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Turning an Amazon Side Hustle into a Multi-Million Dollar Business (Episode 136)

Josh Dittrich is an Amazon Growth Expert. Josh and his team help Amazon stores grow and sell for a maximum price when the time comes.

Josh built, grew, and sold his Amazon brand for $10 million in less than 6 years with zero investors. He also bought an eCommerce business for $750,000 and sold it for $2.5 Million in less than 2 years, took a startup from $3 million to $50 million in 7 years, helped another brand sell for $17 million and helped yet another brand to double their monthly revenue from $250,000 to $500,000.

His book “Aggregator Navigator” is the ultimate playbook for growing and selling your amazon brand successfully.

Josh is on a mission to help eCommerce entrepreneurs live a life of freedom by removing the restrictions of time and money.

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What you will learn

  • What led Josh to start selling on Amazon
  • The ways in which Amazon has transformed how consumers shop
  • The big lesson Josh learned from his father that changed everything
  • Discover a business model that can help you get your time back
  • Learn the little-known challenges of scaling a business
  • Find out how to fund your business growth more easily
  • Discover why having scalability is so important for business success
  • Plus loads more!

Transcript

Jeff Bullas

00:00:06 - 00:01:07

Hi everyone and welcome to The Jeff Bullas Show. Today I have with me, Josh Dittrich. Now, Josh is an Amazon Growth Expert. What's an amazon growth expert? We're gonna find out. There are over 60,000 Amazon sellers doing over a million dollars each in annual revenue, but many struggle to sell for the right price to sell their business. That's what we mean by that. Josh built, grew and sold his Amazon brand for $10 million less than 6 years with zero investors. He also bought an eCommerce business for $750,000 and sold it for $2.5 million in less than 2 years. And his original eCommerce experience, you helped take a startup from $3 million to $50 million in just 7 years and that was US Water Filters and you helped another brand sell for $17 million.

His book Aggregator Navigator is the ultimate playbook for growing and selling your Amazon brand successfully. Josh is on a mission to help eCommerce entrepreneurs live a life of freedom by removing the restrictions of time and money.

Welcome to the show, Josh.

Josh Dittrich

00:01:08 - 00:01:10

Hey Jeff, how you doing? Good to be here.

Jeff Bullas

00:01:10 - 00:01:45

Cool. So Josh, you got into the eCommerce business by going to working for US Water Filters and you were there for quite a few years and your role there was as we're discussing before was the growth guy. So, and also during that as you're working with them, you decided to do a side hustle and start your own eCommerce business and we'll get into that a little bit later. Well let's go back to the beginning. So what made you join an eCommerce business?

Josh Dittrich

00:01:46 - 00:02:46

This particular opportunity wasn't about the company or the role. I had been recruited while I was working at corporate Best Buy and so this particular customer of mine was selling water filters and he needed help selling water filters all over the world and he wasn't ready to hire a sales guy. So this was an earlier side hustle. So the side hustle that turned into US Water Filters was me selling for US Water Filters and then through that process helping him grow when I became full time. That was about 18 months of, you know, 1099 side hustle action until hey, this guy is gonna give me a great offer to help build this company. eCommerce sounds interesting. It's in water filtration, which is sort of a recurring, you know, subscription model where you replace the filter every six months. eCommerce was appealing and up and coming and it just made sense, but I wasn't looking for it, Jeff.

Jeff Bullas

00:02:46 - 00:03:06

Right, Okay. Yeah, well sometimes the best opportunity to come out of something that you didn't expect 90° to what you're doing. So what do you think was behind the success of growing US Water Filter to $50 million. What were some of the things that you implemented that helped them grow?

Josh Dittrich

00:03:07 - 00:04:28

Yeah, so in the course of about seven, you know, seven years in 2010, this was earlier days of eCommerce. And so that business $3 million in sales primarily everything was organic traffic, SEO, one of the only folks online. So that was one way they got started but figuring out how you start sometimes is much different than who you want to be when you grow up, right. So they stumble in the eCommerce and the success came from trying to take market share. And so what we did was not only we were the one of the first kind of direct to consumers. We built a B2B business that we used to leverage supplier relationships so we could procure your product for much less than, you know, a standard person off the street could and so you know leveraging a wholesale relationship. We were able to then go out and find a bunch of online eCommerce companies also selling filters. So we cornered the market by basically allowing ourselves to sell direct but then we created other products and brands to sell through other channels. So we were able to take this whole entire water filter industry, focus online but segmented out to go after the online space through other networks. So it made it fun.

Jeff Bullas

00:04:29 - 00:05:21

Right. Cool. So basically you are also selling water filters to businesses that then resold, is that correct? Because what you're buying was so good. Okay. And then you're also selling, direct them into the market. I actually worked as a business development guy for a company that built websites for eCommerce. And that was that particular angle, in other words, selling to the distributors as well as selling direct to the consumer, was always a challenge because so how did you manage that? Was it because you started and did both at the same time from the word go?

