on a scale if you want to grow that business. So margin structure and unit economics would be very important factors to consider as well.

Jaryd Krause:

Yeah, absolutely. What we have is What's your CLTV? When we're doing our due diligence on an e-commerce business, we understand your customer lifetime value. And then also what your CPA is.

For people listening, cost per acquisition is how much it costs you to acquire that customer. And then you've also got your cost of goods, which is that your product might cost you $10, but then you need to have that budget for the marketing.

So let's now move into We've already mentioned you’re using paid ads. This is where we're going to go anyway. Before somebody decides to start working with you, what are some of the things they should have in place to know that you can scale their ads?

Alex Fedotoff:

That's a good question. So at this point in our business, we prefer to advise people on how to run their ads and how to optimize their business. We don't have the capacity right now to kind of do all of the ad management anymore.

Jaryd Krause:

So let me rephrase that question, since your answer would be that you'd mostly be advising and consulting. What are some of the most common things that you share with people that help them get the best results with the ads when you start consulting with them typically?

Alex Fedotoff:

For sure. Amazing question. So the way I see it, if you're building this kind of paid acquisition vehicle for your business and your product is something that can be advertised, that means you already have a sizable amount of competition.

I like niches when there's a lot of competition, which means there is money to be made and a lot of people are already advertising. In that case, there are only two things that are important—three things.

So number one is your product. So the product itself. Does it have any differentiating points? Does it differentiate in any way from the competition? It could be branding, it could be perception, it could be some features, some benefits. Maybe it's a bigger product or maybe a smaller product than the new competition has.

Maybe it's the story of the founder, which is one of the easiest things to attach to the product. So there's a different perception of why you started this brand and stuff like that, which kind of makes it more relatable for people.

So that's number one. The product. Number two is advertising, which we mostly advertise on Facebook and Instagram. So on that side, it's mostly creative—the visual part of ads. How do you communicate the value of your ad? And you can do that within the image, like a banner ad.

Or you can do that with, let's say, with—right now we're running this format, which is called VSL (Video Sales Ladder). And those ads could be 20–30 minutes long, which means 20–30 minutes, and there is a spokesperson that talks about a particular issue that we're trying to solve. And there are some videos that have been added and dynamically created. So it's almost like a whole documentary about the particular problem that we're trying to solve.

And so for anyone whom we’re advising, I would be like, “Okay. Is your competition successful in advertising those kinds of ads via sales, for instance? What kind of ads your competition is running? How they're selling their products successfully?” And so kind of asking and just kind of seeing what's working right now in the place.

Obviously, we can be creative, and we can figure out some new solutions and some new ways to advertise. But to get started, it's best to just see what's working already. Pioneers have arrows in their backs. I have heard this saying many times.

And so that's the second one. So number one is the product, number two is ads, and number three is the funnel. And so what I mean by funnel is the website and all of the upsell sequences, post-purchase upsells and stuff like that. What is your average shorter value and what's your conversion rate? Those are the two main metrics. And how can you increase those?

So for instance, can you increase the perceived value of your offer on the website? And the easiest way to do it, for instance, let's say, if you are selling a product like this, you can just sell one product or you can say, “Hey, if you buy two products, I'll give you two products for free.”

Because your incremental cost for these products will be just slightly increased if you ship, let's say, four products, but your overall average rate of value pretty much doubles because you get people to buy more products. And also, you increase consumption of your product, which is good because then people will come back and buy it again.

And so those kinds of things that we’re always kind of advising our clients and taking into consideration. In many cases, I see people taking ads out of context. Okay, you can just adjust some settings on Facebook, or you can just adjust some settings on Instagram ads and kind of make some little tweaks.

But in most cases, it's kind of a more holistic view of the business and kind of all of the moving parts, which are the product itself, the ads and the funnel, and these are the three kinds we're mostly advising clients on.

Jaryd Krause:

I love it. And I don't know if people listening actually picked up on this, but I did. I like how you went from the journey in a linear fashion of the product and the brand positioning of the product, and then the ads, then the funnel. What I do like is that you talk about the funnel, upsells, and downsells.

