My New Strategy For Physical Products Brands After The Amazon Gold Rush #TheOnePercent

I'm telling you that it's going to continue to get harder to just throw up any product and hope it sells your best play to be in this long term. And the thing that will make you more valuable to an acquiring company is for you to know who that target market is and to go build that audience or partner with that audience. Because that is how you become Amazon independent. It is how you scale the company, it's how you launch funnels, it's how you get recurring crowdsourced content. You have to start with the person. It takes one free person to create change. This is the show for them. We are the creators of the free world. This is capitalism.com and we are the 1%.

Hey, ladies and germs, Ryan here. Welcome to the show. Today I'm going to be walking you through the model that we are following when it comes to building physical products brands, the ones that we're starting now and moving into the future. I still to this day get people who write in asking if they have missed the boat, if there are still opportunities. And I can tell you that I am still investing in physical products brands and starting new physical products brands. But just like with any business, the way of doing things from 2011 and 12 does not necessarily directly translate into 2018 and 19. Overall. Strategies still apply, math still applies, customers and treating them well applies more than ever. But the approach and the high level strategy of what we're going for is different. And this is a reflection, not maybe somewhat based on the marketplace, but mostly in response to my development as an entrepreneur. So in full transparency, I wanted to document this with you and share with you the direction that I'm going and our companies are going moving forward. So if we look at the landscape of where I know a lot of you come from, you know, you know, I know a lot of you who have followed me for a long time, followed my success or our community's success on Amazon.com and what we have to think about is that Amazon Today, yesterday, tomorrow, 2013 is and always was a distribution mechanism. Always. In fact, all advertising on the Internet is a distribution mechanism.

What many entrepreneurs fell into during kind of the gold rush period of Amazon.com was that you could pretty much distribute anything and there would be a marketplace for it. And part of that was because of the low competition and barrier to entry. That was white space at the time. It was opportunity at the time. It was who could develop the product and get it to market the fastest at the time. Now back in 2014, 15, the whole time I'm saying build brands, not products. Build brands, not products. And three to five products in a brand that sells to the same target market, that sells 20 to 35 sales a day at a $30 price point is a million dollar business. Math still applies, basic business principles still apply.

But if you are not looking at it as a distribution platform rather than what most people are doing, which is trying to find the niche market or trying to sell the same thing as everybody else, you will get creamed. Now, I was really heavily influenced, and by this I mean my brain. Like he went into my brain and pulled a bunch of things out of my brain and readjusted them and put them back in by the hour and a half that I had on stage at the capitalism conference in 2017 with Brian Lee. Brian Lee is the founder of the Honest Company. He's also the founder of LegalZoom. He founded ShoeDazzle, who with Kim Kardashian. And he laid out his model for building billion dollar companies. Not just physical products brands, but companies. Although three of his four companies have been physical products brands. And the way that he has built them is by starting with the audience. And that's the partnership with Kim Kardashian. It's the partnership with Jessica Alba, who did a PR tour to promote the Honest Company. And with his new venture, Art of Sport, he brought on influencers like Kobe Bryant, James Harden, Odell Beckham Jr. And they're now spokespeople using the power of their audience on social media to spread the word about this company. So he starts with the audience and then he goes and builds the products and. And then he raises the money and oversees the team to ensure that that company gets life, or as I would put it, that fire gets lit. And so what I saw when he outlined his process was a different way to achieve the same result of having products be distributed on a grand scale. And most of my audience, big on Amazon, big on Shopify, we have people who do well on Kickstarter. A lot of Internet entrepreneurs, obviously Brian goes straight to the audience, which is sometimes pr, which is sometimes the influencer, which is sometimes Amazon, which is something that actually fostered our relationship was discussions about using Amazon to grow these businesses. These are all distribution platforms. And so often entrepreneurs, specifically Internet entrepreneurs, see the distribution mechanism as the business, but it's not. It's a strategy to bring a business to customers. Business is products and customers who want that product. It's really just about customers and the journey that they are on. And your products are a way for them to express that journey. That's really what you are building as a business. It's a way for customers to connect with their journey. We often think that entrepreneurship is seeing the pie, carving out our slice and giving it to ourselves so that we can go on our journey. That ain't entrepreneurship. Entrepreneurship is bringing solutions to problems that make it easier for other people to go on their journey. That's how you build a business. That's how you get successful. That's how you get rich as a byproduct of doing that. And what was really easy in 2013 and 14 was bringing businesses to Amazon because there was such, I'm sorry, bringing products to Amazon. That's an important distinction because there was so much white space on Amazon that if you put a product there and there was little competition, you could make money. But there was very little business, very little branding being developed on Amazon, which if you did well a few years ago, you were still crushing it today. Because the secret to having lots of sales and getting lots of reviews is having great products that make other people's journey easier. That's the secret. And there are strategies that amplify that, but we often marry the amplification, the distribution, rather than the business and the customer themselves. So, for example, a lot of the frustration that I would often feel in the community was how do I get reviews? And some strategies would be like, oh, well, we would put this sticker on there and we would send them to a QR code or we send them to a website, we send them to manychat, we'd send them here. We put a follow up sequence in place. Well, what happens when the follow up sequence strategies change? Well, there goes my honey pot. What happens when this review strategy gets slapped? So there goes my honey pot. But the thing that never changes is having really happy customers who bought a product that connected with them on their journey. And so if you think about business as playing that role and you take yourself out of the equation of how do I get mine? And you think about how do I create something for people who are on their journey, the money starts to flow. It start. It's kind of the idea of like, seek ye first, the kingdom, seek ye first, the thing that other people want and all this other stuff, the money will be added unto you. So we talk about this at length over on the Brand Builder podcast, which I host with my buddy Max. You can just look up Brand Builder podcast and that will pop up, but we go through examples of how this plays out both on Amazon and in other places. And Amazon is still a really big part of our strategy. But our strategy by no means starts there. You see, what a lot of people are doing in the physical products world is they're trying to force their products into the marketplace and then they wonder why they aren't successful. I only know this because I've done it myself, right? So if you have melatonin and you see that there's a lot of volume in melatonin and you call yourself a sleep company and, and you've gotta force your product into the marketplace and you wonder why you aren't successful is because there's no unique value to that brand and that business. You're trying to create it out of the products that you have. And you can do that to some extent if you have a very clear target market, you're communicating in a way that connects with them and then you provide solutions to the challenges that they face. But that does not make you a melatonin company.

