10/11/21 Leng Inque
Founded in 2017 by Colin McIntosh, Sheets & Giggles is a company that manufactures sustainable beddings from high-quality Eucalyptus wood pulp. The company has been making conscious efforts to impact the world with every sheet they make. For every tree harvested, they plant two more. To date, Sheets & Giggles have already planted 55, 677 trees!
Colin is all about passion and scalability tied together. He believes that for a business to maximize its potential impact, both have to be present. Listen in as Colin explains why that is so. Nick and Colin also talk about Amazon selling, building brand awareness, fixing issues, inventory planning, and knowing which handling and shipping method works best for your goals. Being an Amazon seller comes with a lot of challenges, (a lot!!) but there are things you can do to get the most out of the platform. Tune in and discover the secret to building an Amazon account that scales to a million dollars a month!
“Even if you have a lot of passion, you have to build a business that works, a business model that scales… You have to build something before you can continue to help others on a larger scale.” -Colin McIntosh
- 01:04 Making a One-of-a-Kind Bedding
- 05:36 From an Employee to a Founder
- 13:01 Handling and Shipping
- 21:06 Account Suspension
- 25:32 Inventory Planning
- 31:01 How to Build an Amazon Account that Scales to Millions
- 34:39 What About an Upsell Feature?
- 37:37 2 Obstacles in Amazon
03:27 “Even if you have a lot of passion, you have to build a business that works, a business model that scales… You have to build something before you can continue to help others on a larger scale.” -Colin McIntosh
05:39 “To go from an employee to a founder is more emotional than logical. People need to have a total breakdown before they build their own thing.” -Colin McIntosh
11:25 “Retail is also in transformation. Nobody knows what retail is going to look like.” -Nick Uresin
11:44 “If you build your brand awareness and you have the following, then every retailer will want to carry you anyway.” –Nick Uresin
22:43 “On a macro level, you shouldn’t become overly reliant on Amazon as your core channel.” –Colin McIntosh
25:58 “There’s no artificial intelligence that can replace an inventory planner.” –Colin McIntosh
26:28 “You have to be able to build your own algorithms, your own analytics based on what your business model is. There is no such thing as off the shelf, plug it in.” -Nick Uresin
30:16 “Retail has to be a repeatable, bankable business.” -Colin McIntosh
Meet Your Guest!
Colin McIntosh is the founder of Sheets & Giggles. He founded his company in 2017, three weeks after he got laid off from his last job. Colin wanted to build a business model that he was passionate about, was a long term viable, sustainable, and profitable business model. Although he met with various challenges and setbacks, Colin enjoys his success today with his latest endeavor as Sheets & Giggles was able to ship 100,000 units in less than three years of operation.
Connect with Sheets and Giggles:
- Website: https://sheetsgiggles.com/
- Facebook: https://www.facebook.com/SheetsGiggles/
- Twitter: https://twitter.com/SheetsGiggles
- Instagram: https://instagram.com/SheetsGiggles
- LinkedIn: https://www.linkedin.com/company/sheetsgiggles/
Nick Uresin: Welcome everyone to Amazon Legends. Today, we’re talking to Colin McIntosh. Colin is the founder and CEO of Sheets & Giggles. This is like an unbelievable story, and I’m dying to hear it from Collin because it’s all about bedding. But it’s all about making bedding out of something that you would never think of.
So with that, Colin, tell us about yourself and the company, how you came up with the idea and where it started.
Colin McIntosh: A few questions in a row. But the long and short of it is that I founded Sheets & Giggles in 2017. I found that it three weeks after getting laid off from my last startup job. And the basis of the company is that I really wanted to build a business model that I felt very passionately about, that I felt was a long term viable, sustainable, profitable business model that could scale. And so after my last company didn’t work out and I was very emotional, of course, getting laid off from a startup that I had invested a lot of in my 20’s into, a lot of my time into, an emotion into. I learned a lot of lessons from that company about market strategy, branding, pricing, consumer psychology, logistics supply chain that I used to start Sheets & Giggles. And I’m happy to dive into why bedding, why eucalyptus bed sheets instead of cotton, or polyester, or bamboo. And so far, it’s been pretty successful. And we just shipped our 100,000 unit in less than three years of operation.