And what I have seen that can work really well for beauty products and those sorts of brands is an upsell to a membership of like, if you have this skincare thing or toothpaste or anything in cosmetics, I guess, toothpaste, toilet paper, have a membership monthly or annual membership where you can say, “Hey, you can buy this one-time product for $50, but how would you like to get it for $30 every month?” You don't have to order it, you don't have to think about it, and it's cheaper. You get a massive discount, and you just get it over and over.

And I love taking e-commerce businesses and thinking about them in that fashion, from one-time product sales with ups and downs to membership models. And that's a really, really good thing for the scalability of ads as well.

Because you've got so much cash. Or typically, you've got a baseline of cash and you don't always need to chase—if you stop ads, your revenue doesn't stop. Typically, if you've just got a one-time product sale and you stop ads, or if you don't have a Shopify storefront with organic traffic, your revenue's going to dry up. So this is a really good way to build a bit of a moat and longevity around an e-commerce business.

And I want to get back to the brand positioning. Because this is really fascinating to me. What are some of the things that people do and share with their brand that help buy them a lot more trust?

Because trust equals sales, basically. What are some of the things that you help people do with positioning their brand and their products, branding in a way that allows that trust to sort of either be increased or looked at in a light, like, “Yeah. This product resonates with me, and it feels like I need it?"

Alex Fedotoff:

100%. I mean, one of the probably easiest things to do would be—especially if you're advertising on Facebook; maybe you're already spending some money—to incorporate whitelisted ads. What that means is, let's say, there's some influencers and content creators.

So let's say you work with an influencer and they’re making a piece of content for you. Let's say they're talking about your product. “I like this product; it's an amazing product and I highly recommend it Here's how to use it,” and stuff like that.

So let's say you do that. But then, once you have that piece of content, instead of advertising it from your own page on Facebook, you are advertising it from their page on Facebook. And so what happens is, let's say, you're browsing Facebook, you're browsing Instagram, and you see the ad popping up from the creator's name; for example, I don't know.

Jaryd Krause:

Just Jenny, for example.

Alex Fedotoff:

Yeah. Jenny, yeah. Let's say Jenny Smith. So that's her page. You see the product and it doesn't seem like someone is trying to sell you something. It looks like, genuinely, another person talks about something and then it turns out to be about the product.

Okay, you see the product. But then, let's say, in another sequence, like retargeting, for example, you're retargeting people already on your page. And so now it's the second time a person has seen it. I mean, Jenny was saying so many good things about it. Now it's another one. Oh, okay. So now the person is more likely to buy.

And you can make it as sophisticated as you want it to be. For example, for some of our brands, we have 10–15 different pages running in this fashion, whereby by the time a consumer sees our brand page, the main page of the brand, they’ve already seen the ad from different personalities.

Some of them are older, some of them are younger, some are ladies, and some are gentlemen. And so by that time they're like, “Whoa, wow, it seems like everyone is using this product.” And so that's one of the things to kind of use to your advantage. It's called whitelisted ads. And you can do that on Facebook, and I think Instagram as well.

Jaryd Krause:

And so, that's awesome. So those pages—do you own those pages? Are they the pages that you own and then you use influencers’ content on those pages? Or how does that work?

Alex Fedotoff:

Yeah, you can do it both ways. One way is when the influencer already has the page and they're just pretty much giving you access through the official, you know. They're just giving you access to advertise on their page. So that's number one.

Or it could be that if you have an agreement with them and they're okay with that, you can create a page for them. You can have that content advertised on that page. Obviously, you’ll fund all of the advertising and that is another way to facilitate it.

Jaryd Krause:

Yeah, I like it. So just for people listening, it's not like you create a bunch of Facebook pages and Instagram accounts that aren't actually real people and you're just trying to fake sell or fake create people. Yeah. You are actually using real influencers, which is awesome, and it's a really good win because you are using their ad account; they can make money from it without having to do any work and you sell more products and help more people. Obviously, they're going to be genuinely using the product.

