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“Vendors are Not Evil” with Chip Overstreet - Honest Ecommerce Ep. 133

Chip Overstreet is the CEO of Spiceology, the fastest growing spices and blends company in the US, and a beloved brand with both consumers and chefs. 

Just prior, Chip ran business development for Affirm, the market leader in the “buy now, pay later” consumer financing space. He started his career at Oracle, and ran his first company, RTIME, in the late 90s – RTIME was acquired by SONY in 2000 to enable the PlayStation 2 with online multiplayer gaming capabilities. 

Chip spent most of his career helping small, emerging companies compete with the Goliaths and he takes great joy in doing so. 

Overstreet graduated from Stanford with a BA in Economics and secured all of his graduate degrees from the “school of hard knocks”. 

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:16] From serving clients to being a client
  • [02:53] Passion and potential
  • [03:40] The strong foundation of Spiceology
  • [06:59] Ardent support on Chef’s Manifesto
  • [08:35] Partnering with influencers
  • [11:18] Content from consumers and partners
  • [13:09] Sponsor: Electric Eye electriceye.io
  • [13:30] Sponsor: Mesa getmesa.com/honest
  • [14:23] Sponsor: Rewind rewind.io/honest
  • [14:58] Sponsor: Gorgias gorgias.grsm.io/honest
  • [16:27] Sponsor: Klaviyo klaviyo.com/honest
  • [17:36] Chip’s advice for taking the next step
  • [18:58] Embracing your vendors
  • [20:36] The better vendors
  • [21:11] Talking about the customer’s perspective
  • [22:10] Having a strategy vs relying on hype
  • [23:13] Covid-19’s impact on Ecom
  • [26:46] The fall and rise again of food service
  • [27:51] Longing for the dining experience
  • [28:59] The growing consumer demand for everything
  • [29:47] Traditional spending vs Ecommerce
  • [31:44] Upcoming partnerships for Spiceology

Resources:

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 Transcript:

Chip Overstreet  

Spend time watching and learning from others. There's nothing better than experience.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey everybody. Welcome back to another episode of Honest Ecommerce. I'm Chase, coming to you from sunny Columbus, Ohio today. 

And from across the country, [we're] welcoming Chip Overstreet. Chip is the CEO of Spiceology, a direct-to-consumer and direct-to-chef spice company that believes that the time is ripe for disruption in the spice category. 

Chip spent about 25 years in technology and Ecommerce software before jumping ship to the merchant side around 2 years ago. His claim is that it's more fun putting powders in jars than it is selling ones and zeros. 

Welcome to the show, Chip. 

Chip Overstreet  

Thanks for having me, Chase. Appreciate it. 

Chase Clymer  

Well, 25 years in Ecommerce and in the tech side of things and the grass is always greener, as they say. 

So take me back to before you jumped ship. What were you feeling, what was going on, and where did it make sense to dive into your merchant journey?

Chip Overstreet  

Well, I moved my family from the Bay Area --which is the tech center hub-- up to Spokane, Washington in 2011. It was a "turn the volume down" move, just a "quality of life" move. 

But there were not a lot of high-tech jobs in Spokane so I continued to commute back down to San Francisco every other week and do my jobs here and there. And then about 2 and a half years ago... 

Actually 4 or 5 years ago, I invested in this little company called Spiceology, they were raising their seed round of capital and I helped the founders. One of the founders is a chef and the other one is a food blogger. 

So they'd never raised financing before. So I helped them close the round of financing. They asked me to be on the board so I joined their board. 

And for the next couple of years, I spent a couple hours a week with the team, learning about the business, learning about the industry, in general. I just fell in love with it. 

And 2 and a half years ago, I was on my way to another job. And they said "You know what, why don't you come [and] run this? You come in and do the boring stuff. 

And let us do the fun stuff." I was like (laughing), "That sounds great." So yeah. So I just... Yeah. That was how it all happened.

Chase Clymer  

I can see just by how passionately you're talking about... These guys have never done it. 

Honestly, you can see that the wheels were turning in your brain and you were just falling in love with it as you were helping them get started. 

I think that honestly, to me, the journey is always more fun than the destination. And that's where a lot of cool stuff happens. 

Chip Overstreet  

Absolutely. Absolutely. And these guys, they weren't noobs. They absolutely... They built this brand. And they --I think-- elevated Spiceology above the 1000s of little spice companies that were out there. 

And so I was fortunate to come into a situation that had so much potential. And I already had accomplished so much. And it was just fun. And I'm 2 plus years in and I've never had more fun in my life.

