The ins and outs of Amazon, Facebook, SEO, and other online advertising tools are an ever-changing and challenging landscape. Andy Bedell of Key Smart has learned how to leverage these tools to advertise his incredibly simple yet clever product, and he’s letting us in on some of his secrets.
Andy Bedell joins us to share some inside knowledge and tips for using Facebook, Amazon, and other resellers to sell and market products effectively. He also shares his own captivating copywriting process and some investment ideas and inspiration. We also talk about CRAP products, Amazon leakage, how Facebook ads work, how to properly vet a reseller, and plenty more.
Andrew: Hey guys, welcome to the eCommerceFuel podcast. I’m here with Andy Bedell in Chicago, Illinois. Andy, welcome to the show.
Andy: Thank you. I’m happy to be here.
Andrew: You’re the first, or least, not the first person live, but the first person in a full-on restaurant. I mean, if you, people if you’re listening right now, of course you can hear some people talking behind us. And we’ve got some wine, we’ve got some pizza, we’ve kind of taken over this section of the Italian restaurant. We’re in town for IRCE, and you graciously agreed to meet me for dinner, so…
Andy: Yeah, after three Cabernets, I’m ready to go.
Andrew: Ready to tell all the Facebook secrets to whoever’s listening?
Andy: I am, yeah. Ready to tell all my, my very most deep, personal secrets.
Andrew: Wow. Well, we’ll be here for this, may go a little longer than 30 minutes, like I told you.
Andy: So Dr. Drew style, right?
Andrew: So we, we just of course had dinner, chatted, and I got a bunch of stuff based on that conversation I wanna talk to you about. But quickly, you work for a company called KeySmart, right?
Andy: Yes, KeySmart. We’re based out of Chicago, Illinois. We’re a, I like to say we’re the most innovative key chain company in the world. You know, I think I can make that claim, because there’s probably not too many innovative key companies in the world.
Andrew: No, it’s cool. When you joined the forum, because you’re a community member, I actually got one of your KeySmarts for Christmas, and it’s an awesome product. For people who don’t know, it’s a… How would you describe it?
Andy: You know, it’s a Swiss style key…or it’s, it’s, basically it looks like a pocket knife. I would say the Swiss Army did tell us to, gave us like a cease-and-desist, not to call it that, so…
Andrew: Did they really?
Andy: Yeah, it was very nice. They were very, very nice. They said, “We really like your product, and just stop calling it a Swiss…” I won’t even say it. So now we call it a…
Andrew: Pocket knife.
Andy: Yeah, pocket knife.
Andrew: I’ll say it.
Andy: Swiss style key holder, basically. So what it is, is basically, the simplest explanation I can give is it’s, you can, it looks like a pocket knife. You can unscrew the sides, so you can put whatever you really want in there, right? But it’s, it holds all your standard keys, besides like these gigantic Mortise keys that you might find in Gear Up. I know that, their customer service emails.
Andrew: So it goes from like taking, let’s say, a key chain you could have as a janitor, to being very well-organized something you could put in your pocket.
Andy: Yeah, but you can also add a bottle opener, or a USB drive. We’re also have a big launch with Tile, the Bluetooth tracker company. So we have a, basically if you lost your keys, you’d be able to find it. And if anybody’s used one of these Bluetooth trackers, they’re, they become, I mean they’re very, very nice, but they become a little bit cumbersome on your key chains. So we’ve come up with a streamline system, where it will be within the KeySmart, so it will really be like the most organized and smart key chain in the world, really. So it’s, a, it’s just a functional thing that is very, it’s cool, honestly.
Andrew: In terms of your role at KeySmart, you are really involved in the marketing side, and especially on the Facebook side. And I want to maybe dive into that in a little bit, but kind of selfishly, we just covered some cool stuff that I wanna kind of bring back up from our conversation about e-commerce and just all over the board. Let’s talk about what you were calling “CRAP products,” C-R-A-P, with Amazon. Can you say what those are, and why they’re interesting?
Andy: Yeah, so, and I know this, I’m gonna give a shout-out to The Jason and Scot show. It’s Jason and Scot, Scot with one T, and Jason is…otherwise you won’t be able to find it. So I mean Jason and Scot on their e-commerce, or on your iTunes podcast or whatever you’re using.”