Nick Uresin: Wow, congratulations. Tell me, because I heard you say two key words for me that resonate with me. One is passion. And the other is scale. Usually passion and people don’t really care about scale too much. And people who think scale, they are just mechanical people, and they don’t really look at the passion aspect. They say, what is the job for me. So tell me how you came up with that.
Colin McIntosh: You’re hitting the nail on the head. My last company was all about passion. We were trying to fight against sexual assault and violence. It was a wearable technology similar to Fitbit. But if you pressed it, it would send out an emergency alert. It was for young women, we partner with college campuses. And unfortunately, the conversion just wasn’t there. It was really hard to convince young people on a broad marketplace level to care about their safety proactively. And the company had a lot of other issues in terms of go to market strategy, channel strategy, terms of our gross margins and long term business model. And so it wasn’t really set up to succeed in hindsight from the beginning. And so I learned that as passionate as we were, and as excited as we were, and as strongly as we resonated with the mission. And for all the good that we did in the world, now the company can’t really help anyone because it doesn’t exist.
I really learned that even if you have a lot of passion, you’ve got to build a business that works a business model that scales. That’s why Sheets & Giggles for me is really the best of both worlds because I get to build a sustainable company that does a lot of good in the world. We plant a tree for every order we receive. We help with reforestation efforts. We have a sustainable product that saves on water, insecticides and microplastics, and petrochemicals. Really, really wonderful company and mission. Last year, we donated over $100,000 to charitable causes in our third year of business. And so I really love what we do. But at the same time, it’s business first. And that’s important because if the company stops operating, there’s nothing that we can do to make an impact, at least on the same scale.
Nick Uresin: I once heard this phrase that, in order to finish the race in the first position, first thing that you need to do is finish the race.
“Even if you have a lot of passion, you have to build a business that works, a business model that scales… You have to build something before you can continue to help others on a larger scale.” -Colin McIntosh
Colin McIntosh: It’s kind of like putting your own in the airplane. You put your own mask on first, before you can help other people. I look at S&G, Sheets & Giggles a vehicle to leave the world a better place. And I found it both from a brand perspective and making people happy, and providing a product that improves their sleep quality and their quality of life, as well as in the sustainability field and making an impact on climate change. Hopefully one day. But I do this partially, because as one person, you only have so many volunteering hours, you only have so many capital resources, you only have so many hours in a day. And volunteering in that time and those hours that people spend are important. But I want I felt like I could do more than just the one man twisting in the wind. So I think that you have to build something before you can continue to help others on a larger scale.
Nick Uresin: Yeah. The other thing that I’m curious about is, I heard you mentioned that you were working for the startup, and then you got laid off. So you were really an employee? Bottom line.
Colin McIntosh: Correct.
Nick Uresin: And how do you go from being an employee to be an entrepreneur and starting your own business?
“To go from an employee to a founder is more emotional than logical. People need to have a total breakdown before they build their own thing.” -Colin McIntosh
Colin McIntosh: You have to have an emotional break from reality. To go from an employee to a founder, I think, is more emotional than logical. I think that people need to have a total breakdown before they decide they’re going to do something crazy and build their own thing. Some people are just bread for it. For me, I was so upset of the way things ended and how abrupt it was. And I had three hours to wrap up three years of partnerships, and I thought it was avoidable. I really did. I think that if we had gone back in time with what we had learned, if I had been listened to slightly more, I think that we could have avoided some of the pitfalls that we ran into. And so for me, it was really about putting my money where my mouth was, and investing my life savings in something that I would control.
Nick Uresin: Yeah, yeah. So I guess one door closes, another one opens.
Colin McIntosh: Right. Yeah. And I’ve actually gone through Techstars a couple times. I’m not sure if you’re familiar. Techstars program is one of the best accelerators in the world. And I’ve been through the program a couple times with 10 wonderful other companies and entrepreneurs. And I’ve asked my cohort, why’d you start your company? Why not a charity? Why not a 503c3? Why not something that is a white business? And I always hear some variation of the same reply which is, I was sick of taking orders from someone else. And I think that that’s a common, really common thread in entrepreneurs is they’re bad employees. They make really, really bad foot soldiers. And at some point, you reach a point where you’ve gotten fired a few times, you’ve lost your healthcare. Suddenly, you’ve seen bad outcomes from preventable mistakes, and you just say, alright, fuck it. I’m gonna do it myself. I think that’s a common thread too.