Chase Clymer  

So knowing the brand and making that initial investment in the seed round. I know a lot of the listeners out there. They're looking... They're still in that going from zero to one phase. And they're trying to find... 

Get traction and work on product-market fit. What did the brand do before you came on board that gave them that first initial push out into the open and really started to get the wheels turning within the business going from more of an idea to an actual business?

Chip Overstreet  

I think there are a couple of key decisions that the founders made early on. Number one: Quality. "Grind fresh, shipped fresh" was always the mentality. The key attribute about spices is the moment you grind them, they start to lose their essential oils. 

And that's what creates the flavor. And if you look at what the mega corporations are doing, they're grinding as close to the sources they can back in Vietnam or China or Sri Lanka, storing it there. It's much cheaper to do that. 

And in many instances, by the time that product gets to your table or into a commercial kitchen, it can be several years. So that ethos was really important to the company. Innovation was key. 

One of the things that the founders did early on is they just went to ask consumers. "Tell me about your favorite blend. What do you really love?" And what's interesting is most consumers couldn't even name a blend. They just didn't know it. 

So we came out with the world's first Cajun seasoning with real dehydrated blue cheese. We call it Black & Bleu. It is amazing on steak. I put it on my eggs in the morning. My kids put it on their Mac and Cheese. This is this unique combination of flavors. 

We put raspberry powder together with Chipotle powder. Who does that? We do that! You put that on ribs and it's amazing. But you can put it into a brownie mix and your brownies will pop. 

So our tagline is "Experiment with flavor." The innovation that our chefs... By the way, We're chef owned and operated. That is another key thing. We've got about 8 chefs on staff. And we don't rely on big data. 

We don't rely on food chemistry to come up with cool things. We rely on chefs with really good palates and an imagination to try new things. And so it's a combination of quality and innovation that has just piqued the consumer's imagination. 

And then on the chef side, it's about the quality. And one of our favorite things to do when we're meeting with a chef in rare instances...In the last 18 months, we've actually got to go in and meet a chef. 

But when we do, we've got this playbook where we'll take our domestic garlic --here it is right here-- and when we walk into the room, the rep will just open it up casually and take the top off and just set the jar down. And then we should have a conversation.... 

Started having a conversation. It's like 30-60 seconds later, all of a sudden the chef's eyes pop and go "What? What is that?" That's garlic. Here. Smell this, you probably haven't smelled real garlic in forever." 

And the reaction that you get when a chef realizes that for decades, they've been buying just really average product and how good it can be. It's fun. It's a fun experience.

Chase Clymer  

Yeah, you guys take your partnerships with chefs almost to another level. You do a lot of influencer campaigns with them. You guys also are very ardent supporters of the Chef's Manifesto. 

Being so tied to that customer base, I believe, has really helped you grow. So I want to talk about the manifesto a little bit. And then let's circle back and talk about how the influencer program is helping you grow.

Chip Overstreet  

So we got introduced to the Chef’s Manifesto by Dennis Prescott, who is an amazing individual and amazing chef. And [we] had not heard of it prior, but it's basically part of the United Nation’s SDG2 initiative, which is all about sustainability. 

And they crafted this Chef's Manifesto as a way to make this sustainability approachable to mere mortals: to consumers and chefs. So that they could really understand what the issues are and how they can participate in that. 

And with a core focus on chefs, as soon as we learned about it, we started diving in and realized this is a really cool initiative and it has an opportunity to have a meaningful impact on local and world communities. 

And so we just embraced it and have been ardent supporters. There's much more to come. But it's just a great framework for being able to talk about, and think about, and act upon sustainability.

Chase Clymer  

Oh yeah. You've got to put your foot down and stand up for something, especially these days with just how much direct-to-consumer has impacted the world in general with the extra stuff that gets produced either through packaging materials, or through carbon that's submitted through the process. 

So giving back is something that a lot of consumers are looking for. And it's fantastic that you guys do that. Now, with the quality of your products, you guys are partnering with influencers all over the place. Very famous chefs. 

How does that whole partnership aspect, the influencer aspect, play into your marketing strategy for the company?

Chip Overstreet  

It's pretty central to it. I mean, we... Early on, we started partnering with barbecue influencers, Derek Wolf - Over the Fire Cooking and Matt Crawford - Sasquatch BBQ

And what we did is we would lock arms, and we would really try to understand how they think about food, and how they think about cooking ,and what influences them. 

And our chefs would collaborate with them and we'd come up with blends that really spoke to them in how they wanted to cook and then we brought those to market. And then we expanded those relationships with chefs. 

