Using Capital Investment To Grow Your Amazon Business
Dustin and Kris are joined by Alex Sklar from Payability who’s here to discuss how Amazon sellers are using capital investment to scale and grow their businesses on Amazon!
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Scale and Grow Your Amazon Business
– Hello everyone, and welcome to episode 55 of Two Amazon Sellers and a Microphone brought to you by Sellozo. Today, Chris and I have a great guest on with us Alex Sklar from Payability. Alex, how you doing?
– I’m doing great, guys. How are you guys doing?
– Wonderful. Thanks for coming on.
– Yeah, we’re really excited to have you on this is a great topic for our audience, for Amazon sellers. What you guys offer at Payability and how you can help fund Amazon sellers. Chris and I are both sellers and we certainly know the cashflow issues that arise being sellers. So we’re excited to just dive in, ask you a bunch of questions about Payability, but before we get in why don’t you let everyone know your background? How did you get into this space and what is your current role with Payability right now?
– Yeah, so I’m the head of business development and partnerships for Payability. So, you know, I kind of handle partnerships from everything from affiliates or influencers to software companies, integrations, to us even providing full capital solutions for some of the marketplaces we support. I’ve been with the company for about a year and a half now. And I’ve been in FinTech for about eight years. Got my start, you know, really after I left public accounting and I had grown up in small business and I had started a couple of businesses of my own in a brick and mortar world. And then really after I left public accounting I started a startup called SNB Scorecard where we were doing analytics and creating credit reports for small businesses to make them more attractive for banks so they could get more financing offers. And that’s what really kind of led me further down the world into alternative finance. And then, you know, when I started working with e-commerce companies really on the consumer financing side, about three, four years ago providing them consumer options for their customers and point of sale type options. And then that’s kind of what led me back to the small business side over at Payability and good on e-commerce. I mean, it’s a place to be for at least the next decade-plus.
– Yeah, no doubt. Yeah, it is an exciting time in e-commerce and really we want to just dive in and talk more about Payability because Chris and I, like I mentioned we both sell, and early on, we’ve been selling for a long time, early on in the Amazon world there, or in the e-commerce in general, there wasn’t really that creative type of financing available. And we, Chris and I, have our own stories of challenges we’ve had with sort of traditional lending to businesses that does not help a seller very well. So why don’t you touch on this a little bit? What is Payability? How did Payability come about and how do some of the things that helps with sellers?
– Yeah, so Payability really came about, it was founded in 2014 and it was founded by our founders Keith and Scott, and really what the design there was they’d both come from ad tech and marketing tech and they had seen a pinpoint with affiliates not getting paid fast enough from affiliate platforms like Commission Junction, or Raketan, things like that. And so as they were solving that pain point it kind of hit them over the nail, you know, like hit him over the head like a hammer when they started talking with e-commerce folks who were basically like, hey if you think, you know, the affiliates have a problem, you know, there’s a whole world of marketplace sellers out here who are getting paid on 14, 19, 21, and 30-day cycles. Like you guys should start looking at that and then working through some partners, you know discovering product-market fit. We’re a startup as well. You know, we’ve been around for less than 10 years and kind of just digging in a little bit. It became really apparent that you know, all businesses have issues trying to find capital. And it’s like one of the biggest pain points to growing a business is how do you get that initial capital, and then how do you get the capital to continue to grow your business? And for those selling on Amazon it became even more apparent, you know as well as the other marketplaces. But, you know, Amazon is the biggest and the largest and it’s just about everyone is selling something on Amazon. And it became really apparent that you know, not only first-party sellers, where it’s more of a traditional financing relationship there. Amazon’s the payee. And it’s kind of more expected to be paid on 30-day terms. But for all these third-party sellers whether they’re private labels, whether they’re wholesalers, and especially like the resellers, it’s really hard to scale your business to be able to reinvest back in your business when you’re getting paid twice a month. And that’s when they, you know, came up with the idea for instant access, which is our flagship product. Which is turning that net 14 into a net one and going from getting paid twice a month to getting paid every day so you can reinvest in the business and essentially keep up with that demand that Amazon is going to constantly drive towards you in the form of inventory because you know what we’ve done and what we’ve seen and learned and had case studies done on is one of the fastest ways to like lose the buy box or to lose traction is essential to stock out. And if we think about it naturally I want to buy something and I want it for this weekend. If I don’t get it, right? I may have never known the product existed but now I want it. And if I don’t get it I am so incentivized to go write that review. Because when you think about reviews, no one ever comes in and gives you a three-star or a C plus. And no one goes to a restaurant and says the food tasted okay. Yeah, it was delivered reasonably on time. You give reviews when it, you know, exceeds expectations and you want to tell everyone about it or as you give reviews, negative ones when you’re upset. And you know, so much of what people are ordering, especially now that we’re in that constant demand, you know, I want to press one button, I want it next day. Stocking out leads to upset people who write bad reviews who would have never written a review in the past. All those things together, as well as scaling your business. It kept being apparent that capital was the big, one of the biggest constraints to being able to take that next step and start having that incremental growth.
