Aaron Cordovez; Co-Founder of Zulay Kitchen and Technical Architect of Samurai Seller. He is in the Top 100 Sellers on all of Amazon, selling $75 million a year. While working a 9-5 as a coder in 2015, he started Amazon as a side hustle to try and earn his family an extra $500-$1000 a month.

In two years' time, he was making over 6-figures a month from Amazon and today has sold over $200 million worth of products on the internet.

He has spoken in front of tens of thousands of people across the world and is on a mission to empower people to a life of entrepreneurship and success.

> Here’s a glimpse of what you would learn…. 

In this episode of the Ecomm Breakthrough podcast, host Josh Hadley welcomes Aaron Cordovez, co-founder of Zulay Kitchen and technical architect of Samurai Seller. They dive into the competitive world of Amazon, discussing the necessity for brands to innovate and differentiate themselves to combat margin compression. Aaron shares Zulay Kitchen's strategic approach to product development, emphasizing the role of category managers and a rigorous evaluation process. He also touches on the global team dynamics and the financial realities of product launches. The conversation then explores defensive pricing strategies and the potential of low-profit margins on Amazon, debunking myths about low pricing and underscoring the importance of upselling. Aaron warns against variation abuse and concludes by highlighting the services of Samurai Seller and Nexus Capital, stressing the need for continuous creation and innovation for Amazon sellers. Listeners are encouraged to connect with Aaron for further insights into scaling their e-commerce ventures.

Here are the 3 action items that Josh identified from this episode:

Action Item#1 Launching new products is essential for growth.

Action Item#2 Operational efficiency is crucial for scaling your business.

Action Item#3 Implementing a loss leader strategy can attract customers and lead to upselling opportunities.

Special Mention(s):

Related Episode(s):

Episode Sponsor

This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures. 

I started my business in 2015 and grew it to an eight-figure brand in seven years.

I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.

If you’ve hit a plateau and want to know the next steps to take your business to the next level, then email me at josh@ecommbreakthrough.com and in your subject line say “strategy audit” for the chance to win a $10,000 comprehensive business strategy audit at no cost!

**Josh Hadley** (00:00:00) - Welcome to the Ecomm Breakthrough podcast. I'm your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Michael Gerber, author of the E-myth, and Matt Clark from ASM. Today, I'm speaking with Aaron Cordovez. He's the co-founder of Zulay Kitchen and technical architect of Samurai Seller. And today we're going to be talking a lot about some next level strategies that are going to help your brand survive on Amazon and other e-commerce platforms for years to come. This episode is brought to you by Ecomm Breakthrough Consulting, where I helped seven figure companies grow to eight figures and beyond. Listen, Aaron, I started my business back in 2015 and grew it to an eight-figure brand in seven years. I made a lot of mistakes along the way. That made the path of getting to eight figures really take a lot longer than it needed to. There were times where I had to take money from my own personal checking account to fund payroll because of cash flow constraints. During Covid, I was stressed about whether our brand could survive when we had a 90% decline in sales, and I remember wishing for a mentor who could help guide me through the maze of scaling up someone who had been there, done that.

**Josh Hadley** (00:00:51) - Someone who could share the secrets to help me overcome all of those obstacles. And that's why I've decided to offer one-on-one coaching and consulting, where I help share those nitty gritty cash flow frameworks, the sales strategies, and the operating systems that have helped me scale my own business. And because I believe in giving each entrepreneur my undivided attention. I only work with three clients at a time. But first, I want to make sure that we're a perfect match. So, I offer a completely free, no strings attached business strategy audit session before we decide to take that plunge. So, to our listeners, if this is something that you're up for, drop me an email at Josh at Ecomm Breakthrough dot com. That's Ecomm with two M's. And in your subject line say I want to pick your brain. And then let's chat about how we can take your brand to the next level. Before introducing today's guest, I want to give a big thank you to Yoni Moser. Yoni is the chief growth officer and co-founder of a cloud-based technology that analyzes your data, reconciles your inventory, and then case managers file claims to get reimbursements that Amazon owes you on your behalf.

**Josh Hadley** (00:01:42) - Today, I'm excited to introduce you all to Aaron Cordovez's. Aaron is a top 100 seller on Amazon, selling $75 million a year while working at 9 to 5 as a coder. In 2015, he started Amazon as a side hustle to try and earn his family some extra income 500, 1,000 bucks a month in two years' time. He was making over six figures a month from Amazon, and today he has sold over 200 million worth of products on the internet. He has spoken in front of tens of thousands of people across the world and is on a mission to empower people to live a life of entrepreneurship and success. So, with that introduction, welcome to the show, Aaron.

**Aaron Cordovez** (00:02:12) - Good. Amazing. Thank you for the great introduction. I love what you're doing helping these people. I mean, it's always good to grow with the community. And so that's what this is about. That's why I'm here and that's why you're here. And you know, let's see what we can and what kind of knowledge we can share today.

**Josh Hadley** (00:02:22) - Aaron, I'm super excited to have you on the podcast. You have a great reputation that precedes you, and you've got some wicked smart strategies that I really want to dive into today. I think today's podcast episode is going to be a meaty topic because, you know, we're speaking to an experienced audience here. And so, as we begin, here's the one question that I want to ask you to begin, Aaron, right now is we're recording this in 2024. The biggest thing on everybody's minds right now is the immense amount of what I call margin compression going on in the Amazon space. I think this is the first time, as I've attended conferences, that people aren't shouting out, you know, I'm up 100% year over year and my profit is increasing year over year. So, I'm curious to hear from your perspective, what are you seeing on your side and what's kind of your prediction of what's to come over the next 12 to 18 months?

**Aaron Cordovez** (00:03:07) - We are seeing margin compression unlike anything that has ever happened in history, at least for our company.

**Aaron Cordovez** (00:03:12) - And again, a lot of people around. This doesn't mean everybody 's sales and profits are both up. But what this means to me is that the days of having just a product off the shelf and not having something where you can command a higher price these days are over, right? You can't just take something from Alibaba, throw it up and expect to do great when your product looks like everybody else's. Now, these kinds of companies that this is before generally didn't make it huge anyway. You know, a lot of people would start, and they might be first to market, but then other people pass their product with more innovation, more selection, more colors, better price. And that's going to always happen. But now if you understand the game, okay, you have a product with low returns. You have a product that looks aesthetically pleasing, that looks more clickable, more viable than your product next to it. Right. We're investing now more into inventions and more into design than we ever have, because we're seeing this is the time when the known brands are born.

**Aaron Cordovez** (00:04:05) - Okay. Back in the day, brands that spent nothing on advertising could survive. Well, okay, advertising is now over half of the page when you open it. There is a massive amount of advertising fees going up. This is the marketplace. And Andy Jassy being the new CEO of Amazon, his new push right in his whole letter to shareholders is to reduce the cost to serve okay. This is primarily reducing Amazon's cost to serve. Now to some degree. He's kind of saying hey we're reducing sellers' cost to earn two because now their fees kind of in theory stop practices that hurt both Amazon and the seller. But really, I would say 90% is going to benefit Amazon, 10% will benefit the seller. but what that means is he's pushing toward profitability. The Jeff Bezos that era is gone. We're in the Andy Jassy phase. And so, a lot of times when the founder gets replaced, those same ideas, the customer centric, the low prices, the thing he's pushing now, he's going more on toward the area of maximizing the profits of Amazon for shareholders.

