Selling Digital Products in the B2B Space

You can run an eCommerce store without any inventory, without a warehouse, without having to deal with returns, and with all the benefits that comes with eCommerce. Just ask Niall O’Malley who runs eTrainToday, where he sells online safety training courses.

You’ll learn:

  • Tricks for marketing a subscription based product
  • How Niall went from banking to training crane operators
  • The downsides of selling only digital products

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(With your host Andrew Youderian of eCommerceFuel.com and Niall O’Malley of eTrainToday.com)

Andrew: Welcome to “The eCommerceFuel Podcast,” the show dedicated to helping high six and seven-figure entrepreneurs build amazing online companies and incredible lives. I’m your host and fellow ecommerce entrepreneur, Andrew Youderian.

Hey, guys, Andrew here, and welcome to “The eCommerceFuel Podcast.” Thanks so much for tuning in. And today on the program, I wanna talk about a facet of ecommerce that doesn’t get talked about as much as I think it should. You know, so often when we think about ecommerce, we think about putting a physical item into a box and shipping it somewhere.

And that doesn’t have to be the case, you can run an ecommerce store or run a business without any inventory, without any, you know, without a warehouse, without having to deal with returns, with a lot of the benefits of ecommerce. Without all the physical product hassles.

And I’m talking, of course, about running your own multi-level marketing scheme. And if you give me just a few minutes of your time today, I’ll tell you why I think you’re in the wrong business, and that I have a supplement line that’s perfect for you. You don’t have to sell it, you just get other people to sell it for you.

I’m talking about digital products, of course. It’s a pretty cool area of the ecommerce world, and I’ve had to bring on Niall O’Malley from etraintoday.com, to talk about how he started his digital products business, and some of the downsides, because of course like anything, there are some downsides. It looks nothing but gravy on the other side, grass is always greener. But talk about some of the downsides he’s faced, and problems in his digital products business.

So, Niall is a great guy. I met him on the beach at the, well, I’ve met him before, but I got to finally chat with him for the first time on the beach at the closing party at eCommerceFuel Live in Laguna Beach, California, where he had the audacity to mock my selection of TLC on the closing party playlist. You know, we can disagree on that, Niall, that’s fine, but still wanted to have you on the podcast to talk. So, I hope you enjoy the discussion.

Thanks, Sponsors!

But first, I wanna give a big “Thank you,” to our two sponsors who make the show possible. First, to Klaviyo, who makes email marketing automation for ecommerce incredibly easy and profitable. Three reasons why you should be using them if you’re not right now.

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Niall Can Teach You To Be Competent

Niall, looking around on your website prepping for this interview, the thing that I loved the most was your “Competent Person Training” series. I almost purchased, because I wasn’t sure if I qualify. What is the story behind that? It’s hilarious.

Niall: Yeah, the assumption there is that if you’re taking a course that’s not a competent person course, you must not be competent enough, right? But now, that’s actually, it’s a term that OSHA, the Occupational Safety and Health Administration, which we base a lot of our training off of, came up with as kind of loosely defining somebody on a job site who has the ability to shut down work if there’s anything unsafe going on, and has just a generally higher level of knowledge and maybe responsibility on that job site.

That’s the phrase that they’ve come up with, “Competent Person,” yeah. We do get questions on it from time to time.

From Banking to eCommerce: The Backstory

Andrew: It would not be me on any job site, I’m about as handy as a four-year-old. And now I’m about to dive in to your story here, and I usually don’t spend a whole kind of time on back stories of people, but yours, you’ve got such an interesting business, and I’ve been wanting to get to know you for a while. I wanna take more time to understand your backstory, if nothing else, selfishly, just curious.

And so, you know, I give a little bit of background to listeners on what you’re doing at the top, but take us back, please, what were you doing? You’ve been doing this for about eight-ish years or so, what were you doing before you started the business, or bought the business?

Niall: Yes, so I graduated college in 2005, and got into the lovely world of banking. It turns out that was a bad time to get into banking, because around…

Andrew: When you say banking, what kind of banking?

Niall: What I did, specifically, was small business lending. So, businesses with annual revenues of between one million and five million. So, I really was drawn to that because I always wanted to run my own business and do my own thing. And this job gave me the opportunity to kind of, on a pretty much daily basis, get to talk to business owners, find out what they were doing right, what they were doing wrong, get a sneak peek at the behind the scenes and see their financials, which typically, you know, don’t lie.

So, you could really see, you know, how they were performing from that perspective, and it gave me a pretty good understanding of what it takes to run a business, at least, you know, financially, and I really enjoyed it.

