From MASSIVE Failure To A $40M/Year Ecommerce Business With Gary Nealon #Best Education Page #Online Earning

hey everyone this is Stefan James from

Project life mastery and I'm here right

now at cellar con in Las Vegas and I'm

sitting next to Gary Neal in an

incredibly successful e-commerce seller

and entrepreneur he's built one of the

biggest brands in the kitchen niche a

business known as RTA cabinets store

comm that he built 240 million a year in

sales recently sold that business as

well and today we're gonna dive a bit

into into Gary story and how he built

his business and built it to a point of

that magnitude but also have him share

some of the things he's learned along

the way so Gary thanks for taking the

time and you might turn with people just

a little bit about yourself how you got

started in e-commerce and and I guess

building the difference you've been

involved in many businesses and yeah

brands but interestingly enough my first

kind of dive into the e-commerce space

was an epic failure so yeah before I

started the Archaea cabinet store I

actually had the great idea that I was

gonna buy business this was before I

knew anything about sort of e-commerce

and everything that business was right

around the when the economy turned in

the United States and ended up filing

bankruptcy on that within like a year so

it was kind of a really big blood of the

system

and then I know does that mean me

because the economy challenge is that we

came with that numbers I didn't know

exactly how to buy the business so when

I bought it it was on thin margins to

begin with and it just economy what

ended up happening was it was in the

dollar space market so everything was

made of plastic so when the economy went

to crapper price of fuel went up fuel

makes plastic so our cost of goods out

of China ended up going up by like 30 or

40 percent so it was almost that wasn't

viable anymore but from that I knew that

I never really wanted to work for

anybody again so I went in I ended up

launching our tea a cabinet store I

originally approached my business

partners uncle at the time who was a

vendor of cabinets and asked him if I

can build a website so I really just

want to have some experience in

developing websites again and he was

like you know what these will never sell

online if you want to do it you can do

it yourself so I was like I'm gonna

prove you wrong so I decided to launch

the website myself and you know 11 years

later ended up having a healthy exit on

4

our business Wow and so you primarily I

guess we're selling was it kitchen

cabinets yeah so our primary business

was kitchen cabinets we also had a line

of like bathroom vanities and different

things for other rooms of the house but

primary market was just standard wood

cabinets that went in your kitchen and

nothing fancy nothing crazy all stock

sizes so it wasn't like a custom program

or anything like that everything was

coming out of China so we had usually

about 15 different styles we were

pulling from different vendors so we had

a pretty good network distribution of

dropshippers and things like that well

and I can imagine there's probably

logistically some challenges with that

kind of business like one of them the

weight and the shipping of the product

was that because you know a lot of

people for example there are brand new

sellers they're more looking for a

product that's light and small arguably

one with the worst product you could

possibly sell online because like you

said yes the weight of it the complexity

of it so it's not like selling an

individual product where they could buy

one or buy two our average order might

have been 40 to 50 pieces that all had

to fit together in one space and all the

measurements had to be accurate so there

were a lot of logistical challenges from

both the buying process and what fit

together and then also the logistics of

shipping it making sure it arrives

safely you know it's a natural product

so if it gets damaged you can't really

fix it or do anything with it you

basically have to replace the whole

cabinet so yeah there was a kind of a

learning curve the first year or two of

like how to handle all those challenges

and everything that came up but we

definitely put some good systems in

place right yeah I assume this wasn't a

product that you just started on Amazon

it was more building your own website

your own e-commerce store then did

Amazon kind of fit into that or how did

what was kind of the strategy the way

you sold it's interesting so what most

of your audience in everything probably

started on Amazon we did use the Amazon

we used it kind of in a different way so

we started with an e-commerce store

believe it or not our first traffic

source was Craigslist we were actually

below posting ads all around the country

driving traffic in but once we got to a

scale scaled to a certain point I knew

that we had to diversify our traffic so

we moved into paid advertising obviously

but then we also looked at Amazon and

the way we were using Amazon was we knew

that Amazon was really good at driving

traffic so we said how do we leverage

that to grab those leads and bring them