Andrew: It’s a great podcast.
Andy: It is a great podcast. It’s like my favorite. But Jason is a member of the community, the e-commerce field community. And it’s really just, it’s more of a high level, so it’s not, you’re not gonna get your tactics that you get on eCommerceFuel.
But you’re going to get this like high level overview of what’s going on in the e-commerce industry as a whole. And what CRAP products are, is, I learned this on-air, it’s, they stand for, it’s an Amazon acronym, it stands for Cannot Realize a Profit. And what it really is, is their larger products that Amazon cannot sell successfully, right?
So if you think about, the classic example is like a detergent, like laundry detergent. Laundry detergent is a commodity-based product that you can find at all your local convenience stores or grocery stores, and it’s got kind of like a set price. So Amazon cannot increase that price, and really the shipping economics just do not work in their favor, so they really just cannot really realize a profit.
So they had some people in the finance department come up with this, this acronym, Cannot Realize a Profit, that was initially like an internal marker, and they thought it was really funny that it was CRAP. And then eventually, you know the acronym spells “CRAP,” and then eventually it became an outside-facing thing.
So if you look at, you know, if you make laundry detergent, although I’m not really sure all that many e-commerce companies in this forum really do, or in this podcast really do, but there are some products that are a little more protected from Amazon than others, because they’re just really heavy to ship. There’s just not that much pricing power.
Andrew: We were talking about this because we were discussing how you kind of have to have your own product, your own brand, to compete on Amazon. But start talking about how there’s still some companies selling existing products, as a reseller, that are doing well.
And you brought up this CRAP idea, and actually it led into some interesting investment theses. Which, like Sherwin Williams for example, you mentioned. You were showing me their stock price going up and up and up, and one of your theses was, the reason they’ve been doing well, when so many retailers are just struggling in the face of Amazon, is because paint falls into that category.
Andy: Yeah, and almost, Sherwin Williams also, correct me if I’m wrong, too, I think Sherwin Williams also manufactures. I mean, they have their own brands.
Andrew: They do, sure.
Andy: And so I wonder if it’s also, from a manufacturer’s standpoint, if you’re a traditional manufacturer and you know, your traditional partners are regular resellers, right? You might have a little bit more protection, if Amazon can’t infringe on those resellers, right? I mean, that’s pretty much at the end of the day, that’s what it is.
Andrew: One thing that I found interesting was, you were talking about scaling up. Kind of changing gears a little bit, but scaling up Facebook ads, where you were saying, “If you have this Facebook ad that’s working really well, you can’t just flood it with ad spend and expect it to do well.” Can you talk about why, and like what, what the strategy you should employ is if you do want to scale up a pretty well-performing Facebook ad?
Andy: I guess it, I’m gonna use, make it sound as least complicated as possible. But it really is just, like when you’re running, let’s say you’re running $1000 a day, or just say $200 a day on an ad campaign, right? And you’re getting some wins off that $200, right? And by wins, I just mean conversions, whatever that conversion is, right? So usually for us in the e-commerce industry that’s purchases, right? But if you have a higher priced product that might be leads, right?
But if Facebook can’t get 25 conversions per day, or per week at the very minimum, then they’re not gonna be able to run their statistical analysis to really be able to deliver the ads, right? So the way that Facebook works is really, let’s just say you run 1000 ads, and there’s five people that convert. By convert, I mean purchase, right? If those purchasers that, you run a statistical analyses by those five customers but there’s not really much you can learn from a statistical analysis from five people.
But instead, if there’s like 100 people that convert off that, then you have 100 people to run a statistical analysis off of, and that’s just, with all of the data points that Facebook has, right, they’re keeping thousands of variables. By variables I just mean like, just different stats about you. They’re also connected into the credit bureaus, they know a lot about you that you wouldn’t think. So they’re able to run a statistical analysis between those 100 people, and that will guide where they will deliver the next 1000 ads, right?
And that’s a continuous thing, so the more conversions you’re getting, the better those machine-learning tactics are gonna work. And without getting that initial, a lot of people say, “Oh Facebook’s not working for me,” this or that, and that’s probably because you just haven’t gotten that initial stage, where you’re getting the data in.
And without that data, Facebook’s basically, it’s called a random number generator, right? You know, it’s just completely random when you don’t have anything going on, you know what I mean? And they’re just, just randomly generating numbers. That’s how you would think about it, right?