Josh Dittrich

00:05:22 - 00:06:24

That's a fine line. We actually created two separate entities and intentionally created a brand around B2B that was disconnected from B2C. And so we were able to better navigate it. But you're right. I mean it wasn't completely hidden. You know, this is information that was public and if we were asked, we would always share the details and the details are simple. Yeah. We have great wholesale manufacturer relationships and essentially they've allowed us to sell direct to all the online players and based on our buying power to be able to do it competitively. So, you know, you're right, it's a conflict of interest. It's not necessarily conflict of interest, but it's a channel conflict where we're going after the same customer. So a lot of, you know, a lot of careful navigation, but I'll tell you what, as we built our eCommerce direct to consumer business. We were okay with seeing the B2B side shrinking because we knew we were taking market share on a higher margin business, right as we were building out, you know, in infrastructure.

Jeff Bullas

00:06:24 - 00:06:50

Yeah. And that's why I want to ask the question because it's that channel conflict, I suppose, that's a big issue. So initially a lot of the growth came from basically optimizing keywords and phrases for, buy water filters, whatever key phrases you're using. So a lot of it's organic, right from the word go, was it?

Josh Dittrich

00:06:51 - 00:07:48

Right from the go. But when I started, it was about growing the B2B sales, but I realized how much had been ignored on the eCommerce site. So I came in as a B2B sales guy and quickly after a month said this eCommerce is really interesting. Let's get our advertising turned on, let's create a data feed and put our products out there to a bunch of different shopping engines. Let's sell on Amazon and eBay and Walmart. Let's expand internationally. Let's look at acquisitions. And so we did all of those things to actually grow the business from $3 million to $50 million. A lot of that came from an acquisition, it was a $20 million revenue business that we brought on. So our business effectively, as we were doubling each year, we hit a point. So that was organic growth. But then we acquired a group and so that gave us a whole lot more efficiency at that point, but a lot of different tactics there to grow.

Jeff Bullas

00:07:49 - 00:08:05

Yeah. In other words, you're looking for as many channels as possible to get your market in front of your products in front of people. So while you're doing this you decided, well I'm learning a lot about eCommerce, why don't I do it myself? Is that what happened?

Josh Dittrich

00:08:06 - 00:09:21

Yeah, I mean I got the NBA on how to create a brand and launched on Amazon, you know, I was paid a nice salary and bonus structure to learn and make mistakes that allowed me to take those things and use them to build a new brand. And so I was given the guts, you know, and the confidence to go figure it out and you know it was at a point where the company had around 100 employees where I was like this is just too big for me, I think it kind of makes sense to start moving into my own thing. And so I took that knowledge and it was nights and weekends, you know on the edge of my bed until I replaced my income that I put my two week notice in, so I was probably making two or three times my corporate job and that cash was just going in the bank. And so as that was growing, I was like, okay, well I guess I could probably put my notice in and so I put my notice in and it turned out to be a six month process. So the business kept working and growing and then actually by the time I did leave it would replace my income by four times. When I first thought about leaving, it had replaced my income about twice. So it's kind of fun to see that growth as I was still, you know, working in a full time job.

Jeff Bullas

00:09:22 - 00:09:30

Yeah, and that's what's great about a side hustle isn't it, is that you, it's basically almost a no risk strategy to actually start a business.

Josh Dittrich

00:09:31 - 00:09:46

I just see so many folks though in your line of work that think the side hustle means let me just have an idea and start that and then quit to go see if I can make it work and that's the wrong order of operations.

Jeff Bullas

00:09:46 - 00:10:40

Yeah, exactly. In other words, when I'm making enough money to actually leave, that's when you should decide to leave and I totally get that. I started the blog and I started getting paid for different services and getting paid for speaking influencers and I've got to a point, I think it's 2013 where I said my side hustle now I can actually make more money than the job I was in. So yeah, and that's what I loved about it. And to actually a side hustle is a low risk way. It's not no risk because it's always risk, but it's a very low risk way to actually get into being an entrepreneur. So now I'm curious about one thing. What product did you choose to sell online and why?

Josh Dittrich

00:10:41 - 00:12:41

I'm sort of like niche in the business that I worked for in the eCommerce water filter business was being able to identify very large markets that had national brands and introducing a no name brand to compete with them because it was a compatible or you know, it fit, it worked, it was apart. And so I took that model with water filters and it wasn't exactly the same. But I used that same mindset and in the States, the Keurig coffee machine, right? It's probably pretty big there as well in Australia. But the Keurig brand where you have the pods, you know, was probably the ultimate selling coffee maker. And so as all of these machines, they use water in our country and maybe it's more places around the world. The water is very hard. And so there's hardness minerals that built up in this machine. So people, they put a Target, they go to Walmart and they buy this liquid, this 14 ounce liquid of citric acid to pour it in the machine and it's $13, you know, for a 14 ounce bottle of one use. And so that model as I was going to buy some like that's crazy. $13 for one use. I bet this is just liquid. I bet we can maybe make it more concentrated in a smaller size so it costs less to ship. You know, maybe I can market it as two uses instead of one. And so that was, that was the first idea. I called up a guy that I found online, I just Googled you know a keyword that I thought of and found a manufacturer. He sent me a five gallon jug. I talked to him about whether it would work or not. I filled up 70 bottles in my garage. You got a label ordered and designed and printed and put those labels on the bottles myself. And I built a little contraption to pour the liquid into the bottles and you know, real side hustle, let's figure it out.

