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Marketing Strategies for Startups: Learn From Evan Johansen of Auri | PalletSide Chat Ep. 3

Have you ever had a million-dollar idea but didn’t know where to start? Look no further than PalletSide Chat’s interview with Evan Johansen, CEO, and founder of Auri. At 22 years old, Johansen is already a serial entrepreneur and has some valuable insight into marketing strategies for startups. In this chat with hosts Dan Van Meer and Alex Lewkowict, Johansen shares how he turned his mushroom gummy idea into a booming business. He proves that with hard work and some clever marketing strategies, your dreams can become tangible successes.

In this podcast you will:
Learn how to market your startup like a pro
Identify social media strategies that work
Utilize advertising tactics to control ad spend
Turn your dreams into tangible successes

PalletSide Chat is where you get the real scoop on what it takes to launch, grow, and scale D2C brands and 3PL operations. It doesn’t matter if you’re a first-time founder or an experienced veteran, we’ll unpack stories, lessons, and mistakes that are part of the journey.

Your co-hosts are Alex Lewkowict (Co-Founder of Black Wolf Nation and COO of One23 Fulfillment) and Dan Van Meer (VP of Marketing at ShipHero).

If you have comments or suggestions, let us know by emailing us at podcast@shiphero.com.

Podcast Transcript

Alex Lewkowict:

All right. Today’s PalletSide Chat is with Evan Johansen. Evan is a 22-year-old serial entrepreneur. I’ve worked with him on many cool brands and he seems to always be able to find the right product market fit and make his eCommerce businesses boom. Evan, I have to say, I’m pretty blown away. Your brand Auri, I’ve never seen a brand grow so quickly, especially with no funding. How are you doing it?

 

Evan Johansen:

Oh, my. Thank you for that intro. I appreciate it. Yeah, I mean it’s definitely something that’s interesting to navigate when you’re on the bootstrap side of things. When you’re not taking additional funding on is a bit of a broad question. However, in a nutshell, I take a test first approach with things. It really is just test, see what happens, see how the market reacts first, then double down on inventory, then double down on all the extra stuff. 

 

I think most people with eCommerce brands nowadays, they can spend six months just completely wasting their time doing stuff that isn’t actually growing the business. I really take that to the extreme, trying to figure out what works, if it’s worth me actually spending my time on the long term. And then once I get that validation, figuring everything out in the back end. Just like getting that flow first and then optimizing later on.

 

Alex Lewkowict:

Right. Yeah, especially for me, when I started Black Wolf, not just six months, I think we wasted the first two years just overthinking things before we actually launched and tested. So, Evan, I know earlier this year, just with us, we tested a few brands. Auri was the one that popped. I think it would be cool, just so people have context, tell us a little bit about Auri. Do you think Auri just has the right product market fit or was it the advertising and the go-to market strategy around it that made it pop?

 

Evan Johansen:

That’s a good question. Yeah. So, at the beginning of this year, really just testing a bunch of concepts. I have just a process of ideas, validation, where I’ll look through at Google keywords, really just try to look in Google Trends, all these things and see the movers in the market and what these broader, more macro changes, where I could have an idea where it’s some information advantage, conviction that something’s going to work. But ultimately, what I do is I just put it up to the test, put it up to the test, put some ad budget behind it, simple little mockups.

People don’t realize that the most simple thing you could do is just set up a landing page and get a product rendering for whatever you’re selling, whatever the concept is, and you can simply just sell that and refund the customer on the back end. That’s exactly what I was doing, is just getting sales, seeing if it works, seeing what that return on ad spend is at a very, very, very small scale. And then you can get a gauge because then you have real data that you’re working with.

 

But on the Auri side, it was one of those things where our numbers at the beginning on the paid ad side were not perfect, but I saw room for improvement where I had some conviction that if I was to double down, get some more content, really invest more back into the product and the landing page experience, user experience, that we can get to that point of front end profitability, which is obviously the goal for all eCommerce brands, which allows for that hockey stick type of growth, at least to the point where we could coast at a nice rate and then you have yourself something that’s doing well, growing community, growing customers, and all that. So, that’s like my approach behind that and testing thesis. Yeah, Auri right off the bat was not perfect, but I saw that room for improvement. Compared to the other things that we were testing together, it was looking a lot better. So, it was really just following the data at that point.

 

Alex Lewkowict:

For those who don’t know, Auri is what? It’s mushroom gummies.

