About this episode
Ben Leonard is a fitness enthusiast who found himself in bed with a heart problem in his early 20’s (he’s fit and healthy now). His doctors told him to rest. Said not to go to the gym, he cleared out his bag and noticed some of the accessories he used had worn out prematurely.
The experience sparked an idea. Leonard decided to launch a brand of fitness accessories made to last longer and cost less than the alternatives. He named his fledging company Beast Gear. He borrowed around £1,000 from his father and ordered 250 skipping ropes with the Beast Gear logo emblazoned on them.
Three years later, Beast Gear was turning over more than £4 million — 95% of which was on Amazon. Worried he had become too dependent on Amazon, he decided to sell and got around three times the profit for Beast Gear.
Leonard shares much wisdom in this episode, including:
- How to build a brand “off Amazon.”
- A little trick Leonard used to build raving fans on Instagram.
- How Leonard used a chatbot to grow his list of subscribers.
- How to improve your ranking on an Amazon search.
- How to protect your brand.
- Multiples benchmarks for e-commerce brands.
- Why selling most of your products on Amazon could drag down your valuation.
- Why it’s important to “leave some meat on the bones” for an acquirer.
- What Leonard would do differently if he had the chance to sell Beast Gear over again.
Leonard’s dependency on Amazon as a sales channel depressed Beast Gear’s value compared to an e-commerce brand that sells through a more diversified group of sales channels. Your dependency on a single supplier is one leg of the Switzerland Structure. We’ll give you a score on this value driver — along with a measure on all eight factors that make up your company’s value — when you get your Value Builder Score.
Check out our article on How Amazon Can Be A Blessing And A Curse.
Show Notes & Links
(1:33) John Warrillow: “the Switzerland structure”
(4:25) Ben Leonard: “a condition called pericarditis”
(12:43) Ben Leonard: “the way to stand out on Amazon is yes, you need to rank when you launch your products, but you need to build a brand, right? Build a brand which has off-Amazon assets. Your website, your YouTube channel, your TikTok, your Instagram, your Facebook, whatever it is, and use these to help you build an evangelical base of fans to whom, will buy your products whenever you launch them, whether they buy them on your own website or Amazon.”
(15:04) Ben Leonard: “you can go on the Beast Gear website now, and you’ll see that there’s a page about how I am an averagely fit guy who’s into fitness equipment.”
(15:11) John Warrillow: “I love the video”
(17:32) Ben Leonard: “the YouTube channel was pretty straightforward. Demonstration videos of how to use the products, so immediately you’re busting objections… and you put a link to the demo video in the PDF guide that gets sent through Amazon when they buy the product, so immediately you’re busting problems before they even occur.”
(18:05) Ben Leonard: “Instagram was huge, and there’s a strategy I can talk about which is straightforward, but hard work. And certainly to scale this, the big guys struggle, but it works like a charm when you’re a bit smaller.”
(21:00) Ben Leonard: “[Amazon] reviews are relatively important, but not that important. What’s more important is your add-to-cart frequency, and then your conversion rate. But, what influences your add-to-cart frequency and your conversion rate? Reviews. So indirectly, they are. Customers do care about reviews and ratings.”
(23:17) Ben Leonard: “because they’re in our chatbot now, they’re, effectively they’ve subscribed. So now when I want to launch new products, I can send a broadcast message to my chatbot subscribers to tell them all about it.”
(30:33) Ben Leonard: “we did our homework, and we came to realize that my product was not infringing on theirs, and my product’s protection was sufficient. And not only that, but we figured out that their product had been developed by an entrepreneur like me and then acquired by this enormous organization, and it had inherited the original patent drawings, which were pretty crude. It turned out their own patent didn’t actually protect their own product. So my lawyers politely said, “Go away”.”
(35:02) Ben Leonard: “Amazon, it’s genius, right? They have access to your account, they can see how well you’re performing, and therefore they’re able to offer you a loan that they know you can pay back, and that you’re going to use it to scale your business and therefore scale their business.”
(37:14) Ben Leonard: “The first order I placed with my supplier was for 500 skipping ropes, and then I grew out multiple products. But just before I sold the business, the last order I placed with the supplier for that same skipping rope was 250,000 units.”
(40:29) Ben Leonard: “I had a choice, I could scale the team and put significant amount of work into that, or I could take some money off the table, and make my family financially secure, and move onto the next project. And in some ways, it was a head-vs-heart thing, but it just made sense for me and my family at that time.”
(42:06) Ben Leonard: “the more you sell through a marketplace like Amazon, this is not quite a hard and fast rule, but your multiple tends to be a little lower. Whereas if you are selling more through your own direct-to-consumer website, for instance, or even in combination with, say, bricks and mortar, you would expect a higher multiple.”
(44:31) Ben Leonard: Thrasio
(45:58) Ben Leonard: “they loved what they referred to… as the moat around the business. So, I’d created a suite of products so if any one product went down for some supply chain reason, I had plenty of other products in there. I had plenty of reviews, and I’d built up all these off-Amazon assets.”
(46:49) Ben Leonard: “I don’t think it’s good to max-out growth and then sell. I think you need to leave something for the buyer, leave some meat on the bone. And that gives them … Because they want to accelerate the growth even further and eventually exit themselves, and they need to see something there to want to take it on.”
(50:21) Ben Leonard: “I actually negotiated a side deal where I would develop products for them and take a commission on those, not, that wasn’t part of the share purchase agreement. I negotiated that on the side… I was one of the first people to do that in this space, actually, because I still had a ton of products in my pipeline.”
(53:45) Ben Leonard: “Selling… I wouldn’t have timed it so that I was backpacking around Italy with my wife and six-month-old baby whilst I was having calls with the potential buyer, for starters. I probably would’ve negotiated harder on deal structure.”
(55:59) Ben Leonard: “deal with somebody who’s got experience on all sides of the equation. They’ve done deals, they’ve sold businesses, they understand the accounts, but they’ve also been in the trenches… deal with a broker who has real-life experience of the industry that you are in and can speak to that from a position of authority.”
About Our Guest
Best known as the founder of Beast Gear, Ben Leonard is the classic millennial entrepreneur. He built a business on a laptop, in a cupboard, in his spare time. The difference? Ben grew an international 7-figure business and successfully exited after 3 years; the business holy grail.
Now Ben is doing it all over again and helping others to do the same with his e-commerce consultancy and e-commerce brokerage.
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