Now with those, what I see is, say, you've got 10 different influencers and 10 different accounts that you're working with. Do you go away and take their—what do I call it—proof of use, I guess? So social proof is the word I'm using. Do you go away and use their social proof for your ads and your main page as well?

Say, you have a few different influencers saying, “I like this product because...” and then you have one, two, three, four, or five different influencers saying, “Looks good, tastes good, smells good, makes me sexy.” Do you have that in one ad for your main page? And why does that work? How does that work? Break down the psychology of that for us.

Alex Fedotoff:

For sure. I mean, you just described one of the best form formats for us, which is called mashup. So this is exactly what you said. It's where you combined—the structure of the ad is very social proof driven. And it shows, yeah, again, different kinds of personalities, some blonde girls, some girls with dark hair, some older, some younger, some men.

So it's kind of appealing. Because, as humans, we kind of resonate with people who are like us. And so skin color, ethnicity, age—all of those things can be used to appeal to different demographics.

And usually what you will find with any product is that it's not like your products are being—specifically in e-commerce, I guess in other industries as well—that you usually have not one customer avatar, but most likely you have more like three, four customer avatars.

So, for example, if we're in beauty and we're selling a skin cream, some ladies in their early 30s might have some early wrinkles, and they might be using it to kind of stop that process. It can also be used by some ladies who don't get enough sleep and want to kind of hide or replenish their moisturized skin.

Could be some older ladies that already kind of the skin starts to age, they wanna recover that. So there are different kinds of avatars and there are different uses for each product. There's one very successful company you probably know called Athletic Greens.

Jaryd Krause:

Yes. I’ve heard of it.

Alex Fedotoff:

Athletic Greens from New Zealand. And that company is utilizing, if you'll see how they do it, they sponsor many podcasts. There's a Joe Rogan podcast they're sponsoring. They're sponsoring many others, like Tim Ferris. So all of these kinds of influencers have their own buckets and their own kinds of audiences.

And what they do is leverage—obviously, now that they have huge budgets, they can spend to get in front of that audience, but pretty much they're putting their product in front of different audiences. But then, how they speak to those audiences might be slightly different.

And for some people, it might be recovery because they didn't sleep much. Okay. This will help you replenish the vitamins and minerals. For some people, it might be just like taking care of all the vitamins for the whole day. So then it saves you time. So the benefits and angles, and how they position it for each particular avatar, might be different. But at the end of the day, just the same product.

Jaryd Krause:

Customer avatars—understanding who your demographic is—are massive. Because then that's when you can talk to them, and you can resonate with them. Like you said, we resonate with people who are similar to us. How does somebody that's starting to run ads for their e-commerce business work out who—maybe it's two to three or five different avatars? How do they work that out?

Alex Fedotoff:

Very good question. One of the easiest ways to do that if you have no customers, let's say you're starting from scratch, is to go to Amazon and find a product that's similar to yours and just go through the reviews and see what people say, how they say it and who they are. And then on Amazon, sometimes customers have profiles.

I like to click on those and like to see, okay, is this a man or a woman? Okay. Is this an older person or is it a younger person? And also, by the name, there's the names of people. So are these mostly men who're buying these products or women who're buying them?

And so by doing that, it kind of gives you that initial kind of intelligence. Besides that, I like to go through my competitors like Facebook ads. Okay. Who's my competitor? And if they advertise on Facebook, I go through their ad library, I watch their ads, I see what kind of ad copy they have, and I click on their websites.

I go through their whole kind of flow and see how they're talking to their customers. So let's say if you have a relatively new brand, this can give you an initial foundation, or at least a baseline, for how to talk to your customers and what language and words to use.

And then, once you start advertising, there will be a lot of comments under your ads. And so what you need to do is just kind of, okay, what do people say? What do people like? What do people don't like? What objections do people have? Or people say, “Oh, this product doesn't work because X, Y, and Z.”