And then of late we just launched --actually, this week-- with MOD Pizza. Press release just went out a couple days ago, but they're leveraging one of our salt-free blends called El Taco

And they've launched an LTO called Iggy. It's a street taco pizza. In 2 weeks, we're launching... I'll give you a little heads up with New Belgium. 

So New Belgium is the maker of Fat Tire and Voodoo Ranger. And they're just a very cool company. They're, I think, the third largest craft brewer in America. They're privately held. They're not owned by one of the mega corporations. They're a B Corporation. Crazy good marketing. Great marketing. 

And we're launching a line of 6 beer-infused blends in collaboration with them. And they're a lot of fun. So barbecue influencers, chefs, brands, restaurant chains... Really having a lot of fun just partnering with a variety of partners. 

And in every instance, it's about really learning from them what it is that they want to do, and what's important to them. And then using our chefs who are brilliant at ideation and coming up with formulations that really work and bringing them to market.

Chase Clymer  

Well. And there's also this ancillary benefit of all these partnerships is you guys are not lacking when it comes to the content side. 

All of these partnerships produce so much amazing content from the relationship with either the chef or the partner business, but also I'm assuming that there's a ton of amazing user generated content that comes back after the fact of people out in the wild playing with these flavors.

Chip Overstreet  

Yeah, absolutely. It's a fun market to be in because people love food. They love delicious food. Our tagline is experiment with flavor. And we really encourage consumers and chefs to just try new things and share them. 

And share it when you take a photo. Document the recipe. We've got just shy of 250,000 followers on Instagram, the kids would call us legit. It's just fun. It's just fun to be part of something that's so vibrant, and colorful.

Chase Clymer  

Honestly I believe that if you're getting into direct-to-consumer business, and you're in the food space, you have a leg up on everyone else.

Because there are a lot of these other brands out there, it's probably hard to come up with ideas to create content...

Chip Overstreet  

Yeah.

Chase Clymer  

...around a pair of shoes every day. But in food... Food. It's just so easy to be like "Alright, well let's do another... We'll just do another recipe. We'll do another thing based upon that recipe.” 

I just feel like building the content engine for anything direct-to-consumer related to food is just such an easy playbook.

Chip Overstreet  

Well yeah. And you said just now. It's not us coming up with the content. It's our consumers and chefs that are out there, opening up the Smoky Honey Habanero for the first time and coming up with something amazing. And in capturing that and sharing it.

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Chase Clymer  

Now, obviously a lot of the listeners here, potentially... Probably not, getting into the food industry and especially DTC food, which I think is a very, very interesting industry. 

But what advice would you have to someone out there that they've got an idea in their head, but they haven't really got to the next step. What would you tell them to do? 

Chip Overstreet  

Wow, I think the most important thing is you have to be passionate about it. You can't just  come up with an idea and go execute on it, if you really don't believe in it. And so don't settle. 

Don't just think you've got to come up with an idea and then go pursue it. That passion has to be there. And that was one of the things that attracted me to the company is the founding team. 

The founders and the team that they built, people just loved it. It was just a culture of fun. And everybody knew that they were part of something that could be big. 

They were just taken step after step marching towards that. I would also say spend time watching and learning from others. There's nothing better than experience. And I would also say you --having come from the vendor side-- get to know the vendor community. 

One of the things that was so frustrating on the vendor side is you reach out to a brand and you want to educate them on what you could do for them and too many people... Too many people on the brand side, give you the heisman. It's like this is... "The vendors are evil." Vendors are not evil. Vendors are a great source of knowledge. 

If you're interested in personalization, you can go read article after article. But pick 4 vendors, call them up and say "Pitch me. Tell me what you do. Tell me why you're better than the competition. What are the three most important things that I should be thinking about?"

Every one of these vendors is thinking about a day and night and so you can get educated. You can learn a ton by embracing them instead of  keeping them at bay.

Chase Clymer  

Yeah, and for those that are less into the industry jargon like Me and Chip, a vendor would be like an app provider or an agency or something like that... 

Chip Overstreet  

Ecommerce vendor or email vendor. Personalization, UGC, ratings and reviews. There's just so many different facets.

And one of the things that we always knew on the vendor side is that every incremental solution that you... That a brand would bring on, would add just a little bit higher conversion rate a little bit more to your AOV

But it's about strategically picking and choosing between those. And it's hard to be an expert. 

And you can't be an expert. But if you leverage the community and go in with open eyes and open arms and just say, "Educate me. Help me understand this." And ask them questions. They will love that. And you will prove your business.

Chase Clymer  

[For] any vendor out there, if they can't quantify the value and the impact that they're going to bring to your business, they need to work on their pitch because most of them have it down to a science and point you to case studies, point you to similar things and be like, "This is what you're probably looking for."