to our site so what we did was we looked

for products that

matched sort of our client tells profile

so like we look for accessories for a

kitchen or accessories for a bathroom

it wasn't products that we wanted to

sell but we put them on Amazon capture

that lead and then bring them over to

our site so we were kind of using Amazon

what they're really good at was driving

traffic we weren't necessarily worried

so much about making the profit off of

that but we'd get him into our ecosystem

and then pull them over to the cabinet

site right so was there a way that you

would you would transition from that

that you know the customer buying

whatever that product was to to getting

on your list or getting him into her

funnel so initially we looked for big

bulky products as we knew that they

would be expecting communication from us

so we call have a conversation with them

once we establish that we actually

started doing a kitchen giveaway contest

so we figured if we can put in an insert

or something like that that would allow

us to then capture them pull them over

which you know a lot of people have

tried in different ways which is why we

look for specific products that we knew

kind of lended themselves to the next

step in remodeling remodeling a kitchen

or kitchen giveaway contest ended up

being our most profitable and largest

traffic source even like after we moved

off of even when we kept going with

Amazon so we used that for every lead

gen that we could whether it was

Facebook Instagram and everything else

because we knew it was if we can get

somebody that's interested in the

kitchen then they're probably gonna buy

within the next year or two so was it

you just had an insert that said win a

kitchen and then you know go to this

website put in your name and email or

was that know you would get them yeah we

do you know so the ask method formula

we'd have multiple questions to segment

them out after that you know like how

quickly are you ready to buy what's your

budget and those kind of things to get

him into that ecosystem and then have

those autoresponder sequences that can

kind of split them up well that's

incredibly smart and so I guess what

Amazon you didn't really care whatever

front-end sales that you get on that is

just mainly a back-end strategy that's

what you guys exactly yeah so we we

didn't focus on the front end profit

even though that was profitable for us

we looked at is okay that could be a

real easy lead gen tool get them used to

our buying cycle let them you know let

them have a really good experience and

then when we start transitioning them

over we could remind them hey you had a

really good experience on that product

now let's talk about a bigger product

which is you know our average ticket

sale can it be anywhere from five

thousand to up to fifteen thousand so

there's a lot more of a commitment

for them than just buying $100 or $300

item so just getting them that ecosystem

and allowing them to get comfortable

with us very cool and so I know one

thing you're here talking about here at

silicon is about content marketing and

you know building a brand and everything

so you mind sharing just a little bit

about you know I think a lot of people

here look at it's gonna sell a product

on Amazon but they don't look at other

ways to market their product and build a

relationship with people which is what

content does buddy mind just kind of

touching a little bit on content why you

think it's so important for sellers and

and maybe we can go into some of the

strategies that you guys do yeah I mean

a lot of when I talk to a lot of Amazon

sellers they're like you know they don't

realize that they're already creating

content whether it's their sales copy or

all these other avenues and that's

content that can be redistributed in

other places so we really use content

for two different things one build

backlinks to whatever source is your

main revenue driver whether it's your

Amazon listings your blog or YouTube or

wherever you're really getting your most

your traffic from but then also get

eyeballs out there in places that they

may not see it so you know Amazon's

really good at driving traffic from paid

ads and all their other places but

there's people that could absorb your

content or that are asking questions on

blogs forums reddit medium all these

places even you know if they're looking

on Pinterest or looking on Instagram

these are all people that are out there

searching for your product or may just

stumble across your product so why not

take those assets that you already have

and put them out in the world when you

do that you're actually building

backlinks and you're getting eyeballs on

it from other places that you might not

yeah and just just surveillance could

the purpose of backlinks is primarily

for the search engine rankings is that

primarily what you guys are using before

over you're also getting smaller driving

traffic so we do get a little bit of

traffic from it depending on the types

of products the types of content but it

even what we did find out was that even

with our Amazon listings if we started

driving links back to them it was

naturally helping our organic links grow