Okay, maybe you should address that concern directly in your ad. Or maybe that should be the whole angle. Like, “Okay, here is the reason why these products don't work and here's why this product is different.”

And so, yeah, it's pretty much, initially, mostly just competitive intelligence and utilizing what's already in the market, so you don't reinvent the wheel. You don't become a pioneer with arrows in your back. And second, it's utilizing the intelligence that comes in. And also using post-purchase surveys. We are utilizing those extensively.

Once for every customer that buys from us, after they buy, there's a survey we ask them questions, like, “What almost stops you from buying today?” We’re asking them, for instance, “What other brands, what other products do you buy? And why do you like those products?”

And so we are asking these kinds of questions so that we gather intelligence, whether our messaging is on point, maybe we're not mentioning certain things that we should, or on the other hand, maybe we're talking too much about the product where we shouldn't. And so that helps us adjust and achieve that product market fit.

Jaryd Krause:

I love it. I was also going to mention the survey after purchasing the products. And you can offer 15% off your next order, 10%, 15%, 20% off your next order or whatever it is. And because they've already bought it from you, they're going to use it anyway. You're going to just give them a bit of a reward for spending their time on a survey.

I wanted to ask about the funnel process. So they're going to go through and see the brand, and they're going to see ads eventually before they get to the funnel process. How many times do people need to see, hear, or know about your brand before they have enough trust to get to that point where they start clicking on the website and then go through the funnel?

I know that that has changed over the years as I have learned about ads and ad marketing. But is there an average metric or is there some sort of psychology that happens within people's own thought process when they're thinking about buying a product and what are those stages?

Alex Fedotoff:

Yeah, very good question. So, I mean, the way I try to think about it is in segments. So, for example, there will always be a segment of people who are emotional purchasers; they see the product, they like the product, and they buy the product. So there will be segments of those.

There will also be a segment of people who may need to see it twice. So they see it from another source, maybe another ad. And then, when they see your retargeting ad with a discount, they come and buy.

But there also will be—kind of as we go through that cycle, the majority of people, if you think about the competitive environment in which we're in for almost any niche, have seen other products in your niche, most likely.

They have considered other products in your niche, most likely. They have purchased other products in your niche, most likely. So now you're in that position where you literally have to convince them that this is something that people need, and this is different.

And so, in terms of specific numbers, I kind of have this estimate in my head. It's between 10 and 20 times that people have to see it. That's why, for instance, these whitelisted ads and running ads from different pages are one of the hacks to kind of navigate that.

Because you can achieve that pretty much with just one advertising channel, which is, let's say, Facebook ads. And so you can just kind of have this many different impressions from so many different pages, from so many different personalities, that it could be enough for you to get those purchases and to scale your ads.

But I mean, if thinking even about the bigger picture, then the ideal case scenario and the brands that are growing the fastest usually have some kind of top-of-the-funnel channel. So in many cases right now, TikTok, because of the organic reach that it gives, can serve as that very good top-of-the-funnel channel. Because people see the brand for the first time, and they see the brand from dozens of different creators. So now there's a natural, “Okay, what is this brand?”

Now people go to Google. Now that people find the brand, they land on your website. Now maybe they will not buy; maybe they will put their email or their phone number, so they get on the SMS list. But now they'll be hit with your retargeting ads on Facebook.

And now they’re still receiving your emails and now they're still receiving your ads. They're still seeing your ads because you're retargeting them. And then, let's say, one day you have a good offer, 20% off, Christmas Sale, Black Friday Sale, Mother's Day Sale, Father’s Day Sale, and they decide to pull the trigger and buy.

So I'm thinking about that as more like, okay, you need to kind of dial in one process, but then how do you plant as many seeds as possible with all of these—either with external channels or at least dialing in one channel, which is, let's say, Facebook, and at least getting that wide list of strategy dialed in.