Nick Uresin: Yeah. Okay, cool. So you started in 2017, and you started setting. So obviously, that has to be a channel strategy. How are you going to sell? You’re going to do wholesale, you’re going to do retail? So tell us about that. And of course, my interest is bringing it to Amazon. How did you end up deciding to sell on Amazon? And what was that process?
Colin McIntosh: So we have mostly direct to consumers as our core channel. That was very intentional. My last company, I did a lot of retail, we were in Target. We were in Brookstone. We were in some T-Mobile stores. We had closed deals with a few other people when the company had gone under. And so we had a lot of retail experience. I was flying to Minneapolis every other week, flying to Seattle a lot. And as part of that, we were also on Amazon. And I learned a lot about the Amazon channel, about Amazon Launchpad, about the different teams at Amazon, how they interact with each other, and how you can launch a product on Amazon properly. And I basically learned from that experience that launching a product at physical retail, especially a product that’s not an impulse buy price point is such a risky proposition. And so I changed my outlook on launching products. I mean, we’d launched a product of physical retail in 2016 when the entire ecommerce landscape was shifting beneath our feet, and brick and mortar was going through a crisis. I learned a lot about what I didn’t want to do, what I should have done differently.
So philosophically with Sheets & Giggles, what I’m doing is we’re building a brand that hopefully becomes, if it isn’t already a nationally recognizable brand. We’ve been on Good Morning America, we’ve been in all these different publications, we have some really cool attention from different celebrities and movie stars, and we’ve been on the view on ABC. And I really love that attention. And then eventually, my hope is that retailers who see the value of having a known brand, and exciting brand, differentiated brand on their shelf space will let me come in and build a really powerful merchandising experience. For brick and mortar retail, it doesn’t currently exist in the betting category. But until then, it’s all direct to consumers and Amazon. And that’s very intentional. And the breakdown there is about 80-20 direct to consumer versus Amazon.
Nick Uresin: So what I’m hearing is that this is really a deliberate strategy. What you wanted to do was build your awareness, only awareness for your brand. And while generating revenue, of course, you’re charging a price, that’s also smart to make a point to the retailer’s actually bring you in and give you the shelf space.
Colin McIntosh: Correct. We’ve got social proof, review proof, we’ve built an email list of over 100,000 people who love us and trust us, we have more product lines coming down the pipe. Our lifetime values are really strong. And that’s all very intentional. Because when we launched it in physical retail, you’ve got to support your retail partners with channel marketing. And you’ve got to support the sell through and sales velocity on the shelf. And when you were a start up with a couple employees, and very limited budget, and not a lot of brand awareness, and very small customer base, you can’t really help that retailer launch your product. In fact, you’re more dependent on them to launch it, then you are yourself. And so really what I’m looking forward to is at one point in the near future, we’ll partner with probably one larger retailer to really bring Sheets & Giggles nationwide. In every store, they probably have, we’ll test it out first and really dial in the merchandising and sell through, and sales velocity.
But yeah, anyone with a good pitch and a good product can sell into a retailer. But destination shopping has really become the norm with brick and mortar, and very few people are way finding nowadays. And so if you’re launching a physical retail, you really need to be a destination item instead of something that’s more discoverable.
“Retail is also in transformation. Nobody knows what retail is going to look like.” -Nick Uresin
Nick Uresin: Yeah. Well, actually, this is very smart. From the standpoint that retail is also in transformation, nobody knows what retail is going to look like.
Colin McIntosh: Especially in a post COVID world. Yeah.
“If you build your brand awareness and you have the following, then every retailer will want to carry you anyway.” –Nick Uresin
Nick Uresin: You can count on one thing for sure that e-commerce will always be here. Amazon will always be here. And most important, as a channel, that’s a smarter way to start. Plus if you build your awareness and you have the following, then really, every retailer will want to carry you anyway. They will be sitting up.