So if you don’t have those conversions, Facebook, the power of Facebook doesn’t work. It’s not like, I won’t keep this any longer, but it’s not like Google, where there’s an intent, and you’re basically, like, with your mind, or with your intuition, finding that intent and placing the right ad and the right intent. With Facebook, it’s much more a black box of their algorithm.
Andrew: Well, the other thing that’s interesting you said was, you can see potentially in the future, as Amazon starts siphoning off more traffic from just general retailers, because Amazon makes up 50+ percent now, let’s say when it gets to 70, 80 percent of retail sales, if they get there, which, good chance they will, Facebook won’t be able to…well, why don’t you say it? Why is that problematic for Facebook?
Andy: Well I’ve talked to Amazon before, and they’re definitely not interested in putting a Facebook tracking pixel on their site. I was part of a program with Amazon, where I had closer access to Amazon employees, and they were definitely not interested in putting a Facebook pixel on. Because they’re worried about Facebook, you know, taking their business or whatever.
Andrew: Just to clarify, they’re not interested in putting a Facebook tracking pixel on, on their site, so that they could be able to track and say, “Hey, this is, you know, when somebody came from a Facebook ad to Amazon, they converted on x campaign.
Andy: Yeah, yeah. So to clarify the Facebook pixel, all you have to realize the Facebook pixel is just think about, it’s just a piece of code you put on your regular pages, so it just tracks the page views, it tracks what the URL is of the visitor and then it matches it back to a Facebook user ID, and then there’s a different piece of code that you put on your Facebook, or your thank you page, right? So your thank you page is where you go to after you make a purchase. And it gets more complicated than that, there’s all these add to carts and other stuff you can do.
But at the end of the day, if Facebook doesn’t see people come to that, that purchase page, it doesn’t track that as a win, and any time somebody goes to Amazon, that, it just doesn’t get tracked. So, you know, every company I’ve worked with, you know, KeySmart, very specific, but every other company too, we see a lot of our ads driving sales on Amazon. I think a good, good frame of reference is if you drive four sales on Facebook, expect one, one extra one to happen on Amazon.
Andrew: Just because people see the product, they Google it, they jump over to Amazon, if you’ve got it listed.
Andy: Yep, and that’s also if it’s a branded product. If you’re a retailer, that’s gonna be worse, right? So if you have a branded product that you are, that you are the only one selling, then Amazon’s also another seller. Then you could probably expect four out of five to happen on, four to five to happen on your Shopify store, wherever that is, and then another one on Amazon.
If you’re a retailer, Facebook ads are gonna be really tough, because you’re gonna see a lot of leakage. Unless you have a price differentiation, but I think we all know that, like, here with MAP pricing and everything like that, it’s really hard to be selling below price, because these, these manufacturers are really cost conscious now, right? I mean, they could be selling on their own, they have you as an additional seller, and what they think, you know I can speak from, coming from a manufacturing company, what we think of when we think of resellers, we want somebody that has their own mall, right?
I don’t want them to have to set up a, a store that just sells my products, because that’s just a competition of me. I want them to have their own mall, and what I mean by their own mall is their own store that’s a mall, where people come to search for different products, and they find my product within there. If that store is buying, you know, if they just set up a store that just sells my product and then, and then what will happen is they probably leak some of those onto Amazon, and then also set up Google AdWords, and it’s a whole mess.
Andrew: So you guys of course, you’re the manufacturer, the original manufacturer of KeySmart. You sell wholesale to other companies. Do you restrict people from selling on Amazon? Do you say, “You can only sell on your website, or in your brick and mortar store?”
Andy: Yeah. So we sell, we do, we do a lot of other online retailers, like the grommet.com. It’s a great example of a retailer that helped out our brand initially a lot. They, you know, drove a lot of press to our brand, they are a retailer. But they’re more of a retailer that focuses on founders, and they have kind of like a niche in the retail, in the online retail space, so we allow them to sell.
There’s a couple others. But yes, you’re not allowed to sell on, you either have to have your own online property that has a majority of sales of other products, right? You know what I mean? It can’t be like 50 percent KeySmart and 50 percent, you know…that just doesn’t make sense, right?
