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Unprepared Ep 65 - Diversifying Your Sales Channel with Zach Toste

Timestamp

  • [00:00] - Sponsor: Rewind
  • [00:40] - Intro
  • [01:14] - What is Dotcom Partners?
  • [04:55] - Why should you be on a retailer channel?
  • [06:33] - How businesses scale
  • [09:41] - Fees for the marketplace
  • [11:22] - Who can use these marketplaces?
  • [13:11] - Where to find Zach
  • [14:05] - Educational platform for clients
  • [15:33] - Parting words

Resources

Key Points

  • DotCom Partners started because they want to make Ecommerce an easier channel to navigate.
  • Some brands only operate in Amazon or one specific retailer and they want to expand. DotCom Partners help these brands connect and thrive on other marketplaces like walmart.com and other retailer channels. 
  • Any brand that values first-party data prefers the DTC strategy.
  • Most brands are not exclusionary: if they’re using one marketplace, they are likely using the other. It’s great for brand awareness and reaching people that social media and email marketing can’t do. 
  • There's always a benefit to expanding your horizon. Marketplaces are an extra channel that serves as an extra boost. 
  • If your product sells on your website and has a product-market fit, it’s going to sell to a marketplace. 
  • Operating on multiple sales channels can help brands scale more quickly and reach a wider audience. 
  • As you scale as a brand (i.e. Walmart side), knowing that ecosystem and how that has worked, basically, it would be like you creating a brand presence, a following, and brand recognition.
  • Some channels are ambiguous so being on one is really a case-by-case basis. For example, there are invite-only channels or channels asking businesses for their proven sales track record, and such. 
  • Joining a sales channel like Walmart.com, especially if you have a compelling product that also fills the gap in that channel's online assortment, you already have a strong case. 

Transcript

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Chase Clymer  

Hey everybody, welcome back to another episode of Unprepared. Today I am welcoming to show Zach Toste from Dotcom Partners. 

Zach is about to school me, and I mean literally school me on feeds, how feeds work, emerging marketplaces, and all this might sound like gibberish to you. 

So without further ado, I'm gonna introduce Zach, and Zach is gonna talk us through what DotCom Partners has been up to recently, where they're focusing on the future of their business and the future of all their clients’ businesses.

Zach Toste  

Awesome. Yeah, thanks so much. So basically, to give everybody who's listening to a little bit of a background on DotCom Partners. 

So we were founded back in December of 2019. And my co-founder Cory Hammond and I basically were ruminating on this idea, while we were at walmart.com. 

You know, what if there was a way where we could make Ecommerce an easier channel to navigate for brands that might not be that top cream of the crop of brands within the category. 

And one thing led to another, and we finally decided to pull the trigger, you know, and we really got off to a good start with our client base. We started off with a team of three. [The] three of us all used to work together on the same team at walmart.com. 

And over time, obviously, as COVID hit, it ended up being something that was really good for our business, because as everyone probably knows, you know, the Ecommerce world got shifted upside down, and everyone started shopping online. 

So we pretty much went from overnight of figuring out how are we going to get more clients, and then the script got really shifted to how are we going to handle the clients that we have with only this amount of people. 

And fast forward to today, you know, we have 13 employees, we've got over 30 clients, we've served brands of all different shapes and sizes from direct to consumer startups all the way up to like Walmart private labels that we've worked with, in tandem with store buyers, to help them round out their online assortment. 

But in a nutshell, you know, what DotCom Partners does is we take a look at your online business, we are all expert merchandisers. 

Most of our team comes from walmart.com. So we've just used the relationships that we've had, and that we've gathered throughout the years working there, and really tried to bring that top-tier talent over into DotCom Partners. And our main message is just to have our clients diversify their online sales channels. 

And basically what that means is a lot of the times, you know, we'll get clients who only operate in Amazon or only operate in one specific retailer, and they want to expand. 

And currently, you know, where we're best at is walmart.com. Because that's our bread and butter and what we know. But as we look forward to the future, and what we're starting to explore now is how do we get clients on to Walmart Canada? How do we get them onto Target? How do we get them into Kroger? And how do we help them thrive in those marketplaces? 

Because if you think from an investment perspective, you know, where a lot of these marketplaces are at now is where Walmart was three or four years ago, as far as like how much time and resources and, you know, just overall development have been going on within those platforms. 

So we figure, if we're first in the game, and again, not only in Walmart but to all these emerging retail channels, we can really help brands succeed and be diverse beyond just the one or two places they might be selling right now.

Chase Clymer  

Oh, yeah. And so I guess a lot of listeners here are, I don't know, you know, I should survey my audience again. 

But from what I remember last time, is it's definitely a lot of direct consumer brands, a lot of them are using Shopify, that's, you know, that's what I'm really good at. But anytime we start talking about using these other marketplaces, it's, you know, my opinion has shifted over the years. 

