Welcome to the third episode of My Grand Venture Heroes.
For this episode our Brand Relation Manager, Robin, had the chance to speak with Nick Shackelford, expert of branding, and we are here to share with you his story and strategies.
Here below you find both the video and the written interview.
Nick, welcome to My Grand Venture Heroes. We would like to start by asking you to tell our uDroppers something about yourself, how you started, and why now everybody defines you the best of the best when it comes to branding.
Let’s start by saying that I don’t define myself the best for branding, at least not yet.
When it comes to my career, I have to say that it all started with the fidget spinner, because that was our first adventure with dropshipping.
My partner Jake had the main idea about how to get this up and running. Then we found the product on Alibaba, we found a mediator, we reached out and we started sourcing as much as possible.
But, of course, first we tested the product the traditional way: we found the product, saw if we could sell it, realize we could do it. And then it came the panic, because we didn’t know who was going to ship the product. Should we ship it to us or find a 3PL (third-party logistic).
The fidget spinner project started in 2017 and it was a changing point for both my career and the reputation of our business, that we have been doing for 6/7 years, now.
Dropshipping was the right way to start, because I didn’t know about logistics, negotiation and rates. What I knew was how to market and how to speak creativity, so I used my skills and dropshipping to build something.
I believe that the second episode of My Grand Venture featured Tim Burd and I keep crediting to Tim giving me the first initial push.
You see I’m in California and Tim is Irvine – well, now he’s in Newport Beach, but his offices were in Irvine before. So I went there to meet him and he told me “Look, we are growing really quick at Agency Y and we need media buyers”. So I was there, I opened my computer and showed him that I did with fidgetly and then I sad “What can I do, how can I help” and he was like “Sit down, you’re going to go grind”.
So together we say the first products we sold in dropshipping like magnetic eyelashes (is there anyone still selling them by the way?), the make-up brush cleaner, the one the you put in the little bulb. LED lights.
Every product I am about to list made us at least half million dollars: flame light bulb, dog lint cleaner, make-up brush cleaner, magnetic eyelashes, LED lights, vanity mirror.
We were into the dropshipping game super aggressively, but then there was a shift. Because I was looking at comments and on every post and ads, all the interactions were saying “Hey my product didn’t come.” “This is shit” “You are not responding to me” “Where is customer support?”.
And I couldn’t control all this things that were popping up, but they were hurting my ads, and this made me freak out.
[Robin] I understand this is the reason why uDroppy exists. We deal with logistic, shipping, and quality check, so that digital entrepreneurs like you, really good at marketing. can focus only on that, invest on that, and go and scale up a storm and conquer the world.
Dropshipping it was just the beginning of something for you. 2019 is the year when entrepreneurs finally understood the importance of having a brand. Can you tell us something about the phases that took you to all the way to create a successful brand?
It’s a pleasure, but I want to start with a premise. Kylie Jenner just sold her business for 600 million dollars to a bigger company.
600 million dollars. And Kylie sells make-up that most people can find. In fact, Kylie’s make-up is a brand of another parent company called Colourpop Cosmetics.
But this is the important part, because we don’t talk about Colourpop Cosmetics, but we all know Kylie.
Essentially she was able to build her brand leveraging social growth, connections, her clout. And this allowed her to sell products that Colourpop Cosmetics couldn’t sell in years, and to earn 600 million dollars from this asset.
What’s incredible is that Kylie was able to exit something that is her name literally!
But let’s go back to your question.
The first stage is to test the product market fit. You need to understand if you can sell that product. You need to feel an entrepreneur and confident enough you can actually sell the product, source the product, and work with uDroppy or designers to create your own branded product.
You need to establish yourself before building a brand.
This is something people and gurus don’t talk about because they don’t understand that you need to be ready to build before you can actually, physically, build.
The second phase activates when you have product market fit and you’re selling the product. At this point you want to grow up the right vibe and experience around your product. You don’t want to convince a consumer to buy your product. You want them to be part of your community by sharing content and make them understand that you feel them as part of your life and you feel yourself part of theirs.
I would love to ask to your dropshippers what is their average repeat purchase rate, what are the consistent comments that they are getting. Are people proud to buy their products?
This is important because for me, it is what I want to hear all the time. And this is the moment when you know you started crossing to a branding experience.
People are now taking pictures of your products, people now tag, talk and share about your products.
This is where the change comes to action, because now you want to see comments, taggings, shares of your post. This is what Instagram also care about when understand what is your engagement.