Jeff Bullas

00:12:42 - 00:13:08

So when did, so when you went to market, how did things go? In other words, you obviously did well enough. So you left later. But so how did you go to market, what was the name of the product or maybe just, what was your call to action? In other words, cheaper, more cost effective.

Josh Dittrich

00:13:09 - 00:14:38

Yeah. So that was, that was a good point like that's actually that model determined the brand. It helped me build that brand. Like I could do this concept. You know, and that was the recipe I learned at water filters, that you could identify markets, you could size up the market, you could identify sources of supply to find someone that could make it for you and create improvements to have the product be better quality and then market at a price that's competitive. And so the price point we came up with and we came up with was essential values. And the idea was that all the things you need, you know, the everyday items that don't bring, don't bake, excuse me, that don't break the bank, right. So that was the first model and then we said, you know, rather than just being a coffee product, we can sell anything with that same idea that we can be a quality product as a lower cost alternative to the national brand? And so, you know, in Walmart, in Target, in Best Buy and all these stores today, you see a national brand right next to a brand that's a generic brand. And so in 2016, you know, we were one of the first groups that was one of the first people that do that on that product. But that's where I learned in water filters that this whole landscape is untapped, you know, and there was so much opportunity, so it's much different now, you know, in 2016 versus 2022.

Jeff Bullas

00:14:38 - 00:14:43

So did you follow the model of B2B and B2C at the same time as well?

Josh Dittrich

00:14:44 - 00:14:49

No, this was a pure Amazon director consumer play.

Jeff Bullas

00:14:49 - 00:14:54

And you launch your platform just on Amazon initially?

Josh Dittrich

00:14:54 - 00:14:55

Mhm.

Jeff Bullas

00:14:56 - 00:15:03

So because you've learned that Amazon gave you scale and access to a global market?

Josh Dittrich

00:15:04 - 00:16:56

I mean when you look back and you start thinking about things you can do to, you know, become an entrepreneur to create income. It started for me as just a way to create income. Is this going to work? I had always dabbled, I dabbled before I went to a corporate job and so it was always like, hey can I make money, what made me want to leave and start my own thing was actually time, you know, freedom of time, I was spending 60-70 hours a week, I would drive an hour in traffic, you know, work 10 to 12 hours drive an hour back and I would do that and in the early days of building a business, you would spend 12-14 hours, in some cases overnight and travel and I wanted my time back. I had a young family and so my motivation, you know what started was, you know follow where the opportunity is, it became, how do I create unlimited earning potential but get my time back and that's why eCommerce, you know, after working there was like I know the recipe, you know, it makes sense, if it fits that model where Amazon does give me the scale as you mentioned, I can send hundreds of products there and I don't have to ship anything and they handle all the customer service, right. So that was a very simple conservative way to start up. But a lot of times people get hung up on, you know, what should I be doing? You know, for me it was like a matter of when, not a matter of if. I became an entrepreneur and did something but the struggle is always, I need to create something amazing. Well, there's so many things in the world today business models that you could tap into and start your own thing to generate income that actually truly give you opportunity to earn and make a real living. Right. So yeah.

Jeff Bullas

00:16:57 - 00:17:59

Yeah. So in other words, you took something quite simple, you didn't, you even didn't manufacture it, you packaged it though, didn't you? And then you also found out the infrastructure and distribution of Amazon means that you didn't have to recreate a big warehouse. You didn't have to work out computing platforms, you don’t have to work out logistics and a lot of people underestimate the systems and processes and investment required to do that. So, let me talk a little bit about, so today, just like with anything, algorithms determine how you discovered whether it's an algorithm for search engines, whether it's an algorithm that's within the Amazon place. What's happened with algorithms of Amazon over the years since 2016 that is maybe more a challenge today. I'd be interested in your observation over the last six years on how Amazon has changed.