You're not a melatonin company. You're an opportunity seeker at that point and you're trying to bully your solution to the top. You're trying to elbow your way in front of other people and saying, buy my melatonin, not somebody else's melatonin. Now, again, that can be effective as a part of a strategy to amplify a bigger business, but it is no way to be able to be successful in the short, medium or long term unless the foundation of the business exists to serve customers in a way that makes their journey easier. So, moving forward, my entire thesis around starting businesses, specifically physical products brands, is starting with the audience. Now, sometimes that means partnering with an influencer. For example, I have a skincare company. I like to call it a paleo skincare company, but it's really a natural beauty company called Foxbrim. I acquired it with my partner Clement, acquired that in 2015 and 16. And it has really struggled since the Amazon.

Changes in the last couple years. And that's been really stressful. It's been really stressful. And the reason why it's been so stressful is because it was at one point a lot of products that a lot of other people were selling that weren't represented uniquely. And we had to make a lot of changes to the product line in order to be valuable to the customer, in order to be unique in the marketplace, in order to be able to stand on its own. And it's only now that we're able to get through that very long transition of the branding and the formulations of products in order to be able to amplify them again. And the way that we amplify them is now we partner with audiences and sometimes that can mean sponsoring influencers or it can mean building funnels, or it can mean bringing on people who have audiences. Which is actually the decision that we've decided to go is we're currently courting different influencers to be part of the business and using their distribution as a way of amplifying the uniqueness of the brand. You can't do that at all if there is no uniqueness. It's why when during the kind of Amazon gold rush there was, there was so much like protectionism over. I don't talk about my brand. And I would be like, that's adorable, right? You don't talk about your brand because you're afraid that somebody is going to do exactly the same thing as you because there's no uniqueness to your brand. And I get it. Like I understand at that time you could throw up just about anything and rank and make money today and forever. If you want to have an eight figure company, there has to be uniqueness, there has to be value. And that requires you to be a good business owner. It requires you to think about things like a business, like an entrepreneur. As an entrepreneur, your job is to think about leadership of your customers and your team members and bringing in the assets that you'll need in order to grow a company. And that can mean capital, yours or someone else's. It means distribution on Amazon or elsewhere. Those are the things that you need to think about if you want to build a real company. If you don't want to build a real company, then you're always going to be in that mode of just looking for new opportunities. And that's fine. Like it's totally fine. That's why Gary V. Talks about flipping things and going through that period of being an entrepreneur, because you kind of need that in order to get the itch strong enough for you to graduate to the next level of entrepreneurship. And if that is you looking for that opportunity, looking to amplify that itch, then you should probably be in yes mode. In all opportunities in your life. You should be looking at where the next opportunity is, saying yes to them, looking to provide value and make deposits into relationship bank accounts. That's your job. But I'm speaking to those of you specifically who have been following my work or the work of others on the topic of building physical products brands and I can tell you I'm still all in on this sector. But my strategy is different. It's to start with the audience. You start with the audience and who the person is. Now that can be going to the influencer and seeing who is on their email list or who is following them on social media and saying what does this audience need now? And starting to develop that. Now if you are developing the same me too products as somebody else, you are probably going to struggle. Some will hit. There are some times that you can bring me to products to the marketplace and it's exactly what that audience needs. And you can take that firepower and connect it with something like Amazon.com and still rank. And now you've got the power of both places. But