At the end of the day it has to be like, for us to really, to make sense for a manufacturer to sell on a retailer’s site, they have to be doing a good amount of, you know, like, I can give you an example of like Drew Sanocki, who is like a constant guest on your show, like you listen to his podcast, he was at Karmaloop and they have like a million, just organic visitors a month. So a retailer is gonna think, “Wait”, you know what I mean? Like they’re getting that, that organic visitorship. Like, we wanna be a part of that, right?
But if like you’re a manufacturer and you just give your products, and then they start just kind of getting in the middle, and getting your Google AdWords, and just kind of, it’s more just like stealing your traffic.
Andrew: So when you do an approach like that, you have to invest way more time into vetting the resellers, I’m guessing, to make sure, you know, that they’re legitimate, they actually have some additional traffic, they have a value ad. And even when you do that, I’m still guessing you get people who are still gonna turn around and compete with you on Amazon.
So if somebody’s listening to this right now, and they have their own product, is the additional exposure you get worth the hassle of having to vet people and dealing with Amazon competitors? Like, if you guys could go back, would you still do it again?
Andy: I think we, we still would. Because we, we do do a good amount of…I guess with KeySmart we do feel that we have a unique enough product that we do feel that retail will have, it just has a positive affect for us, right? I guess it really depends, it’s a really tough question to really answer. It’s, for Amazon’s particular, it really depends on your SEO value, and we really, in all honesty, we don’t at KeySmart we really don’t have the SEO value. And I also at the same time, and the reason I say that with KeySmart is because, like what is the search term that you’re gonna get? Like, we are like the cool, innovative key chain, and there’s not really people searching for that on Google, right?
They really know, we get a much larger volume of branded searches than we do like general searches, right? And so obviously this is a higher volume of just search for key chain. But if you were to look at like “key organizer,” which is the closest descriptor word, there’s a higher volume of KeySmarts than just key organizer, right? So if you have a high volume of SEO search in your product category, and you can create a product that is gonna come to the top, rise to the top of that SEO search, and then like be able to keep some ground then that makes a lot of sense. But if not then it doesn’t.
The only reason I say that it makes sense for KeySmart to be on Amazon is because we’re also doing a good amount of retail sales, and other channels. And once you open up to the other channels it just, you’re just opening up the mayhem. So if you wanna, I feel like if you wanna open up to other channels, you do also need to open up to Amazon. But if you wanna be just like a straight, direct seller, right, where you’re not gonna open up to anybody else, I’m not really sure it makes sense to be on Amazon, right? Unless you have a giant SEO value that you can win. And that’s what I would say. But SEO values oftentimes are erased to the bottom, in my opinion.
Andrew: So one thing that we were talking about earlier was you, with your Facebook advertising, kind of had a focus on old-school copywriting. You know, a lot of the old techniques. We were talking about, we’ll talk about a course that you developed for Facebook ads here in a minute, but we were both kinda reminiscing about kind of old-school sales pages, with you know, like the yellow copywriting, highlighting and stuff like that, and how you can make that work effectively and how you can overdo that.
I’d love to hear your thoughts, because you do a lot of Facebook video. What do you, when you’re creating those videos, in terms of script writing and also in terms of the copy you put just to get people to click, what are some of the most important kind of old-school copywriting takeaways you’ve used to help with your Facebook advertising?
Andy: That’s a really good question. You know, and I can, I can speak to this from the invention standpoint, more than like a design or you know, like you know, a bunch of really profitable sellers, like Kevin Stecko, or somebody’s who’s got like a, more of a design store, right, where it’s t-shirt designs, and that it’s not as much of this, but for the inventions it’s a classic problem, agitates to solve, right?
You know, problem agitates to solve for me, right? So it’s like you’ve got this product that has these features, right? So like the classic manufacturer, if you work as a manufacturer, or as an engineer, they think of it as features, right? This is the product feature, right? And then you have got to take that product feature and turn it into a product benefit, right?
So you basically take it from like, this is what the product does, to this is what the product will benefit, how the product will benefit you. And then you take it a step further and you take a, you make a list of the benefits and you say, “What would the problems that you face if you didn’t have these benefits be?” Right? And then you have this like problem, so that you basically have your problems, and the classic copywriting formula that works really well for basic ads is, is you create the problem that you’d have without the benefit, or without the feature, right, you know? Create the problem that you’d have, show that problem, agitate that problem, and then solve it with your, with your product, right?