– You make a lot of good points there. And one of them is like continuing to grow and you’re stocking out. As a seller ourselves, you know, that is a big issue. We stock out and you got to keep that momentum. You got to build that back up again when you get your inventory back in and sometimes you don’t have the capital to put those 30% deposits down or 70% deposits down. So when is it a good time for like new sellers especially to start looking more into like getting some capital or trying to expand and grow their business? When is that a good time for them?
– I really think, you know, and this is where, you know, all businesses are different. Like even if we’re in the brick and mortar world, you know two pizzerias on the same block, depending on how they’re run can be completely different businesses. And so I think we want to like always kind of keep in mind that like your business model might be a little different than people you’re comparing with. But when we look at the larger arc of Amazon sellers, you know, and like people always want to say, I want to get started. I have this great idea for an idea. And typically what I tell people is if you’ve never sold anything before in your life offline or online, you don’t want to jump right into creating your own product off the bat. And I think that’s where a lot of entrepreneurs get a little bit thrown as they have an idea for this amazing product. Having an idea for a product, building a product is very different than actually selling that product. And so typically when people want to start selling on Amazon and they want to get involved, you know, what we’ve seen be really successful, and I didn’t invent this, you know, I’ve just seen this overtime is usually you want to start out some type of like reseller or retail arbitrage and find products that you know are going to sell and learn the systems of how to sell them. Understand your margins, understand your price, understand that 2 million bells and whistles that are happening behind the scenes of Amazon that, you know, most people before they start selling don’t understand, you know. The listed line items, and the difference between short-term storage and long-term storage, or how FBA works, or why they may get suspended even sending into FBA, let alone like the product actually leaving. And so doing some like, you know whether you want to go full retail arbitrage and make it almost like a day trading activity, or whether you want to just start out as a reseller working with products that are already selling, understanding the pricing, understanding the nuances of Amazon, and then growing your skews and either becoming a better reseller maybe even going into the wholesaler world. Essentially, learning how to be a good e-commerce seller and then graduating up into the type of seller whether that’s wholesale, private label, or even manufacturing your own product. If you want to sell it online, I just, you know where I’ve seen people be really successful is when they can take a product that they know works, sell it, learn the metrics of the selling, learn their business model. A lot of people don’t come from a business background and they have to kind of learn the hard way some of those margins. You want to do it with a product that you know works. So you can look at your data at the end of the day and go and understand it. Is it me? Or is it something I’m doing wrong rather than if you start out with your own product right off the bat you may not know if that product was even sellable? So you could be doing everything right. And the product is a dud or it could be your metrics or your margins. So that’s usually where you want to start with something great. And then where we see people be really successful is they take a product to resell and they start to dig through reviews or they start to get feedback, and that’s when they start to improve upon it. And that’s usually that great entry into that private label is I’ve been reselling this outdoor speaker let’s say, and all the feedback I’m getting is or all the reviews I’m seeing is like best outdoor speaker ever, wish it was waterproof. Man, this is a great outdoor speaker. Wish it was waterproof. And then you can say like, look, I’m reselling this speaker. Why don’t I start? Why don’t I make this same speaker, but make it waterproof? And like, you know, things like that. And even doing research on other products that you can improve upon but already knowing how to sell on the platform first.
– Man, you hit it. We talk about this all the time. Like, learn how to sell on Amazon first, before you go and commit to like a $20,000 or even a $5,000 order because there’s a lot of little things you’ve got to do right when you list things on Amazon. So we’re always talking about retail arbitrage wholesale arbitrage, or just listing books online that you got it on a bookshelf somewhere. Just learn the process because it’s going to be different. Like you’re going to have to send shipments in and you’re gonna have to label them, then you’re going to have to make sure the listings are right and deal with the reviews. And there’s a lot more to it than just throw up a product. I was talking to this other the other day and he was in a really competitive niche very competitive and just started out. And he was selling a single product for the same price that you could buy four for. And he’s like, well, I’m not selling anything. I’m like, well, look, let’s take it back down a little bit. Your one product is as much as I can get for four. I can buy four for the same price you’re selling one. And it kind of took him back a little bit. Because he kind of fell in love with the product, right? He’s like, this is what I want to work. I want this to work. I’m like, look, look, the market doesn’t care if it’s a different color, and if it’s going to be the same price as four. If I want to buy, if I need more of these I can buy four of them for the same price as one. So it was kind of like he came to Jesus a little bit. Do you know what I’m saying? Like, he’s like, I need to kind of liquidate and restart. So I think that’s good knowledge there where like sellers they need to learn the process, learn how to list products, and then they can scale up. And I think that’s where they come to you where I got a product, it’s a proven business model. I got reviews. I’m selling, but I need to get some capital so I can get that other order in with my manufacturer.