**Aaron Cordovez** (00:04:57) - And look, that's good for a lot of teacher funds and pension funds. To have those earnings. But long term, that may not pan out for Amazon because as these other platforms grow right there's flip. There's Macy's. There's Kohl's. There's a Walmart. There are all these other marketplaces. There's one Molson Hart just went on the Tucker Carlson show. And in that Tucker Carlson episode there's a company called Public Square. I think it's called they're going for like, hey, let's push us made products. These marketplaces are just popping off left, right, and center. And as the fees continue to go up, it might give a chance to another marketplace to come up as a big winner. TikTok shops are growing exponentially, so the prediction is Amazon's market share will not stay as high as it has been forever. It is going to go down at some point, and to prevent that, we need to be in as many places as possible, as many marketplaces as possible to provide products to wherever the customers will move to.

**Aaron Cordovez** (00:05:42) - And if you're prepared for that, right, if you have fulfillment centers everywhere else, if you're actually looking to see, hey, what's going to happen in five years, then you'll be prepared, and you will not be suffering long term. You're going to continue to grow.

**Josh Hadley** (00:05:52) - Yeah, I completely agree with your predictions as well. I think that Amazon, you know, they are the king right now. And so, they're gathering as much profit as they possibly can right now. And frankly speaking not too worried about these up-and-coming marketplaces. But I think that that tide can definitely shift. So, Aaron, on that topic, what are some marketplaces that you're most excited about right now, and what are some marketplaces that you think brands really need to pay attention to, and maybe consider diversifying and spending more time on right now?

**Aaron Cordovez** (00:06:16) - So I think the primary one that we're focused on at this exact second is tick tock. Okay. Now, the reason that we believe tick tock is going to grow a lot is because they have eyeballs already, okay? They have billions and billions of viewers, like that place is so full of people.

**Aaron Cordovez** (00:06:33) - And if they can solve the e-commerce thing, you know, actually get solved. I was on the phone with TikTok themselves a few days ago, and they were saying they were going to invest in just fulfillment, something like $5 billion. They're going to take losses on fulfillment to solve the problems fulfilled by TikTok. The fulfillment issue. Because the reason why, like all the Shopify stores or whoever, the reason they don't win and there's not one place you can just shop and compete with Amazon because I'm on the same day and next day delivery for most of their catalog, or at least a lot of the like. I think it's almost two days for sure. Most of it. Almost every single product is at least two-day shipping. But if someone solves eyeballs and fulfillment, the only person who's coming close at I think is TikTok. Walmart has a bit of a stigma because of the low-price products, and there and their actual marketplaces it is very hard to navigate the way that you upload products, the reporting, like taking down counterfeits like Walmart, has a lot of issues.

**Aaron Cordovez** (00:07:21) - So while they should be the natural ones to watch out for, that's growing the most, I really think TikTok will be the first place. So, we go to pretty much almost any marketplace, and if we can make, you know, I don't know, ten, 20, 30 sales a month, we're fine. We're going to be there because that might grow one day. But I think the key ones TikTok is the top, the top. Get everything listed on TikTok. Me with these guys. Get there because there are eyeballs. If they sell fulfillment and they solve a bit of the trust factor, they will be growing even more exponentially and exploding. And Walmart is another one to watch out for it, of course, but I don't think they're having a huge resurgence. Some project that right now is building up for them. They're kind of going up their pace. And sure, they already have centers all over the US, but their systems are so antiquated, and the way that they operate is I don't see them having a big boost.

**Aaron Cordovez** (00:07:58) - So I would say TikTok is by far the top to watch out for.

**Josh Hadley** (00:08:01) - Awesome. Yeah, and we're doing the same thing as well. So on that note, Erin, do you have any amazing TikTok strategies to share with us? How are you, you know, getting your videos pushed out there? Are you primarily collaborating with creators, or are you trying to create your own branded storefronts and having somebody that's the spokesperson or the voice of the brand constantly creating videos? What's kind of your approach to TikTok and where have you found success there?

**Aaron Cordovez** (00:08:24) - Right, so our social media in the last three months has exploded in a big, big way. We have a new account that has 100,000 followers. It's all organic, right? And we've been partnering with people right in. We're in the kitchen space. So we're doing recipes right. We're actually also targeting the Spanish. Since I speak Spanish, I have been a great influence to speak Spanish. And we're like, hey, making recipes for the Spanish community, right? Anybody Hispanics, anyone who speaks English, sorry, Spanish anywhere nearby.

**Aaron Cordovez** (00:08:44) - Like we're giving them content that's useful using our products, right? That's been growing huge. But that always and again, TikTok told me this to my face. They said your own content will probably be 1% or less of the content that reaches people about your brain. And what they're saying is like, yeah, this stuff is cute that you're doing. Oh, cool. Like, wow, you have a few million views. Like, congratulations, Pat on the back. That's like nothing. And what they're saying is you want to go after creators. And so they have a platform within TikTok where you can actually go and do mass giveaways. Right? And it's not for reviews because TikTok, do they have a reason they have reviews. I haven't looked at it, but it's actually a giveaway to create videos. And then you offer commissions to the creators so you can go, I think as long as 15% up to 25 to 35%, and then you basically incentivize people to make videos. And the way that the ranking, the most important ranking on TikTok is not on search.

**Aaron Cordovez** (00:09:28) - It is your ranking of your total sales per month. Because, as TikTok has told me, the number one driver of the sales are all these influencers and all these creative creators. How do they find products to promote? What they do is they'll search the last 30 days and they'll say, what products have gotten the most sales? And they'll see some toothpaste that sold $20 million in the last month. And they go, oh, why don't we talk about that? It's so easy. People are just going to buy it. And then they make videos because your total gross sales is high and it shows up high in the rankings when the creators find products that are hot to sell. So what you have to do the biggest, the biggest tip is get enough inventory so you can blow up. Give away a lot of products to creators, offer them a good commission, and get up to those charts now. Because once you get up there, right, if there is a viral, a product that's going and it's already in your category before you, it's very hard to go there because all the creators would rather go to the top seller, right? I experienced this when I tried to become a creator back in, you know, 2014.

**Aaron Cordovez** (00:10:20) - I tried to become a juicer kind of creator. I made a blog about how to do juicing and all that stuff. And what product did I talk about? I talked about the top selling products that were on Amazon because I go, look, if they're the number one best seller, people want to buy them. So I'll talk about them. And I was selling probably 3 to $4000 of other people's goods every month. And I was nowhere. I wasn't my face wasn't even on camera. I just did blogs, okay. But I was promoting the ones that are already at the top. That's what happened with creators today on TikTok. So push as many giveaways as possible, contact as many creators as possible, and get yourself to that top spot where the creators automatically request your product to advertise.

**Josh Hadley** (00:10:49) - Yeah, I love that brilliant, brilliant strategy. And I think right now it is a spray and pray approach. And I think the first mover advantage is going to be king here in the TikTok shop. So echo all of those same sentiments now Aaron, I want to go back peel back to what we were originally talking about, about this margin compression before we hit the record button.

**Josh Hadley** (00:11:06) - You know, you briefly mentioned some stats about your own company and kind of where things are at right now. And it's not sunshine and rainbows of, hey, we've been doubling, and profits are up more than they ever have been. If you wouldn't mind, why don't you share with the listeners what you're currently experiencing with your brand? And also, I think, more importantly, why do you believe you're currently in the situation you're in now and why you're so optimistic about why you think you're going to actually crush it over the next 18 months?

**Aaron Cordovez** (00:11:29) - So for us, so again, we have a couple of fronts of selling. So our biggest one is July Kitchen. Our fastest growing is Nexus Capital where we actually buy brands right. We work with investors. We buy brands together and we send money to the investors. Right. And so Nexus has grown quite a bit. It's growing exponentially this year. It is strong this year by far. That's going fantastic. Zola kitchen we're up in revenue. New this year, but this is actually the first year in our history where the profits are not up.