Then 2008 happened, and the market went in the tank. We stopped, essentially, lending, you know. And that’s what I really liked about, is getting to know these business owners, finding out what they needed, and getting their vision for where they wanted their business to go, and then actually helping them get there.

And we got to a point where, you know, we were not really doing that as much. And the directive from up on high was essentially, “Yeah, we can’t really approve this loan. We’re not gonna be approving a whole lot of loans,” you know, reading between the lines. This is what was going on. But we’d love to get their deposits, so do what you can to get their money, but we really can’t help them on our end. So, it was becoming frustrating.

And the opportunity for this business originated from my father-in-law. He did workplace safety training in the classroom for a long time and he was in kind of a semi-retirement mode at this point, and so my wife said, “Would you, Niall, be interested in trying to do something with this?” and I thought, “Well, I don’t know the first thing about safety training, and I certainly don’t wanna be training in front of, you know, a classroom of people.”

So, I looked into it a little bit and found out you could do it online, and kind of, you know, on nights and weekends. With help from a developer, built out a pretty crude website and researched into the software to develop out a fully narrated interactive training course and figure out how to implement that into a website, learned as much as I could about marketing, search engine optimization, like a Stephen King novel.

I was just devouring as much of it as I could, just finding out what I could do to get more exposure, you know, to these courses.

Turned Crude PowerPoints Into Online Courses

So, what we did was, basically, translate, you know, very crude PowerPoint-based courses into fully interactive courses for a handful of training courses, and man, just organically grew it from there, from that point on.

Andrew: Very cool. When you were in banking, you know, you had some perspective. I think it’s so fascinating, this kind of, you know, X-ray vision and a part of people’s lives, you know, financial aspect that no one talks about, or very few people talk about candidly.

You know, I love, whenever I sit down with bankers, I always ask them like, you know, what commonalities do you see among people that are doing really well? Did you see anything given that unique perspective that surprised you with the way either individuals or businesses, that with their finances, you know, people that were really killing it in ways that you wouldn’t imagine, or vice versa?

The Art of Managing Chaos

Niall: You know, one thing, believe it or not, that I was always surprised at coming from a pretty organized corporate world, was just how disorganized some of these business owners were. You know, in the front office, everything was put together and pretty calm, and, you know, once you got back to the business owners’ office and you kind of saw the background of how the business operates, it was very, in some cases, you know kind of chaotic.

They were just doing what they could with what they had at the time and just, you know, running on instinct almost, it seemed.

And I thought, “Man, this just seems like…” you know, to me coming from, you know, going to school, you read everything is just so structured and so organized. And the thing that really stuck with me was just with the more successful ones were the ones that manage that chaos and almost kind of embrace it, you know, and made it work for them. It seemed to keep it exciting and new for them, but they still had a good grasp on it, and they were able to kind of roll with the punches, it seemed, you know?

So, that was something that kind of stuck with me. You know, no specific hack in general, it was just kind of all over the place with businesses. Some of them were, you know, more organized than others, but that was one thing that I was kind of surprised at, for sure.

Eight Years Into The Business

Andrew: Interesting. So, you know, you get the business running, that was about eight years ago, ish or so, where are you now? Can you give us a sense in terms of maybe…you don’t have to give exact numbers, but maybe rough ballpark revenue ranges, team, things like that.

Niall: Yeah, so we’re getting pretty well, pretty good into the seven-figure range. We’ve got a team of about…we work primarily with subcontractors and remote staff, and we’ve got a team of about five people right now. We’re looking to expand on that here pretty soon and add to that, but yeah, that’s where we’re at right now.

And, you know, it was gangbusters the first of couple years, and now we’re getting to a point where the growth has started to slow down, you know, and I’ve been working on managing what we have and improving what we have, and optimizing that, and we’re also trying to plan for the next stage of growth to get us to that next level I’d like to go to.

Creating the Courses

Andrew: And with the courses, you know, you think about those, do you create them yourselves? Do you use other people’s courses and then just repackage them like you said? And is there a license you have to pay, or are the courses, you know, 100% created on and can keep 100% via the proceeds on? Or how does that work?

Niall: Yeah, so for the most part, yeah, we create them entirely ourselves. So, what our model has been more recently is working with identifying an opportunity topic within the safety world that we want to offer, and then finding a subject matter expert for that topic and contracting with that person to develop out the content of the course. And we then, to make a long story short, we then design it out, fully narrate it, test it, implement it, and yeah, we own it fully and completely from there.

