Learn how Andrew Youderian built a successful eCommerce business and a thriving online community for 7-Figure+ store owners.
In Episode 67 of the Bean Ninjas Podcast, Partner Wayne Richard talks to Andrew Youderian about what it takes to build successful 7-Figure eCommerce business.
Episode Highlights
Learn how to build a successful eCommerce business from the founder @ecommercefuel. #ecommerce #business #success Click To Tweet01:00 – Andrew Youderian’s background and experience in ecommerce
03:52 – The process and tools critical for maintaining a successful ecommerce business
04:42 – Building a strong online community
07:48 – Andrew’s annual State of the Merchant Report and the common struggles that eCommerce merchants are facing
14:29 – The tips and tools Andrew utilizes to manage his time across multiple commitments
17:13 – How Andrew stays on top of his finances and sustains his financial freedom.
Learn the foundations of financial literacy and using Xero with Meryl.
Transcription
Announcer Welcome to the Bean Ninjas Podcast, where you get an all access pass to see what happens behind the closed doors of a fast growing global bookkeeping and financial reporting business.
Wayne Richard:
Welcome everyone to the Bean Ninjas Podcast. I’m Wayne Richard and I’ve been given the opportunity to be your host today.
On today’s episode, we have Andrew Youderian of ecommercefuel.com. Andrew is a family man, podcaster, blogger and community builder, a former investment banker turned entrepreneur.
Andrew has bootstrapped and sold several eCommerce stores which have collectively generated over seven million in sales. Welcome to the show Andrew, how are you doing today and where are you calling in from?
Andrew Youderian:
I’m good, thanks for the invite, Wayne. Good to be here. And I’m calling from Bozeman, Montana.
The process and tools critical for maintaining a successful ecommerce business
Wayne Richard:
Awesome. So Andrew, you’ve personally been successful building and selling several seven figure eCommerce stores and have built a community, eCommerce Fuel, around pulling together thousands of seven figure store owners.
Have you seen a playbook for success or certain similarities across your community members regarding the processes or tools critical to building a seven figure eCommerce business?
Andrew Youderian:
Yeah, I think the biggest framework or commonality among them is just the insane amount of hard work and grit. I know that’s kind of a cop out answer, but I think it’s evolved over the years.
When I started, you could kind of hack distribution you could get on if you were good at SEO and you could find good distributors, you could get on and make a business work. And that’s changed a ton today.
So if you look at today, I think it’s hard to distill what the playbook looks like. But I think as much as I could in 2019 the playbook looks like, especially if you want to do this long term, is having some kind of proprietary product that you’re an expert in or an interesting product that you can sell with some kind of a either marketing advantage or product advantage or both.
And being willing to stick with it for a two to three year horizon.
People who do that, who come in with that type of product, that kind of mentality and timeframe I think do really well. What marketing works best just kind of varies a lot by business to business, but those are the things on the eCommerce front I think that help.
I think another thing in terms of businesses I see that do well really again over a longer time horizon are ones that even if they start on Amazon, are pretty cognizant of the fact that you’re pretty limited on Amazon. You can grow more quickly that way, but in terms of the reach, in terms of omitting your customers, in terms of building a business, you really own all the marketing and the customer.
It’s hard to do that with Amazon and so at a minimum, investing some of those profits back into building your own brand on your own site versus just being on Amazon I think is is something that I see a lot of companies that do well over a multi year horizon approach.
Wayne Richard:
Awesome. Are there any (businesses) that you see that yield higher multiples when they sell? Are stores that are built on a single product or multiple proprietary products yielding higher returns?
Andrew Youderian:
Definitely, yeah. I mean anytime somebody’s looking at a business to buy, they’re going to look at how defensible is the product. Is it unique? Are you just reselling products versus do you own the supply chain and the product itself?
We also look at sales distribution from Amazon versus your own store. And I’d say if your product’s proprietary or at least you’re going to get a higher multiple, if you’re selling more on your own site versus Amazon, you’re going to get a higher multiple.