**Aaron Cordovez** (00:11:53) - We're actually currently down. Now, part of that was a lack of foresight. It was a lack of foresight to know, listen, and I preached this all time on my own podcast on other people's podcasts. If you're not putting out, if you're not putting out your future, what's going to happen a year, five years, ten years from now, whatever, two years from now, okay. If you're not creating it now, whatever you had before, it's going to be copied by the entire market. Whatever you have today, 6 to 2 years, six months to two years from now, the market is going to be flooded with that product, right? Unless you somehow have a patent and it's actually defensible. Okay. So what occurs is when you reach that one year, two year time period from today, you have to be another two years ahead. So nobody actually catches you. And last year we had the least amount of new products and new creations. And funny, I met with on my podcast, I talked to Ershad Ganji from Mr. Pen, and he said he grew his company 47% last year, and his primary reason is because he met with me and I told him to launch a lot of products and I go, damn it, I gave him this advice.

**Aaron Cordovez** (00:12:40) - He went and did it and grew and I didn't follow my own advice. And so what's happening is that now we've restructured our actual company to have its primary focus: the primary executives, the guys running categories right before we kind of had just like everybody did everything right, like I was, you know, somebody just working on all categories. No. And now we're specializing, okay. Like we'll have a person. All they're doing is cookware. We'll have a person. All they're doing is gadgets. One person, all they're doing is coffee whatever. Right. And then so what happens there? It forces development right. Engineering innovation, new products, new variations, new sizes. Do everything in that category because that person can't go and get distracted by everything. And that's a similar viewpoint of what, let's say, Apple does. Apple cannot say, oh, we're going to go into clothing now. Oh, we're going to go sell like they're selling computers. Okay. Now you can have a computer on your wrist.

**Aaron Cordovez** (00:13:23) - You can have a computer on your face. You're like but they're all computers okay. That's all they're selling. And when they're forced to innovate they're then they're going to create on it. If they said, forget computers, we're going to go sell desks, right? They would lose and they wouldn't innovate because they're not forced to do it. So within our company structure, where a person is in charge of a category, it means that category has to continually grow rather than someone saying, oh, I feel like we're good, let's move on to selling lights. Let's move on to selling, you know, shelves, whatever it is. No, no, we're focusing category by category. And we have a structure where right now we're adding more and better products than we ever have in the entire history. And we're going to be seeing the results of that in the next 18 months. So I really, really believe it's possible for us to actually do a double. We haven't done a double since probably 2020.

**Aaron Cordovez** (00:14:05) - you know, so now it's time. It's time to roll into the big time again.

**Josh Hadley** (00:14:08) - Yeah. No, I love that. So Aaron on that note, sounds like a lot of the who where did the product ideation or the new product ideas come from. Is it coming from those product category managers then.

**Aaron Cordovez** (00:14:18) - That's right, that's right. Each. Well so sometimes they're suggestions. So I might run across something and I'm like we have to do this. So what I do is I'll send it to the category manager. And then their job is to figure out what our entrance into the market is. Right. How are we going to have an offering that's actually better than what's out there? Because we don't want to just be average. We don't want to just have an offering we want to have, at least for some customers, the best option for them. And so I know, I know, a category is good, a market is good, right? I'll send it to that category manager.

**Aaron Cordovez** (00:14:45) - It's their job. And they've gotten training of course, for months internally. How to make that product better? How is it going to look better? How is it going to work better? How is it going to be cheaper? How something that's going to be special about it so that when we enter that market, we have confidence that we're going to win, right. And so in fact, we have an internal Shark tank meeting. So all the category managers actually have to pitch to myself, my wife and then the CEO. Hey, this market is good. And then if we like we basically approve that market. And then from there they go okay good. This is the product we want to make. This is the type of variation. This is why this is a price. This is how we got the supplier. This is all stuff like we wanted to market this way. And so everybody reviews and scrutinizes it and says hey what about this angle? What about that? Wait, no that's bad.

**Aaron Cordovez** (00:15:21) - Where are we going after this? You know, and so we actually have that scrutiny level. And at the end of the day it's myself, my wife that says, yes, that product is approved ready to go. When we added products in the past we never had this check. You know, we basically told one person who was in charge of all categories and said, go give this a 200 new products and stuff would come up and then it would arrive and I wouldn't even know about what it was. Right. That was a time period that that happened and that was an ideal. Now every single thing we're involved really on the pulse of every single product, and there's a lead for that product. There is a single person responsible for the success of the product. And this has been I mean, again, we're not going to see the fruits of that probably until another like four months is when a lot of these are going to be starting to actually hit the line and go live. But from what I can tell, this has been the best organization we've ever done.

**Josh Hadley** (00:15:59) - I love that now, Aaron. I want to dive a little bit deeper into kind of your org chart and your org structure and who's on your team. So I think you have about 80 team members on your team. Would you mind kind of breaking down what that org chart possibly looks like for us?

**Aaron Cordovez** (00:16:12) - Okay. So there are again the category managers which have a team under them. Right. That's a lot of the sourcing. That's a lot of the packaging that's like what that product is going to look like. Okay. Those are like let's say a top high responsibility section. You can call it in the company. Then there's a lot of assistant areas, right. Or helping areas, for example, the design team, the design team, we have possibly 12 people in there. So a lot of designers, a lot of videographers, or at least several videographers. And then the idea is how do we make everything be more and more beautiful? Higher conversion rate, higher click through rate? What makes it more appealing? These guys review.

**Aaron Cordovez** (00:16:43) - So now what's happening is the category manager in charge of it will do. Hey they'll do a listing. On their own listings and then say, these are the changes that send it. We'll do it. Maybe I'll go sit in and do a listing teardown with you. With them, we'll send it over to the design team. The design team acts on it and sends back, hey, this is the changes that we did. So there's an interaction with the design team. There's a whole freight and logistics team. The freight logistics team, they're responsible for moving all the goods. There's also for, of course, making sure nothing's out of stock response for lowering the cost of all the transport right through all the different countries that we sell in. And it's like, that is a big hat. That is probably another like 12 people, something like that. of course there's like human resources, right. Hiring all that stuff. What else do we have? we got the category managers, which got all the sources.

**Aaron Cordovez** (00:17:20) - Oh, of course, finance. There's a lot of finance parts, man. That's crazy. The amount of stuff in finance is, like, unbelievable when you're doing so many suppliers and so many payments, then of course, there's a wholesale area or the wholesale is not that strong. We have social media and social media marketplace sales are basically in one area together, and that team is pretty strong as well. And believe those are. Oh, and of course quality control. So our customer service team and then everyone in charge of checking that all these products are actually going to do a very good job. Right. And the people who interact with the customers directly right there, let's say their boss or the lead of that area is also in charge of then getting any changes done to the product that will prevent those customer complaints in the future and provide a better product. So that's our quality control division. And so all these things work all together. But again for category managers, these guys are really responsible for the future.

**Aaron Cordovez** (00:18:01) - What are we going to continue to survive and continue to do? Well. It's not going to be on the products from five years ago. Those products are going to do fine and hopefully they grow, but it's almost an inevitability. If you do not change them, they will literally die out into nothing. Like I was looking at a listing the other day I was going to tear down 4000 reviews yesterday, and these guys are selling like one unit a day, so you got to 4000 reviews. You kept the same product from seven years ago, and now you're practically at zero sales. So it's sad how that happens. But the reason that happens is because people try to live out what happened in the past, but realize they're successful. The successful action they did was creating a new product. That's what got on the big jump. And then they stopped creating new products and kept that same product. So the thing that got you to your first hundred thousand dollars in sales to your first million dollars in sales was actually adding a new product and being innovative and thinking, how do I enter the market? And if you forget that and you just coast on what you did in the past, you're going to come into possibly not just a contraction, but possibly the destruction of your entire business.