Josh Dittrich

00:17:59 - 00:21:04

I think when you think about the evolution of Amazon, it wasn't even that long ago. I mean Amazon has, it's been a significant amount of time where people start shopping on Amazon. Like if you're gonna buy something online, many folks have gotten into the behavior of going to Amazon. So that's sort of a natural thing as you saw. And so just starting on Amazon made, you know, it's so much easier, right. They have a captive audience. A customer, it's already a prime member. So it made a lot of sense to focus on that. But in the early days, it wasn't too terrible from an algorithm standpoint, right. You didn't have hundreds and hundreds of competing items because the catalog hasn't been built out. You know, every single year more sellers join and create thousands of more products. So, you know, now you have more sophisticated algorithms that take into account different things from each brand, different sellers. And so the very, very beginning was simple as does your product have a review, right? What is the rating of the review and what is the price? And then you could sell anything to anybody. Over time, you've had to then you could have a great product, but have your product get buried in the search results and never be discovered. So, the evolution became sponsored products and advertising. So what's cool is that all of this is generating lots of information and data. And so Amazon's algorithm was in the beginning of sales and conversion rates, but now they continue to look at alright, who's just playing on the platform and using all of our tools and taking advantage of everything that Amazon has, which is, you know, 20-30 different tools that they've created. First, start there, but beyond that now, they're looking at outside indications, right. Who's driving traffic from other platforms and driving traffic from your own website or from social media or from affiliates. And so their algorithms are saying, okay, if I'm taking a look at where this value is and where value is being gained, Amazon can see that this seller is investing in advertising, not just on their platform, but outside of that. And really going out there to put their brand and build something inside Amazon. So they're awarding, they're awarding sellers and brands in the search results from a ranking standpoint on that traffic. And so the complicatedness before that reporting existed, before it was there, was no visibility. So you couldn't who's gonna send traffic to these channels? Unless you have visibility. So that didn't exist just a couple years ago because they didn't build a way for you to understand your ROI for doing that. So layers upon layers.

Jeff Bullas

00:21:04 - 00:21:10

Yeah, that's where the complicated has become a lot more complicated since 2016, would you say so?

Josh Dittrich

00:21:11 - 00:22:11

Yeah. And you know what's funny about that? You can move the needle by finding one thing to influence one of their algorithms. So one of their widgets, you know says, hey other people about this product with your product, right. They do that automatically with their logic and they say, okay, well we're gonna try to get more people to do that. So they'll show you those two items or three items together. Well one algorithm change in that example, that's for the benefit is there's ways to reverse engineer that, right? So now you can go after and try to invest in products that are not competing but related to start to show up alongside of their products in that algorithm. And so when, you know, machine is learning, you can learn how the machine learns to some degree and you know, conduct behavior that gets picked up on.

Jeff Bullas

00:22:11 - 00:22:51

So one of the things I have observed over the years in other discussions is that one of the big challenges on Amazon is they see someone who's succeeding with a certain product on Amazon and then the copycats start jumping in. Listen, tell us a little bit about that and challenges with that because a lot of, if you go and there's all these Amazon sellers that are very secretive about what they sell on Amazon and how they do it. So is a copycat competitors a real issue? And if they are, how did you resolve that?

Josh Dittrich

00:22:52 - 00:25:05

Yeah, it's one would say that I'm a copycater, right, and so, right, so I've created products that are alternatives to what already exists, right. I'm taking underserved markets. So it's just like anything, supply and demand. And so if I can create a better version of the mousetrap that's less expensive and has more features and benefits, the consumer wins. And so Amazon says we'll make a platform that allows Jeff and Josh and everyone else to compete and let the best man win. And so it's impossible now to do it legitimately where you can copy cat anything unless you're going to infringe on someone's trademarker, you know, patent rights. So that being aside, those copycats, those illegal copycats, there's still lots of room for what I just said, we still launched. So after we sold our first business with over 100 products and we've launched over 50 additional products in the last year now, and that's because we're seeing markets that are substantial size and they're being underserved from a competitor to sales, you know, relationship ratio, which means we could easily capture parts of that business, right. We can improve the product and the consumer wins and therefore were rewarded for that. But guess what, Jeff, if you're not anything unique, you just compete on price, right. And so that's where the copycats in products that are very very easy to source. So Alibaba exists, that's what happened in water filters. It went from $50, you know, Samsung or GE brand, to $30 aftermarket. Well now that $30 aftermarket or generic is now $9 because there's 5000 people selling the same item because there's lots of people on Alibaba making them very easily accessible. So is there room for more copycats? Well, it depends on the market and how big and how it's served today.

Jeff Bullas

00:25:06 - 00:25:15

So. Alright, so when you got to a point and did you sell that side hustle business eventually?

Josh Dittrich

00:25:15 - 00:25:38

So that business in 2016 started at zero with that scaler, that Keurig, the scaling solution. Five years later, we hit roughly 10 million in trailing 12 month sales and sold it for roughly 10 million to a company that brings brands together and operates them as one company. Those are called aggregators.

Jeff Bullas

00:25:39 - 00:26:05

Now, that's interesting. That brings up the other thing I'm curious about is that there's been a rise in Amazon aggregators, in other words, buy different Amazon online stores and aggregating that. I don't know, but I've heard something like this billions of dollars going into venture capital funds, Amazon aggregators, is that correct?

Josh Dittrich

00:26:06 - 00:27:03

Yeah, there's about 100 different groups that were formed over the last 2.5 years, about $15 billion dollars in capital deployed or at least raised and many of which are struggling. Many of which are no longer around and still plenty that are in the fight. But yeah, it's incredible. It was, you know, and what happens when there's an increased amount of demand and less supply, what happens to prices? They go up and so if you have a business that's doing $10 million in sales And you're on the larger end of Amazon sellers, more people are interested in that. And so we were able to sell in 2021 for pretty nice, you know, multiple that maybe probably I would say more than it would be today if we would have swayed it and sold it today.