 

Evan Johansen:

Yeah. So, Auri is a mushroom gummy supplement. So, if you guys reel back maybe 5, 10 years, the category creator being Four Sigmatic and then you see MUD\WTR. You see all these other brands that are popping up in the space, really creating this category. The way that I envision it is educating the market on things. They’re the ones that were the initial movers, educating people on the benefits of mushrooms, everything behind that. And then really what it does is it just leaves room for secondary and tertiary brands is the way that I view it, because they do all the educating. Maybe they’ve tried one of their products before and they want it in a different format, some different mechanism.

 

This one being a gummy form, which is why I think it was just a perfect second stage for things. I always like to go back to this book Breakthrough Advertising by Eugene Schwartz and he just explains basically the stages of a market of sophistication and it goes all the way back from fat loss products were just a new thing, where it’s like now you can lose the pesky fat. That was the first thing was at stage one, and then obviously, there’s iterations off that. It’s losing fat without having to do XYZ and then it’s just rebuttals off of all those things. So, that’s the way that I view it with this market. The mushrooms, I definitely see it as a slower moving category and yeah, there’s a huge interest behind it.

 

Alex Lewkowict:

Yeah, clearly. I don’t know if you’re comfortable saying, but a lot of gummy mushrooms  going out the door. So, let’s just turn to the marketing side for a second. There’s so many different platforms out there. There are a lot of D2C brands who are struggling now because the arbitrage of cheap Facebook ads has dwindled. What platforms are working for you? Everyone has its challenges, but which ones are you leveraging and what’s working right now?

 

Evan Johansen:

Yeah, so right now, it’s probably around 65% Facebook and then 35% TikTok ads. Obviously, a small percentage in there for Google, for PMax Campaigns. We really haven’t pushed too hard on the YouTube ads, all of that. The way that I’m thinking about things is just keeping it super simple and straightforward. A lot of brands, they’ll go crazy with all these different platforms and they’ll spread themselves too thin, especially if it’s a single founder type of business. You can only allocate so much effort and focus to something to make it work, but that’s how things are looking like right now. But at the end of the day, these advertising channels, they come and go and obviously, we look at the chart of CPMs over time.

 

It literally just goes up and up and up and up and up, but there’s new channels that will show up, TikTok as an example, where there’s some arbitrage opportunity. But still at the end of the day, the most important thing, no matter where you are, is you’re creative. I come back from a direct response copywriting, just background. That is my foundation of thinking. But behind everything, if there’s no data, no way to measure it, I’m not going to spend on there. That’s just my thesis and always going for direct return on the front end. It’ll be very difficult to see me running something where I’m not going for direct return. So, it just fits my philosophy, but yeah, it’s pretty much Facebook and TikTok right now.

 

The most important thing is just creatives. So, Auri on a little bit is just the whole TikTok style creative and just staying in tune with what’s working, what trends, what little things is really, really the thing that is moving the needle for us right now. Even for Facebook, it’s just we create videos as if they’re TikTok videos and then moving them over to Facebook and Instagram and that seems to be working well right now. It may not in six months from now, it may not in 12 months, but it’s all about pivoting, readjusting, and that’s the name of the game. When you’re an entrepreneur you need to be able to pivot very quickly. There’s an iOS issue, all that, being very quick on your feet and agile I think is a huge advantage, which gives the little guy an advantage.

 

Alex Lewkowict:

For sure. Yeah. I mean I moonlight as a marketer sometimes, but for Black Wolf, one thing that I learned is you never really know what’s going to work until you test it. The response will judge what’s good content, but for an entrepreneur who might be struggling right now or someone who wants to start a brand, what type of content would you say in a general sense is hitting right now? Is it UGC? Is it higher production? Is it still images?

 

Evan Johansen:

Yeah, no, that’s a great question. I think it really depends on the brand. It’s a brand by brand basis and obviously, there’s a huge craze with UGC creators right now. A lot of people are getting into the UGC creation space as a side hustle, just creating videos for brands, see that as a growing thing on Twitter, et cetera. But at the end of the day, if you can find yourself a core set of UGC creators that you can pay for a nice affordable rate, because a lot of them are charging very, very crazy rates right now. I think that’s the best way and it always has been the best way over the last four years.