But it's definitely, yeah, you should be there. And you should figure out how it works for your business. Obviously, the big player in this space is Amazon.

But what kind of, you know, when someone's talking to you, and they're in these initial phases of conversation about, I should be, you know, why should I be on a walmart.com? You know, why should I be on target.com? I sell my branded widget through my own .com. What is that going to do for me?

Zach Toste  

Yeah, I mean, I think that it's really just all about knowing who your audience is and how they're going to find your product. Nowadays, obviously, I think any brand who values first-party data is going to want to prefer a DTC strategy, you know, whether that's from Shopify or WordPress or whatever.

But, you know, I don't think any of them are exclusionary. If you're doing one, you should probably be doing a couple, just because you could almost look at these extra channels as almost like an extra boost to your brand awareness and reaching people that you otherwise wouldn't reach with social media targeting or email campaigns or what have you. 

So there's always a benefit to expanding your horizons, you know. Some of our clients that we work with operate in both of ourselves within DotCom Partners, because we do have, let's call it like a retail team and a direct-to-consumer team. 

So one part of our business does really focus a lot on is building out Shopify stores and helping clients with more of the traditional digital marketing has, but when we've seen the most success is when you can blend the two strategies together, and really figure out how to have the two channels really working with each other, rather than like having an online retailer strategy and having a direct to consumer strategy. 

There's really a way that you can mix them both and make them both play off of each other really well.

Chase Clymer  

Absolutely. And obviously, you're using these other marketplaces are going to...in short, if you have a product that is selling on your own website, you've got product-market fit when you take a product with that level of maturity to a marketplace, it's going to sell. I mean, that's it's just that simple of a statement. 

What kind of results have you seen as far as like velocity or like a scale for these clients? Has it helped him scale? Does it help them hit those economies of scale where they're going to have an easier time with, you know, doing larger purchase orders or funding? What are some of the other, you know, ancillary benefits of just selling more of your product faster?

Zach Toste  

Yeah, I mean, I'm definitely, you hit the nail on the head, especially with economies of scale. You know, again, direct to consumer, sometimes, depending on what your product and industry are, it can be a slow-moving process, or relatively so.

But again, if you're operating on multiple sales channels, and you really kind of point those different levers, not only are you going to be able to scale more quickly, and again, reach a bigger audience just that much more exponentially. 

But at the same time, you know, I think any brand’s pie in the sky is how do I get in the store, in a retailer and again, has to be the right product-market fit. But you're starting to look at these DTC brands over time, starting to develop relationships, you look at Quip and Target. 

You look at all these other DTC brands that are really trying to pop up in these big-box retailer stores, which, in a way, kind of goes against the original DTC model, right? Just you're selling direct to consumer, we're cutting out the middleman, there are no more retail costs. 

But as you scale as a brand, what being from the Walmart side, knowing that ecosystem and how that has worked, basically, it would be like, you create this brand presence, you create a following, and you have this brand recognition. 

And as you start scaling and offering a wider product assortment, maybe, you know, if you're going into a Walmart or a Target store, you offer a more cost-effective product that would resonate with that Target or Walmart customer rather than having to like match up perfectly with what you're selling on your GDC site. 

Another thing that I've noticed too, and this is more so of brands that have scaled tremendously already, so if you look at Frito-Lay what they've done in the past year watching their own DTC stuff.

And you're starting to see all these big CPG companies launching direct consumer experiences. That's kind of like what we're seeing in the reverse, where it's like they've only traditionally been in, you know, brick and mortar, big-box retailer stores. 

How do you connect with customers beyond that and furthermore, you know, being able to offer limited products or let's call it your long-tail assortment on your DTC channels? 

And then using those in-store ones as like, you know, if I'm a potato chip manufacturer, you're going to have your sour cream, onion and salt and vinegar and barbecue chips on the shelves because, you know, that's what sells. But maybe on DTC, you also offer your limited time, like, Tabasco sauce are your, you know, weird funky flavors that are kind of almost a novelty. So it's, again, really understanding like, you need to really just understand your market understand your product and where people are going to be shopping for what?

Chase Clymer  

Absolutely, and then I know that people would yell at me in the comments if I didn't ask, you know, one of the things one of the arguments I guess, or just it is what it is people bring up all the time when talking about Amazon is you know, there's a fee, there's a fee. 

So what does that look like for using the Walmart feed? I guess, and then you know, if you have any other information you can share about any of the other feeds that you guys have been exploring as of late. 

Zach Toste  

Yeah. So just to clarify, you're mentioning like when you sell you're just getting, do you have to give Amazon a commission? Right? 

Chase Clymer  

Yeah, yes.

