#39 Tom Shipley – The Secrets Of Selling $1B Worth of DTC Products

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After 3 weeks of no podcasts, Deividas is back. And today, he’s joined by Tom Shipley. An entrepreneur who’s been in the eCommerce and digital marketing space for 21 years now.

Over the last decade, Tom’s been through a number of businesses and has sold up to $1B worth of DTC products.

He’s been through multiple eCommerce businesses and if there’s one thing he’s learned it’s that it doesn’t happen at the snap of a finger.

Like everyone in the eCommerce space, you start with one product.

The first time he got to $1M in his first business, it was a big deal. In his second business, he was focused on getting to $10M. And in the third primary business, the one he started 15 years ago, it took him around 3.5 years to get to $100M in sales.

Tom says one thing all those businesses (and all eCommerce businesses) have in common is that they have the same fundamental building blocks:

Know your customer persona.
Be passionate about them.
Understand what products they need and deliver those products.

Whether you’re doing it online or offline, it’s all connected to the same fundamental marketing principles that allow you to scale.

Right now, he’s running Atlantic Brands – a company dedicated to developing scientifically advanced clinically tested products for beauty brands in the industry.

What Deividas wants to know is – How did Tom get to $100M and what has he learned about USPs when dealing with competitors.

When you’re scaling, it’s easy to lose your competitive advantage and be overwhelmed by your new competitors.

Tom explains when they got into the skincare market 2005, the industry was exploding. There were no strong winners at the time, so, Tom managed to come up with a winning offer – a mix of the right product and a risk-free guarantee.

They came up with a great offer, hook, and copy. Suddenly they started exploding with growth.

Though, it wasn’t easy.

They were slightly profitable but they were eating cash as they grew.

But it wasn’t until 2008 when they hit their first big issue: during the banking crisis.

Even the largest companies in the world at the time had no cash and had to stop focusing on advertising.

Tom faced one big issue: Do they let go of half their team or do they look for new opportunities?

The opportunity was that for the first time, media rates had dropped significantly during the crisis. Therefore, they decided to do a strong test on TV to see what would happen with conversions.

So, they managed to buy media at 60% off the regular rates.

They held their breath, looked at conversions – and turns out, they were still strong.

They decided to double down on their offer and buy media for cheap while they still could.

Turns out, women still wanted to make themselves feel better during the crisis (Lipstick effect) and Tom’s business had grown exponentially.

But the challenge is – how do you sustain that growth?

Sure they had a great product, offer, and a hook. But what was their actual unique selling proposition? Tom wanted to know what really made them unique.

Over the years, the effectiveness of their advertising went down and the competition got stronger.

At a certain point, they were declining. So, they needed something that would differentiate them and help them grow.

Now, they own the market place and it’s tough for anyone to catch up as they spent close to $200M on media. In skincare, it was a lot tougher.

Next challenge, which became an opportunity: How to make an emotional connection with the customer to stay unique.

For tom, it was going all in on a partnership with a celebrity influencer. Her celebrity status gave some further strong growth that was needed.

Deividas wants to know: How many new products do you lunch and sustain that marketing position to stay ahead of your competitors?

Tom says they were launching products almost 2-3 a quarter.

Right now, they’re focusing on digital advertising, naturally and Tom breaks down their approach to online ads.

25% of their spend now is on long-form infomercials and everything else – purely online. Their biggest channels are Facebook and Google, with a strong focus on analytics.

Is the 2008 crisis the same as what’s happening now with COVID?

Deividas explains direct-response companies will survive.

Tom explains that the fact that people changed their buying behavior means we’ve entered a new phase that’s here to stay. And for direct-response marketers, they have to take advantage of this while they still can.

Any channel and offer will eventually run out of steam and become inefficient.

The life and blood of any marketer is innovation.

You have to test offers, creatives, channels, and just about everything if you want to survive.

Right now, Tom thinks TikTok is the most underpriced channel, depending on your demographic.

Deividas is focusing on Snapchat.

But of course, it all depends on attribution models and scaling up.

Next think Deividas wants to know: What does it entail to be a strategic advisor, exactly? And what point should companies look for one?

Your most important goal (as a CEO, entrepreneur, etc.) should be to compress learning.

Instead of taking you 3-5 years to find what will grow your business, you can instead learn from people who have been there and done that. But the key is to find the right person.

Once you knock the first biggest challenge in front of you, the rest of the dominos will start falling on their own, explains Tom.

Right now, Tom’s main focus with his partner is creating a platform for buying Amazon brands.

Amazon businesses are doing extremely well right now. Things are going well and there’s plenty of opportunities to identify winning businesses and scale them sky high.

Having a store is different from having a brand, explains Tom.

The business that has the biggest lifetime value and can afford the highest cost per-order will win in the end.

If you can increase your average order value by 5%, your conversion rate by 5%, and your lifetime value of your customers by 5%, you will double the profit of your business.

One of the biggest mistakes business owners make is focusing on the growth of the top line.

Deividas adds that it all comes down to these 4 main stats:

AOV (average order value)
LTV (lifetime value)
Conversions rate
Cost per acquisition

By increasing a brand’s AOV simply by $10, he managed to scale the brand from $400K to $1.5M in a month.

Tom adds that cross-sells and upsells are also where the money is if you want to scale quickly.

Here’s what we cover during episode #39:

Tom Shipley introduced: Entrepreneur with over 21 years of experience in the eCommerce and digital marketing space
Core philosophies learned from a military background
Why all eCommerce businesses, whether they’re online or offline, have these 3 specific things in common
Lessons learned running beauty brands,
A flashback into the skincare industry in 2005, what was different, and how Tom managed to explode with growth
Steady growth, managing cash flows, and overcoming major challenges
Major challenge #1. 2008 Financial crisis hits and Tom’s team has to make an important decision
How Tom managed to hit a once in a lifetime opportunity that boosted his conversion rate during the financial crisis
How the Lipstick effect saved Tom’s company boost their conversions, and buy media for cheaper than usual, during the financial crisis
How this celebrity partnership helped save Tom’s company and form that emotional connection with the customer that was much needed
Tom’s experience with the 80/20 rule in the skincare industry products
Tom breaks down his approach to online ads (best channels, analytics, ad spend percentages, and more.)
Tom talks attribution models and their tech stack for analytics insights
Major challenge #2. How the 2008 crisis compares with the 2020 COVID situation regarding buying behavior and marketing
Why Tom thinks things are never as good as he thinks he is
The life and blood of any marketer – innovation and how it affects buying behavior
The most underpriced channel according to Tom (spoilers: it’s TikTok), BUT, it depends on your demographic
What being a strategic advisor entails, according to Tom, and what he advises to companies looking for one
Tom’s real focus right now: Very thoughtfully and quickly getting to $1B through a platform dedicated to buying Amazon brands
The single most underleveraged asset most online stores have
One of the biggest mistakes business owners make by focusing on the growth of their top line (and what to focus on instead)
The 4 most important stats in eCommerce, according to Deividas
Deividas’ ‘Aha!’ moment and how he increased a brand’s AOV (average order value) by $10, which moved the brand from $400K revenue to $1.5M in a month
How to beat, outbid, and outspend all of your competition, according to Deividas by focusing on these eCommerce metrics