Andrew: So can you walk us through how you actually do that, like with an actual, tangible example, with KeySmart? How does that work?
Andy: Yeah, I mean, the classic, if you go on KeySmart.com, we have a, you know, just look at the video. And you’ll see, actually for this one I wasn’t, I wasn’t even involved in it, but my CEO just completely followed it, without, he just kind of intuitively did it, but it totally follows the example. If you just look on our home page, there’s, there’s a video and it shows like, “Have you ever thought about your keys?” And then it shows your keys in your pocket, and they’re not coming in, and then they’re bulging and then you know it shows like the keys jingling.
It’s a problem that you have, but we take it to you. We use, you know, what we call Title Cards in videos, where it’s just like a blank screen and we ask you a question. Because like a more tactical part of Facebook ads is like no Facebook ads have audio. And most basic ads don’t have audio to them. So you, you have this problem with Facebook ads where, you know, it’s not like a TV ad, where you can use audio as another input. You have to basic…
Andrew: Just because it’s not turned on by default? Is that why?
Andy: Yeah, it doesn’t have to be turned on by default, and most, if you think about it, most basic ads are listened to while people are on the go, on their mobile phone, right? So it’s not, if you’re on your, so you have to click into it in order to get the, the audio. And then if you click into it, like you have to basically put on headphones or something like that if you’re in a crowded place. So it’s a couple barriers to actually listening to it. You have to click into it and then on top of that you have to be able to be in a situation where you can listen to it. I have a template that I could, it’s like a Google Docs that I could share as a downloadable thing, but yeah.
Andrew: Yeah, yeah we’ll link up that.
Andy: It’s literally, it’s just a way to think about, like, it’s just color coded and it’s just super basic, but it’s just think about what are the problems that you might face, and then how could you think about like, you know, flushing those problems out into a live scenario, where you know, a big thing with the old school copyrighting is, if we go back to old school copyrighting, is you should spend days thinking about, “What are these hot buttons, right? What are the hot buttons that somebody facing this problem might find?”
And you know, Reddit is a great source for that. You go to reddit.com, go to some of these sub-posts, you know what I mean? People have great, great information about, like, very personal stories about like, you know, and that’s where you’re gonna get, you want real stories. It’s what’s great about social media. is authenticity, right? You know what I mean?
Andrew: I had a friend of me recently give me one of their products, and say, “Hey, take this product. Go home and use it. Take a video of it with your iPhone. Don’t make it nice, make it super ghetto, have it be shaky. Talk about the product, if you like it, which hopefully you do.
You know, talk about how you like it, how it’s beneficial.” And he said, “When we do it, we’ll put on the bottom that it’s a sponsored ad, or it’s from a friend or something like that. We won’t try to pass this off as totally objective. But even with that one there, the fact that it looks like it’s a, a very candid testimonial makes it incredibly effective for people.” Which I thought that was interesting.
Andrew: So on the copywriting front, if somebody kind of wants to go old school copywriting, work that into some of their new advertising on Facebook, any book or books that you’d recommend? Or authors?
Andy: Yeah, I mean the classic ones like Gary Halbert, right, everybody loves Gary Halbert. If you just, I think he’s got, the, if you just look on Amazon you’ll find Gary Halbert. “Letters from Boron”, I can’t…
Andrew: “The Boron Letters.”
Andy: Yeah, I’m sorry, I’m screwing them up. “The Boron Letters.” The first book I ever read was Lester Wunderman’s “Being Direct.” He has, he had an agency that was bought out by one of these big, like publicists or one of these people. I can’t remember exactly what it’s called, but… Obviously the classic Claude Hawkins, “Scientific Advertising.” I’d say those three are great. And then if you’re looking for just like a more like, not indirect marketing, but on just like advertising and marketing in general, is “Ogilvy on Advertising” is the classic.
(This is note investment advice. Please consult your own investment advisor before making any decisions.)
Andrew: So, last thing I want to ask you about before we sign off here. Investing. You kind of, we’ve been talking about, you know, different things that you’ve invested in, we’ve been talking about Crypto currencies, a bunch of stuff. Any interesting investments that you would be willing to share with the audience, that you’ve put money in?