 

Most people think the high production value, those types of videos are good for direct return, but oftentimes if you’re going for a Harmon Brothers style video or something along those lines, where it’s crazy production value, I’ve never seen those really work well and effective when it comes to an efficiency standpoint to ROAS. Those usually work well on a branding side where you could leverage it in other ways, maybe on the website, maybe on your About Us page, maybe as a YouTube video or just something along those lines for credibility. I think the same thing goes for big influencers. When you’re working with big influencers, you may not get that direct return. That’s why it’s great to work with these micro influencers and get content.

 

So, yeah, I would say UGC is very, very big right now. It’s just knowing how to edit it up and then mashing that into that TikTok style is working well, doing TikTok replies, going in, and just staying on top of trends. It’s really all about that initial first few seconds hooked, bringing people through a story. People love stories, but you’d be amazed. Sometimes the lower quality stuff that’s like 480P can do way better than a 4K video. I’ve seen it night and day.

 

Alex Lewkowict:

Oh, truer words could not have been said. The ad that finally helped us scale Black Wolf, I literally filmed on my iPhone in the shower of me lathering soap on my hand. It has 16 million views and it was the first ad that actually popped.

 

Evan Johansen:

Wow.

 

Alex Lewkowict:

Yeah, so literally zero effort. I didn’t even edit it. It was a five-second clip and I put it up and that was it.

 

Evan Johansen:

So, I believe it, man.

 

Alex Lewkowict:

Okay, so a lot of people don’t know this, but if you have brands that you like or you’re seeing blowing up, you can actually go and see what ads are working for them, right?

 

Evan Johansen:

That is correct.

 

Alex Lewkowict:

What’s that? Where can people find that? That’s Facebook Ads Library still.

 

Evan Johansen:

Yeah, Facebook Ads Library recently had an improvement a few months ago, where you can actually search for individual videos. Previously, you could only search for brands themselves, type in a brand name, and then you need to click on the page, but they had an improvement. Obviously, there’s increasing transparency from elections and all these different things. So, Facebook Ad Library is good, because you can put in a keyword, it’ll show you a bunch of ads. I really like AdSpy, however. They’re really good for Facebook. And then also TikTok is PiPiADS, P-I-P-I-ads.com and they’re really good when it comes to TikTok ads.

 

So, AdSpy and PiPiADS are really good for picking up and actually finding those videos because the issue with Facebook Ad library is you can’t pull the page post itself. So, you can’t see the engagement behind things, the comments, you can’t see the actual post. But with both of those platforms you’ll be able to see the engagement. With PiPiADS, they’ll estimate how much spend is behind each one of those creatives. So, it’s super insightful and those are two really good tools if you want to get some inspiration what’s working now on an actual level and see some numbers behind it.

 

Alex Lewkowict:

100%. Yeah, don’t feel too bad. Anytime you are the one who comes up with an original ad that pops, every other brand’s going to have that ad within a week and a half, two weeks, but yeah, it’s good to see what’s working. What I found with advertising, at least for us, is once you find what’s working, you have a test that you can then iterate off of. You’re not just pissing in the wind at that point. But the other thing that we’ve gotten caught up a few times with is once you have something that’s working, you’re afraid to change it, but just the digital advertising environment and the algorithms force you to nowadays. If you have something running for over two weeks or with a lot of spend behind it, the performance just starts to go off.

 

Evan Johansen:

Yeah, it definitely does stack on itself. What I’ve found is the more you spend on something, the more traction it gets. It’ll start yielding more consistent ROAS, which is great. And then obviously, it leaves room for if you want to split test with writing pages on the back end, which I think is really great, really simple, because you keep the video itself, split test maybe an advertorial page. Those are doing very well right now on Facebook for us, like a six reasons why article or something along those lines that just gives a little bit of a background and more information to warm them up before the sale. You could probably see a nice impact in conversion rate and AOV, all of those factors.

 

Yeah, I mean the iteration is key. It’s just the simple process of finding out what works and then doubling down on that. And then obviously, through that initial process, it’s a little difficult to figure out what works. It takes some spend to figure that out. I think over the last few years, it’s been taking more and more spend to actually figure out what works, especially if you’re running a new ad account, if it’s a fresh new brand, someone’s starting from scratch just because you have no data to previously work off of. But once you do, it really just does compound from there. You start getting feedback from customers, start getting comments, understanding things. A lot of our videos that do well on TikTok are simply videos that we post.