Colin McIntosh: Yeah, we’re able to show sales velocity on Amazon, we’re able to show reviews, we’re able to show return rate, we’re able to show all the important metrics. And that also allows us to dial in our business model to actually have sustainable margins at retail as well. So we’ll probably go on the channel before long. But as of right now, we’re still scaling directly to consumers, and we’re two or three axing year over year. We went from shipping our first box in Q4 2018 to hitting our first million dollar month in Q4 2020. Two years, so it’s been a quite to come up.
Nick Uresin: Cool. So you’ve been on Amazon since you started? Or did you launch recently?
Colin McIntosh: So we started the company in October 2017. We did a crowdfunding campaign in May 2018, and we launched our first, we shipped our first box in October 2018. And we launched on Amazon in March 2019. So it was about a year and a half after I founded the company, and about six months after we shipped our first box.
Nick Uresin: Okay, so did you choose FBA, FBM or mix?
Colin McIntosh: Mix. So I prefer FBA, obviously, for prime eligibility conversion rate goes up a lot with prime, and then we do have FBM as backup inventory. So whenever we’re out of FBA, especially with the logistics the way they are now, it’s nice to have FBM as a backup switch.
Nick Uresin: For people who are just starting up, or people who are experiencing challenges, what would be your recommendation? If they were to choose one or the other, would you recommend having to mix?
Colin McIntosh: Depends on their goals. So if you want to have the best margins, depends on the shipping cost that you’ve negotiated with the carriers, depends on your item, the margin that Amazon is taking as a category. Obviously, look at the margin and look at which one’s better for you from a dollars and cents perspective, and figure out which one you’re going to go with. Usually, it’s FBA. But then from a customer experience perspective, I really prefer FBM for a couple for a reasons. One is because we actually are able to better control the customer experience, start to finish. And two is that we also get the physical address for the consumer. So we’re able to follow up with a direct mailer. There’s a remarketing opportunity there as well. So I think it just depends on priorities. I think if customer experience is most important for you, I would choose FBM. Then I think that if margin and conversion was most important to you, I’d pick FBA.
Nick Uresin: Okay, I guess it’s not just one thing. So if you are planning to have some offline interaction with the customer, that FBM is more suitable?
Colin McIntosh: I think so. I think it also depends on sophistication and forecasting. So the tricky part about FBA is that you need to predict your sales and you need to be able to forecast your sales properly. So I think just starting out FBM is a heck of a lot easier if you have a 3PL or you’re fulfilling items yourself, you can do like that tomorrow on Amazon. FBA is going to be a little trickier in the sense of, you’ve got to properly forecast each specific skews sell through over a 30 or 60 day period. However much inventory you want to load up, and continually ship pallets to different fulfillment centers. So it just depends.
Nick Uresin: That is actually for our listeners. There’s one more thing here, which is a non issue for you is, if you are the only seller, you’re selling your own products. Of course, FBM, FBA doesn’t really make much difference because you are the only one in the buy box. But if you are competing with other sellers, then FBA will take priority over FBM.
Colin McIntosh: If you’re competing with other sellers, you need to have the prime badge. Yeah, absolutely. Absolutely. You can’t beat other sellers [inaudible].
Nick Uresin: Okay, cool. Tell us about some of the challenges because of Amazon. I have this phrase that I always throw around, selling on Amazon, or starting to sell on Amazon is like tail wagging the dog. Because they come with all these requirements, and you look at it and say, well, we’re not really doing much, why do I have to do it that way? Why can I just do it. And basically, they dictate how you run your business, or some of establish, some of your processes in order to sell on Amazon and you really don’t want to do. And so you end up changing your entire business operation if you really want to grow on Amazon. So tell us about some of those types of experiences.
Colin McIntosh: I think anyone will tell you that there’s endless frustration with Amazon, because it’s so large. And because they have to automate so many things, it is fairly difficult to get personalized attention for Amazon. I think Amazon launchpad does a really good job of bringing startups. And they are interesting and unique, and they have cool products. And then you get a dedicated account manager which is very useful for a little extra margin. And then the main frustration I have is the Black Box that Amazon keeps the customer in. And what I mean by that is specifically, just to give you an example of my deepest frustration.