– Exactly, and I think to the point you were making too I think there’s, you know, and this goes in all businesses but especially when we’re talking about Amazon sellers. Understanding your customers’ view of your product. Is it a commodity or is it something that they can’t live without, you know? And like when you’re talking about something that’s like you know, like a commodity type thing where know it’s the price. If I know that both sellers are going to deliver reasonably at the same time, now I’m just playing in the price game. If there’s no intrinsic value outside of just the commodity value that makes me go to yours then you need to understand that pricing. Like, I mean, as you guys know, like there’s probably a hundred different repricing tools out there and more importantly, you need to know the mindset of the customer because that is everything. And I think that’s where a lot of entrepreneurs, you know, kind of go wrong is they are their own best customer but they don’t necessarily know how the rest of us think about their product.
– That’s great.
– Yeah. We get tunnel vision, right? Dustin and Alex, we get tunnel vision. Like we’re stuck with like, this is my product. I love it, I love it, I love it, I love it, I love it. And then when someone tells you, it sucks, you’re like, no, it’s really good. But then you’re like, well, maybe he’s right. Maybe it does suck. I need to transition.
– It’s a great point. I was just talking to a seller today that kept telling me over and over his clothing that he was selling is premium. And that’s why he wants this higher price. And I was like, you’ve got one review. Nobody knows that your product is premium and can justify that price. Your job right now is to prove that it is premium and then you can get that price. But everything you’re doing now you’re advertising to a listing that’s not going to convert because it’s showing it’s premium, but there’s no proof. And so, yeah, really, I love that line. You said you’re your best customer. Is that it?
– Yeah, I mean, just had the conversation but it’s the truth, right? Like we’re all our own best customers. Like I think what we do at Payability is the best you know, and we have competitors. Everyone has competitors. But I’ll be out there and, you know, and like. But, you know, truthfully what we do here too, and, you know to keep ourselves all in check is we don’t build products that we don’t have, you know, five people in a smoke-filled room deciding what the market needs. We listen to the market. And when our customers tell us that, you know, they don’t want to be a customer anymore because of this reason that is immediately what we’re like beelining towards to make sure that we’re fixing those things. And I think especially when we’re talking about just, you know, I mean e-commerce in general, merchandising, right? Like making sure, like, are you out of step with what the market wants? I have a friend who is a seller who is selling socks, right? Like maybe like four or five years ago, socks were like the thing. You had all these great custom socks. He happens to be a sock aficionado. He’s always loved socks. And he took, you know, he had a great opportunity when the market popped and everyone else wanted socks and it like twisting arms to try to get them to see like you still love socks. Everyone else has kind of moved on. They’re looking at other stuff now. You still have socks. Like if you want to be a successful seller do what they want or just be, you know, a sock-like you know, evangelist really, but not necessarily a seller.
– That’s another really good point. That’s something we had just talked about recently as well. And a personal story is I had a product I was in love with but it became commoditized and I couldn’t compete on the price, but I gave up on it way too late. I should have dropped it earlier, and it cost me some money. But then yeah, just falling in love with the product is critical. So let’s talk now about what it looks like getting started with Payability. And let’s start with your first offering that you guys had. I remember when this came out for Amazon sellers and that’s where you had a daily funding base or daily payouts. What’s the requirements to get started with that? And then what does that particular program look like for a seller?