so organic ranking grow it didn't have

his a massive impact like it does on

Google but it still had a little bit of

a booster so well once we started

building up our site we're like why

don't we do that with our Amazon

listings and we did see a response from

it so we started building these

backlinks and creating this basically a

spider web all over the place of all

these links touching each other from all

the you know whether it's images audio

video all this stuff going right back to

one of our condo

pieces Wow and then in terms of content

like what what type of content would I

guess you create for Denisha of your own

was it more related to the product like

cabinets or was it more related to

kitchen you know kitchen type stuff or I

can tell you after about three years it

became really hard to write content

about kitchens so I had to come up with

like different ways of creating content

so what we started doing was looking on

like forums blogs specifically for that

niche we started looking at start

tracking all of our customer questions

because we realize if people are asking

these questions there's probably a need

for a piece of content about it

so our customer service would actually

create a log of all the questions that

came in in a week we'd look at see if

there's any synergies where we can

create maybe a top five or something

like that and that would create our

content for the week the other sort of

thing that we've started figuring out

too is that we start looking at

competitor listings on Amazon and if

people are complaining about a certain

thing about their products that was a

natural thing for us to talk about about

our products and how it doesn't do it so

we would create a piece of content about

that with the worst you know reviews on

other people's products and how it

doesn't apply to ours so there's a lot

of ways that you can take what's already

out in the marketplace where you're

already seeing every day and just

spinning it into these little pieces of

content that you're putting out there in

different places and did you guys do I

guess a lot of keyword research to see

what people are searching for related to

your product and then just continue

creating content around that - we did we

didn't focus too much on the keywords

because with Google they've kind of

shifted to this intention based search

so it's you know years ago used to be

able to just say kitchen cabinets try to

rank for it and that would drive all

your traffic but just by natural

progression the way people are starting

to search now they'd be looking for the

best kitchen cabinets made of X or you

know best kitchen especific yeah so

you're starting to see searches that are

much more longtail and more of a

question and it is like the specific

keyword so we started creating content

around that like what questions are

being asked in the marketplace let's

create an answer to that so that when

they are searching for that on Google

we're naturally ranking higher and it's

kind of boosting those sub pages within

our site you know I think that's really

important because the content builds

that relationship and that trust and by

the time when they consume your content

you know you're not really competing as

much with all the other products on

Amazon because you know they're

consuming the content they're like oh

wow this is great thank you

yours direct linking right to whatever

the product might be or capturing the

lead and then of course can further

build that relationship with them but I

think also the benefit is you're really

learning the customer learning their

questions their objections who they are

the whole customer avatar and that just

helps you bit I guess to target them

better and build that relationship it

touch on kind of the avatar aspect of it

that was one thing that we figured out

years ago that kind of changed the game

for us was that you know we always just

assumed it was like a very broad like

we're going abroad we just want as many

people on the site as possible but when

we really dove into the avatar and

figured out like who are we actually

selling to we're figured out we actually

had five different people were selling

to those five different people were

buying for very different reasons and

had very different languages in terms of

what they were looking for so when we

started doing custom landing pages

specific to those customers it pretty

much changed the game for us we did you

know custom tailored email campaigns

landing pages our cost per acquisition

dropped by about 40 percent and our

conversion rates went through the roof

because we were literally talking in the

language and the verbage that they want

to hear so instead of using broad terms

niching that down it took a lot of work

to kind of create those campaigns but

once we did it changed the game for us

well I love that you said it was five

because a lot people think that it just

has to be one right but I mean it's more

work obviously doing four five different

but if you know those are the core you

know market for you and it makes sense

to do that so

and it's even become easier I would say

today than it was when we started doing