If you get a bad review, oftentimes, it’s something as simple as, hey, I ordered white sheets, and I got green. And there’s no way for us to rectify that customer complaint because Amazon obscene amount of communication by default from the seller, and they took away the public responses on reviews. You have a very solvable, easy problem that also differentiates good brands from bad brands, and manufacturers from brands, to people who are drop shipping products versus actually companies that are built their own products would take the time to have a really great customer experience. And Amazon doesn’t even let you contact the customer, nine times out of 10, to fix the problem. And that’s really, really frustrating, especially when it’s an FBA shipment. And it’s Amazon’s fault that they get the wrong product. So that’s probably my biggest frustration, the lack of transparency and the lack of direct contact with the amazon customer. We’ve had our account shut down willy nilly without any reason multiple times. We’ve had, oh, four returns and king blue because it was too dark, and the customer was expecting light blue. And so we’re removing that ASIN entirely. There’s all these automated systems that Amazon’s put in that that are not one size fits all. And that doesn’t make a lot of sense. And so you have to constantly be vigilant and make sure that you’re optimizing and improving your page. And I think that Amazon likes that because it keeps sellers on their toes. But as a really negative consequence, it can cost you your seller rankings.
We ran inventory at the beginning of COVID where we didn’t have production capability for 75 days. For worker safety, we had to pause production at our factories, which is totally reasonable. But we ran out of inventory on Amazon. And so we lost our bestseller rankings for three or four search terms, which really reset our sales and our sales velocity at day one, which is very frustrating. Because it’s not any fault of our own. We were able to bring back our sales online after a couple months. But at that point in time, competition has already moved in, just by virtue of the fact that they had inventory available because they weren’t selling as much as we were ahead of time. It can be really frustrating when Amazon automates some of the things that are very impactful for companies. So those are my biggest frustration I think.
Nick Uresin: You mentioned getting shut down, so my next question was going to be, tell us about some of the crisis that you experienced? So I guess losing your account, not even temporarily, is the biggest crisis when you’re on Amazon,
Colin McIntosh: Yeah. I mean, they’ll threaten you with account deactivation a lot if you miss some shipping deadlines. During COVID, we transitioned almost everything over to FBM, and we missed some deadlines. Initially, we had to get better. 3PL had to work with Amazon to get better at their integration, and they threatened to delete your account. It can be really scary when you wake up to an email saying, hey, you’re about to lose a six figure monthly channel if you don’t fix this problem immediately. And it can be really frustrating. But that’s working with the behemoths that is Amazon.
Nick Uresin: When you get hit with something like that, and it’s something you’ve never seen before, how do you go about figuring out? Because they don’t tell you what the problem is.
Colin McIntosh: Not always. It’s not always clear. Sometimes, it’s vague. You immediately got to put in a support case. There’s specific email, and you can also email for escalations directly from the CEO that has to come from me. And we also have an Amazon agency that we use, that I’ve used for a couple years that manages our accounts there. So I have people who are dedicated to the channel. And then we also have an account manager at Amazon that’s been assigned to us because we’re a high growth company on Amazon Launchpad. And then also, if I can’t figure something out, I have a network of consumer companies that I’m in the same investment portfolios of, that I’ll go on slack. And I’ll say, hey, I got this problem. Can somebody please help me?
Nick Uresin: Yeah. Okay. So you really need to have a network of resources around?
“On a macro level, you shouldn’t become overly reliant on Amazon as your core channel.” –Colin McIntosh
Colin McIntosh: I know people who wing it. But I think the other thing is on a macro level. You shouldn’t become overly reliant on Amazon as your core channel. I know there’s a lot of sellers, and a lot of people who do 100% of their volume through Amazon. I think that’s really risky. I think that you need to have a direct presence as well. You need to have a website that you own and that you control from day one. 70 to 90% of our sales have come from our website, and that’s given me a lot of peace of mind. Because even if Amazon goes, if the day before Black Friday, they shut our account down. I mean, yeah, it would be a disaster, but it wouldn’t be a company under. I think diversification of risk, of channel risk is really important.