So yeah, I think definitely people look at that. And stores that fit those criteria definitely go for more.
Wayne Richard:
Sure. You mentioned earlier the hustle that’s required to build successful seven figure eCommerce stores. I’m just curious, what is the nature of the hustle? Where does the long hours come into play?
Andrew Youderian:
It depends on the business and what stage you’re in. But I think early on it’s just being willing to do a lot of stuff.
Building momentum in anything is really hard, like that’s the hardest part of any business is getting that initial traction.
And so oftentimes it takes a lot of hard work, a lot of just figuring out what you need to do, trying a lot of things. And when you find something that’s working, sticking with it for enough time, even if it doesn’t feel like it’s working to let it gain traction.
I think it totally depends on the business. Someone said a quote once that I thought was really true is if you don’t have a hard part to your business, you don’t have a business because someone’s just going to come and rip it off. Right?
So figuring out what the hard part is, mastering it, being able to work through it and get to the other side I think is unique to any business that sticks around for a while.
Building a strong online community
Wayne Richard:
Perfect. Andrew, one thing you’ve had traction around is building an amazing online community with eCommerce Fuel. What are your top three community building lessons?
Andrew Youderian:
That’s a great question.
Start a community around the thing you’ve mastered
I think the first one is: start a community in something that you know you’re really experienced with. I think in some, like when I started my first eCommerce business, it was very much a mercenary approach to “Hey, where’s a good market? How can I get in on it?”
But building a community is so much about connecting with people over shared interests that I think it’s really difficult to fake. And if you try to approach community building completely opportunistically, you’re going to really have a hard time.
You know, if you’re building a community about veterans and our service men or women, you better be a veteran, right? Like it’s going to be hard to be able to be an effective leader and not do that.
So that’d be the first one.
Take on the role of a catalyst for the community
I think the second one is be willing to understand that you are going to be the driver of that community’s growth and be the catalyst for it for probably at least a 12 to 18 month period. You need to be the person that builds the connections, that builds the rapport with people, that invites them into a community, that introduces them to each other, that starts discussions, that pulls people in, that recruits other members.
Like if you’re not willing to do that for 12 to 18 months minimum before you bring on someone else to kind of help you, you’re going to have a really hard time. Because it just takes a lot of tremendous amount of hustle.
Understand the needs of the members
And then I think the third one is thinking about if you run any kind of community, you need to have an expertise in something you focus on. But also understanding that so much of community building is about understanding psychology.
And understanding that at the end of the day, like most people want to have a place where they feel valued, where they feel respected, where they feel like they can contribute, where they’re seen. And good community managers not only focus on quality contributions, but they focus on making people feel valued and appreciated.
If you do that well, it’s amazing what your members will give back to each other, give back to your community. And if you don’t understand that, I think you’re at a real disadvantage at building something that works.
So those would be my top three.
Wayne Richard:
So what are some of the ways you value and show appreciation to your community members?
Andrew Youderian:
It kind of runs the gamut. I mean we have a super easy basic level.
We’ve got badges for different milestones that people receive. We have a member of the week profile where we profile somebody.
I think more valuable is when myself or my community managers, we just notice somebody who is doing an incredible job and we say thank you. We reach out to them with a private message and thank them for it.
We thank them in our weekly newsletters that go out. We have a running list of our top 10 contributors every week that goes out with our newsletter.
With some of our events we give priority to some of our top contributors. So we do an annual big conference every year for about 200-ish members in our community. And we prioritize giving tickets to our members who are most engaged as a way to say thank you.
We have experts programs in different roles within the community where people can lead and we offer those to people that contribute the most. And kind of let people know that they’re an expert in this area or they’re a leader or a moderator and give them some certain perks and sort of different things in the community.
There’s a lot of different ways, even presents sometimes, you know, just sending little gifts or handwritten notes. There’s a lot of ways you can do it.
And those are some of the ways that we do it.