Now, we do have some additional courses that we license and do kind of a revenue share agreement with other people, other training providers who we’ve identified have training courses that we’d like to offer our customers, and vice versa. We do the same for other training providers as well. So, it’s kind of a hybrid of the two, but for the most part, the vast majority of our revenue comes from courses that we own entirely.

Liabilities With Online Courses for Operating Cranes

Andrew: So, do you have like a $250 million liability policy? And the reason I ask is because you have courses on crane operations, right? And so I just see, you know, as a worst case scenario guy, I see some guy taking your course, getting signed off by you, right? You say, “Hey, you completed this course,” and then they go and they drop, you know, four tons of concrete through the middle of a shopping center or something. How does that work?

Niall: Yeah, good question. So, I don’t know, I’ve never thought about this, and it’s one that I have no idea Andrew, do you mean I’m in some sort of liability issue here? No, yeah, it’s one that I definitely try not to think of too much, you know, the potential ramifications there. But we do have protections in place with insurance, yeah, with a pretty good policy.

But for the most part, the OSHA standards that we train on, they really put the onus on the employer to make sure that their employees are trained properly. We’re kind of just the vehicle for which that training is provided.

Finding and Paying Instructors

Andrew: You talked about developing the course was going out, and you’re not teaching these. You’re leveraging somebody who’s an expert in the topic that you kind of bring in. Can you talk to me about how you find those experts? And then also kind of the compensation and the structure you set them up on, do you pay them on a, you know, a flat fee, a royalty basis? How do you find them? How do you pay them?

Niall: Yeah, it tends to depend on the individual. So, as far as how we find them, over the years, I’ve developed relationships with industry consultants, companies that consult on a variety of safety issues for major companies, and they tend to be a pretty good source for people because they have either directly employed or they contract with people that go out into the field and do, you know, safety audits for example, and so they have a big pool of talent that they can pull from.

So, I’ll reach out to them and say, “Hey, this is what we need to train on, do you have anybody who’s an expert in this?” and they’ll send me their information, their bio, their resume and stuff, and I’ll go from there.

Aside from that, the pay, it really varies, but they are expensive. I mean, I think $50 to $100 an hour is a pretty good estimate of where we’re at with subject matter experts, because you’ve got, for the most part, our ideal expert is a guy or gal who’s been in the safety industry for a long time, worked with some big companies and has a lot of experience and can apply that, and now they’re just in retirement, you know, or they’re doing this on the side to supplement their income.

Andrew: So you’re not giving away, sorry to interrupt you, you’re not giving away part of the royalties, you’re kind of paying them upfront, paying them really well upfront, but you’re not giving them equity or anything like that?

Finding The Right Experts

Niall: Yeah. Yes, so far, we have not done that, although I’d be open to that approach.

Even just on a general consultative approach, if we found a very good person who knew a lot about a variety of different things, I would be open to working with them and saying, “Hey, let’s explore what opportunities are out there,” just in general, not in specific courses but what else we could be offering that maybe there is a gap in the market for, and giving them some incentive to come up with some really good stuff and then develop it out and do a kind of a hybrid, you know, maybe hourly or project fee along with the back end kind of revenue share.

I’d be open to that, but yeah, to-date, we haven’t done that.

The Downsides to Digital

Andrew: You think about digital products, and I could ask you what the good parts are, but I’m just gonna summarize them because they sound amazing, right? Of course, you have no inventory, your margins are phenomenal especially once you, you know, create the product and get it out there, it’s, you know, probably the highest margin product you’re gonna sell on ecommerce.

You’ve got, you know, charge backs and fraud are a minimal issue because there’s not a lot of criminals out there really itching to get their hands on a crane safety course and so if you’ve got to refund them, it’s not the end of the world. Lots of great upsides to this. What are the less obvious downsides to selling digital products?

Niall: Yeah, yeah. There are a couple, but you’re right, in general, yeah, it’s great once you get the product out. You know, it tends to be a little asset. I like to think of it as a little engine that just keeps humming for you. You know, each course is out there and it’s generating revenue for you with, pretty hands off for the most part on that particular course.

The initial investment can be pretty high. You know, when I say, you know, say $75 an hour for a subject matter expert to develop our training, these guys are usually used to giving the training in a classroom setting where they can, for the most part, wing it just based off the knowledge that they have.

But to get them to kind of be in the mode of we’re gonna put this course online, you have to really include everything within the standard here, and everything you’re kind of interpreting from that standard into this slide and into the notes section so that we can then narrate, pretty much, what you would say in a classroom environment.