Nick Uresin: Tell us about the experience you had dealing with the peak shopping season. How does it impact your Prime Day? And also, during and post COVID, what are the changes that you see with the performance?
Colin McIntosh: In our history we’ve had, we’ve done two deals of the day. We’ve done three prime days now, and we’ve been through 18 months of COVID. So the company, I shipped the first box myself less than three years ago, it was October 2018. Now, it’s September 2021. So for more than half of the company’s sales history, we’ve been in a COVID world. And so it’s been really interesting to see some of the challenges that come with that, most specifically on logistics. So with deals of the day with Prime Day, with holidays, with seasonality, the main challenge is inventory build up, accurate forecasting and timeliness of build up. So you going to accurately and timely load in your inventory for the most important days of the year.
For a deal the day for holiday, you’ve got to load in sometimes up to several million dollars worth of inventory if you’re going to do a deal of the day during Black Friday weekend. And if you’re a small business that is not cash rich, how do you build up the inventory position to justify these types [inaudible] deals without risking your whole cash position if it doesn’t convert on the day. So I think that’s the biggest thing, the accuracy of report of forecasting, and making sure that you load things in time, especially with COVID. Every deadline that I get, every timeline that I hear, I add four weeks to it, or subtract four weeks from it, I should say. Because everything takes two to four weeks longer in COVID world.
Nick Uresin: Yeah. So what I’m hearing is really inventory planning. That’s the main.
“There’s no artificial intelligence that can replace an inventory planner.” –Colin McIntosh
Colin McIntosh: Inventory planning, I wish I had hired my full time inventory planner 12 months before I did. And all the inventory planning software, it’s total shit. Anyone listening out there who somebody says, hey, I got this inventory planning software, it’s artificial intelligence, will take your sales history, forecast future history and it’ll be by skew, it’ll be great. It’s total bullshit. There’s no artificial intelligence that can replace an inventory planner. Just can’t do it.
“You have to be able to build your own algorithms, your own analytics based on what your business model is. There is no such thing as off the shelf, plug it in.” -Nick Uresin
Nick Uresin: Well, I am computer science, and I’m a systems guy, analytics guy, outworking guy, and I love working with numbers, and I love automation. But I’m an entrepreneur, I’m a business owner, and I built a large Amazon account. So I tell everybody, forget about systems when it comes to managing your inventory. You have to know what you’re doing, and you have to be able to build your own algorithms, your own analytics based on what your business model is. So there is no such thing as off the shelf. That’s it, plug it in.
Colin McIntosh: And there’s so many software’s that promise that they can do it, and none of them can. For me, it’s a very touching field, it’s very art. We’ve gone from, less than three years ago, talking about $20,000 a month to over a million dollars a month. And you tell me how I’m supposed to plan for that type of growth three to six months ahead of time for these inventory builds while increasing your product roadmap, while experiencing seasonality, while going through COVID?
Nick Uresin: How we anticipate COVID in your inventory planning, it just doesn’t work.
Colin McIntosh: Just doesn’t work. We’ve probably spent $75,000 on software that is totally useless when it comes to inventory planning. It excels in human beings. Can build some dashboards and that sort of thing, but, yeah.
Nick Uresin: Exactly. So the most important thing is the data and the data points. What data points you’re working with, and how you’re using that thing. So where would you say that you are now in your Amazon journey as a seller?
Colin McIntosh: We’re not where we want to be, to be totally honest with you. I think the thing that I’m struggling with is the plateau that we reach, kind of what I call it like, we’ve kind of hit the saturation point, in my opinion, for a product at our price point, which is in the $150 range for a set of queen sheets in the sustainable category that slipped this option, that’s still a growth category. The saving grace for us is going to be two things in terms of our continued scale. One is going to be more products in the product roadmap at different price points. So we need to figure out a way to get a secondary product and a tertiary product to a much lower price point, and even a higher price point for a more affluent consumer. And the second thing is going to be awareness of the category. So eucalyptus sheets are still a nascent category compared to bamboo sheets. There’s maybe 1/100 of the search volume. We’re looking to basically grow the eucalyptus category to be the next bamboo, or as big as bamboo when it comes to consumer awareness. And then we’ll naturally claim a lot of that conversion shares as one of the top results, if not the top result on Amazon for Eucalyptus sheets.