Andrew’s annual State of the Merchant Report and the common struggles that eCommerce merchants are facing
Wayne Richard:
And as a part of your community you recently released your third annual State of the Merchant report. Can you share with our listeners a little bit about this report and how you gathered the data?
Andrew Youderian:
Yes, so I go out every year, we put together a, it’s a huge survey, it’s like 50 questions. And so to bribe people to get through it, we give away a plane ticket anywhere in the US or anywhere in the world rather.
So this year we had over 400 respondents with an average revenue of just under $3 million for store owners. And so you know, we’ve gathered data on trends for growth revenues, channel sales, paid traffic, all sorts of macro level trends, Amazon trends, popular software, conversion rates, whatever. You name it, there’s a good chance it’s in there.
And so we release it every year and a big write up and that’s how we get all the data. And we’ve been doing it for about three years now.
Wayne Richard:
Awesome. What were some of the most notable surprises you’ve seen over the three years?
Andrew Youderian:
This year looking at some of the trends. I’ll hit some of the big ones.
One is that the drop shipping model is just getting killed. Half of drop shippers disappeared from last year to this year. So they decreased by over 50% and the number of manufacturing companies went up by a third.
A lot of that was that channel mix or that business bond mix was shifting from drop shipping to manufacturing for a lot of the reasons I mentioned the just you know having your own product, your own supply chain or something unique and defensible is increasingly important. That was a big one.
If you look at the trends with Amazon, Amazon over the last couple of years has really been growing quickly in terms of the percentage of sales that merchants attribute to Amazon. How much of the sales they generate on Amazon versus their own stores. The number of merchants selling on Amazon just in general.
And even the growth of Amazon stores that’s being compared to people that aren’t selling on Amazon. And this last year in 2019 we saw what I call like a plateauing of Amazon and not that Amazon isn’t still a huge force, it’s a massive force. It’s kind of the driving force I would say that’s shaping eCommerce.
But the number of stores, at least in this demographic, that are running to Amazon, that are adopting Amazon, has really plateaued.
The group sales, sales that came from Amazon, really more or less plateaued and was flat year over year.
The number of merchants who were selling on Amazon didn’t shrink but more or less barely inched forward. Less than a percent increase there.
And if you look at actually the growth of stores for the first year ever stores that sold on Amazon grew at a slower rate than those that didn’t. And so interesting trend.
We’ve seen a lot more talk this year about Amazon being the ultimate frenemy and some of the challenges involved there. And still a major player, a lot of people sell on the platform, but I think the number of people who are really flocking to the platform has plateaued.
Wayne Richard:
Could you share with us what are some of the other platforms that eCommerce sellers have an opportunity to sell on?
Andrew Youderian:
You know when I look at the people that join our community, I’d say probably 90, 95% of sales from people come from one of two places, either Amazon or their own store. And there’s definitely other, you know, there’s some other platforms out there like Etsy and eBay and some channels like you jet.com or walmart.com things like that.
But I’d say those two, your own website and Amazon, make up the vast majority of where people are selling today.
Wayne Richard:
Are there certain tools or software services that sellers that are operating on their own platform are more prone to be using?
Andrew Youderian:
Yeah, I mean we look at, if you look at the popular software, that’s another part of the report that we do, and if you want to check out this report, I’ll send you the link Wayne and people can link up to it. Or you can go to ecommercefuel.com/ I think it’s 2019-report. It’ll have all these stats there.
But you look at the shopping cart, if you’re selling on your own platform, you’re going to have to have a shopping cart. Shopify is like far and away the most popular.
They’re going to have an email marketing tool to be able to connect with customers on email. Klaviyo‘s the most popular there.
Help desk, Help Scout‘s our most popular one there. Some kind of live chat tool, Zopim, I think that’s how you pronounce that, is most popular there, owned by Zendesk.
And then the bigger you get, sometimes you’ll have what’s called like an ERP or an order management tool that helps you with inventory management, routing orders and stuff. And that tends to get a little more only adopted when you kind of get up in that kind of mid seven figures, lower to mid seven figures.