And it is something that dropshippers usually don’t care about, because they are not trying to build or establish a relation with the community. And if you’re not trying to relate to some nice or audience, they will never feel like sharing your content or being part of your community.
How does branding impact the price? There is an impact on the customer lifetime value as you just said but can you explain the relation between pricing and branding at this point?
Everybody set a price and a value. If I am a consultant I am what I believe I’m worth and how much my contribution gives to that person’s life.
When it comes to brand I want to mention the top of head like Gucci, Louis Vuitton, Supreme, Fendi, Dior, Chanel, etc.
If you look at stats the growth of luxury brands in the past two years has almost doubled expectations because the flaunting and the social media and the highlighting of all these products have been glorified.
Their sales are going to the roof because now they are seeing influencers and famous people wearing them. Not to mention giveaways for which people would do anything to win. Now they are able to demand, and it’s wild. It blows my mind because something I want to splurge a product like this and it’s going to get dirty this is going to piss me off because I paid it so much.
Now, I’m not saying I don’t have nice things. I love nice things, but when it comes to the price tagging I think that we associate ourselves with the more expensive product because we are convinced that puts us in a different status and this makes us feel good.
This means that when I sell the product for, let’s say 50 dollars it doesn’t matter if the quality is fantastic, because people will associate it with the lesser value category due to the price.
And it goes for everything. Let’s say you bought a Louis Vuitton bag and it wrecks, you are really going to feel that.
But if the same happens to a gym bag or a backpack you would just clean it off and use it again.
I think the price anchoring of a brand is going to come with the entire quality and the entire experience. If you aren’t giving both quality and experience you cannot demand a higher price.
So if you want to do branding and you want to raise the price you have to lean away from what is the establish market product fit, fix the product, make it better and build and entire experience around the product.
In this way you can shift from a 20-30 dollars price to a 60-80 dollars one. Margin increases as well as your budget.
So my growth went from dropshipping, small margins and establishment to a performance branding and now we are talking with brands that are spending hundreds of millions of dollars per year and looking for investment.
You have to understand what are your business’ needs.
Remember that top brands don’t know how to buy media like the dropshippers. They don’t know how to scale. They don’t know how to be aggressive, they don’t know how to find the right angle niche and product.
Not as well as you do.
So if you switch to a mentality where you have awareness about your capability you can keep being aggressive, scale up and keep your integrity to make them come back and buy again.
In this way all you need to do is to worry about your product, your logistic and your margins. And here it comes the help of uDroppy too.
[Robin] Yes exactly.
As uDroppy team we have been observing this of course.
What you said is true and this is the reason why today we see these big fat brands and macro brands and a lot of micro brands that are just as important creating this huge ecosystem. And it’s really really interesting to observe and where this is going to lead e-commerce in general in a year.
We talked about the relationship between pricing and branding. But branding impacts the lifecycle of a product too. In dropshipping there is always this idea about the winner and then saturation comes and then you can push that winner anymore. But it’s all different when you have a brand, right?
We still have the lifecycle of products but we deal with it in a different way.
When you do dropshipping you find the winning product or a set of winning products and you push them up.
While with branding you have evergreen products.
The main difference is that we are not pushing winning products with hundred of thousand dollars in ads, because we leverage what is called the limited edition.
We know which product is our hero and then we create a limited edition of it, like a limited color version.
The problem is that when dropshippers find a winning product, unless they find another congruent or similar product they can’t go to the same audience and try to remarket them, or sell them a product which is different from the first.
While brands can use other techniques like color variation, collaboration, limited edition in small amount. And we can go back to the same audience and do the same again, consistently every year, every two quarter or every month with a specific opportunity or a specific successful push.
We don’t need to do excessive quantities. 300 pieces could be enough to see if the technique works and then we can go back to the manufacturer or the partners and then build from there.
Branding makes also the difference when it comes to influencers.
In fact, they don’t want to push a product that is not part of an experience.
The influencer’s interests are to get paid and give his/her follower and audience a quality product.
If you are an influencer and you don’t have that second one, you are doing it for wrong and you don’t deserve that audience.
If doesn’t matter if you get paid, because giving a poor product to followers means burn your audience. Especially now that social media are taking away like and other things that show how great an influencer is.
This is why influencers won’t push products or brand they don’t truly and completely believe in.
[Robin] Especially now, you’re right. I observe this a lot with dropshipping of course. And the challenge here is to have an influencer that push your product effectively. So if you’re backed by a brand you’re more powerful. You have tested your product, you can guarantee the quality of product. It’s simpler.