– Sure, so that’s our instant access program and that is, you know, essentially on the highest layman’s level, you’ve already made the sale. We want to get you paid faster for it. So there, you know, we have customers as small as $2,000 a month in sales. We have customers as large as 12 million a month in sales. The thing they all share in common is that they’re looking to grow their business. And I think that’s like one of the biggest call-outs we have to make is, you know, in the eBay world, they have, you know, the pickers, right? And then they’re going to estate sales. They’re going to garage sales. The hunt for the product is almost more exciting to them than growing a sustaining business. And so anytime you’re leveraging outside capital, you always want to be able to put it to work in revenue-producing ways. For an e-commerce seller, that’s typically going to be inventory and marketing. Marketing to be able to drive demand. Inventory to be able to keep up with that demand. And there are other uses as well. Entering new product verticals, maybe hiring some virtual assistants, paying for some shipping costs, or something like that. But ideally, if you’re leveraging outside capital you want to be able to put it to work. And so our requirements, our minimum requirements, are that you’re doing at least 2000 a month in sales and that you’ve been selling for at least three months. And it’s really, it’s not just for our own risk. It’s really for, you know, the benefit of the sellers because a lot of people jump into Amazon and, you know, they think they’re gonna make it big and you know they’re going to become an overnight millionaires. And typically a lot of people stop after that first month. They realize it’s a job. It is not a get-rich-quick scheme. You’re going to have to put in the work just like any other job that you do. And just like anything else you want to be great at you’re going to work hard at it. So typically we like to see that three months selling history because it shows that you’re a little more serious. And then the $2,000 minimum is so that when we’re providing you daily cashflow it’s enough that you can actually use it. If you’re only getting maybe $200 in sales and I’m advancing you a couple of dollars a day. You can’t actually put that money to work back into the company. So there’s no real reason for you to, you know, essentially leverage outside capital. So we’re looking for that $2,000 a month minimum and three months time of business. And really, you know, getting started with us it’s a 10-minute application and some high-level information from the owner, some high-level information about their business, and then all the magic happens when they connect that API. Rather than send us bank statements, send us screenshots. We have an approved API with Amazon and you connect it right there and that’s where we’re able to pull all the information in and be able to do underwriting in 24 hours or less and be able to get you an offer. And then from there, we’re basically gonna advance you up to 80% of today’s sales tomorrow, and we’re going to keep doing that every day until Amazon makes the full payout. Then we give you back the 20% we were holding back and we’re holding that back for chargebacks and returns so we don’t over advance you. And then once we’ve had some experience with you like six months under our belts, we start to be able to increase the advance rates, lower the rates. And, you know, our goal is always to try to provide as much capital as cheaply as possible. But, you know, there are some, you know, obviously, there’s different risks involved. You know, an international drop shipper is gonna look different than someone who has their own product. Someone who’s just starting is going to look different than someone who’s been doing it for five or six years. And those kinds of all kind of go into the underwriting months.
– So you’ve got like two different things here. The instant access, which is great. And then you got the instant advance, which if I’m approved and I need some capital to launch new products or buy more inventory, I could do both programs, or do I need to do one or the other?
– No, you can do both. And so instant access is available for those who are selling on a marketplace, Amazon, Walmart, Newegg, and those that are playing a delay term. And so they’re, you know, again, that’s you’ve already made the sale. We’re paying you faster. Instant advances, we’re going to project what we think you’re going to do next month in sales and give it to you upfront in a lump form of cash. So similar to PayPal working capital, similar to Stripe, similar to Shopify. It’s not a loan in that a loan is I give you money, you promise to pay me back, and the risk is on you here. We’re projecting your sales and giving them to you upfront. So the risk is on us that you’re actually going to make those sales, but for the customer, what it feels like is you’re going to get next month’s sales upfront in a lump sum of cash. And typically you’re going to use that for marketing to drive more demand. You’re going to use that to be able to get, you know, hopefully, larger inventory purchases at a discount because you can pay for it upfront. It’s also the way we give it to you is we try to be as flexible as possible. So, you know, once we make money available we have to actually give it to you. So there we give you an E-wallet and a dashboard they can log into. And from there you can wire the money to your bank account, you can do a same-day ACH. You can even pay your suppliers directly through the platform. You can do a direct instant transfer which moves money in about five minutes, or you can opt into our Payability seller card. It’s a corporate visa debit card accepted anywhere visa is accepted, but if you use it we give everyone 2% cashback on every dollar they spend as another way to keep trying to lower their rates and make the cash as flexible as we can.
– What’s so interesting about these, and I think for a lot of people that are starting out in business they don’t understand these aren’t really loans. It’s not a traditional loan in a sense, it’s getting the money that you’ve already sold. Like with instant access, you’re getting your money faster than you normally would. And then what the instant advanced, it’s basically you’re funding the inventory and then taking back the sales as they come in, which is so much better for someone trying to grow their business. And I’m speaking from someone who took traditional loans and the next month you’ve got some $5,000 payment that you can’t make because you don’t have the money hasn’t come back in yet. And that’s scary for a seller.
– Yeah. And truthfully too, I mean, I think hopefully COVID has shown traditional financial institutions there’s a lot of action in e-commerce that they want to be a part of. But traditionally, you know, banks have thought e-commerce is fat. So unless you’ve hit that like 5 million annual revenue number unless you have some type of collateral to pledge or you’re pledging your home, or, you know, you have a warehouse or something. Typically they looked at it as it’s a little bit of fly by night. I think that’s starting to change a little bit as we all are relying on e-commerce to live essentially now, but they still don’t really know what to look at. They want to look at the profit and loss. They want to look at a balance sheet. They want to look at a cash flow statement. Most sellers aren’t keeping those types of books. They want to see gap accounting. Most people are doing it on a cash basis. I mean, a lot of sellers don’t even have QuickBooks or things like that. It’s not necessary to knock them or anything like that, but it’s apples and oranges when you’re talking to a bank underwriter who is looking to see a court, you know, in their mind a corporation and they’re looking at a business that’s thriving but doesn’t check any of the boxes that they’re used to seeing. And it’s like, they almost don’t know how to talk to each other so it becomes an impasse. And then usually they decline.