Jeff Bullas

00:27:03 - 00:27:19

So this is the thing about being an entrepreneur, is that quite often the real payoff is in timing. So in other words, you sold your business at the right time. That sounds like to me.

Josh Dittrich

00:27:20 - 00:27:44

Yeah. And is it perfect timing. There's never and and it's always, you can't time it and I think you can always say, you know, as long as you're prepared to sell and that's the most important piece. If you're prepared, then you can be timely with your timing. But the best time to sell, Jeff, is when you don't need to.

Jeff Bullas

00:27:45 - 00:27:59

Now, in reading your book, the Aggregator Navigator, you said you learned a big lesson from your dad, what was that lesson? Can you remember that?

Josh Dittrich

00:27:60 - 00:29:51

Yeah, and that's sort of key for my foundation to becoming an entrepreneur. Absolutely, but also the business model I chose, and you know, if you wanna go get a job, You can go get a job, which means you're gonna show up, you're gonna get a paycheck and get some benefits and when the phone rings or when they put you on the schedule, you go to work, if you work 8-5 job, you show up every day and you do your job. And so my father owned his own business, but he bought himself a job. And so what I learned from him was when you're in a job, you can have a good life and that's fine, but if your job is your business and you can't automate it or it has limited potential for scale, you know, you end up creating a job for yourself. And so my grandfather was the opposite and he built the company and recently sold it and so he, you have to do dynamics and this is part of the book I described that I wasn't, I didn't want to be an entrepreneur. I had a father who was an entrepreneur, but he didn't have much money, but he was always home and then I had a grandfather who made lots of money, but he didn't have much time. So, I said, how am I going to do this? How am I gonna build something of value? Have a family, you know, make ends meet, be successful that way if I'm just gonna work a job. And so yeah, that's the deal. That's the lesson I learned is find a business model that can replace yourself and so you don't have to put the time in like he did, but he did have some time, you know, he punched the clock and he was home for playing baseball. So there's nothing wrong with that.

Jeff Bullas

00:29:51 - 00:30:29

Exactly. So one of the things you did mention, I remember when you were working for US Water Filters was that you were working very hard, you were commuting and so you didn't have enough time for a young family and obviously you valued that and I think as fathers and mothers, we all value that time with our kids. So I think one of the top things you mentioned for being an entrepreneur that is able to scale, in other words get other people to do your work, create processes and systems is getting your time back.

Josh Dittrich

00:30:30 - 00:30:31

Yeah.

Jeff Bullas

00:30:31 - 00:31:43

And I think, side hustles can reveal that going, okay, I no longer have to commute an hour there and an hour back. So and I think the pandemic has certainly revealed quite a few things that people went, I don't like the community, I really need to commute into the office even with doing the job as a knowledge work essentially. In other words, truck drivers and you know, handyman that still have to, you know, leave home, that's fine. But I think 40%+ of the workforce in the developed world is actually knowledge workers now, so it's fascinating, but it's interesting to hear your feedback going, I no longer have to commute an hour each way and the other lesson was scaling.

Now there's some interesting things about scaling and it comes down to systems and processes and they can be enabled by technology, can't they? What were some of the challenges you had when you started your business as a side hustle in terms of building systems and processes? What was some of the challenges there?

Josh Dittrich

00:31:44 - 00:33:45

I think the biggest one is considering how Amazon really works and it's a game of selling product. And so, at a really high level, and when you sell a product, what's the number one rule if you sell products, never run out. And if you have one product, it's not too hard, you know, to do that, but as you grow and bring on more products now you have twice as many products to look after. You have inventory to look after. Well then you have, you know when you start off you can spend 100 or a couple 100 here or a couple of 1000 here, but as you grow and now you start to run into things like you know, I need more cash, I need more space. So you know these challenges are hard, especially back in the day when these tools that exist today were not available. So big one for us was building an inventory planning or demand planning, you know, Google doc. And so this Google doc had all kinds of columns but you know it was a couple of simple reports like an export and based on a series of, you know, formulas and the lookups, you know, put together a system that anybody could work and so I would spend hours originally trying to, you know how much I ordered, I ordered this much and that well I don't have enough cash, I do, you know, this so I built a tool that could actually help project and forecast but also then bring in enough inventory to never run out, but also you know, put you in a position where you're not gonna have too much inventory but you know systems today, you can buy systems that and even Amazon system gives you some of that for free. But just being resourceful and no one built that for me, I had to solve my own problem. And it was, I don't want to have too much inventory and I don't want to have enough. Because the second most important rule is after don't run out, is don't have too much.