Let’s get to the juicy part: like counts. Social started to hide likes. In Italy it started last summer. And even before in Canada, Australia, New Zealand and India. Now it’s U.S.
I would really like to know what you think about this and how is this going to impact your business.
This is one of my favorite topics and it’s a hot one since everybody is talking about this.
As a business, we don’t necessarily think that it’s going to affect any of our work. We are not worried about it and we think that it’s going to be better because of two reasons.
First, we already have access to all the metrics that we need to see through Instagram and Facebook API. So just because social are not showing likes it doesn’t mean that you can’t get information about engagement.
The second reason is that only uneducated influencers base they price on likes. So if an influencer is making deals based upon their likes, comments or engagements, they are not up to date and they don’t know their worth. Because now likes and comments are not important, because they don’t mean that the influencer is good in promoting your products.
We worked with Khloé Kardashian, Gronkowski, Dan Bilzerian, so many brands, big name people, and sometimes it never worked out even if they had so many likes and engagement.
They need to create content able to state the benefit of a product, they need to speak to their audience and demographic explaining how the product will help them. Otherwise, it doesn’t’ matter how many like the influencer get, he/she is not going to sell products.
And it’s not just content that we want from influencer (that’s a given, right?), we want access to their audience, we want them to share their main audiences with us.
Let’s say that Katy Perry or Justin Bieber make a content. Who is going to see it? Instagram will drive traffic according to what happens in the first one or two thousands impressions. The Indian or Asian market will take off and Instagram will spend the budget on non-U.S. demographics.
So we think that likes and comments are causing troubles to businesses.
This is why as long as we get the piece of content and access to the audience, we business and brands can be totally fine.
Hiding the likes will also make prices decrease because influencers won’t be able to know their value and businesses will be able to negotiate.
When we approach influencers we can either do an up front payment, because we want to get the content quick and get access to their page, or we do a percentage of sales.
Up front you really have to do a lot of work to get them convinced about the product. All of this work up front.
While with rev share they start to post consistently because their performance is based on how much they can sell.
If you have a poor product or if you don’t have anything that’s polished enough to work with an influencer, nobody’s going to share it. there’s no way they’re going to a part of that especially if you’re not building a brand or a name.
What’s your procedure? Do you have a specific criteria when it comes to selecting influencers? I believe you start from a number and then you select the best ones but how do you select candidates in the first place.
Well I tried to build my own frame.
If I’m a brand I could look for influencers with an influencer team or I look by myself.
I usually establish the three main aspects of my business. For example beauty, lifestyle and motherhood. So I want influencers to check as many boxes as possible but they could meet just a couple of the requirements. So with my team I decide which factor is the main one, let’s say motherhood is more important for us for this specific test. We want to speak to those customers because we think that our product resonates with women that are experiencing motherhood.
So then we go back to our influencers to look at. Now it’s not engagement we are looking at, and if it is it’s the comments, how often they receive comments, how they react: are they tagging people? Is it just hearts? Are there genuine questions? What’s the relationship to look like consistently?
Second, we are asking them, cause we want them to be a business profile, to send us a screenshot of their demographic. And on Instagram they can see that, it’s super simple. At that point we have a good idea.
We have seen the screenshots hopefully, if we haven’t we have to trust their words for it, we are going to send them products, we probably be negotiating the rate.
I’m doing my best to be paying for the content and keeping the frame.
If I can send you the product and you can shoot the content and get back to me in reasonable time I’ll value that between 500 and 2 thousand dollars.
My influencers are probably around $500.000 for macro players to get at least 2 or 3 pieces of content. They will create Instagram stories, and one squared 1080 by 1080 image. We want to see how cheap we can get swipe ups and when we get those assets to run we want to run through their page with an IG story placement.
We don’t thing that IG stories are the highest converting placement, but it’s easier to make them swipe up and direct them to the product page. So the friction is low but sometime the conversion is not this high. It’s a caveat to know.
[Robin] Well yeah, stories are new. Let’s say they are still kind of new, and these kind of mechanisms are in a testing phase.
Anyway, thank you very much. we would go on forever to be honest. But we have to switch to our GAME.
We have shared with you the words of Nick Shackelford, but if you want to hear these amazing branding tips from his own mouth watch our video interview on the uDroppy’s YouTube channel, where you will also be able to see what happened during the game.
For the busiest one that want to get to the juicy part of the interview, just go to minute 27:43.