– That’s so true. That’s so true. You guys got here not only for Amazon but there’s, you know, Amazon, Shopify, Newegg, Walmart. I know a lot of Amazon shoppers are starting to spread out a little bit more and like going to have their own stuff, Shopify account, and then they’ll do it in Walmart. And then maybe Newegg comes in at the back end. But is that for different like cycles, or as a seller myself, am I bundling that all into one? Like if I need capital for my Walmart, is it based off my Walmart numbers, or is it going to be based off my account as a whole?
– Ideally, we want to be able to support your online sales everywhere they’re happening. So if you’re selling on Amazon, you’re selling on Walmart, we can look at the health of both. When it comes to advancing your sales on the access program I can only advance the sales that are being made on the different platforms, but when it comes to instant advance, I can take a look at the entire whole. We’ve been trying this out a little bit and we’re doing this a little more. It’s starting to see, are there ways that we can also work with your offline sales? Like for us, we just need the information to be robust. Amazon, Walmart, Newegg, Shopify, all have these very robust APIs that allow us to be able to underwrite quickly and be able to make quick decisions. You know, for some of our biggest sellers, we’ve even worked with some of their offline channels, like Target and CVS because we can get that information in and the risk is worth it. Those are things that we’re looking to do down our roadmap more and more because we want to be able to support all of your sales. But to answer your question, when it comes to advancing the sales that you’ve already made then it’s marketplace to marketplace. When it comes to being able to provide you an instant advance we’re going to take all that information in, but no matter what we’re always going to take all that information in to lower the risk because if you are selling on multiple channels, you’re a less risky seller than someone is only selling on one channel. And it’s not because that seller’s individually bad, or they’re a bad person or anything like that. The risk is if you’re selling on Amazon, Newegg, and Walmart, and Amazon suspends you for a week you still have sales happening. If you have invested only in one marketplace and you get suspended, then it’s a riskier scenario for you, for us, for everyone involved because, you know, unfortunately, Amazon is, you know there are a lot of great partners out there who help you get unsuspended but sometimes it’s just a black box. You don’t actually know what has happened. And there’s a little bit of a delay in that communication. And, you know, that’s where if you’re selling multichannel you’re just less risky for yourself in general. And then, you know, when we look at those who, you know those customers who are selling on their own websites it’s interesting how it kind of skews. So if you’re selling an Amazon, Amazon’s going to drive a tremendous amount of demand. It’s almost just a race to keep up with that demand. And then some advertising to make sure that, you know, once everyone starts doing sponsored ads, it’s kind of like then everyone has to do them, or you don’t get found but they have a great search algorithm. And, you know, they drive a tremendous amount of demand. What we see is when people go to their own website and like Shopify or WooCommerce or something like that, there they don’t have that demand engine, and they have to spend a lot of money upfront marketing whether it’s Facebook, Instagram, Google ads, or something like that, because they have to create that demand. Then they also have to keep up with that demand. So we’ve also seen a lot of very clever sellers who are using Amazon almost as a demand engine to build their brand. And then once they have a brand built, they start to you know, slowly transition into their own website. But I talk to sellers all the time who have done that play and then go, I can never leave Amazon. There’s too much demand there and I can test things out before I actually want to test them out on my own marketing budget. I put them on Amazon, see if they have a hit. And then I kind of work the marketing on the outside. There’s a lot of clever sellers out there who are kind of figuring out these nuances and it’s only going to grow. I mean, it’s only going to grow.
– Yeah, there’s no question that you’re spot on right there. I mean, I’ll speak for myself, but I’m sure Chris is in the same boat. 90% of my business is Amazon. I’ve got Shopify. And I’m selling on other channels and it’s not even close. Amazon, it captures it all. And it’s easier to grow on Amazon than any other channel just because of what you’ve talked about, that outside marketing. Go on, were you about to say something?
– I was just about to say what I’m starting to see a lot more of with Shopify is I’m starting to see them be a payment platform for selling on other platforms. So I’ve come across a handful of merchants who are selling on Etsy. They have a Shopify store. Sorry. They work with Shopify. So I go, oh, you have a website. And they go, actually, I don’t process it. I don’t do anything on my website. It’s all on Etsy. I go, okay, so what are you doing with Shopify? And it’s that they’re using Shopify as the payment processor to then list on Etsy. And there’s almost, and I’ve seen this a couple of times, I think it works perfectly into their partnership with Walmart. And it’s almost like taking that little bit of that channel advisor approach where it’s like Shopify has so many great features out of the box, but a lot of sellers still don’t know how to drive the demand themselves. So they want to use the demand of the marketplaces for their niche, or use all the bells and whistles of Shopify to actually process the orders and have those additional apps and add-ons. And I think we’re going to see a lot more of that over the next coming year or so.