that because there's all these services

that do email pens you know there's

Facebook look like audiences there's

machine learning that can do all this

stuff for you that we're back then we

also we had to literally just ask

surveys and try to figure all the stuff

out so I love it now and everybody comes

to me like with an audience and they're

just like we're not really sure who it

is if you have more than like a hundred

people on your list I'm like I can

figure out that like yeah that's easy to

do what were some of the challenges that

you faced along the way challenges along

the way

oh man or so many of them just when I

would think that we've what we saw every

issue that could possibly come up

another one we just come and slap you in

the face I think the first one was

really the logistical side of it like it

was truly what when I say it's the

hardest product to sell other than maybe

pools or hot tubs there's not much else

that you could sell online that's as

challenging so

we had to make the buying process as

easy as possible for the novice but then

also as quick as possible for the

professional so we ended up creating

really three buying paths based off of

what we call their skill level it was

the guys that knew nothing

the guys that watch DIY shows and

thought they knew what they were doing

and then the professionals that knew

what they were doing and just wanted to

get through so it was really I would say

that was our biggest hurdle to overcome

at first was creating a unique buying

experience for everybody said that we

didn't turn anybody away that you know

was a potential customer once we figured

that out it made everything a lot easier

for us to talk to each of those

different types of buyers how many SKUs

did you guys have oh man we were

somewhere around 25,000 I think because

each cabinet lion had several hundred

pieces and then each accessory that went

in them so you know it was pretty

complicated Wow yeah and I guess he had

inventory management I guess and that's

a whole other little thing yeah so that

I would say it was challenge number two

was inventory management so my

background was logistics I worked in

logistics for probably 10 or 11 years so

I thought I could figure it out myself

originally our model was a dropship

model straight you know we were using

vendors or distributed all around United

States that can do this fulfillment for

us and being me entrepreneur I'm like

man we can make another 20 30 points on

this if we bring it on ourselves that

was probably the first time that I

almost put the company on dirt because

we went from not having any inventory to

suddenly having to carry at one point we

had up somewhere around four or five

million dollars worth of inventory

sitting in a warehouse the complicated

thing when you have that many SKUs is

that you don't carry a lot of one

particular SKU so we can have one

apartment complex a little wipe us out

of one or two SKUs in well and we're not

there's no way to predict that so we

were we had a really hard time trying to

calculate our inventory and at one point

I just decided you know we had a model

that was working and I tried to screw

with it let's go back to that so we went

back to a completely almost I would say

almost 95% dropship model we would bring

some of it into our warehouse just so

that we can you know some of the more

complicated stuff but we went back to

this dropship model relied on the people

that were really good at managing the

inventory and let us be what we really

were which was marketers like let us

drive the traffic let us do all that

customer service but let them do all the

fulfillment and we'll handle everything

that makes sense how many I guess how

many employees did you guys have

ironically I was able to keep it pretty

lean what I became really good at was

outsourcing and figuring out like how to

hire outside of the company and douse

down tasks some of the the lower stuff

so it I think at max we had 18 people in

the office including some in the

warehouse and then we probably had

another 20 that were outsourced so for

the size of the company we're actually a

fairly lean company awesome so I'd love

to hear you know you sold the business

and I just love to hear your thought

process behind that I'm sure there's

many people watching this that you know

they some people go into this I find

expecting or wanting to sell that's a

model for people others looking to do

this long term but I just love to hear

you know what was her thought process

around that was that your original plan

or did you just kind of get to a point

where your values change in your life

you want to do something different like

yeah that's crazy when I started the

company to be perfectly honest with you

when I started company was really to pay

off the people from the company that I

filed bankruptcy on my whole goal was

like if I get it's funny to look back at

it my goal was if I can make 40 I think

was $40,000 a month in sales I could pay

everybody off in a year that's all I was

focus on then I'm like we hit that real

quick and Michael what if we did 100 and

I yeah you just kept setting the bar a

little bit higher a little bit higher so