 

People comment on it and then what we do is reply to those comments and make ads around those. Those comments that are very high up. A lot of people are liking them just because those are questions that are top of mind. You want to enter the customer’s mind from whatever they’re thinking currently before. That’s the perfect way to do that is with these fast-paced, everyone’s in the comment section on TikTok, just really engaging in those conversations, being in the conversation as a brand, not as an external entity and a brand, but almost as a person making it personalized.

 

That’s why I think those iPhone videos do well, lower quality, just because it really blends into the feed with what everybody else is doing. If you look at just an average person’s Facebook feed, Sally, she’s 47 years old and lives in Miami, Florida, whatever. Looking on her Facebook feed, all of her friends that are taking pictures. They’re not these highly produced pictures. You blend right in with the feed and yeah.

 

Dan Van Meer:

Oh, sorry. Go ahead, Alex. I had a question. You keep going.

 

Alex Lewkowict:

No, feel free.

 

Dan Van Meer:

All right. So, I was going to push you guys a bit to go one level deeper here. So, I think it’s interesting you both have perspectives in a similar mindsets, I think, around the importance of testing and iteration. Let’s set some baselines here. So, for every ad that pops, how many ads do you guys see that are just total duds?

 

Evan Johansen:

That’s a good question and I actually was thinking about this literally yesterday. It’s probably around a 50 to 1 ratio, I would say, which is around pretty aggressive creative testing. So, we’re probably testing maybe 12 to 18 new videos on each one of the platforms every single week. So, just really, really cranking that up. That’s been a healthy medium for us at our scale right now with Auri. Yeah, a lot of creative testing. And then ultimately once you get something that sticks, it can work for months and if not years. So, especially on the Facebook side of things. They have a longer half-life.

 

Dan Van Meer:

Yeah, that’s awesome. Alex, what are you guys seeing?

 

Alex Lewkowict:

Yeah, I know, Dan. It’s a really good question because I think one mistake especially new entrepreneurs make is when they hear advice, I don’t think they pause to actually understand it. When people say you have to test your creative, you’re testing dozens of iterations of dozens of different concepts every single week. Or when people talk about sales, you can’t make three, four, five phone calls or even call 10 people a day for a week and then give up. You actually have to be relentless. Like Evan said, once you find something that works, you can ride that for years. When we found out that videos featuring running water worked on Facebook, two, three years, millions of dollars of revenue just from that insight.

 

Dan Van Meer:

Yeah, I love that. That’s crazy. The second question I had for both of you guys was I think there’s two schools of thought around testing once you set your champion variant. We talked about the importance of finding your A ad and then riding that. When you guys iterate on that, what’s the balance between small iterations on your champion to try to just squeeze more out of that versus big swing iteration as a totally different direction? How do you guys balance that in your workflows as well? Because realistically, I would assume that success is not riding one ad that popped off and then making incremental tweaks to it for the next five years. So, what are your thoughts on that?

 

Evan Johansen:

Yeah, I’ll take that one. The way I view with things is that and this goes with landing page optimization, for conversion rate, et cetera, is those big changes are going to have big impacts. So, I’m always looking for big changes. Maybe it’s a fundamental shift in the video. Maybe it’s a hook that we can change, which is not big, but when you look at video watch time, it’s big change and how that drops off, especially nowadays with the goldfish attention span that we have in our society. So, I was looking for those big changes first and then start working my way down to those smaller changes. You’re not going to ever see me split testing or learn more versus a shop now button.

 

If whatever’s working, probably going stick with the one that was working previously and then maybe change the fundamentals of the video a little bit more. Maybe a landing page, which is a big change I would say. So, I would say is big changes first and then start working my way down. And then really it’s one of those things where you just follow the data and you’ll know it’s the point where you could start testing those smaller things if some of the ideas run out for those bigger changes.

 

I always prioritize big changes just because if you’re having something that’s doing really, really well and you make a fundamental shift in where you’re sending the traffic, you could have almost double the results just by sending it to a different page that has a slightly different offer. So, it’s really important to always think of those things first. Split testing button color or all those little things can have a bigger impact from doing those big changes. So, that’s how I think about it.

 

Dan Van Meer:

Yeah, no, I love that. Obviously, I love marketing, I know you guys do too. I think there’s a bit of a trap we fall into where we think that testing colors is enough when it’s clearly that doesn’t drive big impact. If you’ve tested everything else, that’s where you get some incremental gains, but the big swings are what matter. One more question for you, Evan, getting a bit more in the weeds here. I love that part of your story is the fact that you’re bootstrapped and I love your methodical approach to testing and scaling. How do you manage ad spend effectively in terms of spending enough to generate meaningful enough results versus obviously being wise?