Jaryd Krause:

I love it. I absolutely love it. You're building a bit of an ecosystem where people just end up seeing you everywhere, that it's like being tracked in a way that they come to your website, a bit of a pixel, they come back to Facebook, and then you've got a tag for Google, you've got a tag for Facebook, you might have one for LinkedIn and Twitter and all that sort of stuff. And they just feel like the universe is sending them signs that're like, “Hey, this product just keeps showing up,” which builds so much more trust.

At the same time, I like that you've explained that some people might just have an impulse or emotional buy. And there's also those people who say, “Oh, I follow this influencer and I bought two things that she's recommended, and she's come out with this thing, and I need something for my eyes,” or whatever it is at that time frame.

There's so much trust in that influencer. So they might just see it one time and just buy it because that influencer has that much trust, which, I guess, for people listening, if they find the influencers that have the audience that is closest to what their avatars are, they're the influencers that are probably going to get the best results for you. And you're going to be able to pay them big bucks and they'll make you big bucks as well.

Now you mentioned email. People might come to your website, target them in pixels, and all that sort of stuff, but the email thing is fascinating to me. What are e-commerce brands doing these days that are working quite well to get people onto their email list other than get a discount? Are there other cool things that can be done? Let's just give you a 10% discount and get you on the email list. What are some of the genius ways that are working quite well now?

Alex Fedotoff:

For sure. So overall, email, I'm thinking about all of this as a way to communicate with your customers. Not just like, “Hey, buy, buy, buy, buy this product.” But also to communicate and explain what your brand is about and why you're in business.

I mean, why does the world need another one, whether it's a fashion brand, a beauty brand, or a house brand? And so in email, one of the things that we have on the website is a pop-up. So it's like, “Hey, get a 10% off, 20% off, or get some free eBook” on a specific topic of interest, like how to improve your skin and how to improve your hair. And so once people request it, we have their email.

And so we sell this educational welcome email series. We tell the story of the brand. We explain why the brand was started. We talk about our ingredients and our process for making our products. We talk about how our products are different. We plug in some testimonials from customers and their experiences. When we have video testimonials, we also plug those in.

And so pretty much, it's kind of like, how do we build trust with a person? How do we build trust? How do we give them information? Because obviously we want to get that transaction, a one-time transaction, but we also want to create a bonding experience with a customer that says, “All right, I really like this brand, and it seems to be trustworthy, so maybe I'll give them a shot.”

But we don't want them just to give us a shot. We want to deliver very well on that first product, on the first transaction, and then continuously sell them other products if they like the experience.

And so for us, email is kind of that communication channel. So, for example, we always share, like, okay, this customer sent us this testimonial about the products and the results that they have been achieving with our product.

And we do before and after because they send us before and after images. Or we do some kind of educational, okay, how to improve your skin naturally without using any of the buttocks or any of the chemical procedures. So we’re kind of educating; we're building that trust continuously.

And among those cycles, we always have some promotional things as well. Like Black Friday, it's a whole kind of buildup that goes toward that. We have a specific deadline for when the sale begins and when it ends so that people can take advantage of the offer. Christmas, we have as well.

So on some of these big occasions, you definitely want to have something that really pushes the sales and really drives the revenue. But at other times, you want to keep it balanced. When you're telling more about your brand and about the products, you're educating them on different things that they may not be aware of.

For example, we sell gadgets like beauty gadgets, and one of the technologies that we use is radio frequency technology. And that is something that has been used for a long time in very expensive clinics, but it's not something that's very accessible to normal people. And so we pretty much brought the device to the market.

We’re kind of explaining the technology behind it, why it works, why it's being used in those expensive salons, and how we can save time, money, and effort by using this device at home instead of going to all of those salons and spending a lot more. So yeah, those kinds of elements we integrate into our email, and it is pretty much a kind of back and forward communication with our customers.

Jaryd Krause:

Yeah, I like that. That's awesome. Thank you for sharing. I really believe that the best approach to take with an email list, especially for any business, especially for e-commerce, is to think of those people on your list as your friends. And would you—just every single week or every single month—just do a hardcore marketing and sell them your product?

I don't ever sell any of my friends any of my products. If they ask me about it, then I'll share it with them. But just out of association, if they're curious, they can kind of learn more. And the same with the email list.