Nick Uresin: Okay, and that will obviously translate into your channels.
Colin McIntosh: Correct. Yeah, yeah. The category awareness is my big thing. I want every American the same way that most people have heard about bamboo sheets. I want most people to have heard about and understand that eucalyptus is also an option.
Nick Uresin: Well, along the way, your awareness goes around so much that you may get the B2B operation also off the ground.
Colin McIntosh: We’ve got a small B2B. We’ve got a B2B channel. Yet, we sell wholesale to one mattress company that we pride label for. And then we also have a B2B channel for hotels. We just started that up this year.
Nick Uresin: I see. And the retailer, I was actually, the retailers. So retailers may come in and say, we want this. That obviously is a game changer for you, right?
“Retail has to be a repeatable, bankable business.” -Colin McIntosh
Colin McIntosh: No, I think that the thing about retail is just to be repeatable bankable business. And I’m not going to work with a retailer until we come up with the perfect merchandising product mix, price points and brand awareness to where they know that if they’ve worked with Sheets & Giggles, they will be able to bank on that revenue per square footage. And so I’m really excited to do that probably in 2022, 2023 when I feel like we’ll do a big retail play.
Nick Uresin: Okay. And tell us a little bit about your Amazon team. I heard you mentioned the people that you go to when you get suspended. But what does it take to build an Amazon account that scales to a million dollars a month?
Colin McIntosh: [inaudible] has an agency, you need to have an agency that you trust that’ll represent you well, and that you can go to when you have issues. And then the other part of it is there are decent ad software’s out there for ad optimization and performance optimization on Amazon. We’ve used a few different software’s. None that I would fully recommend without reservation. You have to be willing to spend money. When you start out, you have no reviews, or 10 reviews, or five reviews. You’ve got to make sure that you’re gathering your views. You got to make sure that you’re communicating with your customers on the back end through an Amazon third party app. You got to make sure that you’re driving traffic to your page, even if it’s expensive paid traffic. And so in the beginning, we did that with buying keywords on things like cooling sheets, bed sheets for summer, things that were still pretty broad, but not as quite as broad as clean sheets.
Nick Uresin: And in house, how about in house? How many people do you have working on Amazon?
Colin McIntosh: We only have 10 full timers. We’ve got a bunch of agency partners. We obviously have our 3PL that I’ve talked about a few times. We have our manufacturing partners. We have four or five agencies, web agency, Amazon agency, performance and content agency, video agency, we’ve got SEO agency. We’ve really built S&G to be super lean from a full time perspective. But on any given day, I would say about 40 people are touching the company.
Nick Uresin: What I’m hearing is you outsource the work to the expertise. And that’s smart because they don’t waste time to train them. They know what we’re doing.
Colin McIntosh: I bring on full time people when we have a need for it. When I’m noticing that there’s 40 hours of work a week for a job, that’s when I make the hire. It’s when I know that I can support that person full time and I can bring that expertise in house.
Nick Uresin: As far as coordinating between these agencies, because that’s also a job.
Colin McIntosh: I run all the agency relationships.
Nick Uresin: Okay, so you are the one.
Colin McIntosh: I don’t see a ton of, the only difference I see is payroll commitments and in housing certain expertises. So I think that there are certain things that are commodified. I think that there are some things that we pay for, generally speaking, if I’m paying an agency for something, it’s an expertise that I feel like has been commodified, where it’s potentially more transactional function versus something that I really want in house like creativity, writing, visuals, design, things that are very product development, or inventory planning is something that’s very core to the business into who we are. And my director of product, Mike, has 40 years of textile manufacturing development and supply chain experience. My marketing team is very heavily indexed on creatives that have on performance. I think that that’s the hardest skill. I think that those are the kind of ways I think about hiring versus agency relationships.
Nick Uresin: Okay. Question, if you could do ish one thing as a policy for Amazon to change, I heard you mentioned Black Box, because there’s all kinds of things going on right now with third party sellers and others. At policy level, what would you like to change?