Being bootstrapped gives you even more of an appreciation, I guess, for the importance of spending effectively, not that other people don’t spend effectively as well, but just a slightly different perspective. So, how do you manage that part of your business, especially in the early days? Maybe it doesn’t matter when you get to a certain scale, but in the earlier days, how did you find a balance between investing enough to get good results versus making sure there’s enough in the bank to pay for tomorrow and next week and next month’s test?

 

Evan Johansen:

That is a good question. Yeah, I mean at the end of the day, I go back to this. I won’t spend if there’s not a direct return. Obviously, that’s a little bit thrown out the door at the beginning just because you don’t know what’s working, it’s a little bit more difficult. You’re probably in a scenario where you’re just spending and you’re not getting a direct return back, but what you’re essentially doing is you’re paying for the data to make the future decisions so that you could be profitable later on. So, that’s really important to think about. Really, just asking each entrepreneur, “What is their risk threshold and how much are you willing to put into this?” to the point where it’s almost like a stop loss. What’s the point where you need to say this is enough?

For me, I like to lay those terms out at the beginning, especially for something that’s a new venture. Yeah, it’s just like what is the budget that I’m willing to test? What’s a reasonable budget that can get me to that area of profitability where I can really turn things around? Because at some point, when you start spending, the tables are going to turn. Like Alex was talking about before, you start finding those A tests. You start iterating on those and then things just compound from there. It could last for years. Obviously, it’s way easier said than done, but really I just pay attention to every fine line detail. Most people, like I say, I keep going back to this. It just overcomplicates things.

 

Get an office, hire on a bunch of people for things, get your hands dirty, get in there with the customer support, get in there with all those of those things, try to learn a bunch of these skill sets, because it could save you a ton down the line from building your own website. Everything doesn’t even need to be perfect that first.

 

I think that’s probably a really, really important thing is just I value action more than anything and I would rather take something that maybe isn’t the best idea and take bad action versus no action at all, because at least if you’re taking bad action, you’re figuring out, “All right. That doesn’t work. That does work. You’re getting feedback.” So that’s the way I think about things. And then obviously, that translates directly to the bank side of things. So, being really bootstrappy, gritty at first, and then just knowing when the time is right to start stepping back from certain activities and paying a direct response. That’s like my foundation of it all.

 

Dan Van Meer:

I love that. That’s great.

 

Alex Lewkowict:

So obviously, this is PalletSide Chat, so I think the marketing side is obviously key. You have to drive sales. I see a lot of people get stuck overthinking the backend without driving top line sales. You have to drive top line sales and you can optimize after. I’m a firm believer in that. I know Evan, so I know he is too. Just selfish question for you and candidly, Evan does use ShipHero fulfillment for Auri, but yeah, selfish question for you. What does having a super flexible fulfillment partner allow you to do with your business model? I think it’s really interesting what you’re doing.

 

Evan Johansen:

Yeah, 100%. I mean, us working together on the fulfillment side of things has been super helpful and really just the biggest thing is I would say from a cash flow perspective, we’re able to get those orders out super quick. The model that I’m running right now is there’s some periods of time where we’re on back order. We’re still just keeping the floodgates open and allowing people to order and setting expectations with customers, making sure that at every single step of the funnel, they understand that we’re on back order. It’s almost like a false positive. People are actually happy about that, because it just confirms that we have a really great product, which we do and just making sure that we’re having email automations.

 

But on the back end, when it comes with fulfillment, obviously, most fulfillment companies will not be as flexible when it comes to a situation like that. In our case, it’s been really, really great just because we’re on backorder, a few hundred, few thousand units. We’re able to very quickly catch up on that when we get new inventory in. Going through some of those cycles has been super key just by keeping customers happy, making sure that things are getting there on time. Yeah, it’s just been an absolute game changer for that, because if I was working with a different fulfillment company that was not flexible, we would not be able to do what we’re doing. It’s almost a foundation of it all.

 

Alex Lewkowict:

For sure. I think a lot of people are scared of back orders. It’s nerve-wracking especially when you’re doing the customer service yourself and it’s like an onslaught. But from my own experience with Black Wolf, the worst back order situation we had was bodywash was out of stock for 40 days and that group of customers is still to date our most loyal highest revenue per customer cohort, because like you said, they were excited to be part of the journey. We kept them up to date on what was going on. I think they just felt like they were part of the growth, which they were. But again, if you’re back ordered, it’s super tense regardless of how long it is. So, being able to have your goods received in and shift back out within same day or next day is critical for any brand.