Jeff Bullas

00:33:46 - 00:34:41

And there's another thing you mentioned there which I've learned along the way as well is that there's a challenge if you're a growth guy or a growth person, you're essentially a salesperson and sales people like to sell. So the more you sell, the happy you are, right. There's a challenge though. If you grow too fast. How do you fund the business? In other words, I have certainly a lot more. So I have to have more stock. But now I've got to buy, especially when you're starting off, you don't have credit because you don't have a credit history. How did you manage that? You know that challenge of actually being able to fund growth by being able to grow and pay for it. How did you do that?

Josh Dittrich

00:34:42 - 00:36:52

There's you know a rule of thumb around some initial capital and the business started with some of my own money around $15,000 of my own money. And then it really, in the beginning it was hard because that's all we had, that's all we had in there. And so the POs were smaller, the sales were smaller. So the good news was even in those days, there was enough margin. If you think about this too, there's margin percentages and ROI are different things, right. So margin percentage could be high but you may not have a good cash on cash return and that's your problem when it comes to inventory. You know, you could have 20%-30% margins. But if the product has a high selling price and the inventory cost of goods are high, you are never going to have enough cash, you're not gonna be able to fund the need for that business with your own cash. So one really huge thing I did was sort of this, I wouldn't call it a hack. But it just worked out in our favor, we were able to completely fund the business bootstrapped by picking products where our margin was at least two or three times our cost of goods, right. So we could put a dollar in the machine and $4 came back, I could go buy four more, you know, four more devices. Now if I'm running a different margin percentage, you know, and I put a dollar in the machine and a dollar comes back, I can only buy one more, I need to borrow another dollar to go buy two. Right, so we did it the old fashioned way, which is just this nice slow organic growth but it's harder to do that now and you know, it's even worse because you're spending another money called advertising. So you don't ever see those dollars in the beginning, so you can launch a product in the beginning and be profitable in week one. In the world today, you know, we've had products that don't make money for six months to a year because you're still investing in trying to get it to rank.

Jeff Bullas

00:36:52 - 00:37:04

Yeah. Yeah. That's interesting. In other words, you don't want to grow too fast even though as an entrepreneur that is the holy grail is if I can double it every month. But the problem is that you're gonna run out of money to fund it.

Josh Dittrich

00:37:05 - 00:37:18

It's absolutely the case. Yeah. Plus all the other things you mentioned right, when you're trying to scale up, you know, hiring and people and you know, technology and the list goes on and on.

Jeff Bullas

00:37:18 - 00:37:41

Yeah. So did you focus a lot, you would have observed the systems and processes were really essential for the US Water Filters where you were working before you started your side hustle. So I suppose from that would have realized how important having scalability through systems and processes were to you?

Josh Dittrich

00:37:42 - 00:39:19

You know, I think it speaks volumes to many, many, many, many sellers that are on this probably station or watching this or anyone who has a product business that the scalability, it takes time. It doesn't happen overnight, Amazon gives you a lot of benefit, but every week, every month there's something new, there's different challenges and some that we're learning, but then you have all the hundreds and thousands of things you've already learned, right. So people have to play catch up. After building our two businesses and exiting, we have decided and how to build something that does just that and giving other brands and sellers the infrastructure they need and so it's really what's become now our core focus and helping, you know, a guy named Jeff, a gal, a partner, you know, Annabelle is one of them and these are these are folks that were helping and these are individuals that have started businesses that have grown businesses that are stuck, that don't know how to get out of hitting the ceiling and so, you know, it's important, anyone listening that when you find good partnerships then you can give up some of your gravy, you know, you can borrow it even or you can rent it or you can buy it and so we found ways to partner with brands now so they can rent our infrastructure because we know scale is key and that just means our building, our people, our knowledge and our technology, right. And inside of that as systems and processes.

Jeff Bullas

00:39:19 - 00:39:43

So your business model now, is that more identifying Amazon online stores that you can help in other words to grow. And then do you take a percentage in those for when you sell, you've built equity? Is that the business model now?

Josh Dittrich

00:39:44 - 00:41:31

Yeah, it's cool because we've found and maybe you've done this in the past, but when you've had to hire a professional right, you find, you interview, you put in a request for quote and you can go find all kinds of professionals in the Amazon space, but here's the problem. You have to hire lots of professionals and then you have to hire someone to manage all those professionals. So what we found out is that think of it like a general contractor, right. You're gonna get your house done, you don't want to manage all the contractors yourself, we've brought on the responsibility to say we know how the pieces fit and so as a general contractor we do the outsourcing or staff it internally, whatever makes the most sense, cost wise. And that's how we borrow the infrastructure. So our model is three prongs, it's pretty simple, we charge a base fee to cover our people time slash opportunity cost. So if we're gonna put a body on your account, there's a cost for that, but that's just to get, you know, the cover of the overhead, the second piece is we want to put our money where our mouth is, we only get paid on growth. So we want to help you grow, that's where the revenue model comes in for us, that's how we can grow, we can help you grow and we grow in doing so, but the partnership is now secured through the last most important piece, helping your brand become valuable asset that can eventually be sold. And so for that we take a 20% when we get that business to that next level, we then position it to sell and we take 20% of that. So it really allows us to act like a partner, act like an owner and help guide and really take on the right pieces so owners don't get overwhelmed and they don't get distracted.