And even for most of them out there, they're pretty honest. And they're like, "Hey, we're probably not the best fit. But you should probably go talk to this person. This is probably what's going to do you better in your stage of a business or the problem you're looking to solve. It's a better fit for this thing."

Chip Overstreet  

 Yeah.

Chase Clymer  

The better vendors out there are just very straightforward.

Chip Overstreet  

The other thing I would recommend you do is with every vendor you talk to, make them frame their solution from the perspective of a consumer. Today, a consumer came to my site and they had this experience. [If] we implement your solution, what's different? What does that consumer see or do differently? 

Because as soon as you start thinking in those terms, it becomes more real. Too many of these vendors show up and they tell you about their product and their features and  their dashboard and... Just talk to me from a consumer's perspective. 

And that can very much frame the opportunity for you and really understand how you should be prioritizing different types of solutions over other ones. Should personalization come before ratings and reviews, before a loyalty program, before post purchase?

All of those decisions are much easier made when you really understand the impact it has on the consumers that are visiting your site, interacting with your brand.

Chase Clymer  

I think every week, there's a new player in this space. And sometimes there is a little bit of signal versus noise. You got to realize... Put your blinders on and focus on KPIs. And then from the KPIs that you're focusing on. 

Figure out if there needs to be technology improvements, or  experience improvements on your website and go from that direction. I think some businesses get caught up in the flavor of the week, the hypest technology, or the newest player in this space that's just raised some seed round, so they must be good. 

That's not the basis of any sort of strategy. So I would definitely say identify the KPIs that matter to your business, and then make your decisions based upon making efforts to improve those KPIs. Having a strategy behind this is the way to approach it.

Chip Overstreet  

And I would say, even ask the vendors. "What KPIs should I care about? Help me understand your perspective on the KPIs that I should care about across these different types of technologies?"

Chase Clymer  

Absolutely. Now, we are recording this at the --I want to say-- the tail end of the Covid- 19 pandemic. June 15 is the date, for anyone that gives a crap when we record these things. 

And this is gonna come out in like a month, I would say, but I know that COVID had a huge impact on Spiceology. What could you share there? 

And then doubling down on that question, what do you think COVID's impact on Ecommerce in general is? What's going to change in the direct-to-consumer? Or I see a lot of stuff happening with store experiences as well.

Chip Overstreet  

Yeah. COVID definitely impacted us when we entered 2020. We were gearing up to really focus deeply on chefs and restaurants. We had a ton of momentum, some great partnerships that we had lined up. 

And obviously when COVID hits, the last thing you want to do is pick up a phone and call a chef and tell them you've got a better product for them (laughs) because that would be... 

That is tone deaf as you could be. So we... March 16th, we laid off 25% of our workforce. We had 5 people that started that day. 4 of them. We had to let go by noon. 

It was a pretty devastating time when we had to make a really hard pivot directly to consumers. 

When I hired our VP of Marketing in early January, I told her I said "Jeannie, you don't get one dollar to spend on consumers. Everything's going to chefs. Chefs are the new rock stars.” 

“They're the pro athletes and consumers grow up watching chefs. They watch them on TV, they watch them on the Food Network, on Netflix, and the consumers will come along because the chefs... They want to emulate chefs.”

On March 16th, I said “Jeannie you don't get one dollar to spend on chefs since we're all going to the consumer (laughs).” So it was a pretty big about-face. 

We decided we were going to lean in really hard on marketing rather than backing away and just playing it safe. We hired our first PR agency mid-April. 

We hired our first content guy, Matt Broussard. "A Chef named Matt" who subsequently has blown up to 5.5 million followers on TikTok. We put up a recipe section, and we got UGC in. It's one of the first things. 

Now, chefs are utilitarian. They don't want ratings and reviews. They don't want user generated content. They just want... "Give me the best product, make it really easy for me to buy." Consumers are very different. They want an experience. They want to learn. They want to understand. They want a recipe. 

So we made a number of pretty dramatic changes very quickly. We did a lot of product launches, we doubled down on influencers, and we launched our salt-free seasoning to really try to appeal to the more healthy conscious consumers and it worked. And our consumer business went up 3x-4x last year. 

And food service did not crater the way that we thought it would. It was down about 15%. And now it's back stronger than it was in January-February of last year. 

So we've now got the benefit of really 2 strong pillars to the business: The consumer business and the food service side. So yeah, it is. It knocked us on our butts. But we figured a way to get up and you keep plowing ahead.

Chase Clymer  

Yeah, I think a lot of businesses took a breath when it was happening. And then they said, "Well, it's either now or never. Let's dive in on this thing." And the ones that made the investment during that time...  That was a wild ride to be involved in. 