But yeah, those are kind of some of the tools for infrastructure a lot of store owners are using.
Wayne Richard:
Awesome. So you also post some common struggles that eCommerce merchants are facing. Can you share with us maybe the top three?
Andrew Youderian:
It depends on, for common struggles, time management’s huge. That’s the biggest one they reported.
Sales tax is number two. Sales tax has just been a nightmare this year.
It might be interesting to hear if you guys deal with this a lot. I’m guessing you do because just between some of the rules with FBA inventory and with the big Supreme Court ruling case, South Dakota vs Wayfair that came up this last year.
We can dive into the nitty gritty if you want, but it’s just being compliant on the sales tax front. For people selling products online, it’s getting significantly more difficult. That was number two.
Supply chain was number three, but I would probably say even more so than that, the close number four, Amazon competition. Seeing Amazon getting much more competitive both from other Amazon sellers gunning for people’s products and Amazon itself.
Amazon is pretty well known for private labeling their own products.
You think about Amazon and imagine if you were an eCommerce seller and one of your top competitors came in and just said, “Hey, I’d love to take a look at your books. I’d love to see what your top products are. Would you let me see all of your analytics and sales reports data? Is that cool?” Like no one would say, “Absolutely. Here you go.”
But when you sell on Amazon, like they have access to all of that, you’re effectively doing market research for them. And it’s pretty, you know, not uncommon for them to say, “Hey, this looks like a pretty good product, selling well, not that hard to make or if it is hard to make, you know, we see the profit potential justifies it. Let’s make our own little version in house.”
So, and that’s, you know, Amazon’s competing with merchants more and more.
Wayne Richard:
That’s interesting. Yeah. I can imagine they have all kinds of reports around the demand and the limited supply that might be available to some of these products where it would make sense for them just to jump in if they have the ability to manufacture and meet that demand.
Andrew Youderian:
They see everything. And even increasingly, I’m not 100% sure about this, but I’ve heard that in some cases I think maybe even if you sell like kind a first party to Amazon Vendor Central where you’re selling wholesale to Amazon, more or less, they’re requiring invoices with pricing so they can even see potentially what you’re paying your factories.
And so they can run the economic units, you know the economic calculations there as well. So it’s kind of crazy.
I mean, again, another one of the reasons why I think you’re seeing that trend of store owners increasingly not flocking to Amazon, at least the ones that aren’t selling out there on the platform already.
The 2019 State of the Merchant: My in-depth report on key eCommerce stats and trends with data from 400+ stores averaging $3 million in revenue. Sobering trends for Amazon, drop shippers, future ad costs and more: https://t.co/4KZ3oPL8Od pic.twitter.com/KHhWYipq54
— Andrew Youderian (@youderian) May 20, 2019
The tips and tools Andrew utilizes to manage his time across multiple commitments
Wayne Richard:
So you mentioned one of the challenges for the members of your community was time management. And I’ve shared you juggle many roles as a community leader, a podcaster, a blogger.
What tips or tools do you utilize to manage your own time across these multiple commitments?
Andrew Youderian:
Yeah, that’s a good question. Could probably do a whole episode on this. I would say when I think about what I’m trying to do, I’m just going to rattle off a ton.
I try to really prioritize my day well. Usually when I come in I’ve got a list of four or five things I want to focus on.
For me the morning is my most productive time and so I try to reserve that for the hardest things. The things that take a lot of brain power.
Because come about like three o’clock, I don’t know about you Wayne, you’re probably better than I am, I’m pretty worthless after three and I can respond to email and do some low level stuff, but my cognitive abilities quickly go downhill after 3:30.
Wayne Richard:
Yeah, it’s a bit interesting for me because typically my team, will come online around three. We work with a geographically dispersed team across six countries and many of our team members are in Australia.
So 3:00 PM tends to be my core meeting time, which does allow for me to focus more on the creative work in the morning when I’m most fresh. And the meetings tend to be, you know, check-ins, one-on-ones, things that don’t require as much deep thought, just more presence.
