265 Joe Jaques’s Story of Building a Brand Part 1 of 2
Joe Jaques’s story of building a brand
It’s a family business that buys products from China. Joe started working there from age 21.
He took over running the business and building a brand from his father aged around 25.
They had a Salesforce of 6 selling to brick and mortar stores -gradually, they stopped hitting sales targets, and left the business with high overheads.
They made the move from bricks and mortar wholesale to retailing online about 6 years ago.
Now they have their own online store that does around half the amount of Amazon sales; but the majority of sales are made on Amazon.
Do you sell on Amazon UK, Europe and or USA?
Mostly in UK although do sell some things in Germany.
They did have a conventional business in USA but that was taking up a lot of cash.
Since closing that down, the UK business has shot forward.
Can you give us an idea of numbers?
Doing well – should do £100,000 on Black Friday for example.
Give us a snapshot of some of the more glamorous exploits that enables
Just got back from Ibiza; recently in Monaco; driving a McClaren etc.
Building a Brand vs. PL
First time Joe heard of “Private Label” was when he joined the $10K Collective.
It’s too easy to kid yourself when building a brand. But look at the people with real brands.
What intrinsic difference are you delivering? Anyone can do a me-too product.
Be very defined about what you’re doing when building a brand.
Big Brand future competition “The Ultimate Competitor”
Many Brands are not yet selling on Amazon; then not doing a proper brand offering anyway as they are selling to Amazon rather than controlling their own listing.
But for example Nike is just now starting to do a cooperative product project with Amazon.
The question you to ask is:
“Who is my ultimate competitor?”
For example, if you wanted to do thermal underwear, Under Armour could come in and wipe you out in about five minutes.
Joe is about to launch a new brand with a top athlete; but that is because he perceives that the whole sector is weak and the branding is weak, so they can get a head start.
With Amazon, you need to set your goal and ambition very clearly – for example: to be the third bestselling item on page one for the main keywords.
When you are building a brand, you need to be realistic from day one and cash flow it.
Cash requirements for a certain turnover
If you wanted to turn over £500K a year for example, You will need to have about half the stocks ca. £250K worth of sales. That means probably working capital of around £70,000. Plus some initial brand creation and marketing budget.
What does “working capital” mean to you?
Basically this is the money that you need to tie up in stock and you will not get back out of the business unless you completely sell all of the stock and/or close it down.
You can think of this like the deposit you put into a property which you then rent out. You can’t have both the money and the property (which produces your cashflow).
Why would you have six months worth of products when building a brand?
It’s the Amazon sales vortex, it feels like stuff evaporates!
Generally it depends on the lead time, but from China or India is normally about three months from placing an order to receiving the product in stock. You need to allow about one month of slippage for example to account for Chinese New Year etc.
Also it’s really a mistake to average out your monthly sales by taking the annual sales and dividing by 12. Everything is seasonal and you are going to need a lot more working capital in mid summer to prepare the Christmas for example than in an average month.
You always want to have something in tank i.e. some capital to spare. If you don’t you will end up going out of stock – and then your competition will be all over you.
What about the difference between profit and personal income for the business owner? Can you take 100% of profits out as income?
It basically depends on how ambitious your to grow the business.
For example if you are doing £500,000 a year in revenue and you are running a business at about 20% profit margin (which if you are running it very lean with minimal help is very possible), then you might be up to take out £100K a year in personal income.
The first problem is that you are not leaving any money in the business to grow the business. And the competition is probably trying to grow their business, so you will effectively be pushed back into shrinking if you do this. So your income and indeed business will end up under threat.
The other issue is that a profit margin of 10-20% is normal for a well run business. But if it is closer to 20%, your competition is likely to try to undercut you so that 20% margin may well shrink over time.
Joe’s philosophy on this is simple: “Kill or get eaten.”
The big players in an industry tend to be a reasonable representation of that industry.
If you look at the supermarkets, the competition is just a brutal. That is basically an indicator of how tough the retail sector is as a whole.
What do you think are the main Mindset qualities of a successful ecommerce brand builder?
Basically you need to be brave and make decisions when you are building a brand.
Look at John Lewis, which made a massive shift to on-line sales, as opposed to House of Fraser, which has a horrible website; and has been in the news recently, closing down their flagship Oxford Street store.