– That’s exactly what I do. I mean, we have Shopify up and if anybody comes to the site there, it’s going to get fulfilled by Amazon. Like that’s just where it’s at, right? I’m not going to fulfill the order here. We’re using Shopify as a way to fulfill it and Etsy. I’m glad you said that. Etsy is getting really popular. A lot of people are going to Etsy and even for like product research, people are using Etsy to find new products that don’t exist on Amazon. So yeah, Etsy is up-and-coming. What are you seeing on the Walmart side? Are you seeing a lot of Walmart growth or Newegg? I mean, honestly, Newegg I would think is very little, but maybe you say something that I don’t know about.
– Yeah, so on Walmart. Walmart is definitely growing. I think the combination with, you know, I think their partnership with Shopify has helped a lot. I think their partnership with Deliverr has made using Walmart much, much easier. Delivers a great company. And what we’re seeing now is, you know, for the first time we’re starting to see some suspensions on Walmart. They’re rolling out some seven days suspensions and it’s really not the seller’s fault. It’s not even Walmart’s fault. It’s that the shipping companies like UPS and FedEx are so inundated and back-ordered that they’re not even able to get the shipping labels on yet. So typically if the shipping label, if I sell a product and I put the shipping label on today and it doesn’t ship for five weeks, it’s the shipping company. But when the shipping companies are so backed up that that shipping label can’t even get scanned it looks like I never shipped it. And so we’re seeing a little bit of that on Walmart. They’re doing some seven-day suspensions. I think it is all tied back to the shipping companies that I think now that we’re kind of out of the holiday rush that’ll resolve itself a little bit, but we are seeing, we’re seeing growth on Walmart. We’re seeing more and more people request to have us work with their Walmart store. With Newegg. So I love Newegg, personally. I used to use Newegg all the time. I used to build my own computers and I would buy all the refurbished parts off of Newegg. And I liked a lot of people thought Newegg was just a consumer electronics marketplace but they changed that about a year ago. And they are now a general marketplace. I actually, I worked directly with Newegg. We powered Newegg Capital powered by Payability, which is a direct capital solution for Newegg sellers and in partnership with Newegg. And I’m not just saying this as a plug for them. I’m saying there was a reason that I approached Newegg to work with them. And that was because I individually used to use them all the time. And now that they’re a full marketplace, I think that they’re going to be really interesting because they do, they’ve always had a brand for consumer electronics. And I think as they start to open up, like what I’ve seen personally is that to woo people off of Amazon and off of Walmart they’ll do a lot of bells and whistles for sellers that other marketplaces won’t. They’ll do custom pages for, you know, a product if it doesn’t exist on a marketplace already. And I’ve seen a lot of great things. If anyone is interested in selling on Newegg they can definitely reach out to me individually and I can put them on the right path. And I think that you know, as we see more diversity, Amazon still the biggest, and it’s so easy. I mean, that one is so easy, but they are laying the groundwork for how other marketplaces can compete. And I think, you know, Newegg is interesting. Walmart’s interesting, Etsy. Etsy now from Etsy five years ago is a completely different world. I think, you know, Ali Baba is going to be really interesting on the sourcing side because they’re really starting to make a lot more moves into North America. I think that there’s so many other company like marketplaces that are going to start popping up like Albertsons the grocery store. They’re now kind of like a third-party marketplace and they allow third-party sellers to sell directly on it. I think there are companies like Staples.com, Tractor Supply, and all these others that we’re going to start emerging as third-party marketplaces because of the concept of a third-party marketplace versus a big box it’s so much easier for the company to say, yeah, no, it’s all on you, on your shelf, you have to ship it. You have to label it. You have to deal with customer returns. And that model will create more facilitation for third-party sellers to start entering. And even like, you know, we always talk about first-party sellers, third-party sellers. There is technically second party sellers and that’s when you have like a wholesaler in Amazon it’s just like we’re basically buying your whole Amazon wholesale lot but we’re not putting it on our name and we’re not still keeping it in your name but we basically are owning this. And I think we’re going to see a lot more of that evolution across areas that we didn’t think that were normally marketplaces which will be great because then Amazon will have to compete with them. And then we’ll see all these new innovations that we’ve all been asking for and wanting and they’re all gonna fight which will be great for the sellers. And I know I’m rambling on here a little bit, but like right now all of these marketplaces chase the demand. And I think what we’re going to see over the next couple of years is they’re going to switch and realize that they’re not going to have the same type of demand if they don’t have the same inventory. We’re seeing a lot of international sellers pour into these marketplaces and there’s nothing wrong with that. Competition is great, but that means that people are going to start chasing price. At some point, that pendulum is going to swing and they’re going to start chasing quality, and to chase quality, the marketplaces are going to realize they need better sellers. And that shift of all being demand will start to shift to supply. And that’s where I think it’s going to get really interesting. Don’t really know when that’s going to happen but I know it will happen at some point.
– Yeah, yeah.
– That was good.