**Aaron Cordovez** (00:18:50) - So. The org structure. The purpose is to push the managers to know that they have to be creating into the future for us to be able to grow and to continue to thrive. And so that's how we've structured it.

**Josh Hadley** (00:19:01) - Yeah, I love that. And then I guess I would assume underneath each category manager, do you have PPC managers or what does PPC fall under. Oh yeah.

**Aaron Cordovez** (00:19:07) - Sales I didn't talk about. So actually, the way we have it now. Okay. And this is a bit still in like a bit of a pilot phase. We're testing it. Okay. The category managers, since the results for how the listing looks, then we have the PPC section, and they're a bit like parallels. So for the advertising, the whole PPC section, there's let's say a PPC manager for let's say the cookware division or something like that. Right now they're not necessarily their direct report. is not then the manager, okay. They're kind of separate but sort of parallel. So they're both in charge of that same area.

**Aaron Cordovez** (00:19:36) - But for right now, all the ads people, they have a person who's in charge of all the ads and that's their, let's say, their boss. So they kind of meet and they're all like PPC geeks and they're like, hey, let's, you know, each person and they can compete against each other and have races like, hey, my category grew the most this week or whatever, and they have like little competitions between them. And so the idea is ads are a whole separate section. The whole sales section, they're not in charge of the design. That's back to the category guys and the design team. They work together to make the design good. But now the design is good. Now that the other area of picking the products is good, like now, there's no reason the product shouldn't succeed. And then that's the ads managers guys, they're in charge of making sure that actually sells and is profitable. Yeah, sorry I missed an entire humongous section. That is extremely important.

**Josh Hadley** (00:20:11) - That makes a lot of sense. follow up question then would be what percentage of your staff is US based versus overseas?

**Aaron Cordovez** (00:20:18) - It's about half and half. And it's funny because like some people do, all us some people do all remote and so for us, I love having the team here together in the office. I think it creates a dynamic, a relationship that is very hard to emulate. You know, all overseas. They're all remote, even if it's us. Just because you see each other, you could talk about the things we do. Recently we kind of copied a simple modern strategy. Which would they do? They cater, I think they cater lunch every single day and everybody eats together every day was kind of a lot for us. So we just do Fridays and that's pretty cool. And I probably need to shop that a little bit more. But like everyone else, they pretty much come together. They all like it. And I feel like there's time to actually connect human to human as opposed to just, hey, I'm the free person.

**Aaron Cordovez** (00:20:58) - I'm the packaging person. They just send these emails forever. So I want people to know each other. And, you know, the thing is, I spend more time with a lot of my co-workers than I do a lot of other people. This is probably where I spend the majority of my time. So it's like I want to be able to just see somebody and talk to them like, I don't know, there's something about that, this, this thing that we've kind of slowly been losing touch as a society of like, hey, coming together. And so, I mean, I like that, Elon Musk was famous for saying, like, this work from home thing is terrible. And, I mean, whatever it is we hire overseas because there are brilliant people overseas. There's brilliant people in Pakistan, in the Philippines, Colombia, Venezuela, like there are brilliant people. And, you know, typically for them, if they're getting paid half of what a person gets paid here in the US, they're generally living large, right, in a, in a different country now.

**Aaron Cordovez** (00:21:44) - So of course, whatever their pay is, of course they've agreed to that job. And so you think that they want that minimum wage guys in Venezuela, this is just a little thing that might shock people. Minimum wage in Venezuela is $2 and $4 to $0.03 per month okay. Per month. It is a cruel, sick joke. but so if we pay somebody, you know, in Venezuela, my own country where I was born, and they're making, you know, $4 an hour, that is, they literally support, like a family of six down there, right, with that kind of pay. And so the thing is. I think there's pros and cons everywhere, and that's why we have this hybrid approach. Right. So we found a lot of us people are extremely, extremely competent, very good. We love having the team in person, but we don't want to miss out on also global talent where sometimes I mean, we have well, there's a guy in Mexico that we have that is so talented and it's just a spectacular, spectacular, professional in his field.

**Aaron Cordovez** (00:22:33) - And I don't think I can hire that in the US for, you know, five times what the guy makes. Wow.

**Josh Hadley** (00:22:38) - Yep. I think there's good people to find everywhere. Right. And I think the reason why I think some brands have a lot of us staff is obviously if you're a business owner, those are probably the people that you interact with. You meet up at different conferences and so you can build those relationships and it can take things to the next level. So very insightful. Now, Erin, I would love to kind of pivot our conversation into a new topic here. I know you had you had gone on Chad Rubin had done a webinar with you, and Chad actually wrote up a whole LinkedIn post that I know semi went viral if you want, at least in the e-commerce community. and what he did is he basically dissected what you did with your garlic press launch. According to Chad's post. He said, as I look at the numbers, what Aaron did is when he launched this in 2019, garlic press, okay, he lost money.

**Josh Hadley** (00:23:21) - I think it was over $300,000 over the first 15 months. Right. And now he's kind of reaping the dividends of that finally. But so, so few I guess e-commerce Amazon sellers are unwilling to lose, especially that much money up front. So I'd be interested to hear from your perspective, Aaron A is that case study true? B is that what all of your product launches look like? You're just like, we're sinking. We're in the red for a long period of time, and then we hope to make it back up because we bleed literally everybody else out of the market. Tell us more.

**Aaron Cordovez** (00:23:52) - Okay. So I would say that. You know, Chad's numbers are a guesstimate, right? And I would say that that's all I did was an estimate. Right. It's definitely not extremely accurate, but I would say it did give a good picture of generally how we looked at that product. Right. Most of the time we do not expect the product to be profitable in the first three months.

**Aaron Cordovez** (00:24:12) - Right. Like if it's profitable in the first month, that is a humongous win. Right now we have a lot of launches and they're not profitable, right? They're not profitable. But we see, hey, it has a future potential. We will lose for a little bit. And then coming down possibly in six months, possibly in three months, possibly in a year, it's going to make profit. But the market is big enough okay. And this is how Amazon works. When you start you have no reviews and you have very little trust. So at the beginning is your hardest time period. And as you go on then you get of course more profit. Not of course, more profitability. It all depends, right? Because if you're number five, the market is getting crushed and you know your price is to try to stay up there. You don't see more profitability later, but a lot of times your launch is your most expensive period. So for the garlic press we looked into numbers and we were profitable I would say in the first six months, okay, this product was making money.

**Aaron Cordovez** (00:24:57) - In the first six months. It did not take a year and a half, right? Probably was a little bit earlier than six months. Right, like I didn't I don't want to have to give all this exact data. But I will tell you, within six months this thing was profitable. Now at that point I already had a lot of reviews. Okay. Because in six months, if you're selling 4 or 500 units a day, you know, you're going to get at least 5 to 10 reviews per day, right? So you do that for 90 days. Hey, you could be at whatever. You could be at a decent amount of reviews, right? Maybe almost a thousand reviews, something like that. And so at that point you have something to show, okay. Before you get your first 25 reviews, it's extremely hard to make any profit, right? Your first hundred reviews. That's like a nice benchmark where you get a little bit better, and then when you break 1000, it's like, hey, there's some social proof there.

**Aaron Cordovez** (00:25:34) - And then after that, of course, it gets slightly better over and over. Like, of course, if you have 200,000 reviews and then like that's amazing, right? That's like our milk frother. That's 2000 reviews. That's awesome. So, there is a pain period. And unfortunately too many people make their first million and then they take all that money out of the company. So then the company cannot afford to make a $100 and $200,000 loss to make its product go. But we have that. It's very, very, very, very common. That will be out 2 to $300,000 on a product before it makes any profit, because sometimes our first order will be $200,000. Right? So right when we place the order, we're already down $200,000, right. And then it's like, good. Then there's money lost in the launch, maybe in the first month, 2 or 3 months. So there are absolutely multiple products that we have lost $300,000 before we make a single profit. So while Chad's thing was a guesstimate, I would say that scenario is very real, right? I mean, we have a product coming out this year that our first order was over $400,000, right?