To get that mind shift can be challenging for some guys. I mean, for one hour or so of training, it can take, the end product of training, it can take 50 to 80, or even 100 hours of development time from that subject matter expert to get everything he wants to get. And that’s just the one part of the process.

Then you have a designer that takes that raw PowerPoint content, converts it over into a fully functioning, interactive, you know, course with nice design elements, and quizzing and testing included. And then you have a narrator, you know, who needs to narrate the course. So, the initial investment is one thing that can be quite high.

The other thing I found that can take a lot of resources to manage is just the technology side of things, and how to keep the customer experience uniform. Technology is just always changing, you know, so course maintenance, in general, or platform maintenance, can be a big thing.

So, a lot of browsers are migrating over to HTML now, so managing that stuff. Mobile deliverability, you know, a lot more people, a lot of our customers are, you know, starting to take training more on mobile, and so, you know, making sure that the courses are optimized for different screen sizes. So yeah, it’s just a lot of maintenance that I didn’t anticipate at the beginning.

Potential liability, we covered. You know, that’s another one that’s a potential downside. Those are some of the things I couldn’t anticipate upfront.

Marketing an Unsexy Product

Andrew: One thing I’m curious about how you do too is, I feel like it’s getting harder and harder to market. I mean, this is just in general. Traffic is getting more expensive, things are getting more crowded, it’s the nature of, you know, business and internet in general. But you think about trying to market something like crane safety courses where one of the little…not nearly as sexy as let’s say like hover boards or any other topic that people might get a lot more interested in.

There’s probably people that aren’t coming home after a day at work unless they’re really geeks about cranes, and if you are out there listening, no offense to you at all, you know, Googling for crane safety courses they have to take. It’s more of an event-driven, need-based thing.

Have you had a hard time, especially let’s say in the last, you know, two or three years marketing? Have you seen it get more difficult? I’m guessing, you know, being in the business for eight years, you probably built up a pretty good solid base that you’re able to, kind of probably gives you a lot of, especially on the SEO front, traffic, looking forward. But how hard is it to market a business like this that’s not nearly as shiny and maybe as sexy as others?

Niall: Yeah, you know, now we do, like you alluded to, we do get a lot of repeat or direct organic traffic, which is great. At the beginning, that was a struggle, getting the word out. I mean, word of mouth is obviously your best way of getting business and doing your marketing, so putting out a good product and offering great service, and just giving people everything they might want or need.

But initially, yeah, I tried a couple of things, you know, but what really has stuck as far as what you can do right from the outset, for us in particular, was paid advertising with, you know, Google Ad Words and Bing had a really immediate impact and a pretty good return on investment.

And to the lack of sexiness point, yeah, that’s definitely something. I mean, our target audience is not your general, you know, person scouring the internet looking, or potential customer looking for something to buy. Our product for the most part, is gonna be required. You know, the people that are going to take it are going to need it or be required, in most cases.

And you always get people that just want to improve their resume and they just, they don’t really necessarily need to, or they’re curious and they’re in the industry, they wanna take the training. But for the most part, it’s not something that they would do on their own if they didn’t have to. So, that helps.

And it really, it does help with our metrics as well because you don’t get as high of, kind of people bouncing away and not purchasing as I think other ecommerce stores might get. So, the person that’s looking for a crane safety course in that example, you know, our crane signals safety training course, like, “Oh, what signals do I need to show the crane operator in order for him to hoist the boom correctly?” things like that, you know.

So, that type of a customer is going to know that he needs to take that course. At that point it just becomes a question of where he takes it, you know, so there are a lot of times if it’s an individual as compared to a corporate customer, if it’s an individual they’re pretty cost sensitive, you know, and they’ll kind of compare, in general. They’ll compare a couple of different options, see what looks the most attractive and then just go with that one. They’ll be taking that training, it’s just a matter of who they take it from.

Low Traffic, High Conversions

Andrew: So what you’re saying is you’ll only get 50 people to your site per day, but they convert at a 90% conversion rate, I’m I hearing that right?

Niall: Basically.

Andrew: The definition of long tail keyword.

Niall: Yeah, I mean, it’s yeah, it’s basically the case. You know, a little bit more than that, hopefully. But, you know, only…

Andrew: Oh, 95% conversion rate?

Niall: A little bit more than 50 people.

Andrew: That’s amazing.

Niall: A little bit more than 50 people, hopefully, yeah.

Andrew: No, no, of course, I’m joking.

Niall: But, maybe just you could, you know, maybe that that number of people for a specific course over the course of a couple of days or a week, yeah, yeah, definitely.