– I love the energy that you’re showing because e-commerce is really exciting right now. It’s very exciting. It’s still very much wild, wild West, I think. I mean, everyone’s changing on the fly but I love what you’re talking about. Because I’ve thought this myself for a while, with this new competition coming in against Amazon they are going to have to start really wooing the sellers and making it attractive to be a seller. And Chris and I talk all the time about the benefit to the consumer of having third-party sellers all compete if product quality goes up. I mean, Chris and I can’t launch a product that’s got bad quality now. There’s kind of people who are gonna do better. I love the way you had that passion for e-commerce in general. It is exciting. It’s going to be a lot.
– You know, I think you’re exactly right too. It’s going to chase quality. If you want to chase price we all know that there are places to chase price but there’s a reason we’re still going back to Amazon as Amazon does hold a lot of their sellers accountable. There are other websites, there are other marketplaces, like Wish. Wish, I mean, as far as technologically Wish is an amazing marketplace. Great APIs, great dashboard, all of this information. You know, Wish’s marketplaces are typically a lot of cheaper stuff that sometimes gets delivered in a week, sometimes gets delivered in a month, 80% of it’s coming from China, and there’s nothing inherently wrong with that, but it’s a marketplace that chases price. And so when you chase price, you become kind of like you know, it’s a novelty, right? Like I don’t really need it. It looks kind of fun. I’ll buy it, and if I get in and it’s garbage, okay. Versus I want this. I want this television because it’s going to work, It’s got a name brand, I know it’s going to get delivered. If it’s broken, I’m going to send it back. I can also press that little button to have the person install it. Those are the types of things people are going to want. And if we look at like some other brands in general. When we look at like the way, you know, just some of the macro forces in the economy, we’re starting to shift already back to quality. Like Ferrari is now a publicly-traded company. Now granted, like not everyone can afford a Ferrari but like they’re selling more Ferrari’s than they ever did before. Cars like, you know, like Nissan, like a Nissan Altima, Honda Accord, Toyota Camry. These were basic cars. They now all have the same features that luxury cars have. And we’re able to do it with a good price point but like people do want quality. And I think that flooding the market with cheaper and cheaper stuff is almost going to drive people more into that quality because people are not going to. We’re kind of getting past that, you know, I buy a rug I spill something on it, I throw it out. I buy a new rug. We’re kind of getting like, then that was like a big swing in the early aughts but we’re kind of getting past that and getting back to I want something really quality my house. I’m willing to pay a little more and I’m even willing to fix it if it breaks because I respect the quality. And I think it’s a slower shift because it’s kind of like a tectonic plate shift to get back there, but I do think we’re in that direction.
– Yeah, and that’s where that social proof and reviews and all that comes in so big and where that’s another benefit of e-commerce world is you can hear the voice of thousands of buyers before you make your purchase, which is great. But yeah, along with that evolution of e-commerce is as you guys evolving right alongside it with creative ways to help sellers and help third-party sellers fund their businesses. It’s exciting. Is there anything coming down the pipe with Payability that we can look forward to?
– Yeah, so we have a couple of product launches that we’re going to be doing this year. We’re rolling a couple of them out in beta right now. One of them is it’s called advanced line. So we’ve taken our instant advance which is the lump sum of capital, and we’re turning it to look and feel like a line of credit. So it can’t be, again, we’re not a lender so it can’t be like a true line of credit. But essentially what we’re looking to do is max approve you for an amount of money and then you take as literally as much as you want overtime to give that line of credit feel, you’ll always have capital available. You take it as you need it. And then we’re combining that with another product that we have to essentially pay your suppliers directly. So rather than pull the money out then I have to send a payment. You can take from your advance line, pay that supplier, press a button, send the money straight to them. And you know, if you’re sending it overseas foreign exchange fees all of that will be taken care of. It can come in via their approved method, whether that’s wire or ACH. So you don’t have to kind of play around with oh, do I have to send the bank order? Do I, they won’t take a credit card or something like that. And then, you know, we’re always working on trying to lower our rates, increase our advanced amounts, but we’ve got some other kind of products in the hopper that I can’t talk about all of them but the advance line is something we’re really excited about coupled with vendor pay. And you know, one thing I would just, you know that I’m excited and proud about is we were kind of doing our numbers from last year, and during COVID alone, we deployed over $1.4 billion in growth capital to e-commerce sellers. E-commerce is a place to be. Like I have to be honest, people say like, oh, you know, this or that. We have had such a tectonic plate shift in people’s buying attitudes. I don’t think we’ve seen anything like this since World War II, frankly where we started, like, you know. People all of a sudden started getting more canned food and processed food because we had to build these things to be able to go to war. We all, as a world had to stay at home for a period of time. And what we’ve done is we’ve learned the convenience of e-commerce. We’ve learned the convenience of ordering online and pick up curbside. And even when things open up and we are excited to be back in the room with everyone and party, no one wants to do things that are less convenient. And so like, you know, the fact that my father now knows how to, you know now knows how to order things online. And the fact that you have so many new entrances on the demand side to the market, that’s not going away. And I don’t know that you know, COVID was, it’s still it’s a pandemic, it’s a tragedy, but I don’t know that without some type of world moving event like that you can actually change the behaviors of an entire world. And we had that event and that event is driving people to buy things online. And that’s why, I mean, I think that’s why you see companies like Thras.io and Heyday and everyone’s pouring money to get into this industry because we have changed people’s buying habits. And I think it would take another huge event or some type of insane innovation to get away from the buying habits we’ve just created over the last year.