**Josh Hadley** (00:26:28) - Yeah.

**Josh Hadley** (00:26:29) - I'm amazing. So with that being said, then, I'm curious, Aaron, when you launch, is one of your strategies that you're going to go in and be kind of the low price leader, like you're going to go in with a basement floor price that people are like, this dude's absolutely losing money, and everybody in the market knows it and you know it. And you're like, deal with it. I'm willing to make that happen. Is that your strategy to try to bleed out the competition?

**Aaron Cordovez** (00:26:52) - kind of. Here's the thing. It is the most effective strategy. It is the most effective strategy, in categories where we lose market share, where we're struggling or anything like that, pretty much one for one, it's somebody coming in like that. So if you understand the things that, you know, our own brand is vulnerable to, other brands are vulnerable to it just as well. Right. In every category. If we're coming out again, we are coming out with a product later on in the summer that the top seller sells for over $100.

**Aaron Cordovez** (00:27:20) - Okay. And we actually have. The same product. From the same manufacturer, we can sell it at 60. Okay. And like our price will be half. So it's like if you can do that, if you can find a market like that, why not try it. And what people don't understand is like, yes, you might lose money at the beginning. And in theory you could lose money. You could lose money for a while. But if you don't, if that product fails and it never picks, it never takes off. It never makes sales. You make one sale a week and you make a profit of $10 per unit, right? One. But now you're going to have to liquidate that stock and you don't make any money. So there's a bit of. That's the definition of entrepreneurship. You're putting something at risk. You're putting money and your time at risk. And that's why the rewards of entrepreneurship are higher, because you're putting yourself in a scenario where you can lose. But if you're too afraid of losing a little bit, a lot of times you'll never take the necessary competitive actions to get to the top.

**Aaron Cordovez** (00:28:13) - And of course, do we love it if someone comes in at half our price? No. Now again, we do things to mitigate against that, right? We like to always have multiple options, and we want to always, even if we're top in the category, we want to have the low price option to defend when someone is doing that against us. Right. And so we do that pretty well. And we've seen some of these publicly traded companies that get attacked like crazy and they don't defend at all. Right. If you come after us and do that, well, we have a defense strategy against it. But a lot of brands do nothing. A lot of brands, they sit there as they're getting destroyed, and then two years later they go, oh, this part, we're going to discontinue it. Let's lower the price. You're like, why don't you lower the price? Two years ago, when the market was being set. And don't be married to having a 30% profit margin if you can actually maintain sales and lower your profit margin, but you don't lose your market share, and then you can always reinvent that product.

**Aaron Cordovez** (00:28:52) - See, your product can be reinvented, you can do a new model, you can upgrade it. You can do something to either make it cost less or make yourself, you know, charge higher for it. But if you lose your market share, you lose all those rankings. A lot of times it's way harder to revive your product afterwards. So if you have to lose margin for a little bit, good, but don't lose margin forever. Reinvent that product, make it cheaper, or make it so you can charge more for it and continue. And that's why those category managers are so important because you can defend in these categories.

**Josh Hadley** (00:29:16) - Yeah, I love that. And I actually want to double down there. Aaron, you shared the example of I think maybe a client or somebody that reached out to you, a friend that had 4000 reviews on their product. They were seven years ago. It was probably crushing it. And now it's doing one sale a day. So I would imagine what happened.

**Josh Hadley** (00:29:31) - Low price competition came in. And I think everybody's seeing that across the board right now, more overseas sellers than ever have been there, and they're so willing to make so very little margin. Here's kind of my prediction of what's going to happen to Amazon in the future here. I think that Amazon's going to turn into basically margins that you would likely see in grocery and retail, right. Where grocery margins, you're talking single digit margins. Right. And to most people that's not exciting. And you're like, heck no, why am I spending that much time? But that's where I think Amazon's head. I think people will sell a decade from now, you're looking at single digit profit margins and some brands, you've got to be big enough to be able to make that survivable. But going 100%.

**Aaron Cordovez** (00:30:11) - Let me just say 100%. I've had two again, two top 25 sellers on my podcast right now. One of them is number two brands from Utopia Deals or A shot for Mister Pen.

**Aaron Cordovez** (00:30:20) - Both of them were on my podcast recently. Top 25 sellers. Both of these guys have sub 10% margins, right? Like what? But why are they at the top? Because as you're saying, Amazon is not a mature market yet. We're still honestly big, big sales in Amazon started what is 2012, 2013, 2014. Maybe like there wasn't this crazy volume back in the early 2000. So we look at groceries that've been around for, I don't know, like 100 years plus. Right. Like that's a mature market. That's what you're saying is such a strong prediction where there are going to be those small margins and those are the guys who are like, well, we don't have to spend on advertising because nobody could beat our price and our quality, and they're going to continue to get sales. And those guys don't maybe invest in advertising, but they always start at the top. That probably is coming from I agree with you 100%. And again, huge sellers under 10% margins are absolutely extremely common and will probably become more and more common.

**Aaron Cordovez** (00:31:09) - Yeah.

**Josh Hadley** (00:31:09) - Awesome. I love hearing your thoughts on that as well. So Aaron, let's go back to what are the defensive strategies. So overseas competitors are coming in aggressively. They're lowering their prices. They're going to basement level prices. In fact they're losing money. And you know they're losing money. What do you do as a brand?

**Aaron Cordovez** (00:31:25) - So there's a few things that are okay. In some cases you might be shocked. And it's your own justification saying these guys are losing money. But a lot of times they may not be losing money. Okay. There's a strategy that we employ quite often, which is you have one leading product and then you have a lot of colors or a lot of sizes or a lot of packs, and those make your margin okay. Now you might think someone's losing money. But a lot of times they may not be right if they're at, you know, a thousand plus reviews. They're seeing a lot of sales and you see that the price is so low. Like for example, there's a measuring tape, okay.

**Aaron Cordovez** (00:31:59) - If you search measuring tape on Amazon, there's someone with I think 40 to 60,000 sales per month. It is a measuring tape that's selling for 399 or 369. Okay. And you're like, oh my gosh, that guy's losing money this blah blah. But I'm like, they're not losing money. Like at that super tiny size. Your FBA fee might be like 260, right? 50% fee is, let's say whatever. That's a 50. That's $0.45. So they're actually their total FBA fees about $3. And they're selling it for four. And a piece of plastic that's the size does not cost more than a dollar okay. Those guys are probably making $0.70 per unit. Right. And 40,000 units a month. That's maybe 30k - 50KA month. And you go, that's $350,000 in profit in a year. You think they're losing money. So you're like, oh, never that price. But I'm like, no, they've actually just mathematically calculated it. What is the rock bottom price that no one will ever touch them at?

**Aaron Cordovez** (00:32:44) - Plus they have 40,000. They are never going to get touched. Because you look at that and you go, oh, that's just a good price. If a new seller comes out and they're at 2.99 with ten reviews, you're going to go, that's probably fake, right? That's a hijacker. That's like you don't trust it. So if you combine trusted reviews plus the absolute lowest price, that guy is raking in money and doing nothing, the listing is not beautiful, but nobody will take those guys over. Right? It'll be a long time before someone takes them over. And so you tell yourself, oh, they're losing money. I'll never be able to compete. Let's stop. It's a story you're telling yourself. We make up that someone's losing money. Unless you've seen their PNL, unless you've seen their payouts, unless you've talked to that supplier and somebody got an invoice that's actually from that company, you do not know that they're losing money. It's an excuse that we tell ourselves to say, hey, we don't have a chance because those guys are losing money.