I had no intention of building it to

sell which is when I got to the sales

process my accounting was a mess you

know I was running it like a small

business I didn't you know I didn't go

into it with the mentality of selling it

to what I reason I end up selling it was

after 11 years I really enjoyed the

marketing side but I did not enjoy the

day-to-day operations I was not an

Operations guy so I knew that I was kind

of operating now in a place where it

wasn't my skillset

I was people managing versus actually

doing marketing and I knew that I kind

of capped out at where my skill set can

keep the company growing so I wanted my

intention was if I could sell it while

it's still growing I can pass off to

somebody that can take it to the next

level but it's also in an up truck

anyways so I started the process it took

me almost two years for the sales

process it was one of the most

challenging things I've ever gone

through because somebody's coming in

from outside your company and they're

basically ripping it apart to figure out

what's wrong with it

yes the low-value and as I had mentioned

to you earlier it's sort of a buyers

market unless you have like a really

true brand that people are competing for

they hold most of the leverage so what

ends up happening is you sign these

exclusivity contracts or whether it's

three months or six months you have to

pull it off the market you have to

maintain that level of sales or grow it

or else they can subtract money from you

so kind of it's definitely in favor of

the buyer I learned a lot about myself

and a lot about how to run a business

from going through it because it'll

teach you you know what people are

looking for or how to do the books

what's most important through the

process I think the smartest thing I did

was that I actually worked myself out of

a job because that's one of the things

that they want to know is like if you

sell the business is it going to go down

because you're gone so that would be my

biggest tip to anybody that's looking to

sell start working yourself out of a job

make sure that anything that you're

doing in the business is not pertinent

to the fact that if you leave it's gone

so that I had done I've worked myself

out but yeah it was a lengthy process we

went through two years almost two years

five different buyers ended up going

with a PE firm who you know took it over

they had experience in the industry

ended up being a really good fit for

them I think was a win-win for both

parties so yeah I you know there was

sort of a strategic buyer so that was

another good aspect of it but I would

just say to anybody that's looking to

sell one of the other tips I would give

them is that you have to keep your your

head in the game

because the natural tendency even if you

get an offer is to start thinking about

what you're gonna do next

yeah and that sales not guaranteed so

it's it's one of those things where you

have to you have to keep on the grind

and just assume that it's not gonna go

through but you're hoping it does can't

be too attached to it I guess yes and

emotions will get involved and you have

to sort of separate yourself from the

emotions because even if it is your baby

you still have to look at it from an

outsider's perspective yeah I'd love to

touch a little bit on mindset because I

think that's one of most important

things that being an entrepreneur

there's a certain mindset you got to

have especially if you know someone's

just getting started they're going from

having a job to building their own

business

but is there a certain mindset that

level belief or certain things that have

helped you get to where you are you

mentioned the failures that you've gone

through is there mindset to help you

overcome all those challenges and the

failures everybody depends to go through

yeah

the failure hit me pretty hard because

prior to that you know I was a good

grades at school college athlete you

know I had a really good job didn't

really have to do this but for some

reason I did so I took that pretty hard

but I also think that showing me like to

me that was my rock bottom everybody has

a different kind of threshold of what

rock bottom is but having hit that it

kind of gave me this mentality of that

okay now that I know what that looks

like and I'm going this way I know

there's a valley like there's a there's

a gap there and I'll never get back

there so that loss I think really did

teach me a lot but that was sort of the

mindset I had I was just like I just

always kept that in my head of like I

know how I got to be rock bottom

you know I filed bankruptcy literally

had almost no money to my name other

than a couple thousand dollars and I was

like as long as I'm above that I'm good

and now I can just shoot this way I may

be naive or whatever but that was just

my mentality of like where as that but

running a business is challenging you

know everybody has their own skill sets

mine was marketing some people are

really good operations people so stick

with what you're good at like your

natural tendency is to want to do

everything but you're never gonna be

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