Andrew Youderian:
Yeah, exactly. That’s great. Like same thing for me too.
I try to schedule most of my, I mean we’re recording this at 3:30 and it’s not by accident because hopefully not because I’m totally checked out, although maybe I am. People can tell you that when I’m not around.
But yeah, it’s just, it’s easier to have calls and things like this in the afternoon and meetings and so yeah, same thing. I do the same thing with that. I try to batch things when possible.
SOPs are a big part of what our company is built on. Really defining a lot of processes and trying to not solve problems a lot, trying to create mental frameworks.
So I find a lot of times if you have a decision that you feel like you always struggle with, a lot of times it’s usually if you have to make a decision, it’s not a brand new unique decision you’ve had to make. Maybe it’s a slight variation on something that you have to make a lot of times.
For example, someone’s like, “Hey, can we hop on the phone about something?” That’s something people get asked all the time.
And I think having a really clear written framework when you’re not in the moment and feel pressured to do something about when you say yes, when you say no, when you do something, when you don’t do something ahead of time helps a lot with decision making on the margin.
And then finally team like I’m trying to, I have historically not been as good as I should’ve been on this. But increasingly trying to invest a lot, spend, you know, 70, 80% of my time in investing in a core team that can help with things. As opposed to try and doing everything myself.
So that was kind of a shotgun long answer, but those are the things I’m trying to focus on these days.
How Andrew stays on top of his finances and sustains his financial freedom
Wayne Richard:
Absolutely. So we’re always interested in how business owners stay on top of their finances. Who have you got on your accounting team and what tips or tools have you found most helpful in managing?
Andrew Youderian:
I’ll preface this by saying I’ve heard great things about Bean Ninjas from members of our community, so, and I think I got hooked up with the people I use now before you guys. So this isn’t a knock on you guys at all, but I’m currently with Books Keep, I don’t know if you’re familiar with them, but Cindy is part of our community.
Wayne Richard:
Absolutely.
Andrew Youderian:
And been a great member there. And yeah, they do a lot of eCommerce stuff and so they are running, kind of doing accounting for the business right now.
And in terms of tools, I would recommend a couple of things. I think I have a finance background and so it’s a little more kind of in my DNA.
But if you don’t understand how a balance sheet, a cashflow statement and an income statement work together, I think spending the time to understand at a high level how those impact each other, how those work, is going to be really important. Like finance is just something that you need to know even if you’re not compiling the data and doing the bookkeeping.
And so I’d say first off, if you don’t know those, learn those and maybe even spend three or four months doing your own books so you can really get a grasp of how those all work together.
And then the second thing I’d say is spend the time in setting up a lot of rules to auto classify transactions. Maybe QuickBooks has gotten much better on this, but I remember the first time I jumped from QuickBooks desktop version to Xero.
The thing I love the most was the super dynamic auto categorization rules that you could create. And it takes a long time up front, but if you invest the first couple of months in doing it, by month three, you can just pretty much for 90% of the transactions, you know, look at it, hit okay and just fly through reconciliations that otherwise would have taken, I don’t know, you know, hours and hours and hours.
So those would be my two tips.
Wayne Richard:
Great tips. And I’ve also had many a vacation where I’m in line at Disneyland and I’m reconciling transactions on my phone because of the ease established through that time invested in setting up those bank rules upfront.
Andrew Youderian:
Yeah, it helps a ton.
Wayne Richard:
Absolutely. So last question that we like to ask our podcast guests is what does financial freedom mean to you? And on a scale of one meaning just getting started to 10 financially free, how close or far away are you from your goals?
Andrew Youderian:
Yeah, that’s a cool question. One thing that Annie my wife and I thought about the last probably year, year and a half was trying to think like what’s enough?
You know, you think about like how much is enough in life in terms of that dollar amount or that income amount. And I think it’s an interesting question to pose. And so we came up with that answer kind of are working toward that.