**Aaron Cordovez** (00:33:24) - A lot of times they figured out a way to not lose money. You know that, export trading companies out of Hong Kong, if they export companies products out of China, the government gives them a 7% rebate on the cost of the item. Okay. So a $10 item, right. They're going to get $0.70 on a $1 item. Whatever. It's 8% or $0.07 whatever it is. But what if that's the margin they're working with? What if they'll sell 10 million, $10 million a product of cost of goods, and their entire profit is 700,000 just from the rebate to the government. And that's how they make their money. That doesn't mean they're losing money. You don't know these different factors in how these people are making money or not, right? They may have bundles, units, we don't know. And so a lot of times when people say, oh, those guys can't be making money, I'd like to challenge that, because a lot of times these companies will be operating at a 57 percent margin and they will make money.

**Aaron Cordovez** (00:34:09) - And if they're making any amount of money, they're not going to just disappear and change your price. One day they're going to sit there. That tape measure guy is going to sit there for the next ten years, right. He might increase it to $4.25 next year if the fees continue to go up, but no one else will be able to catch up to that guy, and he's going to sit there uncontested. He had someone else who was there in that position and had that 9.99 and refused to go down in price. In one year, their sales might be down to one unit a day and they go like, oh, the margin, these guys are losing money. I can't take it. No, they sourced it well. They're at the right pricing. They packaged it correctly. They did. They did everything right to take that last bit of margin that is unshakeable. And so that's like a strategy for anybody that they could try to employ. And again that's not good for me. If you're going after the kitchen you're going to be like I'm the lowest price.

**Aaron Cordovez** (00:34:46) - I'm going to take a 4% margin. Maybe that's not good for me. So maybe I shouldn't be on this podcast. But here I am. You know, please do it in another category. If you're going to do that, just don't go after the kitchen, go after anything else. Please take my advice in any other category.

**Josh Hadley** (00:34:56) - No, I love that. And I think, Aaron, I love that you kind of dispelled that. Like what's the story that we're telling ourselves. Right. And I think there are a lot of unhidden things that you don't know. Right? Somebody could be sourcing it a lot cheaper or their packaging is different, or they're getting kickbacks or rebates from somewhere else. It could be government subsidies. There's so many different ways that that could be coming to them. So at the end of the day, business capitalism is all about, you know, letting the market kind of dictate and you've got to be on the cutting edge of everything, constantly innovating, constantly trying to be better, improving things.

**Josh Hadley** (00:35:27) - And it's not Amazon's definitely not a platform anymore where you could just kick back, launch a product, sit back and relax. If you do that, you're going to be smoked in six months to a year. As more and more competition comes up, your margin is somebody else's opportunity, right? Aaron, you briefly touched on this, but I had it as a separate talking point that I wanted to dive into as well. one of your strategies, I know, as I've looked at like milk frother, for example, you've got your heroes in that you have kind of like a rock bottom price on, so to speak, and then you've got a bunch of different variations on there which are more expensive, sometimes even double the price. Is that part of your strategy? And tell me, how did you get to that strategy? Has that been effective to tell me more.

**Aaron Cordovez** (00:36:06) - Yeah. So I believe that. Almost everybody, 99.99% of Amazon sellers. We are scrubs. We're newbies. We are in the tiny percentage of these big behemoths that are making billions, right? If you look at a company like Walmart, if you look at any big, big company, Procter and Gamble, right, you're looking at what's another big one that's like Procter and Gamble.

**Aaron Cordovez** (00:36:31) - There's all these crazy ones, right. That they're selling billions and billions. They look at you like a $2 million company and they like to laugh at it. They're like, that's a joke, right? Like Con Air. Right. Like these, whatever. These hairdryers like these companies are so massive. And what I like to do is study what they are doing. Right. And so there is this, this strategy that I heard about. And you can kind of see it in the physical stores, like in a Walmart or other stores like it, where or even a grocery store, right. They'll put your most important items where they make no margin on it, like let's say milk, a gallon of milk. They'll sell a gallon of milk for like $92 or something, right? Everybody buys milk again back in the day. I don't know about it now. Everybody's buying milk, but whatever. A lot of people buy milk. They put it away in the back of the store. Right way, way, way in the back.

**Aaron Cordovez** (00:37:09) - And you got to walk through the whole place. And as you're walking down the aisles, you're like, oh, I need this. Oh, I need that. Oh my gosh, some cookies. Oh wow. Look, oh I need this, I need flour or whatever. And then on the way to go get that milk, you've just loaded up your cart with $200 of stuff. You go back to the thing and you go like, damn, I just came to get some milk and now I've just paid $250. Okay, similar. If you look at the deals, how BestBuy does advertising, how the, you know, some of these other big box guys do advertising, they'll have a very cheap product where they'll do their TV commercials, come in and get the PlayStation four, blah, blah, blah. You know how much money a BestBuy makes on an Apple product? It's like 7%-8%. They do not make a lot of margin on these like Mac. The apple they control. The price is so hard that like you spend $3,000 with Apple at Best Buy, best buy will make like 200 bucks or something.

**Aaron Cordovez** (00:37:48) - It's like stupid. I know, because I know a reseller who sold a lot of these things to the best buys and stuff like the margins are razor thin, but what happens is Best Buy will go and sell that computer and it brings all the people into the door, and then they'll buy these accessories and all this other stuff. And so they may not make a lot of money on that item, but it brings them to the door, brings that traffic, and then these people are buying other stuff. So if you look at how they operate, I go, okay, how do I do that on Amazon? On Amazon you make your main one cheap. So they come in, you win the click. And then when they're there you go look you could buy one that's a special crazy amazing beautiful color whatever. And it's going to cost you, let's say, double. As you were saying, sometimes we do charge double. And the thing is it's not like some sort of like people could front and be like, oh my gosh, like that's extortionist.

**Aaron Cordovez** (00:38:28) - I'm like, dude, you could get black right there, right? Like this is I know it's so funny, but it takes me back to like, in some, there's like, complaints. I was like, I used to do a lot of gaming in my life. Okay? Video games. And generally, people don't complain about video games if the payment for the video game is only for, like, a visual look for the skin of a character. People mostly complain if it's like the gameplay you have to pay to play. Pay something you know if you have to pay to get upgrades in the game, it's a problem. But if it's just static, people don't complain. It's the same thing. I'm like, dude, I'm giving you the lowest price in your face. You can buy it. I'm not changing your experience, but if you want to have that kind of skin, if you want to have that extra, extra deluxe version, you will have to pay. That's a simple thing.

**Aaron Cordovez** (00:39:04) - And it's actually beautiful because if you are broke, do not buy the red one, buy the black one and I will give you the lowest price. So you're actually appealing to all audiences because if someone is not going to pay more for a color, it actually does have extra costs associated with it. Keeping a skin stock has a cost associated with it. You have to buy a mentor, you have to store it. You have to, you know, have a different skill. You have to have different loading. Like it costs money to have variations. So I'm not going to set it at the same price. So anyway that's okay, back to how all these different big companies study them. They bring people in, they offer an option that's available to everybody. And then if you're lucky enough to be able to pay a little more than you can, it doesn't take away from your ability to be a customer. It just is an upsell.

**Josh Hadley** (00:39:42) - Yeah, I like that. I love that analogy that you shared there with the grocery store chains.

**Josh Hadley** (00:39:46) - I mean, that's constantly what their advertising flyers are. There's always loss leaders just to get you in the door. And that's the same strategy on Amazon. What gets you in the door. Click on that listing and then the world opens up to you. and the different variations. So I absolutely love that strategy. Now Erin, I know as of recording this podcast, variation abuse is something on Amazon's wheel of what do we want to crack down on this month or next month or this quarter? Variation abuse seems to be Amazon's go to right now. And I'm even hearing sellers that have had really fairly compliant variations at least so they claim. And they're getting accounts suspended and shut down. Any thoughts on that or any any thoughts.