Colin McIntosh: It would definitely be around customer communication. I know that the reason that they do it the way they do it is because if you allow people to email the Amazon customer, the people who are kind of bad companies or bad marketers, they will just inundate people with messages, upsells and sales. And so I understand why they don’t do it because it would become a spam folder item really quickly. All the emails from Amazon would go directly to spam. But I think that there needs to be a better way of engaging with people who choose to reach out to you. So for example, anyone who leaves us a review, I should be able to contact that person. There’s no reason why someone who takes the time to go and leave a review on my page, especially if they say, hey, my boss came without a pillowcase and only had one pillow case, or whatever it is. Something that’s so easily fixable, it’s a manual error that’s just right there for the improved customer experience. There’s no reason that I shouldn’t be able to reach out to them and fix that problem proactively. And so I think that Amazon is slightly over protective.
The second thing that I would add is an upsell feature after checkout. I’ve sent this idea into Amazon before, I don’t know why the hell they don’t do it. It’s the easiest way in the world for them, it would make them billions of dollars. But after checkout, after you complete your checkout, it should have a button that says, hey, you just bought white sheets from Sheets & Giggles, do you want to add on pillowcases with it? Did you forget to add a duvet cover, or a comforter, or a throw blanket. And the attachment rates on post checkout upsell are huge, like 25, 30% attachment rates because people have already given you $100, they’ve already given you $150. What are $30 pillowcases, what’s another $80 for duvet cover to really complete your bedroom? And for some reason, Amazon doesn’t like free money. All they have to do, they already do hold the credit card information for a certain period of time. They don’t charge that card until like an hour later or two hours later, I think, because they want to make sure they give the customer time to edit or cancel the order if they have remorse, or they don’t want to package it and send it out quickly. So they already do hold the card information and they can simply add something onto that order. They just have to have the gumption and throw around it, and they haven’t done it. It’s driving me crazy.
Nick Uresin: 90 minutes, they will–
Colin McIntosh: 90 minutes, right. And I’m telling you, if you bought a computer, do you want to add air pods to your order? Thanks for your order. Do you want to add air pods? Customers also bought, they do that during the checkout process. But the post checkout would just be like, I mean, literally billions of dollars in extra business.
Nick Uresin: I share my own experience. So in the old days, I started selling on Amazon in 2004. Things were very different then. Of course, they evolved. And I was actively selling for like 10 years and I discovered to capture that the cost was the total cost. But some people were gaming the system by simply charging the shipping separately. What they did was they really crafting, they didn’t allow the primary shipping method, they only allowed the secondary shipping method. So what was happening was by box calculation was only taking into account to primary shipping calculation.
Colin McIntosh: Oh, wow.
Nick Uresin: So of course, if you added that to your cart and you checked out, you will end up paying the highest shipping, but they were winning the buy box.
Colin McIntosh: It’s so interesting. So the customer sees the lowest price, and they get out, and then you know some people will go back, but most people will just go simply to checkout.
Nick Uresin: I discovered this because I built that wall repricing system. This is way back when it wasn’t available, nobody knew about it. That’s how I scaled my orders. I go to Amazon and I said, look, this is what I discovered. I sent screenshots, you guys have to fix this. You know what they told me? It’s website behavior. So where you are coming from actually has two obstacles. They have to change the website behavior, and they have to look at it from a business development standpoint. And the two have to come together to create all kinds of policies around it.
Colin McIntosh: It’s so easy though. Because right now, it just says thank you for shopping. Do you want to continue shopping or view your order? They know what customers buy with each item. They just have — Anyway, aside from the customer communication, I would make them billions more dollars by adding a very obvious feature.
Nick Uresin: Okay. Well, thank you Colin, this has been a great conversation. You really shared a lot, and your journey is obviously very impressive. I wish you a lot of luck, and I’m sure that you will get what you want way before when you want it.
Colin McIntosh: Thank you, I appreciate that. Like a lot of entrepreneurs that have that impostor syndrome and don’t think I deserve any success, so I appreciate you saying that, and thanks. Thanks very much for having me on. And if anyone wants to find me, I’m really easy to find Colin, Sheets & Giggles, sheetsgiggles.com, and I’m on LinkedIn as well.
Nick Uresin: Thank you.
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