Zach Toste  

Okay. So I mean, I think pretty much across the board, any marketplace that you're selling in, you're going to have some sort of fee attached. 

But then my counterargument to that would be like, what's your cost per acquisition when you're monetizing through social? You know, you're not getting those customers for free, unless you have some incredible marketing playbook that I don't know about. 

But, you know, I think it's, again, all about, and that's where I think a lot of the...this is where the line gets really blurred between, you know, being like a marketer and being able to acquire customers, but then we're DotCom Partners really adds that value is that we're, we're truly merchandisers first and marketers second. 

So you know, being able to analyze like your product costs, looking at, you know, your cost per acquisition averages across DTC, and you equate that too well, okay, if your average cost per acquisition is 25% of your margin, can you sustain that when you move over into walmart.com, or to Kroger's, or to target online? 

And you know, is that equitable like are you should theoretically be willing to pay that amount to acquire a customer. You know, again, it's all about just really recognizing, like, where you want to be playing in this audience, where you want your product to be falling within the spectrum of online.

Chase Clymer  

Awesome. And now, that kind of leads me to my next question, which is, can anybody be in these marketplaces? You know, can they get into these product feeds or, you know, is it invite-only? Do I need to have a certain volume? Certain brand awareness? You know, you can anybody listening to this podcast get their products in, say Walmart's feed?

Zach Toste  

I will say that over the last year, especially again, since COVID, went down, Walmart has started relying a lot more on their marketplace offering and really gone away from one which would be either dropship or own inventory. 

So mostly, yes, I would say like, if you have a compelling enough product, and you know, do some research, literally just start searching keyword terms for your product on walmart.com, let's say if you think that your product falls in there, and you are adding a gap in Walmart's online assortment, or you are better priced, or you can add some sort of value to you know, what you think that their customers are shopping currently, you've already got a very strong case.

I will say for other marketplaces is a little bit more ambiguous against and some of them are a little bit more behind from where Walmart is. 

Some of them are invite-only some of them have to kind of have a proven sales track record. So I would say, you know, it really just depends. It's worth exploring and just it really, I hate to say it, but it is like a case by case basis. 

You know, because for example, if you're a really niche brand, and you're trying to get into like a Lowe's but maybe your assortment doesn't necessarily fit what Lowes.com is going for, you might have a tougher time getting listed rather than going to a Walmart.com

Chase Clymer  

No, that makes complete sense. So if someone is listening to this, and they're like, you know what, I really think that my product would probably do well on Walmart.com How do they get ahold of you? How do they reach out?

Zach Toste  

Yeah, so you can just go to dotcompartners.com you know, we have plenty of contact forms on there to fill out. You can also send over an email to business@dotcompartners.com

But basically, you know, what we do is, we have these onboarding surveys that will basically just gauge like: Where are you selling right now? What channels are you operating in? What do you need help with?

And from there, one of our team members will, you know, take the reins and guide you through our process. I will say, over time, we've had to get a little bit more selective with our clients that we're taking on just because bandwidth is a thing. 

And you know, as much as I would love it, we can't just keep on hiring and hiring and hiring. So now we're starting to have the chance to basically matchmake with our clients, which I think just allows us to provide the best service possible. 

What we are doing, though, in the near future is we're working on an educational platform that is going to be for the people who don't necessarily meet that best fit for our clientele in the immediate term. 

We are developing this online resource, basically, an app that really just corrals all of our knowledge that we have with walmart.com we have a glossary of I think over 200 terms already. 

When you hear people talking about walmart.com or maybe even Ecommerce in general, you know, what do these acronyms mean? What do these terms mean? How does it fit into my overall strategy online? 

And, you know, we're really trying to see if there's an appetite in the market as well. If you're running a DTC startup, you have a team of four or five, and don't have a budget to hire an agency, can you invest you know, whatever the cost is for this new educational platform and empower your own team to figure out how to operate on these channels or at least get up and running by themselves? 

And as part of that offering, you know, we're also trying to work in, let's say, you know, you go through and you're in the item setup portion of our course. And you're a little bit stuck in a little bit confused. 

We're trying to come up with like different packages of like, "Okay, well, you can hire a DCP for two hours and we can get one of our specialists to come and help you walk you through the item setup phase, or get you onboarded onto walmart.com". 

So we're really trying to see how we can help as many people as possible while keeping it cost-effective for our potential clients as well.

Chase Clymer  

Absolutely, Zach, I can't thank you enough for coming on the podcast. 

Everybody, I'll link to all that all the information that Zack has shared into the show notes as well. And I'm sure he'll be back soon enough. 

And, you know, as these marketplaces evolve, you're going to be my go-to guy when I have questions.

Zach Toste  

Awesome. Alright, thanks so much. I appreciate it.