How Content Is Delivered

Andrew: What do you use to deliver the content? I mean, you alluded to a bit earlier on the, you know, I’m sure there are SAS providers that can deliver all your content for you, which probably is easier on the tech side but you can, you know, less customization especially given that you’re doing things like certification and after people complete the courses, things like that.

But what do you guys use to, what kind of software do you use to deliver, you know, the actual training aspect, and then also deal with the ecommerce aspect of taking the money and, you know, providing access to the course, credit cards, things like that?

Niall: Yeah, so the course itself, you know, what we author the training in and what we publish it through, is a piece of software called Storyline. And it’s just what they call a rapid authoring e-learning tool. You know, they make it pretty straightforward. You know, like a lot of Adobe products are very, you know, the learning curve is pretty high.

So with this, the idea is that it’s pretty straightforward to put a course together. It’s pretty specific in how they do it. And you can still do a lot with it. It’s pretty flexible in that way. So, we put the course together using that software, load it up to our server, and then everything from there in how it’s delivered is pretty customized. We deliver it through an IFrame window and record progress through the course in a pretty customized way.

We built out a lot of the, what’s called learning managing system in the industry. A lot of companies license these very expensive third party learning management systems to track student progress and see where their employees are within training, generate certificates, etc. What we do is we offer 80% of what anybody would need in a learning managing system right out of the box.

And we had to customize a lot of stuff to do that. So a lot of learning managing systems I tell people it’s like you’re really paying a lot of money. You’re buying a Lamborghini when all you really need is a Chevy to do exactly the four or five things you wanted to do. So, we just built that and offered it to people right out of the box.

So, doing stuff like that, you have a lot of customizations. But for the, you know, the shopping cart side of it, we use WooCommerce because it does allow for, you know, a lot of different customizing that you might need to do. But, yeah that’s our shopping card solution which has worked out pretty well for us so far.

Andrew: Awesome, Niall. This has been cool to hear the story and how you’re, you know, making digital work. Again, it’s etraintoday.com. You can go and check out that hazardous waste course, or like me, start studying for your competent person exam. I’ll actually be doing it after we wrap up this call, for it now.

Thanks for coming on and sharing, man. It’s been awesome having in the community, and I appreciate you coming on and talking shop. It’s been fun.

Niall: Awesome, thank you, Andrew. Thanks for the community. I know a lot of times, as a business owner, it’s kind of a lonely endeavor, and the channel you’ve provided with the forums has made it much less lonely. So, much appreciated there for that.

Andrew: Yeah, of course. That’s gonna do it for this week’s episode, but if you enjoyed what you heard, check out at ecommercefuel.com, where you’ll find the private vetted community for online store owners. And what makes us different from other online communities or forums, is that we heavily vet everyone who joins to make sure that they have meaningful experience to contribute to the broader conversation.

Everyone who we accept has to be doing at least a quarter of a million dollars in annual sales on their store, and our average member does seven figures plus in sales via their business.

And so if that sounds interesting to you, if you wanna get, you know, connected with a group of experienced store owners online, check us out at ecommercefuel.com, where you can learn more about membership as well as apply.

And I have to, again, thank our sponsors who helped make this show possible. Klaviyo, who makes email segmentation easy and powerful. The cool thing about Klaviyo is they pull your entire catalog customer and sales history to help you build out incredibly powerful automated segments that make you money on autopilot. If you’re not using them, check them out and try them for free at klaviyo.com.

And finally, Liquid Web. If you’re on WooCommerce, if you’re thinking about getting onto WooCommerce, Liquid Web is the absolute best hosting platform, for three reasons. One, it’s built from the ground up for WooCommerce and optimized by some of the best industry professionals in the WooCommerce WordPress space that really know their stuff.

And it’s highly elastic and scalable, as well as comes with a whole suite of tools and performance tests to optimize your store. You can check them out and learn more about their hosted WooCommerce offering at ecommercefuel.com/liquidweb.

Thanks so much for listening, I really appreciate you tuning in, and looking forward to talking to you again next Friday.

Want to connect with and learn from other proven eCommerce entrepreneurs? Join us in the eCommerceFuel private community. It’s our tight-knit, vetted group for store owners with at least a quarter of a million dollars in annual sales. You can learn more and apply for membership at ecommercefuel.com.

Thanks so much for listening, and I’m looking forward to seeing you again next time.

What Was Mentioned

Flickr: Dhanti Nath

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5 Comments

  1. Thanks for posting this interview. So much to learn and think on. It takes a lot of patience and skills to launch an e-commerce project without any inventory or warehouse, and after leaving a plush career in banking.

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