 

So, I think if I’m an entrepreneur, I don’t know if you’d agree, but if I’m an entrepreneur, I’d rather be investing in my top level sales than just have money locked up in inventory sitting at a fulfillment center. I think a big mistake I see a lot of new brands make is they spend a lot of time, a lot of money on the product. They load up on inventory and the marketings an afterthought. They have a five-point, we’ll do influencers, we’ll do an email blast, yada, yada. They launch and it’s super slow out of the gate. So, yeah, I think not being afraid of back orders as long as you’re keeping customer expectations in line is a huge strategy right now with the whole market tightening.

 

Dan Van Meer:

For sure. I mean back orders is just a reality of a lot of different issues that brands are facing. I think at the end of the day, it is an interesting opportunity to generate loyalty if you manage it well, right? That’s the difference, right? Back orders where communication’s poor or having products that’s sold out and not available for 40 days, you’re going to lose people over that. But if you’re taking orders, managing expectations, maybe doing some loyalty programs while those customers are sitting and waiting, maybe coupons or whatever it is for next order, there’s ways to build stickiness through that.

 

Plus, you’re taking those orders. Plus, you’re actually also creating a bit of a scarcity around your product and products sell out because they’re good products that are in demand. So, it’s interesting. I know we touched on this in an earlier episode too, Alex, with your experience with Black Wolf. I love your point about how brands shouldn’t be afraid of this scenario. If they can manage it well, manage the customer relationship and communications well, it’s actually a huge opportunity for sure.

 

Alex Lewkowict:

It’s better than be sitting on a year’s worth of inventory. I’d rather be sitting on a couple weeks of back orders-

 

Dan Van Meer:

Sure. 

 

Alex Lewkowict:

… any day of the week.

 

Dan Van Meer:

Do you guys think that customers mindsets have shifted a bit around that though? People still at end of 2022 are seeing empty shelves. I know we can’t get children’s Tylenol in Canada right now. Supply chain challenges are still a real thing. Maybe they’re not as bad as they were before, but do you think there’s maybe more openness from customers living through back orders and that stuff now because of what happened with COVID?

 

Evan Johansen:

That’s a good question. Yeah, I mean, I think from what I’ve seen, just dealing with front end personal experience is that most people are generally okay with it. There’s probably maybe a small percentage of customers that obviously don’t want to wait, want to refund, want to cancel their order, and that’s just a reality of the situation. But most people, as long as you from a brand perspective can explain the reality of the situation, just letting them into the conversation, what’s going on, like Alex was saying, bringing them a part of the growth, just telling them that the demand is high right now, we’ve been selling out of stock, people understand generally. We’ve gotten a positive feedback.

 

Like you were saying on the stickiness note, it has actually added to that stickiness. People are really happy, and nowadays, there’s almost like a lack of communication with some brands. If you can be that brand that is proactively reaching out to customers and letting them know, that’s something that not a lot of people do and people will take a long way and really remember.

 

Dan Van Meer:

For sure. Alex, I mean it’s worth repeating. You talked about your strategy for dealing with that. You talked about holding back some inventory, didn’t you, when you run out and using that to satisfy the local customers that wanted to cancel?

 

Alex Lewkowict:

Yeah. We tried that with Auri, but the goods moved so fast. It was like we almost didn’t have time. Yeah, there’s always opportunity. So, think about this. Out of every 100 back orders, you’re maybe going to have one really annoyed customer. First of all, the cost of losing that customer is a lot cheaper than financing or holding inventory, just so everyone knows. But there’s another strategy. Let’s say you do your first production, run your back order, and you get it. Before you run out to zero, keep 100 back and keep all the orders on hold. And then if a customer’s really upset, you can release their order because the majority of your customers are not going to complain. They’re not even going to remember they ordered it until it arrives.

 

So, that’s a strategy that we’ve used at Black Wolf a lot is just wait until you have these super squeaky wheels. If they’re going to cancel, you can just ship their order. That just prevents chargebacks and those escalations. Also, just from a CS perspective, whether you’re doing it yourself or you have a team, it’s a lot more reassuring if your team knows, “Hey, I can actually do something to help this customer.” Instead of just being like, “Okay, it’s coming in a week. It’s maybe another week delay,” but at least this gives you a little bit of an out. I think it keeps the pressure down.