in most cases there needs to be some sort of uniqueness brought to that audience. And that requires you to take strategic risks. It requires you to think about selling propositions. It requires you to think about how we position this product as a way to be valuable to this audience. It requires you to think like a business person. Now if you don't do these things, you will always be subject to changes that happen on Amazon, to changes that happen in the marketplace, the changes that happen on Facebook, to changes that happen on any platform. But if you have uniqueness that connects with a specific audience, they will find a way to buy from you. Even if you make it really hard. You know, I think about right now, there's a lot of white space on Instagram ads. Like if you're not running Instagram ads for your products, it's a really, really big opportunity. As of right now, as I'm recording this In February of 2019, that opportunity will probably exist for another year or so and then it's going to get harder and still have lots of opportunity. It will just be harder. Just like Facebook ads changes and gets harder. Just like Amazon pay per click changes and gets harder. It means that you can't just fart and put an ad up and make money. You'll have to be more strategic. But right now there's still a lot of wide open opportunity. And as I record this, I am wearing pants that I bought on Instagram because there was some sort of a uniqueness that was communicated in the Instagram ad that was targeted directly to me. I've actually bought cereal on Instagram. I've bought several things on Instagram. Quite. It's interesting for me to see my own buying behavior switch to be more of a shopping mentality on something on Instagram because the targeting is just so darn good. Right? But there never would have been Any transaction had I not seen the uniqueness to myself, seen myself in the story and bought the product. If you cannot do that, you will always lose in any advertising platform.

So for us, my new approach to building physical products, brands starting with the audience. And usually that means bringing on an influencer as early as possible and making them part of the business. That means they can earn equity in the business. It means they can have royalties in the business. They're a part owner, they're a part decision maker. In everything that we do, there are foundational distribution. Now, in order to be an effective influencer, they have to have a well rounded base of influence. That means they need to have an email list, they need to have a social media following, they need to have people who consume their content. Just like we're bringing uniqueness to the marketplace, an influencer needs to bring uniqueness to their audience, because otherwise there could be an Instagram change and that influencer is now worthless. They're meaningless. They're their Facebook pages, remember? Oh, my goodness. Oh, I got creamed by this a few years ago when you could put up a video on a Facebook page and you got 100% organic reach and Facebook pages were being valued at millions of dollars. That's not the case anymore. No. Now you've gotta have a real audience, which means a well rounded audience. So the same thing is true for us. If we're partnering with somebody who has a lot of brand equity, it means that they might get equity in our brand too. Whereas if someone just has organic reach on Instagram, there's probably going to be less impact there. There needs to be more of the ability to influence an audience on demand. So that requires them to have different forms of distribution of their content in order to be able to get it in front of enough, again, distribution for us to find it meaningful to work with that person. So we're looking for people with email lists, we're looking for people with social media followings, people who create content that attracts the right audiences, people who are not afraid to continue to create content. And so we're currently courting a couple relationships with the beauty company, for example, with Foxbrimm, in order to partner our uniqueness with their uniqueness and bring it to our ideal customers moving forward. That's the foundation of the business, starting with the audience, whether that is an audience that we control. And in a previous episode, I outlined kind of my behind the curtain plan of capitalism.com of how I plan to create my own distribution for the brands that I'm a Part of through building an audience, through having a monthly distribution center for physical products, brands that we're a part of, by giving entrepreneurs a platform. Right. So I'm creating my own distribution.