**Aaron Cordovez** (00:40:23) - So there was a lawsuit, I believe, to nature's bounty FTC if you look at nature's bounty Federal Trade Commission lawsuit on Amazon. So what they did is they had a variation. Now this variation was like some sort of cranberry supplement. And then it was like a vitamin C supplement or something.

**Aaron Cordovez** (00:40:36) - And they made the variation and showed all the reviews. And I was like, dude, the product, they're, they're not they're both supplements. That's where the similarities end. And so that was when the FTC came down on it, I think it was like a $400,000, $500,000 fine. Again, you have to check the figures on this. But when you look at that it's like, dude, there are two different products. And variation of what's so funny is that Amazon sometimes is a worse culprit. The vendor listings are the ones that have the most crazy variations that you're like, what? Like those are the worst. And so again, that's not like anything to say for us. But what we've seen is if the product is actually the same product and you're following what the variation is, typically you just get it back up. If you have a product that's different color and someone you know deletes your listing or something and moves it and you change, you just say Amazon. They're the same product, different colors, like put it back together and you're generally fine.

**Aaron Cordovez** (00:41:19) - If the category change is actually fit by the variations, then I mean it should be fine. I actually don't know anybody who's been suspended for something like that. yes. There's warnings and a lot of times we'll get warnings and we're like Amazon, look at it like it's the same product. Like what's happening. And then they say, okay, sorry you're fine. So I don't know. I'd love to see who you know what that issue was. Of course if it's two different products and that's an issue, if you have a microphone and you're doing a variation and you're trying to then sell like a cabinet or something like, and again, that I have seen people suspend for things like that even, they'll take old listings that people stop selling, change the brand name and then use those. That's a tactic that was used by a lot of overseas sellers and stuff like that, where you're trying to buy something like an umbrella and it has a bunch of iPhone case reviews and you're like, what's going on? Like, that's a very clear violation and you probably will get your account suspended for that, I guess.

**Aaron Cordovez** (00:42:00) - I mean, don't do that. That's idiotic. So if you like everyone on that level, please just don't.

**Josh Hadley** (00:42:05) - Yeah. Yeah. Basic common sense there. Erin, as we begin to wrap things up here, I do want to touch on real quick Nexus Capital. Tell me more about what you're doing there. And also just give our listeners kind of an overview of the different things that you own. To my knowledge, you have Samurai Seller, which is a software, right? I believe you're an owner there. You also have a PPC agency, if I'm right.

**Aaron Cordovez** (00:42:25) - not really. I mean, so in Samurai Seller, we do take on select clients for actual managed services. So we have a team that actually manages that. We use the software, we use different automations and we have a manual review. But that's all within the samurai seller umbrella. It's not a different company, okay.

**Josh Hadley** (00:42:38) - Makes sense. And then you have Nexus Capital which is separate from any other holdings that you have there.

**Aaron Cordovez** (00:42:43) - I mean, there's other holdings, but I would say for example Amazon stuff, those are primarily for a while how to send us something else. And that's why we're not looking at that. So with Nexus Capital, we have an incubator going on too. So you can apply if you want us to like, buy part of your company, do that. Like we're looking into that now. So, I want to say if you just go to either Aaron Cordovez.com or nexus.com and excuse cap.com, you can fill out a form and say like hey, you either want to sell your company, sell part of your company. We're happy to buy that. You know, or, you know, obviously not happy to buy it, but like to look at it, see if we would like to. That's the first step. And then the software, we're very, very happy to have people check out Samurai Seller and I actually could even personally like it if you have PPC questions loaded up and you want to say, hey here, like, let's have a meeting and show me what you see.

**Aaron Cordovez** (00:43:23) - Like I'm happy to review, you know, your info.

**Josh Hadley** (00:43:26) - Awesome. Love that. Now real quick on the Nexus Capital front, you know, it's interesting that you're focused on acquiring or even, you know, purchasing partnering in some Amazon brands when all that we've heard right now is bankruptcy after bankruptcy with all of the aggregators. So what's different?

**Aaron Cordovez** (00:43:40) - So it's a lot of what we talked about already on this podcast, right? Which is a lot of these aggregators, first of all, they did not. I mean, I would say probably 90% of them did not start on the Amazon brand. That got to over 10 million in sales by themselves. Did not happen. Right? There were a few, a few, and even the ones that are still around that actually started with knowledge about Amazon. And so what occurs is when they overpaid, right. Like at one point was paying like ten x, right, ten x profits to companies. And you're like dude a ten x. That's almost like a real estate buy where you buy real estate at a, at a ten times, which is like a ten cap rate.

**Aaron Cordovez** (00:44:11) - They call it like that's available to buy almost. And it's like, dude, a piece of real estate is like the rent will go up. Rent has always gone up. It will never go down over a long period of time. It will not happen. So why would you take the risk of Amazon where if you don't operate it, it will go down? The guarantee is if you leave your Amazon thing alone, it will go down. In real estate, you leave it alone. The land will still be worth more money. So if you just take the approach of doing absolutely nothing right, land goes up in value. Amazon will go down in value, period if you're not involved. So why would you pay the same amount for Amazon as you would for real estate? That seems ridiculous. So that was I would say the first area. But the second area is the reason we buy Amazon is because we understand that we can make most companies grow. Right. And of course, from the ones that we look at like, hey, we're going to buy one, we believe we can grow.

**Aaron Cordovez** (00:44:53) - Why? Because the images are bad. Because there's, you know, new product opportunities available, because their advertising was really bad, or they write no advertising or they spent way too much advertising. There's so many aspects that we look at. We say, hey, we can grow it, and then we take it and we defend against people coming in. As we talked about earlier, when someone's coming in aggressively to your market, you must defend, you must do things to bring down those guys' sales so you can continue to have that revenue increase above them. If you sit there and take it, your thing will become worth nothing. And that's what's happening to a lot of these humongous companies. They'll buy it. And I promise that there's people that have salaries of $500,000 and $800,000 a year, and with multiple people of that pay range in the company, you see the listings not changing. You see the image is not changing. You see ads not changing. And I wonder, what are these people doing in that company? You're hiring a person for almost $1 million a year, which you can see in public records, like, why have their listings looked the same for the last three years? Like, why has their number one seller not changed your image where like and it actually it's shocking to me this industry and how they're totally fine on watching Amazon not change even though they have humongous payrolls.

**Aaron Cordovez** (00:45:54) - And it's probably because they don't know any better. Right. The guys who invested, they don't understand Amazon. Hey let's open up that listing. Hey let's look at my listing and look at the person who just overtook us in the number one spot. What are they doing that we're not doing? Oh well, their image is 30 times better than ours. It's bright, it's wonderful. It has props, it has whatever, blah, blah blah images. Olden hasn't changed for seven years. It's like someone that has a $1 million salary. Probably should be able to recognize that and change it, but that's too much hopeful thinking. I think for a lot of these aggregators.

**Josh Hadley** (00:46:19) - I think you hit the nail right on the head there, Erin. Erin, this has been such an amazing podcast. Is there anything else that you feel like you haven't shared that you want to share with seven figure sellers to help them scale to eight figures and beyond?

**Aaron Cordovez** (00:46:31) - I think just know, if you do not continually create your future, what your brand will look like in a year or two years, someone else is going to get it for you.