– You’re right on. We saw a surge of like people that were brick and mortar and how do I get on Amazon? How do I get on Amazon? It’s like, well, you should’ve called last year. You should’ve been thinking about it, you know two years ago. But no, we’ll try our best to help them out and like give them the resources to get started. But you know, by the time they figure that all out, I mean it’s going to be probably too late. So you kinda gotta jump on that ship now and ride it out because that’s where everybody’s going. You’re clearly right with the curbside thing. You know, one store started doing it, the other store started doing it, they all start doing it. Now, it’s like a sectioned area in the parking lots and that’s like, that’s gonna be it. Like, they’re just going to roll up there and you’re going to get your stuff and move on. So I think you’re right. I think all that stuff is going to be people having to adapt and convenience. Convenience is what we’re going to pay for it. If it’s premium, a couple of bucks more, I think people don’t mind that. So it’s just going to happen.
– Yeah, the biggest indicator for me was when at Sellozo we started talking to a lot of people that were in the grocery category. I mean, that was probably the latest or the last adopter to go full e-commerce. But once people started shopping for everything online and all these people that were selling food that normally just sold directly to grocery stores all of a sudden had to establish their presence on Amazon, make sure stuff’s in there. That’s how, you know, that the demand for stuff online through e-commerce is enormous. And yeah, it’s been really interesting.
– We saw growth in online groceries like we had never seen. I mean, I think people were afraid to buy groceries online and now everyone’s going, and then when you have to, and you have no other choice then you do it and then you’re going, why I haven’t I’ve been doing this all along? It’s so easy.
– You’re exactly, exactly right. Yeah. Well, it’s fun. Like I said, it’s an exciting time to be a part of it. So all the people that are listening and want to learn more about Payability, or get started with Payability, what are their steps?
– Yeah, and I mean, I think the first thing would be if you want to learn more about what we’re doing I would recommend you to go to Go.Payability.com/Sellozo. And that way, if you do like what you see and you want to do more that way you’ll get a $250 sign-on bonus for having watched this podcast and for having, you know, come through Sellozo and you know, that means that the first $250 in fees are on us. And I would say, check us out. You know, like we’re always happy to have a conversation. The application is easy. There are no commitments, no credit check, no commitments, no obligations to apply and see what your offers are. And we have real people on the phones every Monday through Friday nine to six. We’re happy to talk to you about your business. Learn a little bit more and see if we can be a resource. If we can be a resource, we want to be a resource as fast as we can. If it’s not a fit for your business model, then you know hopefully you get some insight maybe from our blog, maybe some insight from watching here, but with finance always, you want to explain finance and if it’s a fit for your business model we want to be able to provide it for you. And we’re always happy to have that conversation.
– Man, Alex, I highly encourage everyone out there who’s in that spot in their business right now where cash flow is an issue to check you guys out to go to Payability, give them that link again one more time.
– Yup, it’s Go.Payability.com/Sellozo.
– And they’re going to get $250 of their fees waived from that. That’s excellent.
– I’m guilty. If this is a kind of over your head and finance, it’s kind of like I don’t want to deal with it. Go, just go for conversation. Just go have a conversation. They’re gonna look at your business. They’ll give you kind of an idea of where you’re at and just bounce ideas off somebody. Don’t put this on the back burner. If you’re trying to scale and grow these are the kind of type of people that you want to have in your corner.
– Yeah, it’s great stuff. Yeah, and again, we want to encourage everyone to do that. Also, if you’re listening and you need help with your advertising, we’d love for you to check out Sellozo. You can go to Sellozo.com and book a demo with either Chris or myself. Once you have all this funding and you’re looking to launch your product, you need to advertise and you want to make sure you’re spending your advertising dollars the most efficient way possible. That’s where we can help you. Sellozo.com. You can book a demo with Chris or I and we’ll talk all about your business. And if you want to talk about funding too we can help direct you to Alex over here at Payability. Alex, it’s been amazing. It’s been fun. Thanks so much. We’re going to have you back on once you have some more new programs that you can talk about that are coming down. We’d love for you to keep us posted. It’s been super educational for everybody out there and we’ll be talking to you next. So everyone have a great day. And thanks again, Alex.
– It’s my pleasure, guys. Thank you for having me.