But I also am looking to partner with other people who have that distribution for the brands that we want to build.

And the only way that you can make that valuable to the audience is if your product is good and it's unique and it's positioned in a way to connect with a specific person. One of the themes that you will hear over and over again over at the Brand Builder Podcast is, is the idea that there has to be a person behind the purchase. If you do not know who you are targeting, you are targeting no one. Many entrepreneurs make the mistake of trying to target everyone in the world, and by doing that, they target no one. Your message can't connect with anyone if you sell again, Melatonin. And the thing that you are bringing to life is to solve sleep challenges. Well, sleep challenges for who? Sleep challenges for what segment of the market, for what demographic? What are the next two to four products that that same person will purchase? If you can't answer those questions, you're toast. Now, I have been saying this in some variation for years, but it is more true than ever, and I would even say more profitable than ever to be able to follow this. If you are willing to answer those hard questions, if you are willing to match what you want to bring to the world with the right people and develop a brand and a story and a message that connects with other people that are like your ideal customer. Now, if you currently sell physical products, can you make a pivot to be able to go in the new direction, to take advantage of opportunities of working with influencers of distribution mechanisms like Instagram swipe up ads, which are the greatest advertising platform, the cheapest right now, that's where all of the opportunity is in terms of paid advertising. Yes, you can. You can. The first step is to answer the question, who's showing up as raving fans right now? Do I have customers who come back again and again and demand more and more other people who respond on social media more actively than others? What are they like? Why are they buying? What's the story that they have of where they entered into my world and bought my products?

That's your starting point. Because then you just have to distribute your product and your solutions to more people like them and position your products in a way that is a solution for them on their story. And you do that through a myriad of different advertising platforms. Then once you know who that ideal person is, you can start to look at other audiences, other influencers that speak to that person, person and go out and look at partnering with them or sponsoring them. Now, for someone like, for someone like me who's starting new brands, like, I have a nice track record with successful brands, but now we're starting new ones, the entire strategy is to identify that person first. And we do that by looking for the audience first and then building the brand around that audience. In fact, my thesis behind where I think I will find my billion dollar opportunity is by partnering with people with audiences, by continuing to speak to people with audiences, knowing that I can build the infrastructure behind people who have multi million person audiences that buy. Because if that person couldn't put up a tweet and send people to a blog post or send people to a message, then they will also send them to a product as well. It's why the Kardashians can launch any product they want if it connects with their audience. That business takes off really, really quickly. They own the distribution. So what I'm building, my approach to physical products is to be in constant pursuit of connecting with those audiences, building the audiences, connecting with the audiences, partnering with the audiences and building the brand with the message to that person, amplifying it with paid advertising, Amazon.com, other relationships, and when you do that, first, bullying your way to the top on Amazon is real simple and easy. Putting up a blog post that goes viral is real simple and easy. Now, it still requires everything that you do to be good and connect with that ideal person. But if you start with the distribution in the first place, rather than putting it on the distribution, hoping that you can extract it, you're in a position to do a lot of damage. So for you physical product sellers, I'm telling you that it's going to continue to get harder to just throw up any product and hope it sells. You might be able to pivot over into wholesaling or private labeling your product if you've already got a head start on the marketplace. You know there's more volume on Alibaba than there is on Amazon.com hint, hint. But for those of you who are already building brands, your best play to be in this long term. And the thing that will make you more valuable to an acquiring company is for you to know who that target market is and to go build that audience or partner with that audience. Because that is how you become Amazon independent. It is how you scale the company, it's how you launch funnels it's how you get recurring crowdsourced content. You have to start with the person, otherwise it's always going to be you pushing that boulder uphill, which is why you feel frustrated and stuck at the level that you're at. If you want help with this or you want to work with me directly, I sometimes do workshops at my home in Austin. I also am putting together a couple groups in 2019 that I'd be proud to put you in to help you make this pivot and be able to grow the business that is both scalable and sellable. Hey, thanks for listening to my work. Thanks for listening to my voice on the Internet. Let me know what your thought. You can find me on Instagram. You can DM me. I'm ryandaniel Moran. I'd love to hear your thoughts on this episode. Thanks for listening. Talk to you soon.