You share some things that you've learned about your product, your process and your story, and if they're curious, then they can go away and learn more. You're just building that relationship and trust. And I think that's a really good way to think about it.

In terms of getting people on the email list, are there ways that e-commerce brands are doing creative things that can get them on the email list as an opt-in? For example, for this brand that's a skincare brand, “What complexion skin are you and what oils are best or worst for your skin? Take the quiz,” sort of thing. Are there other ways that you can use as opt-ins to get people on the list?

Alex Fedotoff:

Yeah, quizzes are great, as you mentioned. Quizzes are amazing. We currently don't have quizzes, but what we've done is we've done giveaways, where, let's say, on Instagram, we do giveaways. And if people comment on a specific keyword, then they're pretty much entered in this sequence where we're asking them for their email address and pretty much they participate.

They get on a special email list and one of the participants on that list wins, for example, an annual supply of our product or any other kind of related gift. And so that helps to bring about this quick burst in email growth. So if you want to grow your email list, that can work very well and that can help you build that momentum faster.

And another way that we are doing it is that sometimes, with some products, we have compatible digital products. And so it's kind of a mix between information marketing and the beauty kind of e-commerce, where we are asking them for their opt-in. They’re opting in. And pretty much what we are selling is a bundle between digital products and physical products.

For example, there are 35 foods that make your skin look worse. And then another could be a mini of five routines to take five years off your skin in 35 days and stuff like that. And then package it together with a physical product that will actually help them achieve their goal. So yeah, these are the ones that we have fused.

Jaryd Krause:

I love that. That's a really good way to increase the average order value. Like you said in the funnel, you're going to get people to the order page and you're going to have upsells and downsells and add on for no profit, so there's no real cost of goods compared to an e-commerce product. You don't have a cost of goods there.

You've just got a one-time product that is going to get a decent profit margin, which, if you think about it, means that for people that are running ads starting out, maybe they're not profiting from the product, but they are from that digital product. The physical product they may not be profiting from, but the digital product gets some profit so they can continue scaling ads.

Alex Fedotoff:

Yeah, definitely. I think this is one of the most underused opportunities, kind of taking some of these things—information marketing and how digital products are being sold—and combining those ideas with e-commerce. Because everyone is just like, you come to the website, here's the product, buy the product, and it is a very standard transaction.

Whereas if you start building on value and also, okay, you're getting this product, but also you're getting this and you're also getting this and you're getting this and you're getting this, and it's kind of the whole system to actually apply that product and get results instead of just one little piece. So the perceived value of the system will be greater. And subsequently, the conversion rates, the AOV margin structure, and everything else that you mentioned will also be better.

Jaryd Krause:

Yeah. So much more valuable. And that's what builds a good business. The value. The more value we create and give, the more money we're going to make and the more people we can help. So, Alex, that's been such a good conversation to have you come on.

Thank you so much for sharing some of these e-commerce scaling secrets with us. I really appreciate it. Where can people find out more about what you guys are up to?

Alex Fedotoff:

Thank you, Jaryd. Thank you so much for inviting me. And yeah, you can connect with me on Instagram. I'm pretty active there. It's @alexfedotofff, with three Fs at the end. So @alexfedotofff, and yeah, three Fs at the end. I think this will probably be the best place to find me.

Jaryd Krause:

Awesome. I'll share that link in the show notes. Everybody who is listening, thank you for listening. If you know somebody with an e-commerce business, please do them a massive favor and share this podcast episode with them.

Alex and I went through some insanely valuable things that can help people scale their e-commerce brands with not even just paid ads, just adding things on without having to spend more on ads. So give the gift of giving, share this pod, and I'll speak to you guys on the next one. Hey, YouTube watchers, if you thought that video was good, you should check out this video here on the 2 Best Types of Websites Beginners Should Buy. Or check out my playlist on How I Made My First $100k Buying Websites and how to do due diligence. Check it out. It's an awesome playlist. You'll enjoy it.