**Aaron Cordovez** (00:46:38) - They're going to show you what your listing will look like on the bottom of page one or on page two and beyond, because people will take that spot every single day. There are thousands of people who have an idea to come and beat your spot. So if you are not defending that spot, you will lose it. So just know that like that's part of the territory. If it happens to you and you didn't change your images, you didn't add products for 2 or 3 years and it happens to you. Like please don't be surprised. Like go, go work on it now because it might be too late when somebody passes you and they have now twice as many reviews as you, you're very unlikely to take that spot back. yeah.

**Josh Hadley** (00:47:10) - I love that. Erin, as we wrap things up here today, I love to leave our audience with three actionable takeaways. So here are the three actionable takeaways that I noted. You let me know if I'm missing anything. Action item number one, just as you just talked about, is you should always be launching new products.

**Josh Hadley** (00:47:24) - if anybody has been listening to this podcast, you've heard me repeat this, and I'm a broken record. But the number one growth lever for any Amazon based brand or e-commerce in general is new product development and new product launches. That should be your number one core KPI. And if you think about it, you look at the apples of the world, you look at any big company. Guess what? They're always launching new products, and if they don't, that's where things stagnate. And so I love what you talked about. You need to plan your future, which means guess what, Apple. I know that they know what products they're launching for the next five years, if not for the next ten years. So likewise your brand, you should at least know what you're launching over the next 12, 24, even 36 months. That will help you create and manifest really what your future is going to look like. Action item number two, you need to make sure that you are executing operational efficiency. And Erin, the question I asked you, what happens if somebody comes in and starts undercutting your price, right, and starts stealing sells? Well, ultimately you can't, you can't assume that they're losing money and that they'll eventually bleed themselves dry.

**Josh Hadley** (00:48:21) - You need to take the proactive approach of, hey, how do I lower my Cogs? This manufacturer that I've been working with for the last decade, maybe it's time to make a change. Or are you a little lazy in your operational efficiency of how you're getting your product through the supply chain, right? Are there little things that could be saved along the way that add percentage points of margin to your business? And I think over the next five years, operational efficiency is going to become king on Amazon. And those brands that can build a team that can execute on operational efficiency and can execute and operate in single digit percent profit margins, are going to be the brands that survive in the decades to come. Third final action item here is consider, that kind of loss leader strategy that you talked about. Aaron, I think that this is a truly like a game changing strategy that people can implement in their brands to take their heroes and do it at a bottom price, that people are like, I don't even want to touch that price, but it gets people in that door and your competition wants to effectively avoid it, and you start making money through the upsells of different variations and cross-selling other products, potentially through your A+ content.

**Josh Hadley** (00:49:24) - Right. And it is your entry door into your figurative Amazon store, and people start walking your aisles of your store and end up with a $200, $200, average cart value at the end of the day. Now, I wish we had more control over the Amazon upsell sequins and things like that. Maybe one day that will come. it would make that strategy that much more powerful. but that would be my third and final action item. Aaron. Anything else that I missed here?

**Aaron Cordovez** (00:49:46) - Nope. That sounds perfect. Awesome. Pretty good recap.

**Josh Hadley** (00:49:49) - Aaron, as we wrap it up here, final three questions for you. What's been the most influential book that you've read and why?

**Aaron Cordovez** (00:49:55) - Probably it's funny, this question, I always have a different answer. Like every time. Like I'm like, okay, there's always a different answer. I think I've answered many various ones and this one's one that has an answer. But I remember this moment. It's a book, okay? It's called Scientology: A New Slant on Life.

**Aaron Cordovez** (00:50:07) - Okay. And I got this book when I was in 10th grade, and I was sitting in my biology class, and it was this moment when I remember so vividly, because I'm sitting there and in my high school, we had 30 minutes of free reading. We can read anything we want at any moment. And so, like, I don't know, I got the book. You know, my dad had me checked out, I said, okay, check it out. So I bought the book. I'm sitting there reading and I'm reading this chapter on like, evolution, okay. And my whole life, you know, you're told like, okay, here's evolution. There's the monkeys, there's this whatever, and you're a monkey. And now you're no longer a monkey or whatever. And I'm reading and this guy says, listen, they don't ask you to like, inspect that information to see if it's true, if you believe it. And they fail to say yes, maybe the body's went through evolution.

**Aaron Cordovez** (00:50:45) - But what if there was a higher power at play that was using this cycle of evolution to achieve something that's basically a divine entity, something that's higher and more spiritual, that's using this sort of structure of evolution. And then it was so funny because I'm sitting in the room, I'm in my biology class and I go, oh crap, no one asked me like, hey, do you think this through? They just said, this is the fact. And I took it on as fact before even actually analyzing it. And I think at that moment I realized a lot of things that we are taught. We're taught as fact, as opposed to being invited to go and look and see for yourself. So that would really change my life at that moment in a big way.

**Josh Hadley** (00:51:15) - I love that, and it goes back to what are the assumptions that you make in the stories you tell in your mind, right. And us as human beings, we love to jump to a conclusion and think that that's the reality of it.

**Josh Hadley** (00:51:23) - And sometimes there's a lot more to learn. Aaron. Question number two here. What is a new productivity tool or software tool that you've recently discovered? You've been using something that you think is a hidden gem that other people should use?

**Aaron Cordovez** (00:51:34) - I love Airtable okay. Airtable.Com this is a $9 billion company or $3 billion. It's like a humongous company. It is like Excel on steroids. It is so beautiful. It's so easy to use. And we use it in a lot of our different areas of the company. I love Airtable, I'm a big proponent of it. I create so many things in our table. I love that one. I mean, there's a bunch of others. Dropbox is amazing. Obviously slack, like a lot of the ones people know about, right? Like a lot of people use slack. Slack is amazing. Dropbox people use it. You know, there's a lot of similar password manager tools. They're all amazing. But I don't know, I love Airtable, it's one of them.

**Josh Hadley** (00:52:02) - Yeah. They're tables that we use as well. So I echo those same sentiments. All right, Erin, final question for you here. Who is somebody that you admire or respect the most in the e-commerce space that other people should be following and why?

**Aaron Cordovez** (00:52:11) - I think Jabran Niaz is okay from Utopia deals. Utopia. Kitchen. Utopia. Sheetz. Utopia. Everything okay? I had him on the podcast. There's not a lot of places you can listen to him because he's spending his time building, you know, his brand, and, like, that's amazing. But you need to listen to this guy because he has over 10,000 employees. He's the number 16 exporter in the entire country of Pakistan. Pakistan has been growing at an exponential rate. Their labor rates are less than China. Chinese labor is more expensive because of the low birth rate. And right now, the amount of young people that are willing to work for, like not that high is extremely low. And in Pakistan, their populations, they're becoming one of the world's next superpowers.

**Aaron Cordovez** (00:52:45) - And this guy has harnessed a lot of that community to build products for the entire world right out of there. And it's amazing how somebody within nine years can go from not having a business working at Bank of America to becoming number 16, exporter of a country with over 300 million people. I mean, this guy's spectacular human being. Gibran has like, search whatever this guy's talked about, go listen to somebody selling over $700 million in Amazon. I highly recommend it.

**Josh Hadley** (00:53:06) - Yeah. That's brilliant. I love that. Great recommendation. Aaron, thank you so much for joining us today. If people want to learn more about you, they want to follow your journey. They're interested in Samurai Seller. Where can people go?

**Aaron Cordovez** (00:53:16) - Yeah. just any social media Aaron Cordovez's. That's two A's. Aaron, I got the podcast, we got LinkedIn, Instagram, you name it, we're on there. Honestly, just send me a message on LinkedIn. A lot of times I respond to it. That's probably the easiest way to reach me directly or leave a comment or anything on YouTube is perfect.

**Josh Hadley** (00:53:30) - Awesome! I love that Aaron. Thanks again for your time today.

**Aaron Cordovez** (00:53:33) - Awesome, Josh. Thank you brother. It's been a pleasure.