I saw a lot of crazy growth for the brands that we were working with, we're investing during that time. They're like, "We're not going to hold back. We're going to dive all in on direct-to-consumer." 

And they maintain that momentum and grow their customer bases. So it was really... It was an "okay" result from a bad situation, I guess, is the only way to spin it. 

The one thing that I have seen, though, you mentioned that food services in a better place than it was before because I think that just the velocity and the volume at which restaurants are producing food, with just the acceptance of delivery through all of the different vendors in that regard, that skyrocketed during everything. 

I think people are just moving that much more food these days.

Chip Overstreet  

But there's so much pent up demand. How many times have you coveted going to a restaurant over the last 18 months and just been like "I just want to go eat"? Depending on where you are in the country, that was a difficult proposition. 

So here in Spokane, there are lines out the door everywhere. You can't get a table. So I think that will cool off a little bit. 

But I think that people... The lack or the inability to go out and eat has created this, I think, a lasting desire to like really, really appreciate that. I think  the ghost kitchens were probably a little bit overbuilt. I think that you're probably gonna see a little bit of pullback on that. Certainly millennials and Gen Z, love to get food delivered to them. 

But I think that just from the experience of going out to a restaurant and sitting down and dining, you can't you can't replicate that with Uber Eats or GrubHub experience.

Chase Clymer  

I agree that there is. I think that there's always... In every action there's an equal and opposite reaction. 

There's a pendulum to almost all things in life and I think that with the takeaway experience and in-person and dining in and just all of that. 

All of the stuff that we couldn't do, it's gonna just surge for the next year and you're already seeing it with some of the consumer spending these days, diving in a lot on outdoor related products and stuff as the season starts to get warmer and people start to do things again.

Chip Overstreet  

Yeah. The consumer demand for just about everything just got through the roof. It's really bizarre. And it has to cool down at some point. There's not an endless buying capacity, but...

Chase Clymer  

No, there isn't. (laughs) But the one thing that I do think is here to stay is just the impact... That's the wrong term. What am I looking for? The percentage of overall Ecommerce spending versus traditional spending. 

I think that the influx and all those new buyers, the people that weren't traditionally shopping, I don't think they're gonna stop once they realized how easy buying online was. And it wasn't as scary as whatever they had worked up in their heads. 

I think they're here to stay and I think it's gonna be fun to... Ecommerce is still growing now, even though we jumped 10% during the pandemic.

Chip Overstreet  

Yeah. No, I completely agree with that. I think that the impetus was there. You had to buy it online. And people that did have those concerns, they had to get over it. And so you did see that resurgence. 

We've not seen... The growth on the direct to consumer is not as ridiculous as it was last year, but the growth is still strong. On the DTC channel. But we've...

Beginning of this year, we started expanding into retail grocery and really starting down that path of getting our product closer to consumers. 

We had a reasonable presence, especially retail, which are the mom and pop shops, butchers, seafood shops, gift shops... Trinkets here and there. That blew up over... During COVID, I should say. 

But the success that we're seeing already in retail and grocery has been... They've been pretty astounding. We've got a brand that is becoming more and more recognized. And it's appreciated for quality and innovation. And  that's recognized by the buyers.

Chase Clymer  

And that's amazing. Now, before I let you go, I have 2 final questions for you. And they're pretty easy to answer back to back. 

First, is there anything that I forgot to ask you that you want to share with our listeners today? 

And then second, if I am now curious to try all these awesome flavors? Where do I go to check out the products?

Chip Overstreet  

Well, you didn't ask me about what sorts of crazy partnerships we have coming up. And I wouldn't tell you anyway. I did float the news about New Belgium. But that will be... That will be live. 

But we have some really cool stuff coming up. I'm so excited. The team is so excited about the continuing success we're having with partnerships out there. 

So keep your eyes open for us. And you will start to see... You will find us in specialty retailers, primarily. Direct to consumer is still the primary channel. 

We're available on Amazon and Amazon Canada. But go to your local butcher. If they're not carrying us, ask them why. Go to your local seafood shop. If they're not carrying this, ask them why. 

But yeah, that's the primary model. But you will start to see us in some retailers that we'll be announcing and rolling out very soon.

Chase Clymer  

And that's amazing. I'll keep my eyes peeled. I've got a strong hunch of where that might be. 

Chip Overstreet  

Good to hear. 

Chase Clymer  

Awesome. Thanks so much for coming on, Chip. 

Chip Overstreet  

Chase, thanks so much. I appreciate it. 

Outro:

Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. 

We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

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And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.