 

Dan Van Meer:

For sure. I’ve made a note here, I feel like we could probably do a whole… Maybe Evan will come back and join us. We could do a whole other episode on building customer loyalty with back orders and a strategy around that. So, note made, we’ll revisit the topic for sure.

 

Evan Johansen:

Yeah.

 

Alex Lewkowict:

Yeah, it’s supplier surprise. I mean, you never know what you’re going to get, so it could happen to anyone. Literally, we have a rigorous QC process. For every single run, we have certain testing reports that need to be done on the bulk, on the finished good. We even require pictures of the finished cases and pallets, routing sheets, all of that. But even sometimes things slip through. One of our last runs of shampoo, instead of getting 20,000 filled units, we got 20,000 pounds of bulk shampoo in 55 gallon drums. What are you going to do?

So, at Black Wolf, we don’t sit on inventory. We were bootstrapped most of the journey. We raised a little bit of money, but we’re really just in time inventory for everything. So, we had gone out of stock two days before this was set to arrive. We paid for a team driver to take it from California and shows up. Imagine my face when it’s a truck of barrels of shampoo and I was like, “Should we list this on the site as a value pack?” It’s going to happen. You just have to take it with stride.

 

Yeah, I think regardless of what you do, whether you ship yourself, use a 3PL, whatever you’re doing, just make sure that if you’re a new brand, that 3PL is going to work with you on receiving times and getting back orders out quickly. Just because if you have someone with super rigid SLAs and you’re back ordered and then it takes them seven to eight days to receive and then they won’t ship out more than a 10% increase over your daily sales, you can’t, that’s not going to work. You need someone who’s in and out, get it done, relieve the pressure.

 

Dan Van Meer:

For sure. For sure.

 

Alex Lewkowict:

So, Evan, when Sam and I started Black Wolf, we’d always done other eCommerce businesses, but this was the one that we were going to build, grow, really build a lasting brand. So, to conclude, what’s your long term vision for Auri? Is it just the product of the day? Are you going to just always try and find that winning product at any given time or what are your plans?

 

Evan Johansen:

Yeah, yeah, that’s a good question. I would say it’s really important to have a long term vision with things. Obviously, being a young entrepreneur at the beginning stages, it was a little bit difficult. I was thinking very, very short term and it took me a little bit to get out of that mindset, which I think most people don’t do. They’re thinking about next week, next month. But with this brand, I definitely do have a little bit of a longer term vision with things. I really think that we could shake up the mushroom category, especially in the gummy line. There’s multiple different SKUs that we can create for a bunch of different areas of people’s health, which I think is going to be super important.

 

But really I’m taking things day by day and seeing how things are going. I have a long term vision with things. There’s that value in having compounding customer relationships and the subscription base. You’ll see those disproportionate returns five years down the line when you really have those great relationships with customers. However, we’re really, really in the early stages right now, so it’s unclear to see what exactly is going to happen with the brand. But at the end of the day, I’m taking it day by day, but looking a little bit longer term. I think that there’s definitely something to be made on the longer term view of things. Yeah, we’ll just have to see.

 

Alex Lewkowict:

Awesome. Yeah, and we can probably do an entire episode as well on new product launches. That’s always been the game changer for Black Wolf. It just opens up an entire new realm or galaxy of revenue as you expand your product line, at least for us.

 

Dan Van Meer:

I like that. Stay tuned. Love to do that, for sure. Cool. Well, that’s awesome. Evan, appreciate you taking the time to chat with us. I think we scratched the service on a lot of different topics, so stay tuned. I think we should send a follow up invite here and do a round two of this for sure.

 

Evan Johansen:

This has been awesome.

 

Dan Van Meer:

That’s awesome. Appreciate it. Thank you. Alex, any closing thoughts from you today?

 

Alex Lewkowict:

Peak’s coming up like we’ve been talking about. Just make sure that you’re in sync with your logistics partner, especially if you’re going to be in a back order situation. Yeah, good luck.

 

Dan Van Meer:

Absolutely. Cool. Well, we appreciate you taking the time joining us today. Thanks. As always, if you have any questions or comments or feedback, you can get to us through podcast@shiphero.com. Look forward to chatting with you next time. Thanks a lot.

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