Jeff Bullas

00:41:32 - 00:41:41

Yeah. So do you get paid as you do, you get a percentage of sales growth before you exit through a sale?

Josh Dittrich

00:41:42 - 00:42:10

Yeah, so the monthly retainer plus a revenue share is how we build monthly and that can range between 1% and 5% of the sales, it really depends on what someone needs, where they're at, you know, and some brands need more work, some brands, you know, just have different challenges that have to be solved differently. So, you know, all of these things come with very, very large trade offs between fixed resources and variable.

Jeff Bullas

00:42:10 - 00:42:19

And do you go out and try to identify opportunities or do opportunities come to you or both?

Josh Dittrich

00:42:20 - 00:42:51

I'd say both, but what's nice, you know, there's 10, you just mentioned 60,000 plus sellers doing over a million dollars were unique enough where our success has been, you know, we can look at 60 different sellers and there might be only one that's the right fit for us. And that's just because we've picked our own products and you can kind of see what, you know, you can do. So yeah, it's interesting because we're in that phase now bringing on new clients and, you know, that's biz dev so absolutely.

Jeff Bullas

00:42:52 - 00:43:06

Yeah. So what's next for you guys? Are you going to sell the business down the track you've maybe got, so you're in a position where you really don't need much more money, is that correct?

Josh Dittrich

00:43:07 - 00:43:17

Yeah, that's the hard part. What do you do when you're in that position, Jeff, what do you do? You gotta do something you love. That's the next step.

Jeff Bullas

00:43:18 - 00:43:23

Can you give us a hint of what doing something you love looks like?

Josh Dittrich

00:43:24 - 00:44:33

Yeah, creating new businesses, I guess. So after we sold the business, I wrote a book and that sort of, you know, inspired me to think about what we really have and when we sold our business, we didn't hire a broker and I went out in, so listed in 30 different buyers and ran a whole process and instead of paying, you know, someone 8% or 10% for selling for helping us sell the business. We saved that. And so we put, you know, $800,000 perhaps in our pocket by not paying a broker. And so you know on top of that we felt like we got a nice multiple, we built a great business and we said boy there's a lot to this. I bet we could help others do that. And so that was sort of the next evolution. We already had a third business that we kept, you know, where we are servicing clients. And so now it's kind of keeping that rebranding and then now putting it in position to scale it. But we'll see, I'm putting down the guess of about 6-7 years. We'll see where it's at in 6-7 years. That's kind of the rough math on it. Hopefully.

Jeff Bullas

00:44:33 - 00:44:50

Yeah, I've heard of people that have sold their businesses and really don't have to work again. I spent six months having pina coladas on the beach and they're going, this is boring. Also they've got no one else to play with a lot of the time.

Josh Dittrich

00:44:51 - 00:45:20

My wife called me a confused puppy after I sold the business. You know I was home. I was playing with the kids and she's like you're ruining my day. Like I have a schedule. Like you can't just come here and hang out like go do something, you're bored. And so it was hard, it really was and I was so used to doing, you know having my day sort of be designed for me instead. I had to design my own day.

Jeff Bullas

00:45:21 - 00:45:23

In other words you had too many options.

Josh Dittrich

00:45:23 - 00:45:39

Too many options. Yeah, you're right. Six months is about what you need, you know a few pina coladas and you know a few naps on the couch during the day, you know a few Netflix, you know at the wrong time of day, you're right.

Jeff Bullas

00:45:40 - 00:45:52

So you're still currently running your own one eCommerce Amazon business still as well as doing the aggregator value add, helping other people grow, is that correct?

Josh Dittrich

00:45:53 - 00:46:05

Yeah. So we just treat that brand as like a client, you know, we manage that like we would a client and so we just shove that into its own P and L. And manage that like you know it's a customer's P and L.

Jeff Bullas

00:46:05 - 00:46:36

Yeah. So just to wrap things up and I've just been fascinating hearing your stories and the challenges. And I'd really love some of the takeaways, will split them out into some Youtube segments, many segments. What are some top tips for anyone who wants to start and build a successful Amazon store? What are some of the top few tips you can give us?

Josh Dittrich

00:46:37 - 00:47:46

Yeah I mean starting it is the hardest part and if you're starting it absolutely test fast and you can find lots of ways to test, you can find product online, you can white label it and fake it till you make it. You can literally do that, we still continue to do that. That's that there's still an opportunity still out there. So I just encourage you. Second is if you've already started one, get your books in order because it's so much harder to go back in time than it is to do what you have to do now and sort of make a few changes, you know, in the calendar year you're in and so that means getting your books up to speed and making sure you're starting with a cruel based accounting as opposed to a cash based accounting system, that's kind of the second one and then third is you know find a mentor or a coach, you know, as you build, you can unlimited resources on the web, but making decisions in real time, you know, a lot of people get analysis paralysis. So you know, having a mentor, being a part of groups that can absolutely you know, share and help you along the way.