So to answer the first part of your question, to me financial freedom means being able to spend your time in life doing things that you think are important, valuable or enjoyable with little to no worry about the financial implications.
So that’s what I think financial freedom means. In terms of how close I am or we are collectively, I’d say seven out of 10. You know in terms of where we want to get to that number or at least what we think is enough.
And I think it’s just cool saying how much is enough because otherwise you end up chasing something your whole life and not to say you necessarily don’t work when you hit that number or sit on a beach forever. Because I think most people would, especially entrepreneurs that have the ability to build things, would go crazy.
But it does. I think it’s important to have that number in mind because if you don’t, then you know, you just work forever. You always move the goal markers.
So anyway, that’s my thoughts on that.
Wayne Richard:
Yeah. And it may not be to many a number, it might be a certain lifestyle.
What is the number of vacations you would like to have? Is there a certain time of the year where you like to spend it away from home or more committed to family. So that’s great.
So Andrew, where can people find you and are there any things that you want to share across to the community in terms of reaching out?
Andrew Youderian:
People can find me, best place is ecommercefuel.com. eCommerce Fuel is a private community for seven figure plus store owners.
So we’ve got over a thousand members there, focus on you know in the trenches, active, experienced store owners. And so if that’s you and you’d like to connect with and learn from other experienced eCommerce entrepreneurs, you can learn more about the community there.
And then you’re listening to a podcast obviously. So I’ve been doing a weekly podcast now for about five years and it’s just called the eCommerce Fuel Podcast.
Focused a lot on eCommerce but also along a lot of business topics and guests. So if that at all sounds interesting, eCommerce Fuel is the name of the podcast. You can find it wherever you get your podcast.
So those are probably the two best places to track me down.
Wayne Richard:
Excellent. And we’ll go ahead and we’ll list in our show notes, applicable links to get back to you. So thank you so much Andrew for being my first guest on the Bean Ninjas Podcast. I really enjoyed the time together and enjoyed the conversation.
Andrew Youderian:
Yeah, thanks for having me. Really appreciate it. And yeah, thanks for the time, it was fun.
Wayne Richard:
Take care.
Meryl Johnston:
Want to upgrade your financial skills and learn how to use Xero better? Applications are now open for our financial literacy for Xero users training course designed for non accountants who want to better understand and manage small business finances.
Here’s what Hayden, one of our past students, shared about his experience.
Hayden:
I guess one of the biggest challenges I’ve found with our business predominantly being eCommerce is that as soon as money comes in, it goes straight back out to invest in inventory and other expenses that are involved in having a product based business. So cash flow’s always a significant issue.
I basically realized that I wasn’t checking financial documents regularly enough so didn’t really have as good understanding of where we were financially on a regular basis. And I wasn’t keeping up to date.
Checking the bank accounts occasionally wasn’t enough really. And when you go in and check the financial statements, you really get a better understanding of where your business is positioned financially.
The course really gave us a better understanding of the different elements of the cash flow and financials and really made it to be a great course. It’s really great now to have all the tools and templates that I need to go back and have a look at.
I’ve got them saved away, which is fantastic. Can go back through and review them at any stage when we need them, which is often required as we grow.
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Want to build a strong online community? Check out these tips from Andrew Youderian, founder @ecommercefuel. #community #business #success Click To TweetContact Andrew Youderian:
References and Links Mentioned:
Did you know that 50% of drop shipping businesses disappeared from 2018 to 2019? Learn what’s hot and what’s not in e-commerce from Andrew Youderian, founder @ecommercefuel. #amazon #business Click To Tweet Want to build a strong online community? Check out these tips from Andrew Youderian, founder @ecommercefuel. #community #business #success Click To TweetHalf of drop shippers disappeared from last year to this year.
If you have a decision that you feel like you always struggle with, a lot of times… it’s not a brand new unique decision you’ve had to make.
Building momentum in anything is really hard, like that’s the hardest part of any business is getting that initial traction.