Andy: I mean, obviously I’m gonna sound like an idiot, talking about Crypto currencies, but obviously Ethereum is like blowing up, and it’s pretty interesting if you listen to those Andreessen Horowitz podcasts, called “a16z” podcasts, where they talk about how Ethereum is really changing the way that we invest in new software. Or new protocols, basically, for like, for languages, which is really interesting. Nividia is like a really interesting graphics card company that I had the pleasure of investing in, and has just like blown up. But…
Andrew: You were saying one of the reasons that they’re blowing up is because they’re working AI into the actual graphic chips. And I don’t understand how that works per se, but is that part of the reason?
Andy: Yeah, it’s more they’re kind of like a hub, right? So they have the…and there’s probably gonna be somebody in the forum who will be like, “You don’t know what you’re talking about, ” but it’s Cuda, it’s C-U-D-A, is Cuda drivers, and they’re, basically think about like when you have a piece of hardware, it also can come with software, and they have a machine learning software that’s built into their graphic cards. That’s like, the basically the software of choice for a lot of these startups that are coming on. So there’s like all of these startups that are coming in to the machine learning space, or personal intelligence space, doing just all different kinds of things.
Another good investment tip I’d be like is like, have you heard of MercadoLibre? MercadoLibre is like the Amazon of South America. They’re blowing up in Brazil, I can tell you from, as an advertiser, Brazil is like an awesome place to advertise. Because if you can get your products in there, like, the clicks on Brazil are like eight cents a click, and people convert there, and it’s insane. They’re in Argentina, Mexico, Brazil. And they’re doing really, really well in the stock market and, you know, there’s talks like maybe Amazon, you know, could buy…they only got like $12 billion market cap, Amazon could purchase them if they really wanted to. But yeah it’s, it’s a good spot to be in.
Andrew: Nice. Cool. So before we kind of wrap things up, we didn’t talk about Facebook as much as I thought we were going to, because we started, you know, having pizza and drinking a little wine. And there was way more things I want to discuss, but you have a Facebook course, where you talk about a lot of the stuff that you do know. What’s the name of that, and the URL where people can find out if they want to learn more?
Andy: Yeah, it’s pretty simple, “FB Video Course.” I think Facebook, instead of facebook it’s just fb, so www.fbvideocourse.com, and just a free course. There’s really, to be honest there’s really no way that I monetize this at the moment. It’s really just to, to spread the knowledge.
I hope people gain insights from it. I hope to, I’ve been too lazy, but I hope to start doing weekly blog posts on, like, more new stuff, and do kind of like case studies on different Facebook advertisers that I, you know, just Facebook accounts that I really admire.Like, you know, like we were talking about Purple. I’m going to do a case study on, I’ll actually post it to the e-commerce forum, so you don’t have to join my course or anything, if you don’t want to.
Andrew: So check out his Facebook course if that’s something you’re interested in. And yeah, Andrew, thanks for…Andy, excuse me, not Andrew, I’m Andrew, you’re Andy. Thanks for talking about this. I’m in Chicago actually right now, because it’s IRCE weekend, and are you going?
Andy: No, I’m not going.
Andrew: You’re not going. Okay, you’re coming to the meet-up. We’re doing a, I’m hosting a meet-up for all the security members tomorrow night. I think we have like 20 people coming.
Andy: I’ll also be at eCommerceFuel Live this year, so…
Andrew: Oh, did you sign up?
Andy: I signed up, yeah. Maybe I missed the date again, did I?
Andrew: No, it’s tickets go on sale tomorrow.
Andy: Tickets tomorrow. Okay, alright, I’ll buy tomorrow.
Andrew: Yeah, and Andy, thanks so much for talking.
Andy: Thanks so much for having me. I really appreciate it, and I really appreciate, I need to spend more time on that forum. I really appreciated all of the, I’ve gotten a lot of good insight from people in the forums. So, just thank you.
Andrew: Yeah, of course, it’s been real good to have you. And speaking of the forum, if you are listening and you are a store owner doing at least 250k in annual revenues, join us. It’s a community for people just like you. High six and seven figures store owners. We’d love to have you be a part of that. You can learn more about the community and apply right here.
So with that I’m gonna sign off, and happy listening, thanks for listening, and we’ll see you in a couple weeks. Bye bye.