Jeff Bullas

00:47:46 - 00:48:24

Alright, cool. Now I have one other question that I was going to ask. In the past, growing an online business was very often organic. Alright, in other words you can rank high, whether it's rank high in Amazon or rank high on Google. Today, it's moved much more into pay to play. In other words, you've got to spend money to be discovered. How do you manage that tension between organic and paid? Is there a ratio? What's your secret sauce on that? I'd be interested in your observations.

Josh Dittrich

00:48:25 - 00:50:45

Yeah. In the beginning, launching a product, you used to be able to launch it and as I mentioned, and be profitable. So now the next level of that is spending more money on ads and advertising inside. There's still ways to rank but to keep yourself in check. Our model has always been if it's a new product, 100% of the sales come from advertising, you know, over time you want to get that split to like 30% advertising 70% organic. And if you can do that and you can run and it depends on your margins, but you would want to first target break even on your advertising, right. So if you're at 100% advertising, all of your sales are in advertising, and you have 30% margin, you can effectively spend all of your margin, your contribution margins, just your profit after your expenses, the variable expenses back to break even on the page. So doing that will get you kick started, but it's gonna drain your bank, you know, in the long term, because you need to buy inventory. That's the reality we live in, which makes starting a product harder. And so that's, that's kind of the first thing is just, you know, can you do it with the cash, it's gonna take more cash, but now you have to think about other things, how do I drive traffic? How can I be creative to drive traffic beyond just from this? Right. And so using Google ads and looking at Facebook doing affiliates and finding influencers and so we've had to learn how to do these things to have more touches and do more testing to have more traffic sources because pay to play is hard, pay to play is hard and if you can get there, the theory is, if you can get there, you can stay there, but even when you get there, it's not guaranteed to stay there. And so if you run out of stock, you can find yourself back to the original position that your, your way under served on the ranking because It's a catch 22, Amazon rewards you for having product in stock and continuing to fuel that engine so there's no disruption.

Jeff Bullas

00:50:46 - 00:51:32

So I thought that was the last question, but I actually have another question and we'll wrap it up then. What is your ideal Amazon store, in other words, does it have to be achieving? In other words, someone you are going to lean in and help. In other words, you are going to provide them resources and tech, you're going to help them sell. I mean grow the sales and then you're going to take a position in their equity when you exit. So what's your sweet spot, your ideal Amazon store revenue size that you would say is your sweet spot in terms of who your partner with to help them grow an exit.

Josh Dittrich

00:51:32 - 00:53:00

Yeah, there's really two groups, you know, one is the entrepreneur himself with that example. We just talked about those businesses are, you know, usually less than a million in sales. You know, they have sort of a good baseline, you know, and that profile to be someone also under five million in revenue, but it's really that 125 million for the owner operator that needs the help. But then you have the larger groups. So after we sold our business, our $10 million dollar brand hired us back to manage it. We have other clients that are large enterprises and so they don't have eCommerce digital marketing. They don't have warehouse management and fulfillment in a warehouse shipping, you know, model. And so large companies that are doing this from a financial impact use companies like us. So if you're a private equity group and you bought a brand, you kind of want someone who can just handle it, right? And so we're a bolt on, we're a really good bolt on for large private equity groups to say, hey, we just bought this thing here, figure it out. So, you know, it's interesting, right. Because you want to define your perfect customer, but it's never good to say, well it's from, you know, from this to this, you know, it's unlimited, but it's two buckets, that's how I say it.

Jeff Bullas

00:53:01 - 00:53:35

[inaudible] owner operator and then there's the venture capitalists that need the bolt on to help them manage and grow it because a lot of them, the venture capital funds are experts at Amazon eCommerce stores so interesting.

Josh, it's been an absolute pleasure, mate, to have a chat with you. And I've learned so much from sitting down and having a chat across the ditch because you're in the US and I'm in Sydney. It's been an absolute pleasure, mate. I should use the term buddy because that's the American version of Australian’s mate.

Josh Dittrich

00:53:36 - 00:53:37

Yeah,

Jeff Bullas

00:53:37 - 00:53:50

So thank you very much for your time and your insights and I've learned so much and I'm sure our listeners and viewers will as well. So how can they find you, Josh? What's the best way for them to get in touch with you?

Josh Dittrich

00:53:51 - 00:54:07

LinkedIn, Josh Dittrich. It’s easy. D. I. T. T. R. I C. H. You can find me there and www.brandedseller.com. There's lots of ways to get in touch with me there as well. I love being on the show with great questions. It was fun to end with you.

Jeff Bullas

00:54:08 - 00:54:33

Well it's, I've just enjoyed learning so much about the niche that you have become guru, an expert at and you're adding so much value to other people's lives and businesses, which is great to see. So wherever the next step on the journey is after 5,6,7 years time, I'm sure it won't just be pina coladas.

Josh Dittrich

00:54:34 - 00:54:37

That’s it, man. Alright. Thanks. Have a good one. Bye bye.